<SUBMISSION>
<ACCESSION-NUMBER>0001047469-03-019192
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>11
<PERIOD>20030329
<FILING-DATE>20030519
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>POLYMER GROUP INC
<CIK>0000927417
<ASSIGNED-SIC>2221
<IRS-NUMBER>571003983
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>0103
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-14330
<FILM-NUMBER>03710866
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>4838 JENKINS AVE
<CITY>NORTH CHARLESTON
<STATE>SC
<ZIP>29405
<PHONE>8037445174
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>4838 JENKINS AVENUE
<CITY>NORTH CHARLESTON
<STATE>SC
<ZIP>29405
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>a2111067z10-q.htm
<DESCRIPTION>FORM 10-Q
<TEXT>
<HTML>
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</HEAD>
<BODY BGCOLOR="#FFFFFF" LINK=BLUE  VLINK=PURPLE>
<BR>
<FONT SIZE=3 ><A HREF="#03CHI3070_1">QuickLinks</A></FONT>
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<P ALIGN="CENTER"><FONT SIZE=5><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>  </B></FONT><FONT SIZE=2><B>Washington, D.C. 20549  </B></FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=5><B>FORM&nbsp;10-Q  </B></FONT></P>

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<TD WIDTH="12%" ALIGN="CENTER"><BR><FONT SIZE=3><FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
<TD WIDTH="88%"><BR><FONT SIZE=3><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)&nbsp;OF&nbsp;THE SECURITIES&nbsp;EXCHANGE ACT OF 1934</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2 ALIGN="CENTER"><BR><FONT SIZE=2><B>For the quarterly period ended March 29, 2003</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="12%" ALIGN="CENTER"><BR><FONT SIZE=3><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="88%"><BR><FONT SIZE=3><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)&nbsp;OF&nbsp;THE SECURITIES&nbsp;EXCHANGE ACT OF 1934</B></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 ALIGN="CENTER" VALIGN="TOP"><BR><FONT SIZE=2><B>For the transition period from
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> to
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></B></FONT></TD>
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<TD COLSPAN=2 ALIGN="CENTER"><FONT SIZE=2><B><BR>
Commission file number:&nbsp;&nbsp;&nbsp;&nbsp;1-14330</B></FONT></TD>
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<P ALIGN="CENTER"><FONT SIZE=5><B>POLYMER GROUP,&nbsp;INC.<BR>  </B></FONT><FONT SIZE=2>(Exact name of registrant as specified in its charter) </FONT></P>

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<TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2><B>Delaware</B></FONT><FONT SIZE=2><BR>
(State or other jurisdiction of<BR>
incorporation or organization)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2><B>57-1003983</B></FONT><FONT SIZE=2><BR>
(I.R.S. Employer<BR>
Identification No.)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%" ALIGN="CENTER"><BR><FONT SIZE=2><B>4055 Faber Place Drive, Suite 201<BR>
North Charleston, South Carolina</B></FONT><FONT SIZE=2><BR>
(Address of principal executive offices)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="49%" ALIGN="CENTER"><BR><FONT SIZE=2><B>29405</B></FONT><FONT SIZE=2><BR>
(Zip Code)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3 ALIGN="CENTER"><FONT SIZE=2><BR>
Registrant's telephone number, including area code:&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><B>(843)&nbsp;329-5151</B></FONT></TD>
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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant (1)&nbsp;has filed all reports required to be filed by Section&nbsp;13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or for such shorter periods that the registrant was required to file such reports), and (2)&nbsp;has been subject to the filing
requirements for the past 90&nbsp;days.&nbsp;&nbsp;Yes&nbsp;/x/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;/&nbsp;/ </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule&nbsp;12b-2 of the Exchange
Act)&nbsp;&nbsp;Yes&nbsp;/&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;/x/ </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate
by check mark whether the registrant has filed all documents and reports required to be filed by Securities 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to
the distribution of securities under a plan confirmed by a court.&nbsp;&nbsp;Yes&nbsp;/x/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;/&nbsp;/ </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate
the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
May&nbsp;12, 2003 there were 8,125,869 shares of Class&nbsp;A common stock, 399,978&nbsp;shares of Class&nbsp;B common stock and 118,449&nbsp;shares of Class&nbsp;C common
stock outstanding. No shares of Class&nbsp;D or Class&nbsp;E were outstanding as of such date. The par value for each class of common shares is $.01&nbsp;per share. </FONT></P>

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NAME="page_fa3070_1_2"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><B>POLYMER GROUP,&nbsp;INC.  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fa3070_index_to_form_10-q"> </A>
<A NAME="toc_fa3070_1"> </A>
<BR></FONT><FONT SIZE=2><B>INDEX TO FORM 10-Q    <BR>    </B></FONT></P>

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<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH WIDTH="77%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER"><FONT SIZE=1><B>Page</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>Part I.&nbsp;&nbsp;&nbsp;&nbsp;Financial Information</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2>3</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="7%"><FONT SIZE=2><BR>
Item 1.</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="77%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
Financial Statements</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
3</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="7%"><FONT SIZE=2><BR>
Item 2.</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="77%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
Management's Discussion and Analysis of Financial Condition and<BR>
Results of Operations</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
27</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="7%"><FONT SIZE=2><BR>
Item 3.</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="77%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
Quantitative and Qualitative Disclosures About Market Risk</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
36</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2><BR>
Part II.&nbsp;&nbsp;&nbsp;&nbsp;Other Information</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
38</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2><BR>
Signatures</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
39</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2><BR>
Exhibit Index</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
42</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2>2</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_fc3070_1_3"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fc3070_item_1._financial_statements"> </A>
<A NAME="toc_fc3070_1"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 1.&nbsp;&nbsp;&nbsp;&nbsp;FINANCIAL STATEMENTS    <BR>    </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>POLYMER GROUP, INC.<BR>
CONDENSED CONSOLIDATED BALANCE SHEETS<BR>
(In Thousands, Except Share Data)  </B></FONT></P>

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<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Successor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Predecessor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 29,<BR>
2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>December 28,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>(Unaudited)<BR> </B></FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 ALIGN="CENTER"><FONT SIZE=2><B>ASSETS</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2><BR>
Current assets:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Cash and equivalents</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>30,193</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>45,901</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Short-term investments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>12,246</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Accounts receivable, net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>132,065</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>117,420</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Inventories</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>115,813</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>115,696</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Other</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>32,934</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>45,236</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="61%"><FONT SIZE=2>Total current assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>311,005</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>336,499</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2><BR>
Property, plant and equipment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2><BR>
361,600</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2><BR>
429,528</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Intangibles and loan acquisition costs, net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>34,907</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>33,357</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Other</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>11,221</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>11,935</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="61%"><FONT SIZE=2>Total assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>718,733</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>811,319</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 ALIGN="CENTER"><BR><FONT SIZE=2><B>LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2><BR>
Liabilities Not Subject to Compromise</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Current liabilities:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Accounts payable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>46,178</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>46,068</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Accrued liabilities and other</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>63,652</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>45,376</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Short-term borrowings</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>248</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>534</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Current portion of long-term debt</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>9,488</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>24,616</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="61%"><FONT SIZE=2>Total current liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>119,566</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>116,594</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2><BR>
Long-term debt, less current portion</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2><BR>
479,470</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2><BR>
478,224</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Other non-current liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>47,949</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>45,309</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Total liabilities not subject to compromise</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>646,985</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>640,127</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2><BR>
Liabilities Subject to Compromise</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2><BR>
637,106</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Total liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>646,985</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,277,233</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2><BR>
Shareholders' equity (deficit):</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Successor Class A common stock&#151;$.01 par value, 19,279,388 shares authorized, 8,125,869 shares issued and outstanding at March 29, 2003</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>81</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Successor Class B common stock&#151;$.01 par value, 800,000 shares authorized, 399,978 shares issued and outstanding at March 29, 2003</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Successor Class C common stock&#151;$.01 par value, 118,453 shares authorized, 118,449 shares issued and outstanding at March 29, 2003</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Predecessor series preferred stock&#151;$.01 par value, 10,000,000 shares authorized, 0 shares issued and outstanding at December 28, 2002</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Predecessor common stock&#151;$.01 par value, 100,000,000 shares authorized, 32,004,200 shares issued and outstanding at December 28, 2002</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>320</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Predecessor non-voting convertible common stock&#151;$.01 par value, 3,000,000 shares authorized, 0 shares issued and outstanding at December&nbsp;28,&nbsp;2002</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Additional paid in capital</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>73,304</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>243,722</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>(Deficit)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(1,485</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(661,572</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Accumulated other comprehensive (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(157</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(48,384</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>71,748</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(465,914</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Total liabilities and shareholders' equity (deficit)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>718,733</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>811,319</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>3</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=3,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=993407,FOLIO='3',FILE='DISK022:[03CHI0.03CHI3070]FC3070A.;16',USER='MBLOUNT',CD='17-MAY-2003;09:46' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_fe3070_1_4"> </A> </FONT> <FONT SIZE=2><B>POLYMER GROUP, INC.<BR>
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)<BR>
(In Thousands, Except Per Share Data)  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Successor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Predecessor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>One Month<BR>
Ended<BR>
March 29, 2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Two Months<BR>
Ended<BR>
March 1, 2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>(Restated)<BR>
Three Months<BR>
Ended<BR>
March 30, 2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Net sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>64,067</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>132,909</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>191,180</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Cost of goods sold</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>52,694</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>111,075</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>162,711</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Gross profit</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>11,373</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>21,834</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>28,469</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2><BR>
Selling, general and administrative expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
8,250</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
16,218</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
26,624</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Special charges</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>2,168</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Plant realignment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>176</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Operating income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>3,115</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>5,612</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(499</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2><BR>
Other (income) expense:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="41%"><FONT SIZE=2>Interest expense, net (contractual interest of $20,306 for the two months ended March 1, 2003)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>3,760</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>10,665</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>25,753</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="41%"><FONT SIZE=2>Investment (gain) loss, net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(291</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>68</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="41%"><FONT SIZE=2>Foreign currency and other</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(31</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>1,875</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>3,253</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>3,729</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>12,249</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>29,074</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2><BR>
Loss before reorganization items, income taxes and cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(614</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(6,637</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(29,573</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2><BR>
Reorganization items:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="41%"><FONT SIZE=2>Gain on cancellation of prepetition indebtedness</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(619,913</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="41%"><FONT SIZE=2>Fresh start adjustments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>47,460</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="41%"><FONT SIZE=2>Chapter 11 reorganization expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>10,448</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="41%"><FONT SIZE=2>Other</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>19,395</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(542,610</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2><BR>
(Loss) income before income taxes and cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(614</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
535,973</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(29,573</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2><BR>
Income taxes</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
871</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
1,692</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2><BR>
(Loss) income before cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(1,485</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
534,281</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(29,573</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2><BR>
Cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
12,774</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2><BR>
Net (loss) income</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(1,485</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
534,281</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(42,347</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2><BR>
Net (loss) income per common share&#151;basic<BR>
Average shares outstanding</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
8,644</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
32,004</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
32,004</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>(Loss) income before cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(0.17</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>16.69</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(0.92</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>0.40</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Net (loss) income</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(0.17</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>16.69</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(1.32</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2><BR>
Net (loss) income per common share&#151;diluted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="41%"><FONT SIZE=2>Average shares outstanding</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>8,644</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>32,004</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>32,004</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>(Loss) income before cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(0.17</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>16.69</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(0.92</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>0.40</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Net (loss) income</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(0.17</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>16.69</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(1.32</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>4</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=4,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=419423,FOLIO='4',FILE='DISK022:[03CHI0.03CHI3070]FE3070A.;14',USER='MBLOUNT',CD='17-MAY-2003;09:47' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_fg3070_1_5"> </A> </FONT> <FONT SIZE=2><B>POLYMER GROUP, INC.<BR>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited)<BR>
For the Two Months Ended March 1, 2003 and One Month Ended March 29, 2003<BR>
(In Thousands, Except Share Data)  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=4 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Common Stock</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=3><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Accumulated<BR>
Other<BR>
Comprehensive<BR>
Income / (Loss)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Additional<BR>
Paid-in<BR>
Capital</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Retained<BR>
Earnings /<BR>
(Deficit)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Comprehensive<BR>
Income / (Loss)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>Shares</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Amount</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Total</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=1>Predecessor:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=1>Balance&#151;December 28, 2002</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>32,004,200</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>320</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>243,722</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(661,572</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>(48,384</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(465,914</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=1>Comprehensive (loss) for the year ended December&nbsp;28, 2002</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>(417,052</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=1><BR>
Net loss excluding effects of plan of reorganization and fresh start adjustments</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1><BR>
(8,329</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1><BR>
(8,329</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1><BR>
(8,329</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=1>Currency translation adjustment</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>6,784</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>6,784</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>6,784</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=1>Marketable securities valuation</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>(655</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(655</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>(655</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=1>Minimum pension liability</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>(460</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(460</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>(460</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=1><BR>
Effect of plan of reorganization and fresh start adjustments:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="14%"><FONT SIZE=1>Cancellation of old common stock</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(32,004,200</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(320</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(243,722</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(244,042</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="14%"><FONT SIZE=1>Issuance of new common stock</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>8,644,296</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>86</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>73,304</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>73,390</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="14%"><FONT SIZE=1>Other fresh start adjustments</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>669,901</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>42,715</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>712,616</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=1><BR>
Comprehensive (loss) for the two months ended March 1, 2003</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1><BR>
(2,660</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=1><BR>
Successor:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=1>Balance&#151;March 1, 2003</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>8,644,296</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>86</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>73,304</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>73,390</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="14%"><FONT SIZE=1><BR>
Net loss</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1><BR>
(1,485</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1><BR>
(1,485</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1><BR>
(1,485</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="14%"><FONT SIZE=1>Currency translation adjustment</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>(157</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(157</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>(157</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=1>Balance&#151;March 29, 2003</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>8,644,296</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>86</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>73,304</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(1,485</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>(157</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>71,748</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=1><BR>
Comprehensive (loss) for the one month ended March 29, 2003</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1><BR>
(1,642</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>5</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=5,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=176933,FOLIO='5',FILE='DISK022:[03CHI0.03CHI3070]FG3070A.;20',USER='MBLOUNT',CD='17-MAY-2003;10:09' -->
<A NAME="page_fg3070_1_6"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><B>POLYMER GROUP, INC.<BR>
CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)<BR>
(In Thousands)  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=4 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Successor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Predecessor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=4 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>One Month<BR>
Ended<BR>
March 29, 2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Two Months<BR>
Ended<BR>
March 1, 2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>(Restated)<BR>
Three Months<BR>
Ended<BR>
March 30, 2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2>Operating Activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(1,485</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>534,281</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(42,347</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>12,774</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Gain on cancellation of prepetition indebtedness</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(619,913</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Fresh start adjustments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>47,460</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Depreciation and amortization</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>3,344</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>7,398</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>16,024</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Foreign currency and other</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(31</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>1,875</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>3,321</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Changes in operating assets and liabilities, net of effects of fresh start adjustments:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="37%"><FONT SIZE=2>Accounts receivable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(6,268</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(8,377</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>755</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="37%"><FONT SIZE=2>Inventories</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>935</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(1,052</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>10,169</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="37%"><FONT SIZE=2>Accounts payable and accrued expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>2,235</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>13,138</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>6,669</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Other, net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>2,346</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>12,289</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(11,052</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="37%"><FONT SIZE=2>Net cash (used in) provided by operating activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,076</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(12,901</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(3,687</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2><BR>
Investing Activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Purchases of property, plant and equipment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(2,031</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(3,062</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(2,328</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Proceeds from sale of marketable securities classified as available for sale</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>11,867</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Other</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>15</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="37%"><FONT SIZE=2>Net cash (used in) provided by investing activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(2,031</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>8,820</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(2,328</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2><BR>
Financing Activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Proceeds from debt</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>535,310</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>16</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Payments of debt</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(968</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(549,031</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(978</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Loan acquisition costs</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(948</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="37%"><FONT SIZE=2>Net cash (used in) financing activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(968</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(14,669</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(962</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2><BR>
Effect of exchange rate change on cash</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
333</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
4,632</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
5,843</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2><BR>
Net (decrease) in cash and equivalents</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(1,590</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(14,118</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(1,134</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2><BR>
Cash and equivalents at beginning of period</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
31,783</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
45,901</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
28,231</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2><BR>
Cash and equivalents at end of period</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
30,193</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
31,783</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
27,097</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>6</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=2,SEQ=6,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=561318,FOLIO='6',FILE='DISK022:[03CHI0.03CHI3070]FG3070B.;8',USER='MBLOUNT',CD='17-MAY-2003;10:09' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->

<P><FONT SIZE=2><A
NAME="page_fk3070_1_7"> </A> </FONT> <FONT SIZE=2><B>Note&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;Nature of Operations  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Polymer Group,&nbsp;Inc. (the "Company" or "Polymer Group"), a global manufacturer and marketer of nonwoven and oriented polyolefin products, currently operates
in two market segments that include consumer and industrial and specialty. The Company undertook a comprehensive financial and business restructuring beginning in fiscal 2001 that continued into 2002.
After extensive reorganization efforts, the Company and each of its domestic subsidiaries filed voluntary petitions for Chapter 11 reorganization under the United States Bankruptcy Code in the South
Carolina Bankruptcy Court on May&nbsp;11, 2002 (April&nbsp;25, 2002 as to Bonlam (S.C.),&nbsp;Inc.). In its efforts to emerge from Chapter 11, the Company filed a Modified Plan (as defined) on
November&nbsp;27, 2002 that was approved by the Bankruptcy Court on January&nbsp;16, 2003 and accordingly the Company emerged from Chapter 11 effective March&nbsp;5, 2003 (the "Effective Date").
For accounting purposes the Company recognized the emergence on March&nbsp;1, 2003, which was the end of the February accounting period. The Company adopted "fresh-start accounting" as of
March&nbsp;1, 2003, and the Company's emergence from Chapter 11 resulted in a new reporting entity. The reorganization value of the Company has been allocated to the underlying assets based on their
respective fair values at the date of emergence. Such allocation has been based on preliminary estimates which may be revised at a later date as additional information becomes available. References to
"Predecessor" refer to the old Polymer Group and its subsidiaries on and prior to March&nbsp;1, 2003 and references to "Successor" refer to Polymer Group and its subsidiaries from March&nbsp;2,
2003 through March&nbsp;29, 2003, after giving effect to the implementation of fresh start reporting. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Modified Plan generally resulted in the: (i)&nbsp;restructuring of the Company's bank debt by entering into the Restructured Credit Facility (as defined): (ii)&nbsp;retirement of
in excess of $591.5&nbsp;million of the Company's obligations under the senior subordinated notes; (iii)&nbsp;payment in full of virtually all critical business relations claims (as defined in the
Modified Plan); and (iv)&nbsp;cancellation of the Company's old common stock and issuance of new common stock and warrants. The Company entered in to Amendment No.&nbsp;1 to the Restructured
Credit Facility ("Amendment No.&nbsp;1"), effective as of March&nbsp;29, 2003, to provide the Company with additional flexibility in meeting the financial covenants under terms of the Restructured
Credit Facility. A complete description of Amendment No.&nbsp;1, and certain other matters is contained in Note&nbsp;15. "Recent Developments." </FONT></P>

<P><FONT SIZE=2><B>Note&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;Significant Accounting Policies  </B></FONT></P>


<P><FONT SIZE=2><I>Basis of Presentation and Use of Estimates  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim
financial information and include the accounts of the Company and its subsidiaries. The preparation of such financial statements assumes continuity of operations and realization of assets and
satisfaction of liabilities in the ordinary course of business. In accordance with Statement of Position 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy
Code," ("SOP 90-7"), all liabilities subject to compromise have been segregated in the consolidated balance sheets and classified as Liabilities Subject to Compromise, at the estimated
amount of allowable claims. Liabilities Not Subject to Compromise are separately classified as current and non-current. Revenues, expenses, realized gains and losses, and provisions for
costs resulting from the reorganization are reported separately as reorganization items in the consolidated statements of operations. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>7</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=7,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=344640,FOLIO='7',FILE='DISK022:[03CHI0.03CHI3070]FK3070A.;23',USER='LSTARKE',CD='19-MAY-2003;15:05' -->
<A NAME="page_fk3070_1_8"> </A>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
consolidated financial statements of the Company do not include all of the information and footnotes required by generally accepted accounting principles for complete financial
statements. The Condensed Consolidated Balance Sheets as of March&nbsp;29, 2003 and December&nbsp;28, 2002 contain summarized information; as a result, such data does not include the same detail
provided in the Company's Annual Report on Form&nbsp;10-K for the year ended December&nbsp;28, 2002. In the opinion of management, these unaudited consolidated financial statements
contain all adjustments of a normal recurring nature necessary for a fair presentation. Operating results for the two months ended March&nbsp;1, 2003 and one month ended March&nbsp;29, 2003 are
not necessarily indicative of the results that may be expected for fiscal 2003. The results for the one month ended March&nbsp;29, 2003 are not comparable to the results for the two months ended
March&nbsp;1, 2003. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
material intercompany accounts are eliminated in consolidation. Certain amounts previously presented in the consolidated financial statements for prior periods have been reclassified
to conform to current classification. 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 amounts reported in the financial statements and accompanying notes. Actual amounts could differ from those estimates. Investments in 20% to 50% owned affiliates are
accounted for on the equity method. </FONT></P>

<P><FONT SIZE=2><I>Revenue Recognition  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue from product sales is recognized at the time ownership of goods transfers to the customer and the earnings process is complete in accordance with Staff
Accounting Bulletin No.&nbsp;101 ("SAB&nbsp;101"). </FONT></P>

<P><FONT SIZE=2><I>Accounts Receivable and Concentration of Credit Risks  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other
information. The Company identifies delinquent accounts based on specific customer terms and typically does not accrue interest charges on customer balances. The recorded values are separately
maintained, even those balances that are fully reserved. Once management determines that the receivables are not recoverable, the amounts are removed from the financial records along with the
corresponding reserve balance. The allowance for doubtful accounts was approximately $13.7&nbsp;million and $12.9&nbsp;million at March&nbsp;29, 2003 and December&nbsp;28, 2002, respectively
which management believes is adequate to provide for credit loss in the normal course of business, as well as losses for customers who have filed for protection under the bankruptcy law. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>8</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=2,SEQ=8,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=486428,FOLIO='8',FILE='DISK022:[03CHI0.03CHI3070]FK3070A.;23',USER='LSTARKE',CD='19-MAY-2003;15:05' -->
<A NAME="page_fk3070_1_9"> </A>
<BR>

<P><FONT SIZE=2><I>Inventories  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories are stated at the lower of cost or market using the first-in, first-out method of accounting and, as of March&nbsp;29, 2003
and December&nbsp;28, 2002 consist of the following (in thousands): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="80%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="52%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Successor<BR>
March 29, 2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Predecessor<BR>
December 28, 2002</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="52%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>(Unaudited)<BR> </B></FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="52%"><FONT SIZE=2>Finished goods</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>53,570</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT"><FONT SIZE=2>56,126</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="52%"><FONT SIZE=2>Work in process</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>20,056</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT"><FONT SIZE=2>17,515</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="52%"><FONT SIZE=2>Raw materials</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>42,187</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT"><FONT SIZE=2>42,055</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="52%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="52%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>115,813</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT"><FONT SIZE=2>115,696</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="52%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2><I>Long-Lived Assets  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company reviews the recoverability of the carrying value of long-lived assets in accordance with Statement of Financial Accounting Standard No.144
"Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS&nbsp;144") and Statement of Financial Accounting Standard No 142 "Goodwill and Other Intangible Assets"
("FAS&nbsp;142"). As more fully discussed in Note&nbsp;6. "Business Restructuring and Impairment," the Company recorded a non-cash asset impairment charge in fiscal 2002 of
approximately $317.9&nbsp;million related to the write-down of goodwill and other intangibles and property, plant and equipment in accordance with FAS&nbsp;142 and FAS&nbsp;144. As
part of the Company's adoption of FAS&nbsp;142 the Company completed a transitional impairment test in the fourth quarter of 2002, as permitted by the standard. The Company's transitional impairment
test resulted in a charge of $12.8&nbsp;million which was reported as a cumulative effect of a change in accounting principle in the Company's annual results for fiscal 2002 and has been allocated
to the first fiscal quarter of 2002 for reporting purposes. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table reconciles reported results to restated results for the three months ended March&nbsp;30, 2002 (in thousands, except per share data): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="80%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>As Reported</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Restated</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Net sales</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>191,180</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>191,180</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Gross profit</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>28,469</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>28,469</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Loss before cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(29,573</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(29,573</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>12,774</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Net loss</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(29,573</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(42,347</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Per share&#151;basic and diluted:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="63%"><FONT SIZE=2>Loss before cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(0.92</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(0.92</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="63%"><FONT SIZE=2>Cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0.40</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Net loss</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(0.92</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(1.32</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>(Deficit)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(271,510</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(284,284</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>9</FONT></P>

<HR NOSHADE>
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<A NAME="page_fk3070_1_10"> </A>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the provisions of FAS 142, goodwill and indefinite lived intangible assets are no longer amortized, but will be tested for impairment on at least an annual basis. Amortization
expense is presented in the following table (in thousands): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="80%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="30%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Successor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Predecessor</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="30%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>One Month Ended<BR>
March 29, 2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Two Months Ended<BR>
March 1, 2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Three Months Ended<BR>
March 30, 2002</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="30%"><FONT SIZE=2><B>Amortization of:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="30%"><FONT SIZE=2>Goodwill</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="30%"><FONT SIZE=2>Intangibles with finite lives</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>480</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>220</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>782</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="30%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="30%"><FONT SIZE=2>Amortization included in selling, general and administrative expense</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>480</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>220</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>782</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="30%"><FONT SIZE=2>Loan acquisition costs included in interest expense, net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>157</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>1,426</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>1,741</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="30%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="30%"><FONT SIZE=2>Total amortization expense</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>637</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>1,646</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>2,523</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="30%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE></DIV>
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<P><FONT SIZE=2><I>Income Taxes  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred tax liabilities and assets are determined based upon temporary differences between the basis of certain assets and liabilities for income tax and
financial reporting purposes. A valuation allowance is recognized if it is likely that some portion of a deferred tax asset will not be realized in the future. Implementation of the Modified Plan
resulted in the Company recognizing cancellation of indebtedness income ("CODI"). All of the CODI is excluded from taxable income. However, the Company is required to reduce certain of its tax
attributes, including net operating loss carryforwards ("NOLs"), by an amount not to exceed the CODI it realized. In general, tax attributes will be reduced at the close of the 2003 tax year in the
following order: (i)&nbsp;net operating loss carryforwards; (ii)&nbsp;tax credits and capital loss carryforwards; and (iii)&nbsp;tax basis in assets. The Company is currently in the process of
determining the amount of the corresponding reduction of its tax attributes and/or asset basis. It is anticipated that the Company's net operating loss carryforwards will be entirely eliminated in
2003 as a result of the reorganization under the Modified Plan. </FONT></P>

<P><FONT SIZE=2><I>Foreign Currency Translation  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All assets and liabilities in the balance sheets of foreign subsidiaries whose functional currency is other than the U.S. dollar are translated at
quarter-end exchange rates. Translation gains and losses are not included in determining net income but are accumulated as a separate component of shareholders' equity. However,
subsidiaries considered to be operating in highly inflationary countries use the U.S. dollar as the functional currency and translation gains and losses are included in determining net income. In
addition, foreign currency transaction gains and losses are included in determining net income. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>10</FONT></P>

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<BR>

<P><FONT SIZE=2><I>Net Income (Loss) Per Share  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic earnings per share exclude any dilutive effects of options, warrants and convertible securities and are computed using the number of common shares
outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if stock options were exercised and is based upon the weighted average number of common and
common equivalent shares outstanding for the period. Shares under option represent common equivalent shares. All stock options were cancelled under the Modified Plan. The numerator for both basic and
diluted earnings per share is net income (loss) applicable to common stock. A separate table illustrating the calculation of earnings per share has not been presented as such amount can be derived
from information contained in the statement of operations. There were no reconciling items between basic loss per share and diluted loss per share for the periods presented in this Quarterly Report on
Form&nbsp;10-Q. </FONT></P>

<P><FONT SIZE=2><I>New Accounting Standards  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July&nbsp;2001, the FASB issued SFAS No.&nbsp;141, "Business Combinations." SFAS No.&nbsp;141 requires that the purchase method of accounting be used for
all business combinations completed after June&nbsp;30, 2001, and specifies criteria for the recognition and reporting of intangible assets apart from goodwill. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April&nbsp;30, 2002, the FASB issued SFAS No.&nbsp;145, "Recission of FASB Statements No.&nbsp;4, 44, and 64, Amendment of FASB Statement No.&nbsp;13, and Technical
Corrections." SFAS No.&nbsp;145 rescinds Statement No.&nbsp;4, which required all gains and losses from extinguishments of debt to be aggregated and, if material, classified as an extraordinary
item, net of related income tax effect. Upon adoption of SFAS No.&nbsp;145, companies will be required to apply the criteria in Accounting Principle Board Opinion No.&nbsp;30, "Reporting the
Results of Operations&#151;Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions" in determining the
classification of gains and losses resulting from the extinguishments of debt. SFAS No.&nbsp;145 is effective for fiscal years beginning after May&nbsp;15, 2002. The provisions of SFAS No.145 have
been adopted by the Company in 2003. The gain recognized by the Company on the cancellation of indebtedness pursuant to the emergence from bankruptcy has been classified as a reorganization item in
the consolidated statements of operations. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
July&nbsp;30, 2002, the FASB issued SFAS No 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No.&nbsp;146 requires companies to recognize costs
associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. The provisions of SFAS No.&nbsp;146 are effective for exit or
disposal activities that are initiated after December&nbsp;31, 2002. The Company will incur cost pursuant to SFAS&nbsp;146 during 2003 related to its continued business restructuring efforts. Such
cost will be accounted for in accordance with the standard. Refer to Note&nbsp;6. "Business Restructuring and Impairment." </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
December&nbsp;31, 2002, the FASB issued SFAS No 148, "Accounting for Stock-Based Compensation&#151;Transition and Disclosure." SFAS&nbsp;148 amends SFAS No.&nbsp;123,
"Accounting for Stock-Based Compensation," to provide alternative methods of transition for an entity that changes to the fair value method of accounting for stock-based employee compensation. In
addition, SFAS&nbsp;148 amends the disclosure provisions of SFAS&nbsp;123 to require expanded and more prominent disclosure of the effects of an entity's accounting policy with respect to
stock-based employee </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>11</FONT></P>

<HR NOSHADE>
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<A NAME="page_fk3070_1_12"> </A>
<BR>

<P><FONT SIZE=2>compensation.
SFAS No.&nbsp;148 is effective for fiscal year 2003. The Company does not anticipate that SFAS&nbsp;148 will have a significant effect on its results of operations as a result of the
cancellation of all stock options under the 1996 Plan and 2001 Plan pursuant to the Modified Plan. </FONT></P>

<P><FONT SIZE=2><B>Note&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;Chapter 11 Proceedings  </B></FONT></P>

<P><FONT SIZE=2><I>Description of Chapter 11 Proceedings  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;11, 2002 (the "Filing Date" or "Petition Date"), the Company and each of its domestic subsidiaries (together with the Company, the "Debtors") filed
voluntary petitions for "pre-negotiated" reorganization (the "Chapter 11 Filings" or the "Filings") under the Bankruptcy Code in the South Carolina Bankruptcy Court. The Chapter 11 Filings
were jointly administered for procedural purposes only. The Company's direct and indirect foreign subsidiaries and foreign joint venture entities did not file petitions under Chapter 11 and were not
the subject of any bankruptcy proceedings. To facilitate stabilizing operations during the Chapter 11 Filings, the Debtors secured a $125&nbsp;million commitment (the "Commitment") for
debtor-in-possession financing (the "DIP Facility") from a group of financial institutions, some of which were Senior Secured Lenders (the "DIP Lenders") in order to provide
the Debtors sufficient liquidity, if needed, to operate during the Chapter 11 Filings. JPMorgan Chase Bank was the Agent for the DIP Lenders under the DIP Facility. Pursuant to the DIP Facility, the
Debtors paid certain fees to the DIP Lenders, including a structuring fee of 0.85% of the Commitment, an underwriting fee of 1.65% of the Commitment as well as certain other fees. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
a hearing, which took place on August&nbsp;15, 2002, and concluded on August&nbsp;20, 2002, the South Carolina Bankruptcy Court approved the Company's Disclosure Statement
relating to the Plan of Reorganization, as amended and filed on August&nbsp;21, 2002, over the committee's objection. The Plan was not confirmed and thus the Company filed the Modified Plan as more
fully discussed in Note&nbsp;4. "Recapitalization." </FONT></P>


<P><FONT SIZE=2><I>Chapter 11 Costs and Financial Restructuring Expenses  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the Petition Date, the Company classified expenses related to its financial restructuring efforts as "Special charges" in the consolidated statement of
operations. Such charges consist of professional and other related services that have been expensed as incurred. After the Petition Date, costs related to the Company's reorganization activities are
also expensed as incurred and have been classified as "Chapter 11 reorganization expenses" in accordance with SOP 90-7. The cumulative amount of costs and expenses related to the Company's
financial restructuring efforts, including bank financing fees through March&nbsp;29, 2003 have been approximately $45.6&nbsp;million. </FONT></P>


<P><FONT SIZE=2><B>Note&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;Recapitalization  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On November&nbsp;27, 2002, the Company filed the Joint Amended Modified Plan of Reorganization (the "Modified Plan"). The Modified Plan consisted of:
(i)&nbsp;the restructuring of the Prepetition Credit Facility, including a payment (the "Secured Lender Payment") of $50.0&nbsp;million on the Effective Date to the agent for the benefit of the
Senior Secured Lenders under the Prepetition Credit Facility, which Secured Lender Payment was exclusive of the proceeds (the "Chicopee Sale Proceeds") of the sale of the South Brunswick facility
owned by Chicopee,&nbsp;Inc., (ii)&nbsp;payment of 100% of the Chicopee Sale Proceeds to the agent for the benefit of the Senior Secured Lenders, (iii)&nbsp;a minimum </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>12</FONT></P>

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<A NAME="page_fk3070_1_13"> </A>
<BR>

<P><FONT SIZE=2>$5.0&nbsp;million
additional prepayment out of existing cash-on-hand, (iv)&nbsp;the retirement of in excess of $591.5&nbsp;million of the Debtors' obligations under the
Senior Subordinated Notes, wherein each Holder of the Senior Subordinated Notes and other general unsecured creditors (other than claims of certain vendors who supplied goods and services to the
Debtors during the bankruptcy and with whom the Debtors intended to do business after emerging from bankruptcy ("Critical Vendor Claims") and claims held by non-debtor subsidiaries of the
Company ("Intercompany Claims") (together constituting the "Class&nbsp;4 Claims") had the right to receive on, or as soon as practicable after the Effective Date, (x)&nbsp;its pro rata share of
Class&nbsp;A Common Stock in exchange for each $1,000 of its allowed claim or (y)&nbsp;at the election of each holder who was a Qualified Institutional Buyer (as defined in the Modified Plan and
the 1933 Securities Act), its pro rata share of Class&nbsp;C Common Stock, (v)&nbsp;the Critical Vendor Claims and Intercompany Claims were not impaired, (vi)&nbsp;each holder of an allowed
Class&nbsp;4 Claim that elected to receive Class&nbsp;A Common Stock was given the option to take part in the new investment in the Convertible Notes (the "New Investment") by choosing to exercise
its subscription rights (the "Subscription Rights") thereto, which New Investment of $50&nbsp;million was made in exchange for 10% subordinated convertible notes due 2006 (the "Convertible Notes"),
(vii)&nbsp;MatlinPatterson Global Opportunities Partners&nbsp;L.P. ("GOF") issued, or caused to be issued, letters of credit in the aggregated amount of $25&nbsp;million (the "Exit Letters of
Credit") in favor of the agent under the Restructured Credit Facilities pursuant to a bank term sheet, for which GOF was entitled to 10% senior subordinated notes due 2007 (the "New Senior
Subordinated Notes") equal to the amount (if any) drawn against the Exit Letters of Credit (plus any advances made by GOF solely in lieu of drawings under the Exit Letters of Credit),
(viii)&nbsp;holders of the Company's existing common stock ("Old Polymer Common Stock") received 100% of the Class&nbsp;B Common Stock (which will not be diluted by any conversions of the
Convertible Notes) in exchange for their Old Polymer Common Stock interests; such Holders also received pro rata shares of the new Series&nbsp;A and Series&nbsp;B Warrants (as discussed below). </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the Modified Plan, all common stock of the reorganized Company (the "New Polymer Common Stock") was the same class (the "Class&nbsp;A Common Stock"), with the exception of
(i)&nbsp;separate classes (the "Class&nbsp;D Common Stock" and "Class&nbsp;E Common Stock") to be issued upon exercise of the Series&nbsp;A and Series&nbsp;B Warrants (as defined below),
(ii)&nbsp;the 4% of New Polymer Common Stock designated as "Class&nbsp;B Common Stock" issued to the holders of Old Polymer Common Stock, and (iii)&nbsp;a small percentage (the "Class&nbsp;C
Common Stock") issued to holders of Class&nbsp;4 Claims, who contributed such stock to the Special Purpose Entity ("SPE"). The Class&nbsp;C Common Stock shall pay a dividend payable equal to the
lesser of (i)&nbsp;1% per annum of the principal
amount of the promissory notes issued by the SPE or (ii)&nbsp;$1.0&nbsp;million per annum. Shares of New Polymer Common Stock (other than Class&nbsp;A Common Stock) are convertible into shares
of Class&nbsp;A Common Stock on a one-for-one basis. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
holders of Old Polymer Common Stock received two series of warrants, the Series&nbsp;A Warrants and Series&nbsp;B Warrants, which have (i)&nbsp;customary adjustments for stock
splits, stock dividends, and consolidations, (ii)&nbsp;specified anti-dilution protection for sales of securities by the reorganized Company ("New Polymer") at a price below the fair
market value of such securities if offered to all New Polymer common stock holders and (iii)&nbsp;specified anti-dilution protection for sales of securities by New Polymer at a discount
that exceeds 25% of the fair market value of such securities and which will not terminate upon a transaction with GOF or an affiliate of GOF. Except as set forth in the preceding sentence, the
Series&nbsp;A and Series&nbsp;B Warrants do not have anti-dilution </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>13</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=7,SEQ=13,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=255393,FOLIO='13',FILE='DISK022:[03CHI0.03CHI3070]FK3070A.;23',USER='LSTARKE',CD='19-MAY-2003;15:05' -->
<A NAME="page_fk3070_1_14"> </A>
<BR>

<P><FONT SIZE=2>provisions.
In addition, the cash dividend payment by New Polymer described above in connection with the Class&nbsp;C Common Stock is excluded from the calculation of cumulative distributions for
all purposes relating to the Series&nbsp;A Warrants, the Series&nbsp;B Warrants, the Class&nbsp;D Common Stock and the Class&nbsp;E Common Stock. The New Polymer Common Stock received by the
holders of Class&nbsp;4 Claims and the Holders of Old Polymer Common Stock and which will be issued upon conversion of the Convertible Notes is subject to dilution upon the exercise of the
Series&nbsp;A Warrants and Series&nbsp;B Warrants. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Modified Plan also provided that, on the Effective Date, in consideration of GOF acting as the standby purchaser for the New Investment, and in consideration of GOF's role in
facilitating a consensual resolution of the disputes among the parties involved in the negotiation of the Modified Plan, New Polymer paid GOF a Standby Purchaser fee of $2.0&nbsp;million and an
arrangement and plan facilitation fee of $2.0&nbsp;million. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
order to facilitate the issuance of a new senior subordinated note ("New Senior Subordinated Note") in the amount of any drawing under the Exit Letter of Credit, MatlinPatterson
Global Partners LLC, ("Matlin Global Partners") a limited liability company organized under the laws of Delaware, the Company and its domestic subsidiaries, as guarantors, entered into a Senior
Subordinated Note Purchase Agreement (the "Senior Subordinated Note Purchase Agreement"), dated as of March&nbsp;5, 2003, and pursuant thereto, the Company issued to Matlin Global Partners a New
Senior Subordinated Note. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Senior Subordinated Note Purchase Agreement and Senior Subordinated Note provide that upon any drawing under the Exit Letter of Credit, the principal amount due under the New Senior
Subordinated Note will automatically increase by the amount of such drawing. The Company is required to pay interest on any amount outstanding under the New Senior Subordinated Note
semi-annually in arrears on January&nbsp;1 and June&nbsp;1 of each year, commencing on June&nbsp;1, 2003, at a rate of 10% per annum, and default interest in an amount of 2% per
annum will
be payable on the principal amount in addition to the existing 10% rate. The Company shall, to the extent lawful, pay interest at a rate of 12% per annum on overdue interest. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company's obligations under the Senior Subordinated Note Purchase Agreement and Senior Subordinated Note are guaranteed by the Company's domestic subsidiaries. Both the Company's
obligations under the Senior Subordinated Note and the guarantees thereof are subordinate to the indebtedness outstanding under the Company's Restructured Credit Facility. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Senior Subordinated Note Purchase Agreement contains customary representations and warranties and standard default terms. Additionally, the Senior Subordinated Note Purchase
Agreement contains affirmative and negative covenants of the Company with respect to (a)&nbsp;delivery of information, (b)&nbsp;of proceeds of asset sales, (c)&nbsp;limitation on restricted
payments, (d)&nbsp;corporate existence, (e)&nbsp;limitation on liens, (f)&nbsp;future domestic subsidiary guarantors, (g)&nbsp;designation of unrestricted subsidiaries, and (h)&nbsp;mergers
and similar transactions involving the Company or the guarantors. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>14</FONT></P>

<HR NOSHADE>
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<BR>
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->

<P><FONT SIZE=2><A
NAME="page_fm3070_1_15"> </A> </FONT> <FONT SIZE=2><B>Note 5.&nbsp;&nbsp;&nbsp;&nbsp;Fresh Start Accounting  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fresh-start reporting requires that the reorganization value of the Company be allocated to its assets in conformity with SFAS No.&nbsp;141. Such allocation is
based on preliminary estimates which may be revised at a later date as information becomes available. The excess of the fair value of the specific tangible or identifiable intangible net assets over
the reorganization value, or negative goodwill, is to be allocated to non-current non-monetary assets on a pro-rata basis. Based on the consideration of many
factors and various valuation methods, the Company and its financial advisors determined the reorganization value of the Company as described in the Modified Plan. As part of the Modified Plan, the
Company's common stock was divided into five classes: Class&nbsp;A, Class&nbsp;B, Class&nbsp;C, Class&nbsp;D and Class&nbsp;E. As of the Effective Date, 8,125,869 shares of Class&nbsp;A,
399,978 shares of Class&nbsp;B and 118,449 shares of Class&nbsp;C common stock were outstanding. An additional 1,355,480 shares of Class&nbsp;A common stock has been reserved for issuance
pending the outcome of certain claims against the Company in connections with the Modified Plan. No shares of Class&nbsp;D or Class&nbsp;E common stock were outstanding as of such date. The
following table reflects the reorganization adjustments to old Polymer Group's consolidated balance sheet as of March&nbsp;1, 2003 (in thousands): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Predecessor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Modified Plan of<BR>
Reorganization</B></FONT><HR NOSHADE></TH>
<TH WIDTH="5%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Fresh Start<BR>
Adjustments</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Successor</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2><B>Assets</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Current assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>308,411</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>1,163</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;(g)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>309,574</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Property, plant and equipment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>431,384</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(39,491</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>)(f)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(29,150</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)(g)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>362,743</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Intangibles and loan acquisition costs, net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>38,315</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(26,341</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>)(e)(f)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>23,572</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;(h)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>35,546</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Other assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>13,296</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(2,075</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)(g)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>11,221</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="29%"><FONT SIZE=2>Total assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>791,406</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(65,832</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(6,490</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>719,084</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2><B>Liabilities and Shareholders' Equity (Deficit)</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Liabilities not subject to compromise</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Accounts payable, accrued liabilities and other current</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>94,466</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>3,950</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;(a)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>9,668</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;(g)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>108,084</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Short term borrowings</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>223</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>223</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Long term debt&#151;Prepetition Credit Facility</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>484,877</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(484,877</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>)(b)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Long term debt&#151;Restructured Credit Facility and Other</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>18,165</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>421,434</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;(c)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>439,599</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Long term debt&#151;Junior Notes</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>50,000</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;(d)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>50,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Noncurrent liabilites</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>48,133</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(345</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)(g)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>47,788</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="29%"><FONT SIZE=2>Total liabilites not subject to compromise</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>645,864</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(9,493</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>9,323</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>645,694</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Liabilites Subject to Compromise</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>637,122</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(637,122</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>)(e)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="29%"><FONT SIZE=2>Total liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,282,986</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(646,615</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>9,323</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>645,694</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Shareholders' equity (deficit)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(491,580</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>580,783</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;(f)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(15,813</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)(I)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>73,390</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="29%"><FONT SIZE=2>Total liabilities and shareholders' (deficit)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>791,406</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(65,832</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(6,490</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>719,084</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>To
record certain prepetition liabilities to be settled in cash.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>To
record the elimination of the Prepetition Credit Facility. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>15</FONT></P>

<HR NOSHADE>
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<A NAME="page_fm3070_1_16"> </A>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(c)</FONT></DT><DD><FONT SIZE=2>To
record the Restructured Credit Facility.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(d)</FONT></DT><DD><FONT SIZE=2>To
record the Junior Notes.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(e)</FONT></DT><DD><FONT SIZE=2>To
record the elimination of pre-petition liabilites that were cancelled, which include the old senior subordinated notes, accrued interest, and loan acquisition costs.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(f)</FONT></DT><DD><FONT SIZE=2>To
record the issuance of securities, the cancellation of prepetition liabilities and negative reorganization value.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(g)</FONT></DT><DD><FONT SIZE=2>To
reflect assets and liabilities at fair value.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(h)</FONT></DT><DD><FONT SIZE=2>To
write-off goodwill and adjust certain intangibles to fair value.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(I)</FONT></DT><DD><FONT SIZE=2>To
write-off Predecessor's securities, accumulated deficit and accumulated other comprehensive loss. </FONT></DD></DL>

<P><FONT SIZE=2><B>Note&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;Business Restructuring and Impairment  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's restructuring program continued into 2002 on a smaller scale than that which was undertaken in 2001. Such restructurings included reductions in
headcount of approximately 54&nbsp;employees and facility closing costs in the U.S. as business processes were rationalized in the Oriented Polymers Division. The total plant realignment charge in
2002 and 2001 related to the restructuring approximated $8.5&nbsp;million. Cash outlays in 2002 and 2001 associated with the Company's business restructuring approximated $7.6&nbsp;million. A
summary of the business restructuring activity during the three months ended March&nbsp;29, 2003, accounted for in accordance with FAS&nbsp;146, is presented in the following table (in thousands): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="69%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Employee&nbsp;Termination<BR>
and&nbsp;Facility&nbsp;Closing&nbsp;Costs</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="69%"><FONT SIZE=2>Plant realignment liability as of December 28, 2002</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>893</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="69%"><FONT SIZE=2>2003 plant realignment charge</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="69%"><FONT SIZE=2>2003 cash payments and adjustments</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>(168</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="69%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="69%"><FONT SIZE=2>Plant realignment liability as of March&nbsp;29, 2003</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>737</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="69%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the fourth quarter of 2002, based upon further reviews of the Company's long-lived assets and the continued decline in operating profits over the course of 2002, the
Company recorded a non-cash charge of approximately $317.9&nbsp;million, consisting of the write-down of goodwill and other intangibles ($83.9&nbsp;million) and machinery,
equipment and buildings ($234.0&nbsp;million) related predominantly to production assets within the U.S. and European Nonwovens business in accordance with FAS&nbsp;142 and FAS&nbsp;144. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>16</FONT></P>

<HR NOSHADE>
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<A NAME="page_fm3070_1_17"> </A>
<BR>

<P><FONT SIZE=2><B>Note&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;Debt  </B></FONT></P>

<P><FONT SIZE=2>Debt
as of March&nbsp;29, 2003 and December&nbsp;28, 2002, consists of the following (in thousands): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Successor<BR>
March&nbsp;29,&nbsp;2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Predecessor<BR>
December&nbsp;28,&nbsp;2002</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>(Unaudited)<BR> </B></FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Indebtedness, including current portion:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="22%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="46%"><FONT SIZE=2>Prepetition Credit Facility</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT"><FONT SIZE=2>484,478</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="46%"><FONT SIZE=2>Restructured Credit Facility</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>421,433</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="46%"><FONT SIZE=2>Senior Subordinated Notes</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT"><FONT SIZE=2>587,482</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="46%"><FONT SIZE=2>Junior Notes</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>50,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="46%"><FONT SIZE=2>Other</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>17,773</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT"><FONT SIZE=2>20,405</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>489,206</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT"><FONT SIZE=2>1,092,365</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2><I>Restructured Credit Facility  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's Restructured Credit Facility provides for secured revolving credit borrowings with aggregate commitments of up to $50.0&nbsp;million and aggregate
term loans and term letters of credit of $435.3&nbsp;million. Subject to certain terms and conditions, a portion of the Restructured Credit Facility may be used for revolving letters of credit. All
borrowings under the Restructured Credit Facility are U.S. dollar denominated and are guaranteed, on a joint and several basis, by each and all of the direct and indirect domestic subsidiaries of the
Company and certain non-domestic subsidiaries of the Company. The Restructured Credit Facility and the related guarantees are secured by (i)&nbsp;a lien on substantially all of the
assets of the Company, its domestic subsidiaries and certain of its non-domestic subsidiaries, (ii)&nbsp;a pledge of all or a portion of the stock of the domestic subsidiaries of the
Company and of certain non-domestic subsidiaries of the Company, and (iii)&nbsp;a pledge of certain secured intercompany notes issued to the Company or one or more of its subsidiaries by
non-domestic subsidiaries. Commitment fees under the Restructured Credit Facility are equal to 0.75% of the daily unused amount of the revolving credit commitment. The Restructured Credit
Facility contains covenants and events of default customary for financings of this type, including leverage, senior leverage, interest coverage and adjusted interest coverage. The Restructured Credit
Facility terminates on December&nbsp;31, 2006. The loans are subject to mandatory prepayment out of proceeds received in connection with certain casualty events, asset sales and debt and equity
issuances and from excess cash flow. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
interest rate applicable to borrowings under the Restructured Credit Facility is based on a specified base rate or a specified Eurodollar base rate, at the Company's option, plus a
specified margin. The applicable margin for revolving credit loans bearing interest based on the base rate is 2.75%, and the margin for revolving credit loans bearing interest on a Eurodollar rate is
3.75%. The applicable margin for term loans bearing interest based on the base rate will range from 4.00% to 8.00%, and the margin for term loans bearing interest on a Eurodollar rate will range from
5.00% to 9.00%, in each case based on the Company's ratio of senior consolidated indebtedness to consolidated EBITDA calculated on a rolling four quarter basis. In addition, if the Company's ratio of
senior consolidated indebtedness to consolidated EBITDA calculated on a rolling four quarter basis exceeds 5.00 to 1, the Company is required to pay to the term loan lenders and the term letter of
credit lenders a fee of 1.00% on the outstanding balance under the term loans and the term letters </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>17</FONT></P>

<HR NOSHADE>
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<A NAME="page_fm3070_1_18"> </A>
<BR>

<P><FONT SIZE=2>of
credit. Refer to Note&nbsp;16. "Recent Developments" for a description of Amendment No.&nbsp;1 to the Restructured Credit Facility. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company sold its Dayton, New Jersey ("South Brunswick") facility for approximately $10.2&nbsp;million, net of expenses of $0.4&nbsp;million, during December&nbsp;2002 at no
material gain or loss. Proceeds from the sale were maintained in an escrow account outside of the Company's control prior to emergence from Chapter&nbsp;11 and thus were classified within "Other
current assets" in the consolidated balance sheet at December&nbsp;28, 2002. The proceeds from the sale of South Brunswick were used to reduce amounts outstanding under the Restructured Credit
Facility during the first quarter of 2003. </FONT></P>


<P><FONT SIZE=2><I>Convertible Subordinated Notes  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the emergence from Chapter&nbsp;11, the Company issued $50&nbsp;million of 10% Convertible Subordinated Notes due 2007 (the "Junior Notes")
pursuant to an indenture dated as of March&nbsp;5, 2003 (the "Junior Indenture"). The Junior Notes are unsecured subordinated indebtedness of the Company and are subordinated in right of payment to
all existing and future indebtedness of the Company which is not, by its terms, expressly junior to, or </FONT><FONT SIZE=2><I>pari passu</I></FONT><FONT SIZE=2> with, the Junior Notes. The Junior
Notes are convertible into shares of Class&nbsp;A Common Stock, at an initial conversion price equal to $7.29 per share. The Junior Indenture contains several covenants, including limitations on:
(i)&nbsp;indebtedness; certain restricted payments; liens; transactions with affiliates; dividend and other payment restrictions affecting certain subsidiaries; guarantees by certain subsidiaries;
certain transactions including merger and asset sales; and (ii)&nbsp;certain restrictions regarding the disposition of proceeds of asset sales. </FONT></P>

<P><FONT SIZE=2><I>Subsidiary Indebtedness  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's China-based majority owned subsidiary ("Nanhai") has a bank facility with a financial institution in China that is scheduled to mature in
April&nbsp;2004. At March&nbsp;29, 2003, the approximate amount of outstanding indebtedness under the facility was $9.5&nbsp;million. The Nanhai indebtedness is guaranteed 100% by the Company
and to support this guarantee, a letter of credit has been issued by the Company's agent bank in the amount of $10.0&nbsp;million. As a result of the Company's 80% majority ownership of Nanhai and
full guarantee of the Nanhai bank debt, all amounts outstanding under the Nanhai bank facility are reflected in the Company's consolidated balance sheet. At March&nbsp;29, 2003, Nanhai had cash and
cash equivalents on hand of approximately $3.4&nbsp;million and working capital of approximately $10.7&nbsp;million. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company's Argentina-based majority owned subsidiary ("DNS") has two bank facilities denominated in U.S. dollars of approximately $6.2&nbsp;million at March&nbsp;29, 2003 with
current maturities of approximately $3.6&nbsp;million. The facilities are scheduled to mature in 2004 and 2005 respectively. The full amount of such indebtedness is reflected on the Company's
consolidated balance sheet at March&nbsp;29, 2003 as a result of the Company's 60% majority ownership of this subsidiary; however, the minority shareholder guarantees 40% of such indebtedness.
Because of the Argentine peso devaluation against the U.S. dollar, the Company is exposed to foreign currency remeasurement losses of the U.S. dollar denominated debt at DNS because the functional
currency of DNS is the Argentine peso. At March&nbsp;29, 2003, DNS had cash and cash equivalents on hand of approximately </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>18</FONT></P>

<HR NOSHADE>
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<A NAME="page_fm3070_1_19"> </A>
<BR>

<P><FONT SIZE=2>$1.1&nbsp;million
and working capital of $7.0&nbsp;million, excluding current debt. Including current debt, DNS working capital was approximately $3.5&nbsp;million at March&nbsp;29, 2003. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
order to support working capital requirements at Vateks Tekstil Sayani ve Ticaret AS ("Vateks"), an 80% majority owned subsidiary in Istanbul, Turkey, the Company has deposited
through the European parent company of Vateks, approximately $6.5&nbsp;million with a member of its European bank group who in turn has funded an approximate equivalent amount to Vateks. The amount
owed by Vateks to the bank member is secured by this deposit. </FONT></P>

<P><FONT SIZE=2><B>Note&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;Condensed Consolidating Financial Statements  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain of the Company's wholly-owned subsidiaries unconditionally guarantee payment of the Company's Junior Notes, jointly and severally, on a senior
subordinated basis. Management has determined that separate complete financial statements of the guarantor entities would not be material to users of the financial statements; therefore, the following
sets forth condensed consolidating financial statements (in thousands): </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>Condensed Consolidating Selected Balance Sheet Financial Data<BR>
As of March&nbsp;29, 2003<BR>
Successor  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="96%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="22%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Combined Guarantor Subsidiaries</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Combined Non-Guarantor Subsidiaries</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>The Company</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Reclassifications and Eliminations</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Consolidated</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="22%"><FONT SIZE=2>Working capital</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>76,432</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>133,096</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(4,373</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(13,716</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>191,439</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="22%"><FONT SIZE=2>Total assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2,532,408</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>739,147</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,058,511</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(3,611,333</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>718,733</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="22%"><FONT SIZE=2>Total debt</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>17,439</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>471,766</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>489,206</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="22%"><FONT SIZE=2>Shareholders' equity (deficit)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,460,416</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>222,972</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>71,748</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(1,683,388</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>71,748</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2><B>Condensed Consolidating Selected Balance Sheet Financial Data<BR>
As of December 28, 2002<BR>
Predecessor  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="97%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="22%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Combined Guarantor Subsidiaries</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Combined Non-Guarantor Subsidiaries</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>The Company</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Reclassifications and Eliminations</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Consolidated</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="22%"><FONT SIZE=2>Working capital</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>94,832</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>131,989</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>556</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(7,472</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>219,905</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="22%"><FONT SIZE=2>Total assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2,342,690</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>615,516</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,103,031</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(3,249,918</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>811,319</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="22%"><FONT SIZE=2>Total debt</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>25,310</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>478,061</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>503,374</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="22%"><FONT SIZE=2>Shareholders' equity (deficit)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,045,012</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>234,887</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(465,914</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(1,279,899</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(465,914</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>19</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=5,SEQ=19,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=91366,FOLIO='19',FILE='DISK022:[03CHI0.03CHI3070]FM3070A.;42',USER='LSTARKE',CD='19-MAY-2003;13:00' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_fo3070_1_20"> </A> </FONT> <FONT SIZE=2><B>Condensed Consolidating Statement of Operations Selected Financial Data<BR>
For the One Month Ended March 29, 2003<BR>
Successor  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="95%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="22%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Combined Guarantor Subsidiaries</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Combined Non-Guarantor Subsidiaries</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>The Company</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Reclassifications and Eliminations</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Consolidated</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="22%"><FONT SIZE=2>Net sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>31,990</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>35,926</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(3,849</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>64,067</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="22%"><FONT SIZE=2>Operating income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(945</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>3,642</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(87</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>505</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>3,115</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="22%"><FONT SIZE=2>Interest expense, income taxes and other expense (income), net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(616</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,608</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,398</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>2,210</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>4,600</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="22%"><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(329</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,034</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(1,485</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(1,705</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(1,485</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2><B>Condensed Consolidating Statement of Operations Selected Financial Data<BR>
For the Two Months Ended March 1, 2003<BR>
Predecessor  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="97%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="23%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Combined Guarantor Subsidiaries</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Combined Non-Guarantor Subsidiaries</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>The Company</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Reclassifications and Eliminations</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Consolidated</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="23%"><FONT SIZE=2>Net sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>67,515</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>73,917</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(8,523</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>132,909</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="23%"><FONT SIZE=2>Operating income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(1,547</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>7,203</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(129</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>85</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>5,612</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="23%"><FONT SIZE=2>Interest expense, income taxes and other expense (income), net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(130,717</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>7,337</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(534,410</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>129,121</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(528,669</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="23%"><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>129,170</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(134</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>534,281</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(129,036</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>534,281</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2><B>Condensed Consolidating Statement of Operations Selected Financial Data<BR>
For the Three Months Ended March 30, 2002<BR>
Predecessor  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="97%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="23%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Combined Guarantor Subsidiaries</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Combined Non-Guarantor Subsidiaries</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>The Company</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Reclassifications and Eliminations</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Consolidated</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="23%"><FONT SIZE=2>Net sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>101,006</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>98,467</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(8,293</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>191,180</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="23%"><FONT SIZE=2>Operating income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(9,294</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>11,379</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(2,598</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(499</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="23%"><FONT SIZE=2>Interest expense, income taxes and other expense (income), net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(16,510</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>9,799</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>39,749</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>8,810</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>41,848</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="23%"><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>7,216</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>1,580</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(42,347</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(8,796</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(42,347</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>20</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=20,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=207934,FOLIO='20',FILE='DISK022:[03CHI0.03CHI3070]FO3070A.;16',USER='MBLOUNT',CD='17-MAY-2003;09:47' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->

<P><FONT SIZE=2><A
NAME="page_fq3070_1_21"> </A> </FONT> <FONT SIZE=2><B>Note&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;Segment Information  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company's reportable market segments consist of Consumer and Industrial&nbsp;&amp; Specialty and beginning in fiscal 2003, the Company is required to report operating data to its
senior lenders under the Restructured Credit Facility based upon the Company's primary operating divisions. Therefore, disclosures for the operating divisions have been presented in the following
table. Sales to P&amp;G account for more than 10% of the Company's sales and are reported primarily in the Consumer segment. The loss of these sales would have a material adverse effect on this segment.
Generally, the Company's nonwoven products can be manufactured on more than one type of production line. Accordingly, certain costs attributed to each segment of the business were determined on an
allocation basis. The Company recorded unusual items during the first fiscal quarters of 2003 and 2002 consisting of plant realignment and special charges. These charges have not been allocated to the
segment data because the Company's management does not evaluate information that is not considered operating in nature on a segment-by-segment basis. Segment operating
performance is measured and evaluated before unusual or special items. Financial data by market segments and operating divisions follows (in thousands): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Successor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Predecessor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>One&nbsp;Month&nbsp;Ended<BR>
March&nbsp;29,&nbsp;2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Two&nbsp;Months&nbsp;Ended<BR>
March&nbsp;1,&nbsp;2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Three&nbsp;Months&nbsp;Ended<BR>
March&nbsp;30,&nbsp;2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Market Segments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Net sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="29%"><FONT SIZE=2>Consumer</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>35,044</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>74,956</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>107,730</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="29%"><FONT SIZE=2>Industrial and specialty</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>29,023</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>57,953</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>83,450</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>64,067</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>132,909</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>191,180</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Operating income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="29%"><FONT SIZE=2>Consumer</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>1,759</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>2,891</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>5,484</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="29%"><FONT SIZE=2>Industrial and specialty</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>1,364</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>2,725</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>(3,639</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>3,123</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>5,616</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>1,845</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="29%"><FONT SIZE=2>Plant realignment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>(8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>(4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>(176</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="29%"><FONT SIZE=2>Special charges</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>(2,168</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>3,115</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>5,612</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>(499</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2><BR>
Depreciation and amortization expense included in operating income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="17%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="18%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="29%"><FONT SIZE=2>Consumer</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>2,399</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>4,386</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>10,659</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="29%"><FONT SIZE=2>Industrial and specialty</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>945</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>3,012</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>5,365</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>3,344</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>7,398</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>16,024</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Successor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Predecessor</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March&nbsp;29,&nbsp;2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>December&nbsp;28,&nbsp;2002</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Identifiable assets</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="63%"><FONT SIZE=2>Consumer</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>373,043</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>404,220</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="63%"><FONT SIZE=2>Industrial and specialty</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>294,961</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>326,670</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="63%"><FONT SIZE=2>Corporate</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>50,729</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>80,429</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>718,733</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>811,319</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>21</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=21,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=268095,FOLIO='21',FILE='DISK022:[03CHI0.03CHI3070]FQ3070A.;17',USER='LSTARKE',CD='19-MAY-2003;12:19' -->
<A NAME="page_fq3070_1_22"> </A>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="96%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Successor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Predecessor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>One Month Ended<BR>
March 29, 2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Two Months Ended<BR>
March 1, 2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Three Months Ended<BR>
March 30, 2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Operating Divisions</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Net sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=2>Nonwovens</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>50,075</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>108,373</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>153,576</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=2>Oriented Polymers</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>13,992</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>24,536</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>37,604</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=2>Unallocated Corporate</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>64,067</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>132,909</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>191,180</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2><BR>
Operating income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="17%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="18%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=2>Nonwovens</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>1,670</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>4,480</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>1,066</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=2>Oriented Polymers</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>1,002</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>1,372</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>1,962</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=2>Unallocated Corporate</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>50</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>(351</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>(1,183</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=2>Eliminations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>401</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>115</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>3,123</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>5,616</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>1,845</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=2>Plant realignment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>(8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>(4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>(176</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=2>Special charges</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>(2,168</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>3,115</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>5,612</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>(499</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2><BR>
Depreciation and amortization expense included in operating income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="17%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="18%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=2>Nonwovens</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>3,466</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>5,777</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>13,945</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=2>Oriented Polymers</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>666</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>1,349</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>2,065</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=2>Unallocated Corporate</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>(272</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>272</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>14</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=2>Eliminations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>(516</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>3,344</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>7,398</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>16,024</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Predecessor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Successor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>December 28, 2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 29, 2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Identifiable assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="60%"><FONT SIZE=2>Nonwovens</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,071,855</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>950,473</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="60%"><FONT SIZE=2>Oriented Polymers</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>164,106</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>159,445</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="60%"><FONT SIZE=2>Corporate</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,720,761</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,567,353</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="60%"><FONT SIZE=2>Eliminations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(3,237,989</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(2,865,952</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>718,733</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>811,319</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>22</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=2,SEQ=22,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=929730,FOLIO='22',FILE='DISK022:[03CHI0.03CHI3070]FQ3070A.;17',USER='LSTARKE',CD='19-MAY-2003;12:19' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->

<P><FONT SIZE=2><A
NAME="page_fs3070_1_23"> </A> </FONT> <FONT SIZE=2><B>Note&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;Geographic Information  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Geographic data for the Company's operations are presented in the following table (in thousands): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="96%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Successor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Predecessor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>One Month Ended<BR>
March 29, 2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Two Months Ended<BR>
March 1, 2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Three Months Ended<BR>
March 30, 2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Net sales to unaffiliated customers:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>United States</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>28,141</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>58,992</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>94,532</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>Canada</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>9,034</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>16,416</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>24,205</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>Europe</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>15,829</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>33,936</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>43,996</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>Asia</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>2,140</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>4,773</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>6,128</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>Latin America</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>8,923</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>18,792</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>22,319</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>64,067</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>132,909</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>191,180</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Operating income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>United States</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>(520</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>(1,582</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>(9,465</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>Canada</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>789</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>1,019</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>1,967</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>Europe</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>1,040</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>2,330</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>4,035</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>Asia</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>249</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>848</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>1,081</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>Latin America</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>1,565</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>3,001</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>4,227</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>3,123</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>5,616</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>1,845</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>Plant realignment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>(8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>(4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>(176</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>Special charges</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>(2,168</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>3,115</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>5,612</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>(499</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Depreciation and amortization expense included in operating income (loss):</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>United States</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>1,451</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>3,669</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>9,830</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>Canada</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>468</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>950</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>1,338</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>Europe</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>659</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>1,166</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>2,347</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>Asia</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>275</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>628</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>878</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="32%"><FONT SIZE=2>Latin America</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>491</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>985</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>1,631</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>3,344</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>7,398</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>16,024</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="76%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Predecessor</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Successor</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>December 28, 2002</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 29, 2003</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Identifiable assets</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="60%"><FONT SIZE=2>United States</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>87,778</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>374,705</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="60%"><FONT SIZE=2>Canada</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>140,289</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>110,181</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="60%"><FONT SIZE=2>Europe</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>306,958</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>159,637</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="60%"><FONT SIZE=2>Asia</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>47,958</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>39,643</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="60%"><FONT SIZE=2>Latin America</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>135,750</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>127,153</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>718,733</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>811,319</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>23</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=23,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=30355,FOLIO='23',FILE='DISK022:[03CHI0.03CHI3070]FS3070A.;15',USER='LSTARKE',CD='19-MAY-2003;12:18' -->
<A NAME="page_fs3070_1_24"> </A>

<P><FONT SIZE=2><B>Note&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;Purchase Option and Subsidiary Matters  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the third quarter of 2002, the Company's 40% minority shareholder in DNS exercised an option under the Purchase and Option Agreement dated July&nbsp;1,
2000 whereby the Company or the minority shareholder could elect to sell their respective ownership share of DNS to the other party. The completion of the purchase of shares under the option is
subject to approval of the Company's
lenders, which has not been obtained. In addition, the Company and the minority shareholder have not agreed to an acquisition price for such additional investment. The Company did not receive any
approval from the U.S. Bankruptcy Court to engage in such transaction. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company acquired an 80% majority ownership position in Vateks during fiscal 1999. The acquisition agreement contained a purchase price adjustment based upon the achievement of
certain operating targets within an agreed-upon period after the acquisition date. Vateks did not achieve the operating targets and thus the Company sought to recover the short fall as
calculated pursuant to the provisions of the acquisition agreement. The Company and former majority shareholder did not agree on such amount and therefore, the settlement proceeded to arbitration. The
independent arbitrator concurred that the Company was entitled to receive an adjustment of the purchase price pursuant to the agreement. Accordingly, the Company and former shareholder agreed to a
settlement of approximately $1.8&nbsp;million payable in installments between fiscal 2002 and 2004. The Company received approximately $0.6&nbsp;million during fiscal 2002 representing the first
settlement installment. Such amount was accounted for as an adjustment to the purchase price of Vateks pursuant to the provisions of APB No.&nbsp;16. Subsequent installment payments, in accordance
with the settlement agreement, have not been paid to the Company by the former majority shareholder. Accordingly, the Company is pursuing its alternatives relative to this matter. </FONT></P>


<P><FONT SIZE=2><B>Note&nbsp;12.&nbsp;&nbsp;&nbsp;&nbsp;Related Party Transactions  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company leased a manufacturing facility from an affiliated entity that the Company believed was comparable to similar properties in the area. This lease was
terminated in January&nbsp;2003 at no cost to the Company. The Company currently leases office space from an affiliate of a shareholder of the Company at an approximate annual rental charge of
$0.2&nbsp;million. This facility previously served as the Company's corporate headquarters. Shared service costs are charged to the Company and approximated $0.2&nbsp;million during the three
months ended March&nbsp;29, 2003. The Company also entered into a Joint Development Agreement dated as of April&nbsp;17, 2002 and a Supply Agreement dated April&nbsp;30, 2002, with a third party
affiliated with certain of the Company's stockholders. During the three months ended March&nbsp;29, 2003, no payments were made by either party under either of these agreements. The Company is
currently reviewing these agreements to determine their enforceability and the Company's rights, including the right to terminate, under these agreements. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain
of the Company's key employees provide services for an entity that is a shareholder of the Company ("InterTech"). InterTech and its affiliates pay such employees directly for
these services. The Company is currently reviewing this relationship. </FONT></P>


<P><FONT SIZE=2><B>Note&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;Certain Matters  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;19, 1997, DT Acquisition&nbsp;Inc. ("DTA"), a subsidiary of the Company, acquired substantially all of the outstanding common and first
preferred shares of Dominion Textiles&nbsp;Inc., a Company organized under the laws of Canada ("Dominion"), and on January&nbsp;29, 1998, DTA acquired all remaining common and first preferred
shares, at which time Dominion underwent a </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>24</FONT></P>

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<P><FONT SIZE=2>"winding-up."
All assets and liabilities of Dominion were transferred to DTA and all outstanding common shares and first preferred shares held by DTA were redeemed. Immediately thereafter,
pursuant to a purchase agreement, dated October&nbsp;27, 1997, the apparel fabrics business of Dominion was sold, at no gain or loss, to Galey&nbsp;&amp; Lord,&nbsp;Inc., ("Galey") and the Company
acquired the nonwovens and industrial fabrics operations. The Company and Galey finalized the acquisition cash settlement during 2000 pursuant to the Master Separation Agreement (the "MSA") dated
January&nbsp;29, 1998. The result of such settlement was not material to the Company's financial condition. Under the MSA, the Company and Galey are required to share in the payment of certain
on-going costs, including taxes, for historical Dominion entities as required by the MSA. Because the Company originally acquired Dominion, the Company generally makes the payments and is
reimbursed by Galey. On February&nbsp;19, 2002, Galey and its U.S. operating subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code and began
operating their businesses as debtors-in-possession. During March&nbsp;2002, Galey informed the Company of its intention to reject the MSA as part of its bankruptcy
proceedings. If approved by the Bankruptcy Court, Galey's contemplated rejection of the MSA would result in the Company being required to fund expenditures that should be allocated to, and paid by,
Galey, which could potentially have a material adverse effect on the Company. At March&nbsp;29, 2003, the amounts due from Galey for shared cash activity pursuant to the MSA, including amounts
associated with statutory tax payments, approximated $2.6&nbsp;million (the "Galey Receivable"). The Company has fully reserved the Galey Receivable at March&nbsp;29, 2003 due to the uncertainty
of collectibility at such date. All shared cash activity prior to the first quarter of 2002 relative to the MSA has been collected from Galey. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April&nbsp;23, 2002, the Company filed a demand for arbitration against Johnson&nbsp;&amp; Johnson ("J&amp;J"). The primary issue in the arbitration is the Company's assertion that J&amp;J
breached a supply agreement when: (i)&nbsp;J&amp;J and its affiliates in the U.S., Canada and Europe failed both to purchase certain products from the Company and to allow the Company a reasonable
opportunity to compete for certain sales; and (ii)&nbsp;J&amp;J failed to encourage its affiliates in other parts of the world to buy the Company's products. The arbitration is currently pending in the
State of New York. </FONT></P>

<P><FONT SIZE=2><B>Note&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;Investment in Partially-Owned Equity Affiliate  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of the acquisition of Dominion and through its wholly-owned subsidiary, DTA, the Company acquired a 50% equity interest in a Canadian-based manufacturer
of home furnishing products. The
Company's equity ownership of this entity is a 50% shared investment with Galey pursuant to the MSA; therefore, the Company's effective ownership approximates 25%. Thus the results of this entity are
not consolidated with those of the Company. At March&nbsp;29, 2003, the Company's investment in this entity approximated $0.3&nbsp;million. The Company received no dividends from this entity
during the three months ended March&nbsp;29, 2003 nor has the Company guaranteed any of this entity's obligations. </FONT></P>


<P><FONT SIZE=2><B>Note&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;Recent Developments  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;11, 2003, the Company's Chief Executive Officer was replaced by James L. Schaeffer. The Company and its former Chief Executive Officer are
currently involved in a dispute with respect to the amount and timing of certain severance payments to be made to its former Chief Executive Officer, as well as other matters. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>25</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April&nbsp;11, 2003, GOF entered into an agreement with the Company (the "GOF Agreement") pursuant to which GOF agreed to undertake certain actions solely for the purpose of
assisting the Company in maintaining compliance with the financial covenants contained in the Restructured Credit Facility during the period beginning on March&nbsp;6, 2003, and ending on
January&nbsp;4, 2004 as follows. GOF has agreed to amend the New Senior Subordinated Note and the Junior Notes it beneficially owns or controls (approximately $38&nbsp;million aggregate principal
amount) to provide that interest that accrues from March&nbsp;6, 2003 until January&nbsp;31, 2005 on the New Senior Subordinated Note and from March&nbsp;6, 2003 until January&nbsp;5, 2004 on
the Junior Notes, may be paid by the Company issuing additional aggregate principal amount of debt securities rather than paying such interest in cash. In the event the Company is unable to meet the
senior leverage covenant, interest covenant or adjusted interest covenant contained in the Restructured Credit Facility, the Company is permitted to instruct the Agent under the Restructured Credit
Agreement to make a drawing under the Exit Letter of Credit and apply the amount of the drawing to repay indebtedness under the Restructured Credit Facility. GOF also has agreed that, in the event the
Company is unable to comply with the leverage covenant under the Restructured Credit Facility, GOF will convert such amount of its Junior Notes into Class&nbsp;A Common Stock. Finally, in the event
the Company has undertaken all the actions described above and is unable to meet the interest covenant solely for the 12-month period ending on the last day of the Company's third fiscal
quarter of 2003, GOF will purchase up to $10&nbsp;million aggregate principal amount of additional senior subordinated notes (with interest payable in additional principal amount of senior
subordinated notes) or equity securities (the "New Investment") in order to allow the Company to repay indebtedness under the Restructured Credit Facility to meet such covenant. GOF's obligation to
take any of these steps is conditioned on Amendment No.&nbsp;1 remaining in full force and effect. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of March&nbsp;29, 2003, the Company and the Senior Secured Lenders under the Restructured Credit Facility, entered into Amendment No.&nbsp;1. Amendment No.&nbsp;1 permitted the
Company to take the actions described in the GOF Agreement, and also provides that in the event the Company repays indebtedness under the Restructured Credit Facility using the proceeds from the Exit
Letter of
Credit or New Investment, for purposes of the interest and adjusted interest covenants, the interest savings to the Company is calculated on a pro forma basis as if the cash pay indebtedness had been
repaid as of March&nbsp;6, 2003. </FONT></P>

<P><FONT SIZE=2><B>Note&nbsp;16.&nbsp;&nbsp;&nbsp;&nbsp;Supplemental Financial Data  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cost of research and development, shipping and handling, and selling and advertising is charged to expense as incurred and is included in selling, general and
administrative expense in the consolidated statement of operations. A summary of these expenses is presented in the following table (in thousands): </FONT></P>

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<TH WIDTH="35%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Successor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Predecessor</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Predecessor</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="35%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>One Month Ended<BR>
March 29, 2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Two Months Ended<BR>
March 1, 2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Three Months Ended<BR>
March 30, 2002</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="35%"><FONT SIZE=2>Research and development</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>1,044</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>2,483</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>3,886</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="35%"><FONT SIZE=2>Shipping and handling</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>1,709</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>3,411</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>5,327</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="35%"><FONT SIZE=2>Selling and advertising</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>2,260</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>4,904</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>7,561</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2>26</FONT></P>

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<P><FONT SIZE=2><A
NAME="page_fu3070_1_27"> </A> </FONT></P>

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<P><FONT SIZE=2><A
NAME="fu3070_item_2._management_s_discussio__ite03663"> </A>
<A NAME="toc_fu3070_1"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 2.&nbsp;&nbsp;&nbsp;&nbsp;MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS    <BR>    </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company's consolidated
results of operations and financial condition. The discussion should be read in conjunction with the consolidated financial statements and notes thereto contained in this quarterly report on
Form&nbsp;10-Q. In particular, this discussion should be read in conjunction with Note&nbsp;3. "Chapter 11 Proceedings" and Note&nbsp;4. "Recapitalization," which describe the filing
by the Company and its domestic subsidiaries of voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code on May&nbsp;11, 2002 and the financial restructuring
associated with the Company's emergence from Chapter 11 effective March&nbsp;5, 2003. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
accounting purposes the Company recognized the emergence on March&nbsp;1, 2003, which was the end of the February accounting period. For purposes of discussion of results of
operations, the one month ended March&nbsp;29, 2003 (Successor) has been combined with two months ended March&nbsp;1, 2003 (Predecessor). </FONT></P>

<P><FONT SIZE=2><B>Results of Operations  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the percentage relationships to net sales of certain income statement items. </FONT></P>

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<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Three Months Ended</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER"><FONT SIZE=1><B>March&nbsp;29,<BR>
2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER"><FONT SIZE=1><B>March&nbsp;30,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Net sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>100.0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>100.0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Cost of goods sold</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="69%"><FONT SIZE=2>Materials</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>46.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>44.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="69%"><FONT SIZE=2>Labor</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>10.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>8.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="69%"><FONT SIZE=2>Overhead</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>26.0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>32.2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>83.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>85.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Gross profit</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>16.9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>14.9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Selling, general and administrative expense</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>12.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>13.9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Plant realignment costs</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Special charges</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Operating income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>4.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(0.2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Other expense</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="69%"><FONT SIZE=2>Interest expense, net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>7.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>13.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="69%"><FONT SIZE=2>Investment (gain)/loss</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(0.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="69%"><FONT SIZE=2>Foreign currency and other</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0.9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1.7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>8.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>15.2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Loss before reorganization items, income taxes and cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(3.7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(15.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Reorganization items</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>275.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Income before income taxes and cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>271.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(15.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Income taxes</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Income before cumulative effect of change in accounting principle</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>270.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(15.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Cumulative effect of change in a accounting principle</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>6.7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>270.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(22.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>27</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=27,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=890136,FOLIO='27',FILE='DISK022:[03CHI0.03CHI3070]FU3070A.;26',USER='LSTARKE',CD='19-MAY-2003;15:05' -->
<A NAME="page_fu3070_1_28"> </A>

<P><FONT SIZE=2><B>Comparison of Three Months Ended March 29, 2003 and March 28, 2002  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth components of the Company's net sales and operating income (loss) by market segment and operating division for the three months
ended March&nbsp;29, 2003 and the corresponding change over the comparable period in 2002 (in thousands, except percent data). </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Three Months Ended</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March&nbsp;29,<BR>
2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March&nbsp;30,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Change</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER"><FONT SIZE=1><B>% Change</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Market Segments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Net Sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="45%"><FONT SIZE=2>Consumer</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>110,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>107,730</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2,270</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>2.11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="45%"><FONT SIZE=2>Industrial&nbsp;&amp; Specialty</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>86,976</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>83,450</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>3,526</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>4.23</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>196,976</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>191,180</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>5,796</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>3.03</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Operating income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="45%"><FONT SIZE=2>Consumer</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>4,650</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>5,484</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(834</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(15.21</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="45%"><FONT SIZE=2>Industrial&nbsp;&amp; Specialty</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>4,089</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(3,639</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>7,728</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(212.37</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>8,739</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,845</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>6,894</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>373.66</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="45%"><FONT SIZE=2>Plant realignment costs</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(176</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>164</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(93.18</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="45%"><FONT SIZE=2>Special charges and other unusual items</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(2,168</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2,168</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>8,727</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(499</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>9,226</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Operating Division</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Net Sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="45%"><FONT SIZE=2>Nonwovens</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>158,448</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>153,576</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>4,872</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>3.17</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="45%"><FONT SIZE=2>Oriented Polymers</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>38,528</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>37,604</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>924</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>2.46</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="45%"><FONT SIZE=2>Eliminations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>196,976</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>191,180</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>5,796</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>3.03</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Operating income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="45%"><FONT SIZE=2>Nonwovens</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>6,150</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,066</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>5,084</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>476.92</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="45%"><FONT SIZE=2>Oriented Polymers</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2,374</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,962</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>412</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>21.00</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="45%"><FONT SIZE=2>Unallocated Corporate</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(301</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(1,183</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>882</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(74.56</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="45%"><FONT SIZE=2>Eliminations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>516</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>516</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>8,739</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,845</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>6,894</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>373.66</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="45%"><FONT SIZE=2>Plant realignment costs</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(176</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>164</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(93.18</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="45%"><FONT SIZE=2>Special charges and other unusual items</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(2,168</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2,168</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>8,727</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(499</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>9,226</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2><I>Net Sales  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A reconciliation of the change in net sales between the three months ended March&nbsp;29, 2003 and the three months ended March&nbsp;30, 2002 is presented in
the following table (in thousands): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="80%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>Net sales&#151;three months ended March 30, 2002</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>191,180</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="3%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Change in sales due to:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="75%"><FONT SIZE=2>Volume</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(166</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="75%"><FONT SIZE=2>Price/mix</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(2,545</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="75%"><FONT SIZE=2>Foreign currency</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>8,507</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>Net sales&#151;three months ended March 29, 2003</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>196,976</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>28</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=2,SEQ=28,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=767845,FOLIO='28',FILE='DISK022:[03CHI0.03CHI3070]FU3070A.;26',USER='LSTARKE',CD='19-MAY-2003;15:05' -->
<A NAME="page_fu3070_1_29"> </A>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated
net sales were approximately $197.0&nbsp;million for the three months ended March&nbsp;29, 2003, an increase of $5.8&nbsp;million or 3.0% over net
sales of $191.2&nbsp;million for the same fiscal period in 2002. The increase in net sales was due primarily to favorable foreign currencies versus the U.S. dollar offset by unfavorable price / mix.
Excluding the favorable effects of foreign currency translation, similar economic and business issues continued to impact both the Consumer and Industrial and Specialty market segments. The Company's
businesses continued to be unfavorably impacted by the general economic decline in the world-wide economy and the financial restructuring efforts associated with the Chapter 11 process,
including lost sales from existing customers. In addition, certain factors that have historically contributed to lower than anticipated net sales continued to negatively affect net sales during the
three months ended March&nbsp;29, 2003. Within the Company's Nonwovens business, lower sales volume, predominantly in the U.S. medical markets and lower sales volume within the European hygiene
markets, offset volume gains in the Latin American business. Price / mix within the Nonwovens business was unfavorable within the U.S. and European markets. Sales volume was lower year over year
within the Oriented Polymers business offset somewhat by favorable price / mix in the industrial fabrics and agricultural markets. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign
currencies, predominantly in Europe and Canada, were stronger against the U.S. dollar during the three months ended March&nbsp;29, 2003 versus the same period in 2002. However,
the Argentine pesos continued to unfavorably impact the Company's results of operations. The increase in net sales between the three months ended March&nbsp;29, 2003 and March&nbsp;30, 2002 due to
favorable foreign currency translation in Europe and Canada was approximately $10.2&nbsp;million offset by the continued decline of the Argentine peso of $1.7&nbsp;million. Continued discussion of
foreign currency exchange rate risk is contained in Item 3. Quantitative and Qualitative Disclosures About Market Risk. </FONT></P>


<P><FONT SIZE=2><B>Operating Income (Loss)  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A reconciliation of the change in operating income (loss) between the three months ended March&nbsp;30, 2002 and March&nbsp;29, 2003 is presented in the
following table (in thousands): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="80%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Operating (loss)&#151;three months ended March 30, 2002</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(499</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Change in operating income due to:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="77%"><FONT SIZE=2>Plant realignment and special charges</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2,344</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="77%"><FONT SIZE=2>Volume</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>613</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="77%"><FONT SIZE=2>Cost savings and other initiatives related to plant realignment and business restructuring</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>4,014</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="77%"><FONT SIZE=2>Lower depreciation and amortization</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>4,972</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="77%"><FONT SIZE=2>Price/mix</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(2,545</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="77%"><FONT SIZE=2>Raw materials</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(3,820</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="77%"><FONT SIZE=2>Foreign currency</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>198</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="77%"><FONT SIZE=2>Lower administrative costs associated with historic Dominion entities</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>642</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="77%"><FONT SIZE=2>All other</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2,808</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2><BR>
Operating income&#151;three months ended March 29, 2003</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2><BR>
8,727</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated
operating income was $8.7&nbsp;million for the three months ended March&nbsp;29, 2003. Excluding unusual items, which consist of plant realignment and special charges,
consolidated operating income increased of $6.9&nbsp;million over operating income before unusual items of $1.9&nbsp;million during the first three months of fiscal 2002. The increase in operating
income before unusual items was due to cost savings and other initiatives related to plant realignment and business restructuring of $4.0&nbsp;million, lower depreciation and amortization of
approximately </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>29</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=3,SEQ=29,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=398705,FOLIO='29',FILE='DISK022:[03CHI0.03CHI3070]FU3070A.;26',USER='LSTARKE',CD='19-MAY-2003;15:05' -->
<A NAME="page_fu3070_1_30"> </A>
<BR>

<P><FONT SIZE=2>$5.0&nbsp;million
resulting from a lower depreciable fixed asset base produced by asset impairment charges in the fourth quarter of fiscal 2002 and to the application of fresh start accounting,
lower administrative costs associated with historic Dominion entities of $0.6&nbsp;million and all other of $3.6&nbsp;million consisting of lower spending and favorable foreign currency
translation. Offsetting these favorable impacts were higher raw material costs of $3.8&nbsp;million predominantly in the U.S. and Latin America Nonwovens business and lower price/mix of
$2.5&nbsp;million. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
discussed in Note&nbsp;6. "Business Restructuring and Impairment," the Company undertook a comprehensive financial and business restructuring of its operations in the latter part of
fiscal 2001 in response to a confluence of negative economic and business factors. The restructuring continued on a smaller scale through 2002. Accordingly, the cash component of the restructuring
during 2002 included workforce reductions and plant realignment predominantly in certain of the Oriented Polymers U.S. Industrial and Specialty business. Manufacturing and operating cost savings have
been realized within each business segment for the duration of the realignment as a result of the restructuring initiatives. However, lower selling prices and higher raw material costs predominantly
offset the cost savings achieved during the three months ended March&nbsp;29, 2003 within the Consumer and Industrial and Specialty segments. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company recorded a non-cash charge in 2002 of approximately $317.9&nbsp;million, consisting of the write-down of goodwill and other intangibles
($83.9&nbsp;million) and machinery, equipment and buildings ($234.0&nbsp;million) related predominantly to production assets within the U.S. and European Nonwovens business in accordance with
FAS&nbsp;142 and FAS&nbsp;144. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
restructuring related charges have not been allocated to the Company's reportable business segments, for reporting purposes, because the Company's management does not evaluate such
charges on a segment-by-segment basis. Segment operating performance is measured and evaluated before unusual or special items. </FONT></P>

<P><FONT SIZE=2><B>Interest Expense and Other  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of the Petition Date and in accordance with SOP 90-7, the Company discontinued accruing interest on the senior subordinated notes and, as a result,
interest expense decreased $11.4&nbsp;million from $25.8&nbsp;million during the first three months of 2002 to $14.4&nbsp;million during the same
period in 2003. Interest expense recognized by the Company during the one month ended March&nbsp;29, 2003 resulted primarily from the Restructured Credit Facility. Refer to Note&nbsp;7. "Debt" for
further discussion of the Restructured Credit Facility. Foreign currency and other losses decreased approximately $1.4&nbsp;million, from $3.3&nbsp;million during the first three months of 2002 to
$1.8&nbsp;million for the same period in 2003. </FONT></P>

<P><FONT SIZE=2><B>Reorganization Items  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reorganization gains of $542.6&nbsp;million were recognized in the three months ended March&nbsp;29, 2003. The gains were due to the gain on cancellation of
prepetition indebtedness, offset by fresh start accounting adjustments and chapter 11 reorganization and other expenses. </FONT></P>

<P><FONT SIZE=2><B>Income Tax Expense  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company recorded income taxes of $2.6&nbsp;million during the three months ended March&nbsp;29, 2003. Implementation of the Modified Plan resulted in the
Company recognizing CODI (as defined in Note 2. "Significant Accounting Policies"). All of the CODI is excluded from taxable income. However, the Company is required to reduce certain of its tax
attributes, including net operating loss carryforwards ("NOLs"), by an amount not to exceed the CODI it realized. In general, tax attributes will be reducted at the close of the 2003 tax year in the
following order: (i)&nbsp;net operating loss carryforwards; (ii)&nbsp;tax credits and capital loss carryforwards; and (iii)&nbsp;tax basis in assets. The </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>30</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=4,SEQ=30,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=1028608,FOLIO='30',FILE='DISK022:[03CHI0.03CHI3070]FU3070A.;26',USER='LSTARKE',CD='19-MAY-2003;15:05' -->
<A NAME="page_fu3070_1_31"> </A>
<BR>

<P><FONT SIZE=2>Company
is currently in the process of determining the amount of the corresponding reduction of its tax attributes and/or asset basis. It is anticipated that the Company's net operating loss
carryforwards will be entirely eliminated in 2003 as a result of the reoganization under the Modified Plan. During the three months ended March&nbsp;30, 2002 the Company incurred a
pre-tax loss of $29.6&nbsp;million which produced an income tax benefit of approximately $8.3&nbsp;million. However, due to the uncertainty of the Company's ability to realize the
asset associated with the tax benefit, a valuation allowance in the amount of $8.3&nbsp;million was recorded at March&nbsp;30, 2002. </FONT></P>

<P><FONT SIZE=2><B>Cumulative Effect of Change in Accounting Principle  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of the Company's adoption of FAS&nbsp;142, the Company completed a transitional impairment test in the fourth quarter of 2002, as permitted by the
standard. The Company's transitional impairment test resulted in a charge of $12.8&nbsp;million which was reported as a cumulative effect of a change in accounting principle in the Company's annual
results for fiscal 2002 and has been allocated to the first fiscal quarter of 2002 for reporting purposes. </FONT></P>

<P><FONT SIZE=2><B>Net Income (Loss)  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's net income during the three months ended March&nbsp;29, 2003 was approximately $532.8&nbsp;million as a result of the factors described above,
as compared to a net loss of $42.3&nbsp;million during the comparable period in 2002. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fu3070_liquidity_and_capital_resouces"> </A>
<A NAME="toc_fu3070_2"> </A>
<BR></FONT><FONT SIZE=2><B>Liquidity and Capital Resouces    <BR>    </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="72%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 29,<BR>
2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>December 28,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>(In Thousands)<BR> </B></FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Balance sheet data:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="57%"><FONT SIZE=2>Cash and short-term investments</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>30,193</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>58,147</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="57%"><FONT SIZE=2>Working capital</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>191,439</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>219,905</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="57%"><FONT SIZE=2>Working capital, excluding current portion of long-term debt and liabilities subject to compromise</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>200,927</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>244,521</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="57%"><FONT SIZE=2>Total assets</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>718,733</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>811,319</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="57%"><FONT SIZE=2>Total debt</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>489,206</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>1,092,365</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="57%"><FONT SIZE=2>Shareholders' equity (deficit)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>71,748</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>(465,914</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="73%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Three Months Ended</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 29,<BR>
2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 30,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>(In Thousands)<BR> </B></FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Cash flow data:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="61%"><FONT SIZE=2>Net cash (used in) operating activities</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(11,825</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(3,687</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="61%"><FONT SIZE=2>Net cash (used in) provided by investing activities</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>6,789</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(2,328</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="61%"><FONT SIZE=2>Net cash (used in) financing activities</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(15,637</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(962</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>31</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=5,SEQ=31,EFW="2111067",CP="POLYMER GROUP, INC.",DN="1",CHK=500276,FOLIO='31',FILE='DISK022:[03CHI0.03CHI3070]FU3070A.;26',USER='LSTARKE',CD='19-MAY-2003;15:05' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->

<P><FONT SIZE=2><A
NAME="page_fw3070_1_32"> </A> </FONT></P>

<!-- TOC_END -->

<P><FONT SIZE=2><B>Operating Activities  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company used cash in operations of $11.8&nbsp;million during the three months ended March&nbsp;29, 2003, an approximate $8.1&nbsp;million increase over
the three months ended March&nbsp;30, 2002. Cash used in operations was negatively impacted during the three months ended March&nbsp;29, 2003 by operating losses predominantly within the
U.S.&nbsp;Nonwovens business and lower working capital efficiency within certain geographic regions. The Company had working capital of approximately $191.4&nbsp;million at March&nbsp;29, 2003.
Excluding the current portion of indebtedness, working capital was $200.7&nbsp;million at March&nbsp;29, 2003, compared to working capital, excluding current portion of indebtedness, at
December&nbsp;28, 2002 of $244.5&nbsp;million. Accounts receivable on March&nbsp;29, 2003 was $132.1&nbsp;million as compared to $117.4&nbsp;million on December&nbsp;28, 2002, an increase
of $14.7&nbsp;million or 12.5%. Accounts receivable represented 63&nbsp;days of sales outstanding at March&nbsp;29, 2003 versus 57&nbsp;days outstanding on December&nbsp;28, 2002. The
increase in accounts receivable and in days sales outstanding is due primarily to longer collection cycles in Latin America during the three months ended March&nbsp;29, 2003; weaker economic
conditions in Mexico/Colombia which has recovered somewhat in the second fiscal quarter of 2003; higher accounts receivable balances within the agriculture portion of the Oriented Polymers business
attributable to the normal business cycle within this unit; and timing of collections within the U.S. Nonwovens business. Inventories at March&nbsp;29, 2003 were approximately $115.7&nbsp;million,
an increase of $0.1&nbsp;million over inventories of $115.7&nbsp;million at December&nbsp;28, 2002. The Company had approximately 66&nbsp;days of inventory on hand at March&nbsp;29, 2003 and
December&nbsp;28, 2002. Accounts payable at March&nbsp;29, 2003 and December&nbsp;28, 2002 was $46.2&nbsp;million, representing 26&nbsp;days of accounts payable outstanding. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior
to the Petition Date, the Company classified expenses related to its financial restructuring efforts as "Special charges" in the consolidated statement of operations. Such charges
consist of professional and other related services that have been expensed as incurred. After the Petition Date, costs related to the Company's reorganization activities are also expensed as incurred
and have been classified as "Chapter 11 reorganization expenses" in accordance with SOP 90-7. The cumulative amount of costs and expenses related to the Company's financial restructuring
efforts, including bank financing fees, through March&nbsp;29, 2003 have been approximately $45.6&nbsp;million. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a result of the Company's financial condition, certain suppliers have requested alternative payment provisions. However, such alternative payment provisions have not currently had a
significant negative impact on the Company's liquidity. </FONT></P>

<P><FONT SIZE=2><B>Investing and Financing Activities  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital expenditures during the three months ended March&nbsp;29, 2003 totaled $5.1&nbsp;million, an increase of $2.8&nbsp;million from capital spending of
$2.3&nbsp;million during the same period in fiscal 2002. During the fourth quarter of 2002, the Company entered into an agreement with Reifenhauser&nbsp;&amp; Co. GmbH for the purchase and
installation of a Reicofil 3.1 SSXS nonwovens production line ("Line 5") at its San Luis Potosi, Mexico manufacturing site. The total commitment for Line 5 approximates $22.0&nbsp;million.
Approximately $7.3 million has been funded toward Line&nbsp;5, including building expansion, through the three months ended March&nbsp;29, 2003. The remaining portion of the total commitment for
construction of Line&nbsp;5 is expected to be funded during fiscal 2003 and 2004. The Company is evaluating certain financing alternatives for Line 5. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
complete description of the Company's emergence from Chapter 11 is described in Note&nbsp;4. "Recapitalization." </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company's Restructured Credit Facility provides for secured revolving credit borrowings with aggregate commitments of up to $50.0&nbsp;million and aggregate term loans and term
letters of credit of $435.3&nbsp;million. Subject to certain terms and conditions, a portion of the Restructured Credit </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>32</FONT></P>

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<P><FONT SIZE=2>Facility
may be used for revolving letters of credit. As of March&nbsp;29, 2003, the Company had availability of $50.0&nbsp;million under the revolving portion of the Restructured Credit Facility.
All borrowings under the Restructured Credit Facility are U.S. dollar denominated and are guaranteed, on a joint and several basis, by each and all of the direct and indirect domestic subsidiaries of
the Company and certain non-domestic subsidiaries of the Company. The Restructured Credit Facility and the related guarantees are secured by (i)&nbsp;a lien on substantially all of the
assets of the Company, its domestic subsidiaries and certain of its non-domestic subsidiaries, (ii)&nbsp;a pledge of all or a portion of the stock of the domestic subsidiaries of the
Company and of certain non-domestic subsidiaries of the Company, and (iii)&nbsp;a pledge of certain secured intercompany notes issued to the Company or one or more of its subsidiaries by
non-domestic subsidiaries. Commitment fees under the Restructured Credit Facility are equal to 0.75% of the daily-unused amount of the revolving credit commitment. The Restructured Credit
Facility contains covenants and events of default customary for financings of this type, including leverage, senior leverage, interest coverage and adjusted interest coverage. The Restructured Credit
Facility terminates on December&nbsp;31, 2006. The loans are subject to mandatory prepayment out of proceeds received in connection with certain casualty events, asset sales and debt and equity
issuances and from excess cash flow. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
interest rate applicable to borrowings under the Restructured Credit Facility is based on a specified base rate or a specified Eurodollar base rate, at the Company's option, plus a
specified margin. The applicable margin for revolving credit loans bearing interest based on the base rate is 2.75%, and the margin for revolving credit loans bearing interest on a Eurodollar rate is
3.75%. The applicable margin for term loans bearing interest based on the base rate will range from 4.00% to
8.00%, and the margin for term loans bearing interest on a Eurodollar rate will range from 5.00% to 9.00%, in each case based on the Company's ratio of senior consolidated indebtedness to consolidated
EBITDA calculated on a rolling four quarter basis. In addition, if the Company's ratio of senior consolidated indebtedness to consolidated EBITDA calculated on a rolling four quarter basis exceeds
5.00 to 1, the Company is required to pay to the term loan lenders and the term letter of credit lenders a fee of 1.00% on the outstanding balance under the term loans and the term letters of credit. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Refer
to Note&nbsp;15. "Recent Developments" for a discussion of Amendment No.&nbsp;1 to the Restructured Credit Facility. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Refer
to Note 13. "Certain Matters" for a complete description of the MSA between Galey (as defined) and the Company. </FONT></P>


<P><FONT SIZE=2><B>Effect of Inflation and Foreign Currency  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inflation generally affects the Company by increasing the cost of labor, equipment and raw materials. The Company's substantial foreign operations expose it to
the risk of foreign currency exchange rate fluctuations. If foreign currency denominated revenues is greater than costs, the translation of foreign currency denominated costs and revenues into U.S.
dollars will improve profitability when the foreign currency strengthens against the U.S. dollar and will reduce profitability when the foreign currency weakens. </FONT></P>


<P><FONT SIZE=2><B>New Accounting Standards  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Refer to Note&nbsp;2. "Significant Accounting Policies" for a complete discussion of recently issued standards and their anticipated effect on the Company's
results of operations. </FONT></P>

<P><FONT SIZE=2><B>Critical Accounting Policies And Other Matters  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's analysis and discussion of its financial condition and results of operations are based upon its consolidated financial statements that have been
prepared in accordance with </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>33</FONT></P>

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<P><FONT SIZE=2>generally
accepted accounting principles in the United States ("U.S. GAAP"). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. The Company evaluates these estimates and assumptions on an
ongoing basis, including but not limited to those related to inventories, bad debts, income taxes, intangible assets, restructuring related adjustments, pension and other post retirement benefits and
contingencies. Estimates and assumptions are based on historical and other factors believed to be reasonable under the circumstances. The results of these estimates may form the basis of the carrying
value of certain assets and liabilities. Actual results, under conditions and circumstances different from those assumed, may differ from estimates. The impact and any associated risks related to
estimates, assumptions, and accounting policies are discussed within Management's Discussion and Analysis of Operations and Financial Condition, as well as in the Notes to the Consolidated Financial
Statements, if applicable, where such estimates, assumptions, and accounting policies affect the Company's reported and expected results. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company believes the following accounting policies are critical to its business operations and the understanding of results of operations and affect the more significant judgments
and estimates used in the preparation of its consolidated financial statements: </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue Recognition:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Revenue from product sales is recognized at the time ownership of goods transfers to the customer and
the earnings process is complete in accordance with Staff Accounting Bulletin No.&nbsp;101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 specifies how existing rules should be
applied to transactions in the absence of authoritative literature. Based on the guidelines of current accounting rules and SAB 101, revenue should not be recognized until it is realized or realizable
and earned. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign Currency Translation:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Company accounts for and reports translation of foreign currency transactions and foreign
currency financial statements in accordance with SFAS No.&nbsp;52, "Foreign Currency Translation." All assets and liabilities in the balance sheets of foreign subsidiaries whose functional currency
is other than the U.S. dollar are translated at quarter-end exchange rates. Translation gains and losses are not included in determining net income but are accumulated as a separate
component of shareholders' equity. However, subsidiaries considered to be operating in highly inflationary countries use the U.S. dollar as the functional currency and translation gains and losses are
included in determining net income. In addition, foreign currency transaction gains and losses are included in determining net income. </FONT></P>


<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Business Combinations, Goodwill and Other Intangible Assets:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In July&nbsp;2001, the Financial Accounting Standards Board
issued Statements of Financial Accounting Standards No.&nbsp;141 "Business Combinations" ("FAS&nbsp;141") and No.&nbsp;142, "Goodwill and Other Intangible Assets" ("FAS&nbsp;142").
FAS&nbsp;141 requires that the purchase method of accounting be used for all business combinations initiated after June&nbsp;30, 2001. Use of the pooling-of-interests
method is no longer permitted. FAS&nbsp;141 also includes guidance on the initial recognition and measurement of goodwill and intangible assets acquired in a business combination that is completed
after June&nbsp;30, 2001. FAS&nbsp;142 supersedes Accounting Principles Bulletin No.&nbsp;17, "Intangible Assets." FAS&nbsp;142 primarily addresses the accounting for goodwill and intangible
assets subsequent to their acquisition. The most significant changes made by FAS&nbsp;142 are: (1)&nbsp;goodwill and indefinite lived intangible assets will no longer be amortized,
(2)&nbsp;goodwill will be tested for impairment at least annually, (3)&nbsp;intangible assets deemed to have an indefinite life will be tested for impairment at least annually and (4)&nbsp;the
amortization period of intangible assets with finite lives will no longer be limited to forty years. FAS&nbsp;142 is effective for fiscal years beginning after December&nbsp;15, 2001. The Company
recognized a non-cash charge of $96.7&nbsp;million, of which approximately $12.8&nbsp;million was </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>34</FONT></P>

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<P><FONT SIZE=2>recognized
as a cumulative effect of a change in accounting principle, for the write-down of goodwill and other intangibles in accordance with FAS&nbsp;142 during fiscal 2002. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of Long-Lived Assets:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In October&nbsp;2001, the Financial Accounting Standards Board issued
Statement No.&nbsp;144 "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS&nbsp;144"). FAS&nbsp;144 provides accounting guidance for financial accounting and
reporting for the impairment or disposal of long-lived assets. The statement supersedes Statement of Financial Accounting Standards No.&nbsp;121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("FAS&nbsp;121"). It also supersedes the accounting and reporting provisions of APB Opinion No.&nbsp;30
"Reporting the Results of Operations&#151;Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions" related to
the disposal of a segment of a business. The statement is effective for fiscal years beginning after December&nbsp;15, 2001. The company recognized a non-cash charge of
$234.0&nbsp;million for the write-down of property, plant and equipment in accordance with FAS&nbsp;144 during fiscal 2002. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts Receivable and Concentration of Credit Risks:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable potentially expose the Company to concentration of
credit risk, as defined by Statement of Financial Accounting Standards No.&nbsp;105, "Disclosure of Information about Financial Instruments with Off-Balance Sheet Risk and Financial
Instruments with Concentration of Credit Risk." The Company provides credit in the normal course of business and performs ongoing credit evaluations on certain of its customers' financial condition,
but generally does not require collateral to support such receivables. The Company also establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific
customers, historical trends and other information. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income Taxes:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Company records an income tax valuation allowance when the realization of certain deferred tax assets, net
operating losses and capital loss carryforwards is not likely. These deferred tax items represent expenses recognized for financial reporting purposes, which will result in tax deductions over varying
future periods. The Company has not provided U.S. income taxes for undistributed earnings of foreign subsidiaries that are considered to be retained indefinitely for reinvestment. Certain judgments,
assumptions and estimates may affect the carrying value of the valuation allowance and deferred income tax expense in the Company's consolidated financial statements. </FONT></P>

<P><FONT SIZE=2><B>Environmental  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is subject to a broad range of federal, foreign, state and local laws governing regulations relating to the pollution and protection of the
environment. The Company believes that it is currently in substantial compliance with environmental requirements and does not currently anticipate any material adverse effect on its operations,
financial condition or competitive position as a result of its efforts to comply with environmental requirements. Some risk of environmental liability is inherent, however, in the nature of the
Company's business, and there can be no assurance that material environmental liabilities will not arise. </FONT></P>

<P><FONT SIZE=2><B>Euro Conversion  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;1, 1999, member countries of the European Monetary Union began a three-year transition from their national currencies to a new
common currency, the "euro". Permanent rates of exchange between members' national currency and the euro have been established and monetary, capital, foreign exchange, and interbank markets have been
converted to the euro. Euro currency has been issued and effective July&nbsp;2002, the respective national currencies were withdrawn. The Company has operations in three of the participating
countries and has successfully transitioned to using both the euro and local currencies for commercial transactions. Costs of the euro conversion </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>35</FONT></P>

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<P><FONT SIZE=2>have
not had a material impact on the results of operations or the financial condition of the Company. </FONT></P>


<P><FONT SIZE=2><A
NAME="fw3070_item_3._quantitative_and_quali__ite02633"> </A>
<A NAME="toc_fw3070_1"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    <BR>    </B></FONT></P>

<P><FONT SIZE=2><B>Foreign Currency Exchange Rate Risk  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company manufactures, markets and distributes certain of its products in Europe, Canada, Latin America and the Far East. As a result, the Company's financial
results could be significantly affected by factors such as changes in foreign currency rates or weak economic conditions in the foreign markets in which the Company maintains a manufacturing or
distribution presence. If foreign currency denominated revenues are greater than costs, the translation of foreign currency denominated costs and revenues into U.S. dollars will improve profitability
when the foreign currency strengthens against the U.S. dollar and will reduce profitability when the foreign currency weakens. For example, during 2002 certain currencies of countries in which the
Company conducts foreign currency denominated business weakened against the U.S. dollar and had a significant impact on sales and operating income. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" within the Company's Annual Report on Form&nbsp;10-K for 2002 for additional discussion of the foreign currency impact on the Company's
results of operations. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the three months ended March 29, 2003, the result of a uniform 10% strengthening in the value of the dollar relative to the currencies in which the Company's sales are denominated
would have decreased operating income, before special items, by approximately $1.1 million. This calculation assumes that each exchange rate would change in the same direction relative to the U.S.
dollar. In addition to the direct effects of changes in exchange rates, which are a changed dollar value of the resulting sales, changes in exchange rates also affect the volume of sales or the
foreign currency sales price as competitors' products become more or less attractive. The Company's sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in
a potential change in sales levels or local currency prices. </FONT></P>

<P><FONT SIZE=2><B>Raw Material and Commodity Risks  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The primary raw materials used in the manufacture of most of the Company's products are polypropylene and polyester fiber, polyethylene and polypropylene resin,
and, to a lesser extent, rayon, tissue paper and cotton. The prices of polypropylene and polyethylene are a function of, among other things, manufacturing capacity, demand and the price of crude oil
and natural gas liquids. During January&nbsp;2003, several suppliers of key raw materials, including polypropylene and polyethylene, announced price increases to take effect beginning as early as
February&nbsp;2003. To the extent the Company is not able to pass along all or a portion of such increased prices of raw materials, the Company's cost of goods sold would increase and its EBITDA
would correspondingly decrease. By way of example, if the price of polypropylene were to rise $.01 per pound, and the Company was not able to pass along any of such increase to its customers, the
Company would realize a decrease of approximately $2.0&nbsp;million on an annualized basis in its reported EBITDA. There can be no assurance that the prices of polypropylene and polyethylene will
not continue to increase in the future or that the Company will be able to pass on any increases to its customers. Material increases in raw material prices that cannot be passed on to customers could
have a material adverse effect on the Company's results of operations and financial condition. </FONT></P>


<P><FONT SIZE=2><B>Safe Harbor Statement  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Form&nbsp;10-Q contains forward-looking statements within the meaning of Section&nbsp;27A of the Securities Act of 1933, as amended, and
Section&nbsp;21E of the Securities Exchange Act of 1934, as amended. In addition, from time to time, the Company or its representatives have made or may </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>36</FONT></P>

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<P><FONT SIZE=2>make
forward-looking statements orally or in writing. Such forward-looking statements may be included in, but not limited to, various filings made by the Company with the Securities and Exchange
Commission, press releases or oral statements made with the approval of an authorized executive officer of the Company. Actual results could differ materially from those projected or suggested in any
forward-looking statements as a result of a variety of factors and conditions which include, but are not limited to: the emergence by the Company and its domestic subsidiaries from Chapter 11 of the
United States Bankruptcy Code, adverse economic conditions, demand for the Company's products, competition in the Company's markets, dependence on key customers, increases in raw material costs, the
amount of capital expenditures, fluctuations in foreign currency exchange rates, the Company's substantial leverage position, potential defaults in the Company's outstanding indebtedness, and other
risks detailed in documents filed by the Company with the Securities and Exchange Commission. </FONT></P>

<P><FONT SIZE=2><A
NAME="fw3070_item_4._controls_and_procedures"> </A>
<A NAME="toc_fw3070_2"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 4. CONTROLS AND PROCEDURES    <BR>    </B></FONT></P>

<P><FONT SIZE=2><B>Evaluation of Disclosure Controls and Procedures  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's principal executive officer and its principal financial officer, after evaluating the effectiveness of the Company's disclosure controls and
procedures (as defined in Exchange Act Rules&nbsp;13a-14 and 15d-14), have concluded that the Company's disclosure controls and procedures were adequate and effective to
ensure that material information relating to the Company and its consolidated subsidiaries would be made known to them by others within those entities. </FONT></P>

<P><FONT SIZE=2><B>Changes in Internal Controls  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were no significant changes in the Company's internal controls or in other factors that could significantly affect the Company's disclosure controls and
procedures subsequent to the date of their evaluation, nor were there any significant deficiencies or material weaknesses in the Company's internal controls. As a result, no corrective actions were
required or undertaken. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>37</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ja3070_part_ii._other_information"> </A>
<A NAME="toc_ja3070_1"> </A>
<BR></FONT><FONT SIZE=2><B>PART II. OTHER INFORMATION    <BR>    </B></FONT></P>

<P><FONT SIZE=2><A
NAME="ja3070_item_1._legal_proceedings"> </A>
<A NAME="toc_ja3070_2"> </A></FONT> <FONT SIZE=2><B>ITEM 1. LEGAL PROCEEDINGS    <BR>    </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable. </FONT></P>

<P><FONT SIZE=2><A
NAME="ja3070_item_2._changes_in_securitites"> </A>
<A NAME="toc_ja3070_3"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 2. CHANGES IN SECURITITES    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Note&nbsp;4. "Recapitalization" for a discussion of the Modified Plan. </FONT></P>

<P><FONT SIZE=2><A
NAME="ja3070_item_3._defaults_upon_senior_securities"> </A>
<A NAME="toc_ja3070_4"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 3. DEFAULTS UPON SENIOR SECURITIES    <BR>    </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable. </FONT></P>

<P><FONT SIZE=2><A
NAME="ja3070_item_4._submission_of_m__ja302359"> </A>
<A NAME="toc_ja3070_5"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLERS    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On November&nbsp;27, 2002, the Company distributed its Modified Plan to its Securities holders, which was voted on and approved by such holders as of
January&nbsp;16, 2003. See Note&nbsp;4. "Recapitalization" for a discussion of the Modified Plan. </FONT></P>

<P><FONT SIZE=2><A
NAME="ja3070_item_5._other_information"> </A>
<A NAME="toc_ja3070_6"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 5. OTHER INFORMATION    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable. </FONT></P>

<P><FONT SIZE=2><A
NAME="ja3070_item_6._exhibits_and_reports_on_form_8-k"> </A>
<A NAME="toc_ja3070_7"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K    <BR>    </B></FONT></P>

<P><FONT SIZE=2><B>Exhibits  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits required to be filed with this report on Form&nbsp;10-Q are listed in the following Exhibit Index. </FONT></P>


<P><FONT SIZE=2><B>Reports on Form&nbsp;8-K  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;10, 2003, the Company filed a report on Form&nbsp;8-K regarding the recent increase in raw material cost and the estimated effect
on the Company's EBITDA. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>38</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="jc3070_signatures"> </A>
<A NAME="toc_jc3070_1"> </A>
<BR></FONT><FONT SIZE=2><B>SIGNATURES    <BR>    </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized. </FONT></P>

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<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="45%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3><FONT SIZE=2>POLYMER GROUP,&nbsp;INC.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>JAMES L. SCHAEFFER</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> James L. Schaeffer<BR></FONT> <FONT SIZE=2><I>Chief Executive Officer and<BR>
Acting Principal Financial Officer</I></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%"><BR><FONT SIZE=2> May&nbsp;19, 2003</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
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<P ALIGN="CENTER"><FONT SIZE=2>39</FONT></P>

<HR NOSHADE>
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NAME="page_je3070_1_40"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="je3070_certification_of_chief_executive_officer"> </A>
<A NAME="toc_je3070_1"> </A>
<BR></FONT><FONT SIZE=2><B>CERTIFICATION OF CHIEF EXECUTIVE OFFICER    <BR>    </B></FONT></P>

<P><FONT SIZE=2>I,
James L. Schaeffer, certify that: </FONT></P>

<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>1.</FONT></DT><DD><FONT SIZE=2>I
have reviewed this quarterly report on Form&nbsp;10-Q of Polymer Group,&nbsp;Inc.;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>2.</FONT></DT><DD><FONT SIZE=2>Based
on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>3.</FONT></DT><DD><FONT SIZE=2>Based
on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>4.</FONT></DT><DD><FONT SIZE=2>The
registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules&nbsp;13a-14 and 15d-14) for the registrant and have:
<BR><BR></FONT>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>a)</FONT></DT><DD><FONT SIZE=2>designed
such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this quarterly report is being prepared;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>b)</FONT></DT><DD><FONT SIZE=2>evaluated
the effectiveness of the registrant's disclosure controls and procedures as of a date within 90&nbsp;days prior to the filing date of this quarterly report (the "Evaluation
Date"); and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>c)</FONT></DT><DD><FONT SIZE=2>presented
in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
<BR><BR></FONT></DD></DL>
</DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>5.</FONT></DT><DD><FONT SIZE=2>The
registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of
directors:
<BR><BR></FONT>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>a)</FONT></DT><DD><FONT SIZE=2>all
significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial
data and have identified for the registrant's auditors any material weaknesses in internal controls; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>b)</FONT></DT><DD><FONT SIZE=2>any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
<BR><BR></FONT></DD></DL>
</DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>6.</FONT></DT><DD><FONT SIZE=2>The
registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. </FONT></DD></DL>
<BR>

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<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="42%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="55%"><FONT SIZE=2>Date: May 19, 2003</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="42%"><FONT SIZE=2>/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>JAMES L. SCHAEFFER</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> James L. Schaeffer<BR></FONT> <FONT SIZE=2><I>Chief Executive
Officer</I></FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2>40</FONT></P>

<HR NOSHADE>
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<A NAME="page_je3070_1_41"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><B>CERTIFICATION OF ACTING CHIEF FINANCIAL OFFICER  </B></FONT></P>

<P><FONT SIZE=2>I,
James&nbsp;L. Schaeffer, certify that: </FONT></P>

<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>1.</FONT></DT><DD><FONT SIZE=2>I
have reviewed this quarterly report on Form&nbsp;10-Q of Polymer Group,&nbsp;Inc.;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>2.</FONT></DT><DD><FONT SIZE=2>Based
on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>3.</FONT></DT><DD><FONT SIZE=2>Based
on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>4.</FONT></DT><DD><FONT SIZE=2>The
registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules&nbsp;13a-14 and 15d-14) for the registrant and have:
<BR><BR></FONT>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>a)</FONT></DT><DD><FONT SIZE=2>designed
such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this quarterly report is being prepared;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>b)</FONT></DT><DD><FONT SIZE=2>evaluated
the effectiveness of the registrant's disclosure controls and procedures as of a date within 90&nbsp;days prior to the filing date of this quarterly report (the "Evaluation
Date"); and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>c)</FONT></DT><DD><FONT SIZE=2>presented
in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
<BR><BR></FONT></DD></DL>
</DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>5.</FONT></DT><DD><FONT SIZE=2>The
registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of
directors:
<BR><BR></FONT>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>a)</FONT></DT><DD><FONT SIZE=2>all
significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial
data and have identified for the registrant's auditors any material weaknesses in internal controls; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>b)</FONT></DT><DD><FONT SIZE=2>any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
<BR><BR></FONT></DD></DL>
</DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>6.</FONT></DT><DD><FONT SIZE=2>The
registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. </FONT></DD></DL>
<BR>

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<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="42%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="55%"><FONT SIZE=2>Date: May 19, 2003</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="42%"><FONT SIZE=2>/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>JAMES L. SCHAEFFER</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> James L. Schaeffer<BR></FONT> <FONT SIZE=2><I>Acting Chief Financial
Officer*</I></FONT></TD>
</TR>
</TABLE>
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<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD><FONT SIZE=2>James&nbsp;G.
Boyd, the Company's Chief Financial Officer, was involved in an automobile accident on May&nbsp;8, 2003 and has been hospitalized since such date. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>41</FONT></P>

<HR NOSHADE>
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NAME="page_ka3070_1_42"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ka3070_exhibit_index"> </A>
<A NAME="toc_ka3070_1"> </A>
<BR></FONT><FONT SIZE=2><B>EXHIBIT INDEX    <BR>    </B></FONT></P>

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<TR VALIGN="BOTTOM">
<TH WIDTH="10%" ALIGN="CENTER"><FONT SIZE=1><B>Exhibit<BR>
Number</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="88%" ALIGN="CENTER"><FONT SIZE=1><B>Document Description</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>3.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="88%"><FONT SIZE=2>Amended and Restated Certificate of Incorporation of Polymer Group, Inc.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>3.2</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="88%"><FONT SIZE=2>Amended and Restated By-Laws of Polymer Group, Inc.</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>4.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="88%"><FONT SIZE=2>Indenture, dated as of March 5, 2003, among the Polymer Group, Inc., the Guarantors named therein and Wilmington Trust Company, as trustee.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>4.2</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="88%"><FONT SIZE=2>Senior Subordinated Note Purchase Agreement, among Polymer Group, Inc., the Guarantors named therein and MatlinPatterson Global Opportunities Partners LP</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="88%"><FONT SIZE=2>Third Amended, Restated and Consolidated Credit Agreement, dated March 5, 2003, by and among the Company, the Guarantors named therein, the lenders named therein and JPMorgan Chase Bank, as agent.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.2</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="88%"><FONT SIZE=2>Amendment No. 1 to Third Amended, Restated and Consolidated Credit Agreement, dated as of March 29, 2003, by and among the Company, the Guarantors named therein, the lenders named therein and JPMorgan Chase Bank, as
agent.</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.3</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="88%"><FONT SIZE=2>Shareholders Agreement, dated March 5, 2003, among Polymer Group, Inc. and certain of its shareholders.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.4</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="88%"><FONT SIZE=2>Letter Agreement, dated April 11, 2003, between Polymer Group, Inc. and MatlinPatterson Global Opportunities Partners LP</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>99.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="88%"><FONT SIZE=2>Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>99.2</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="88%"><FONT SIZE=2>Certification by the Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2>42</FONT></P>

<HR NOSHADE>
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<BR>
<P><br><A NAME="03CHI3070_1">QuickLinks</A><br></P><!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_fa3070_1">INDEX TO FORM 10-Q</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_fc3070_1">ITEM 1. FINANCIAL STATEMENTS</A></FONT><BR>
<!-- TOC_BEGIN -->
<UL>
<FONT SIZE=2><A HREF="#toc_fu3070_1">ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</A></FONT><BR>
</UL>
<FONT SIZE=2><A HREF="#toc_fu3070_2">Liquidity and Capital Resouces</A></FONT><BR>
<!-- TOC_BEGIN -->
<UL>
<FONT SIZE=2><A HREF="#toc_fw3070_1">ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_fw3070_2">ITEM 4. CONTROLS AND PROCEDURES</A></FONT><BR>
</UL>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_ja3070_1">PART II. OTHER INFORMATION</A></FONT><BR>
<UL>
<FONT SIZE=2><A HREF="#toc_ja3070_2">ITEM 1. LEGAL PROCEEDINGS</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_ja3070_3">ITEM 2. CHANGES IN SECURITITES</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_ja3070_4">ITEM 3. DEFAULTS UPON SENIOR SECURITIES</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_ja3070_5">ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLERS</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_ja3070_6">ITEM 5. OTHER INFORMATION</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_ja3070_7">ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K</A></FONT><BR>
</UL>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_jc3070_1">SIGNATURES</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_je3070_1">CERTIFICATION OF CHIEF EXECUTIVE OFFICER</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_ka3070_1">EXHIBIT INDEX</A></FONT><BR>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>3
<FILENAME>a2111067zex-3_1.txt
<DESCRIPTION>EXHIBIT 3.1
<TEXT>
<Page>

                                                                    Exhibit 3.1

                              AMENDED AND RESTATED

                          CERTIFICATE OF INCORPORATION

                                       OF

                               POLYMER GROUP, INC.

                                   ARTICLE ONE

     The name of the Corporation is POLYMER GROUP, INC.

                                   ARTICLE TWO

     The address of the Corporation's registered office in the State of Delaware
is 32 Loockerman Square, Suite L-100, Dover, Delaware, County of Kent. The name
of its registered agent at such address is The Prentice-Hall Corporation System,
Inc. The registered office and/or registered agent of the Corporation may be
changed from time to time by action of the board of directors of the Corporation
(the "Board of Directors").

                                  ARTICLE THREE

     The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware (the "Delaware
General Corporation Law") either alone or with others through wholly or
partially owned subsidiaries, as a partner (limited or general) in any
partnership, as a joint venturer in any joint venture, or otherwise.

                                  ARTICLE FOUR

     Section 1. AUTHORIZED SHARES.

            (a) The total number of shares of capital stock which the
Corporation has authority to issue is 21,220,086 shares, consisting of:

            (i)     19,279,388 shares of Class A Common Stock, par value $.01
per share ("Class A Common");

            (ii)    800,000 shares of Class B Common Stock, par value $.01 per
share ("Class B Common");

            (iii)   118,453 shares of Class C Common Stock, par value $.01 per
share ("Class C Common");

            (iv)    498,688 shares of Class D Common Stock, par value $.01 per
share ("Class D Common"); and

<Page>

            (v)     523,557 shares of Class E Common Stock, par value $.01 per
share ("Class E Common").

     The Class A Common, Class B Common, Class C Common, Class D Common and
Class E Common are referred to collectively as the "Common Stock." The shares of
Common Stock shall have the rights, preferences and limitations set forth below.

            (b) Notwithstanding anything herein to the contrary, the Corporation
shall not be authorized to issue non-voting equity securities of any class,
series or other designation to the extent prohibited by Section 1123(a)(6) of
title 11 of the United States Code (the "Bankruptcy Code"); provided, however,
that the foregoing restriction shall (i) have no further force and effect beyond
that required under Section 1123(a)(6) of the Bankruptcy Code, (ii) only have
such force and effect for so long as such Section 1123(a)(6) is in effect and
applies to the Corporation and (iii) be deemed void or eliminated if required
under applicable law.

     Section 2. The preferences, limitations, designations and relative rights
of the shares of each class and the qualifications, limitations or restrictions
thereof shall be as follows:

            (a) COMMON STOCK.

     Except as otherwise provided in this Section 2(a) of Article Four or as
otherwise required by applicable law, all shares of Class A Common, Class B
Common, Class C Common, Class D Common and Class E Common shall be identical in
all respects and shall entitle the holders thereof to the same rights,
preferences and privileges, subject to the same qualifications, limitations and
restrictions, as set forth herein.

                    (i)     VOTING RIGHTS. Except as otherwise required by
applicable law, all holders of Class A Common, Class B Common, Class C Common,
Class D Common and Class E Common shall be entitled to one vote per share on all
matters to be voted on by the Corporation's stockholders, and the holders of
Class A Common, Class B Common, Class C Common, Class D Common and Class E
Common shall vote together as a single class.

                    (ii)    DISTRIBUTIONS. At the time of each Distribution,
such Distribution shall be made to the holders of issued and outstanding shares
of Class A Common, Class B Common, Class C Common, Class D Common and Class E
Common in the following amounts and priority:

                            (A)   The holders of Class A Common, Class B Common
     and Class C Common, as a group, shall be entitled to receive all or a
     portion of such Distribution (ratably among such holders on a
     share-for-share basis based upon the number of shares of Class A Common,
     Class B Common and Class C Common held by each such holder as of the time
     of such Distribution) in a cumulative amount equal to the aggregate Initial
     Equity Hurdle Distribution, and no Distribution or any portion thereof
     shall be made under paragraphs (ii)(B) or (ii)(C) below until the entire
     amount of the Initial Equity Hurdle Distribution payable on the outstanding
     shares of Class A Common, Class B Common and Class C Common as of the time
     of such Distribution has been paid in full.

                                        2
<Page>

                            (B)   Once the Initial Equity Hurdle Distribution
     has been paid in full, the holders of Class A Common, Class B Common, Class
     C Common and Class D Common, as a group, shall be entitled to receive all
     or a portion of such further Distributions (ratably among such holders on a
     share-for-share basis based upon the number of shares of Class A Common,
     Class B Common, Class C Common and Class D Common held by each such holder
     as of the time of such Distribution) in a cumulative amount equal to the
     Subsequent Equity Hurdle Distribution, and no Distribution or any portion
     thereof shall be made under paragraph (ii)(C) below until the entire amount
     of the Subsequent Equity Hurdle Distribution payable on the outstanding
     shares of Class A Common, Class B Common, Class C Common and Class D Common
     has been paid in full.

                            (C)   After the required amounts of the Initial
     Equity Hurdle Distribution and Subsequent Equity Hurdle Distribution have
     been paid in full, the holders of Class A Common, Class B Common, Class C
     Common, Class D Common and Class E Common, as a group, shall be entitled to
     receive all of such further Distributions (ratably among such holders on a
     share-for-share basis based upon the number of shares of Common Stock held
     by each such holder as of the time of such Distribution).

                            (D)   In determining whether the Initial Equity
     Hurdle Distribution or Subsequent Equity Hurdle Distribution has been
     satisfied, all Distributions made from March 5, 2003 until the date of
     determination shall be aggregated.

                    (iii)   CLASS C DIVIDEND. On the Class C Dividend Payment
Date, the Corporation shall (to the extent permitted under the General
Corporation Law of Delaware) pay a cash dividend on each share of Class C Common
(the "CLASS C DIVIDEND") equal to a pro rata portion of the lesser of (i) 1% per
annum of the aggregate principal amount outstanding under the SPE Notes and (ii)
$1,000,000. The Class C Dividend shall be payable on January 1 of each year,
beginning January 1, 2004 (the "CLASS C DIVIDEND PAYMENT DATE") and shall
terminate on the maturity date of the SPE Notes .

                    (iv)    SALE TRANSACTION. In the event the Corporation is
acquired by any Person in a Sale Transaction, proper provision shall be made by
the Corporation to ensure that the holders of Common Stock are treated in
accordance with the provisions of Section 2(a)(ii) of this Article Four if and
only to the extent that a Distribution of the proceeds of such Sale Transaction
is required to be made hereunder. For purposes of ensuring compliance with the
provisions of Section 2(a)(ii) of this Article Four, all amounts received by any
holders of Common Stock in their sole capacity as a holder of Common Stock in
connection with a Sale Transaction shall be treated as a Distribution from the
Corporation to holders of Common Stock, and any non-cash consideration received
by a holder of Common Stock in their sole capacity as a holder of Common Stock
will be valued at its fair market value, on a date selected by the Board of
Directors within ten days of its distribution to holders of Common Stock, as
determined by the Board of Directors in good faith.

                    (v)     STOCK SPLITS AND STOCK DIVIDENDS. The Corporation
shall not in any manner subdivide (by stock split, stock dividend or otherwise)
or combine (by stock split,

                                        3
<Page>

stock dividend or otherwise) the outstanding Common Stock of one class unless
the outstanding Common Stock of all the other classes shall be proportionately
subdivided or combined. All such subdivisions and combinations shall be payable
only in Class A Common to the holders of Class A Common, in Class B Common to
the holders of Class B Common, in Class C Common to the holders of Class C
Common, in Class D Common to the holders of Class D Common and in Class E Common
to the holders of the Class E Common.

                    (vi)    REGISTRATION OF TRANSFER. The Corporation shall keep
at its principal office (or such other place as the Corporation reasonably
designates) a register for the registration of shares of Common Stock. Upon the
surrender of any certificate representing shares of any class of Common Stock at
such place, the Corporation shall, at the request of the registered holder of
such certificate, execute and deliver a new certificate or certificates in
exchange therefor representing in the aggregate the number of shares of such
class represented by the surrendered certificate, and the Corporation forthwith
shall cancel such surrendered certificate. Each such new certificate shall be
registered in such name and shall represent such number of shares of such class
as is requested by the holder of the surrendered certificate and shall be
substantially identical in form to the surrendered certificate. The issuance of
new certificates shall be made without charge to the holders of the surrendered
certificates for any issuance tax in respect thereof or other cost incurred by
the Corporation in connection with such issuance.

                    (vii)   REPLACEMENT. Upon receipt of evidence reasonably
satisfactory to the Corporation (an affidavit of the registered holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more shares of any class of Common Stock, and
in the case of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Corporation (provided that if the holder is a
financial institution or other institutional investor its own agreement shall be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.

                    (viii)  NOTICES. All notices referred to herein shall be in
writing, shall be delivered personally or by first class mail, postage prepaid,
and shall be deemed to have been given when so delivered or mailed to the
Corporation at its principal executive offices and to any stockholder at such
holder's address as it appears in the stock records of the Corporation (unless
otherwise specified in a written notice to the Corporation by such holder).

                    (ix)    AMENDMENT AND WAIVER. No amendment or waiver of any
provision of this Article Four shall be effective without the prior written
consent of the holders of a majority of the then outstanding shares of Common
Stock voting as a single class; provided that no amendment directly to any terms
or provisions of any class of Common Stock that materially and adversely affects
such class of Common Stock shall be effective without the prior consent of the
holders of a majority of the then outstanding shares of such class of Common
Stock.

                                        4
<Page>

                    (x)     CERTAIN ISSUANCES OF ADDITIONAL SHARES OF CLASS A
COMMON STOCK. If at any time the Corporation shall issue any additional shares
of Class A Common Stock upon conversion of the outstanding Convertible Notes,
then each holder of a share of Class B Common Stock shall receive additional
shares of Class B Common Stock in an amount per share so that the holders of the
Class B Common, as a group, continue to hold the same percentage of the combined
outstanding Class A Common, Class B Common and Class C Common immediately
following such issuance as they held immediately prior to such issuance.

                    (xi)    CONVERSION.

                    (A)     Each holder of issued and outstanding shares of
Class B Common, Class C Common, Class D Common and Class E Common (collectively,
"Convertible Stock") shall be entitled at any time to convert any or all of the
shares of such holder's Convertible Stock into an equal number of shares of
Class A Common.

                    (B)     Each conversion of shares of Convertible Stock into
shares of Class A Common shall be effected by the surrender of the certificate
or certificates representing the shares to be converted at the office of the
transfer agent for the Convertible Stock (or at the principal office of the
Corporation if the Corporation serves as its own transfer agent for the
Convertible Stock) at any time during normal business hours, together with a
written notice by the holder of such Convertible Stock stating that such holder
desires to convert the shares, or a stated number of the shares, of such
Convertible Stock represented by such certificate or certificates into shares of
Class A Common. Each conversion shall be deemed to have been effected as of the
close of business on the date on which such certificate or certificates have
been surrendered and such notice has been received, and at such time the rights
of the holder of the converted shares of Convertible Stock as such holder shall
cease and the person or persons in whose name or names the certificate or
certificates for shares of Class A Common are to be issued upon such conversion
shall be deemed to have become the holder or holders of record of the shares of
Class A Common represented thereby.

                    (C)     Promptly after the surrender of certificates and the
receipt of written notice, the transfer agent for the Convertible Stock or the
Corporation, as the case may be, shall issue and deliver in accordance with the
surrendering holder's instructions (a) the certificate or certificates for the
Class A Common issuable upon such conversion and (b) a certificate representing
any shares of Convertible Stock which were represented by the certificate or
certificates delivered to the Corporation in connection with such conversion but
which were not converted.

                    (D)     The issuance of certificates for Class A Common upon
conversion of shares of Convertible Stock shall be made without charge to the
holders of such shares for any issuance tax in respect thereof or other cost
incurred by the Corporation in connection with such conversion and the related
issuance of Class A Common; provided that the Corporation shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Class A Common in a name other than that in
which the shares of Convertible Stock were registered and no such issuance or
delivery shall be made unless and until the person or entity requesting such
issuance has paid to the Corporation the amount of any such tax or has
established to the satisfaction of the Corporation that such tax has been paid.

                                        5
<Page>

                    (E)     The Corporation shall at all times when Convertible
Stock shall be issued and outstanding reserve and keep available out of its
authorized but unissued shares of Class A Common, solely for the purpose of
issuance upon the conversion of the Convertible Stock such number of duly
authorized shares of Class A Common as shall from time to time be sufficient to
effect the conversion of all issued and outstanding Convertible Stock. All
shares of Class A Common which are so issuable shall, when issued, be duly and
validly issued, fully paid and nonassessable and free from all liens created by
the Corporation. The Corporation shall take all such actions as may be necessary
to assure that all such shares of Class A Common may be so issued without
violation of any applicable law or governmental regulation or any requirements
of any domestic securities exchange upon which shares of Class A Common Stock
may be listed (except for official notice of issuance which shall be immediately
transmitted by the Corporation upon issuance).

                    (F)     Neither the transfer agent for the Convertible
Stock, if any, nor the Corporation shall close its books against the transfer of
shares of Common Stock in any manner which would interfere with the timely
conversion of any shares of Convertible Stock. Any shares of Convertible Stock
so converted shall be retired and cancelled and shall not be reissued, and the
Corporation (without the need for stockholder action unless otherwise required
by applicable state or Federal laws or regulations or rules of any stock
exchange or automated quotation system) may from time to time take such
appropriate action as may be necessary to reduce the authorized number of shares
of Convertible Stock accordingly.

            (b) DEFINITIONS. Capitalized terms used in Section 1 of this Article
Four and Section 2(a) of this Article Four shall have the meanings set forth
below.

            "AFFILIATE" of any Person means any Person, directly or indirectly,
through one or more intermediaries, controlling, controlled by, or under common
control with such Person. The term "control," as used in the immediately
preceding sentence, shall mean with respect to a corporation or limited
liability company, the right to exercise, directly or indirectly, more than
fifty percent (50%) of the voting rights attributable to the controlled
corporation or limited liability company, and, with respect to any individual,
partnership, trust, other entity or association, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the controlled entity or the actions of the individual, as the case
may be.

            "CONVERTIBLE NOTES: means the 10% convertible subordinated notes due
2007 issued by the Corporation pursuant to the Indenture by and among the
Corporation, the Guarantors named therein and Wilmington Trust Company, as
trustee.

            "DISTRIBUTION" means each distribution on the Common Stock
(excluding all Class C Dividends) made by the Corporation to holders of Common
Stock, in their capacity as such, whether in cash, property, or equity
securities of the Corporation without consideration and whether by dividend,
liquidating distributions or otherwise; provided that (i) any exchange of any
shares of Common Stock for other shares of Common Stock or other equity
securities issued by the Company, (ii) any subdivision (by stock split, stock
dividend or otherwise) of any outstanding shares of Common Stock, (iii) any
combination (by stock split, stock dividend or otherwise) of any outstanding
shares of Common Stock, (iv) any issuance of shares pursuant to a

                                        6
<Page>

rights offering to all holders of Common Stock, (v) any issuance in accordance
with Article II of the Shareholders Agreement, dated as of March 5, 2003, by and
among the Corporation and the other parties identified therein, (v) any issuance
of shares in accordance with an anti-takeover plan in the form of a any
shareholder rights or similar plan approved by the Board of Directors of the
Corporation, (vii) any payment of principal or interest on the Convertible
Notes, (viii) any issuance of shares of Class A Common Stock upon conversion of
the Convertible Notes (including any shares of Class A Common Stock issued as a
result of the antidilution provisions thereof), (ix) any payment of principal or
interest on the Senior Subordinated Notes, or (x) any issuance of shares of
Class B Common Stock pursuant to Section 2(a)(x) of this Article Four shall not
be a Distribution.

            "INITIAL EQUITY HURDLE DISTRIBUTION" means Distributions to the
holders of Common Stock in a cumulative amount equal to $600,000,000.

            "PERSON" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

            "SALE TRANSACTION" means the acquisition of (i) all or substantially
all of the assets of the Corporation or, (ii) at least 51% of the voting capital
stock of the Corporation, in each case, by any Person, whether pursuant to a
sale, merger, consolidation, reclassification, reorganization, recapitalization,
purchase of stock, tender offer, purchase of assets, lease or otherwise;
PROVIDED that a transfer of voting capital stock by GOF to an Affiliate of GOF
shall not constitute a Sale Transaction.

            "SENIOR SUBORDINATED NOTES" means any of the 10% senior subordinated
promissory notes issued pursuant to the Senior Subordinated Note Purchase
Agreement, dated as of March 5, 2003, among the Corporation, each of the
entities listed as guarantors on the signature pages thereto and MatlinPatterson
Global Opportunities Partners LP.

            "SPE NOTES" means those promissory notes issued by PGI Special
Purpose Holdings, LLC on March 5, 2003 pursuant to the Corporation's Joint
Second Amended Modified Plan of Reorganization, dated January 16, 2003 with an
original maturity date of December 31, 2007.

            "SUBSEQUENT EQUITY HURDLE DISTRIBUTION" means Distributions to
holders of Common Stock in a cumulative amount greater than $600,000,000 and up
to $1,150,000,000.

                                  ARTICLE FIVE

     The Corporation is to have perpetual existence.

                                   ARTICLE SIX

     The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors, and the directors need not be elected
by ballot unless required by the By-laws of the Corporation. In furtherance and
not in limitation of the powers conferred by statute,

                                        7
<Page>

except as set forth in the By-laws of the Corporation the Board of Directors of
the Corporation is expressly authorized to make, alter, amend, change, add to or
repeal the By-laws of the Corporation.

                                  ARTICLE SEVEN

     Meetings of stockholders may be held within or without the State of
Delaware, as the By-laws of the Corporation may provide. The books of the
Corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the Board of Directors or in the By-laws
of the Corporation. The Board of Directors shall from time to time decide
whether and to what extent and at what times and under what conditions and
requirements the accounts and books of the Corporation, or any of them, except
the stock book, shall be open to the inspection of the stockholders, and no
stockholder shall have any right to inspect any books or documents of the
Corporation except as conferred by the laws of the State of Delaware or as
authorized by the Board of Directors.

                                  ARTICLE EIGHT

     Special meetings of stockholders of the Corporation may be called only by
the chairman of the board, the president, the Board of Directors, written notice
of at least two directors then in office or stockholders of the Corporation
holding at least 25% of the outstanding shares of Common Stock in accordance
with the By-laws. Any action required or permitted to be taken by the
stockholders of the Corporation may be effected by the written consent of the
stockholders of the Corporation necessary to take such action in lieu of a
meeting of the stockholders of the Corporation.

                                  ARTICLE NINE

     Section 1. The number of directors which shall constitute the whole Board
of Directors shall be designated in the By-laws of the Corporation. Directors
shall be elected for a term of office that expires at the next succeeding annual
meeting of stockholders and shall hold office until their successors have been
elected and qualified.

     A director may be removed from office with or without cause by affirmative
vote of a majority of the outstanding shares of Common Stock voting at a meeting
or acting by written consent in lieu of an annual or special meeting of the
stockholders.

     Section 2. Except to the extent prohibited by law or otherwise set forth
herein or in the By-laws of the Corporation, the Board of Directors shall have
the right (which, to the extent exercised, shall be exclusive) to establish the
rights, powers, duties, rules and procedures that from time to time shall govern
the Board of Directors and each of its members, including, without limitation,
the vote required for any action by the Board of Directors, and that from time
to time shall affect the directors' power to manage the business and affairs of
the Corporation .

                                   ARTICLE TEN

     Section 1. To the fullest extent permitted by the Delaware General
Corporation Law as it now exists or may hereafter be amended (but, in the case
of any such amendment, only to the

                                        8
<Page>

extent that such amendment permits the Corporation to provide broader
indemnification rights than permitted prior thereto), no director of the
Corporation shall be liable to the Corporation or its stockholders for monetary
damages arising from a breach of fiduciary duty owed to the Corporation or its
stockholders.

     Section 2. Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.

                                 ARTICLE ELEVEN

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

                                 ARTICLE TWELVE

     The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation in
the manner now or hereafter prescribed herein and by the laws of the State of
Delaware, and all rights conferred upon stockholders herein are granted subject
to this reservation; provided that any amendment, alteration, change or repeal
of Sections 2(a)(i), (ii), (iii), (iv), (v), (ix) or (x) or 2(b) of Article IV,
Article VII, Article IX, Article XII or any amendment, alteration, change or
repeal of Article X that results in an adverse effect upon the limitation of
liability provided to directors therein, in each case, shall require the
approval of at least one Non-GOF Board Member (as such term is defined in the
Shareholders Agreement dated as of March 5, 2003, by and among the Corporation,
MatlinPatterson Global Opportunities Partners LP and the other parties
identified therein (the "Shareholders Agreement")) and, in the case of any such
amendment, alteration, change or repeal of Article X, the director adversely
affected; provided further that the foregoing approval of at least one Non-GOF
Board Member shall only be required if both (a) at lease one Non-GOF Board
Member has the right to a seat on the board of directors pursuant to the
Shareholders Agreement, and (b) at the time such approval is sought one of the
following is true (i) at least one Non-GOF Board Member is a member of the board
of directors, (ii) if a Non-GOF Board Member is not a member of the board of
directors, a Non-GOF Board Member shall have been a member of the board of
directors within sixty days of such time, or (iii) if a Non-GOF Board Member is
not, and, within sixty days of such time, has not been, a member of the board of
directors, a nomination or designation of a proposed Non-GOF Board Member shall
have been made in good faith pursuant to the terms of the Shareholders Agreement
and not withdrawn, and such nominee or designee shall not have refused or
declined appointment to the board of directors.

                                        9

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.2
<SEQUENCE>4
<FILENAME>a2111067zex-3_2.txt
<DESCRIPTION>EXHIBIT 3.2
<TEXT>
<Page>

                                                                    Exhibit 3.2

                          AMENDED AND RESTATED BY-LAWS
                                       OF
                               POLYMER GROUP, INC.
                             A DELAWARE CORPORATION

                                    ARTICLE I
                                     OFFICES

     Section 1.    REGISTERED OFFICE. The registered office of the Corporation
in the State of Delaware shall be located at 32 Loockerman Square, Suite L-100,
Dover, Delaware, County of Kent. The name of the Corporation's registered agent
at such address is The Prentice-Hall Corporation System, Inc. The registered
office and/or registered agent of the Corporation may be changed from time to
time by action of the board of directors.

     Section 2.    OTHER OFFICES. The Corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the Corporation may
require.

                                   ARTICLE II
                            MEETINGS OF STOCKHOLDERS

     Section 1.    PLACE AND TIME OF MEETINGS. An annual meeting of the
stockholders shall be held each year for the purpose of electing directors and
conducting such other proper business as may come before the meeting. Unless
otherwise directed by the board of directors, annual meetings of stockholders
shall be held on the fourth Friday in May beginning in 2003, if not a legal
holiday and, if a legal holiday, then on the first preceding regular business
day. At the annual meeting, stockholders shall elect directors and transact such
other business as properly may be brought before the meeting pursuant to Article
II, Section 11 hereof.

     Section 2.    SPECIAL MEETINGS. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Such meetings may be called at any time by
the chairman of the board, the president, the board of directors, any two
directors or stockholders of the Corporation holding at least 25% of the
outstanding shares of the Corporation's common stock, in each case, by written
notice to the secretary of the Corporation (or, if no secretary is then in
office, an assistant secretary or the chairman of the board or president of the
Corporation). The notice required by the foregoing sentence shall set forth the
date (which shall not be less than twenty (20) nor more than sixty (60) days
after the date of such notice), time and purpose or purposes of the meeting in
reasonable detail. Thereafter, the Corporation promptly shall take all steps
required by this Article II, the General Corporation Law of the State of
Delaware, as amended, the Securities Exchange Act of 1934, as amended, the rules
and regulations promulgated thereunder, and all other applicable laws, rules and
regulations, to call a special meeting of the stockholders on the date and time
and solely for the purpose or purposes set forth in such notice. The only
matters that may be considered at any special meeting of the stockholders are
the matters specified in the notice of the meeting delivered by the Corporation
to the stockholders pursuant to Section 4 of this Article II.

<Page>

     Section 3.    PLACE OF MEETINGS. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
Corporation.

     Section 4.    NOTICE. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting not
less than ten (10) nor more than sixty (60) days before the date of the meeting.
All such notices shall be delivered, either personally or by mail, by or at the
direction of the board of directors, the chairman of the board, the president or
the secretary, and if mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, postage prepaid, addressed to the
stockholder at his, her or its address as the same appears on the records of the
Corporation. Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person attends for the express purpose
of objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened.

     Section 5.    STOCKHOLDERS LIST. The officer having charge of the stock
ledger of the Corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.

     Section 6.    QUORUM. The holders of a majority of the outstanding shares
of capital stock entitled to vote, present in person or represented by proxy,
shall constitute a quorum at all meetings of the stockholders, except as
otherwise provided by statute or by the certificate of incorporation. If a
quorum is not present, the holders of a majority of the shares present in person
or represented by proxy at the meeting, and entitled to vote at the meeting, may
adjourn the meeting to another time and/or place. When a specified item of
business requires a vote by a class or series (if the Corporation shall then
have outstanding shares of more than one class or series) voting as a class, the
holders of a majority of the outstanding shares of such class or series entitled
to vote, present in person or represented by proxy, shall constitute a quorum
(as to such class or series) for the transaction of such item of business.

     Section 7.    ADJOURNED MEETINGS. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is

                                        2
<Page>

fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.

     Section 8.    VOTE REQUIRED. When a quorum is present, the affirmative vote
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless (i) by express provisions of an applicable law or of the
certificate of incorporation a different vote is required, in which case such
express provision shall govern and control the decision of such question, or
(ii) the subject matter is the election of directors, in which case Section 2 of
Article III hereof shall govern and control the approval of such subject matter.

     Section 9.    VOTING RIGHTS. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the Corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of common stock held
by such stockholder.

     Section 10.   PROXIES. Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him or her by
proxy, but no such proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period. A duly executed proxy shall
be irrevocable if it states that it is irrevocable and if, and only as long as,
it is coupled with an interest sufficient in law to support an irrevocable
power. A proxy may be made irrevocable regardless of whether the interest with
which it is coupled is an interest in the stock itself or an interest in the
Corporation generally. Any proxy is suspended when the person executing the
proxy is present at a meeting of stockholders and elects to vote, except that
when such proxy is coupled with an interest and the fact of the interest appears
on the face of the proxy, the agent named in the proxy shall have all voting and
other rights referred to in the proxy, notwithstanding the presence of the
person executing the proxy. At each meeting of the stockholders, and before any
voting commences, all proxies filed at or before the meeting shall be submitted
to and examined by the secretary or a person designated by the secretary, and no
shares may be represented or voted under a proxy that has been found to be
invalid or irregular.

     Section 11.   BUSINESS BROUGHT BEFORE A MEETING. At an annual meeting of
the stockholders, only such business shall be conducted as shall have been
properly brought before the meeting pursuant to this Section 11 of Article II;
provided that, nominations for the election of directors properly made pursuant
to the provisions of Article III, Section 5 of these by-laws shall also be
considered at such annual meeting. To be properly brought before an annual
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the board of directors, (b)
brought before the meeting by or at the direction of the board of directors, or
(c) otherwise properly brought before the meeting by a stockholder. For business
to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the secretary of
the Corporation. To be timely, a stockholder's notice must (x) be delivered to
or mailed and received at the principal executive offices of the Corporation, at
any time prior to the date of the annual meeting, and (y) comply with all
applicable requirements of the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder with respect to the matters set forth in
this

                                        3
<Page>

Section 11 of Article II. A stockholder's notice to the secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting (a) a brief description of the business desired to be brought before the
annual meeting, (b) the name and address, as they appear on the Corporation's
books, of the stockholder proposing such business, (c) the class and number of
shares of the Corporation which are beneficially owned by the stockholder, and
(d) any material interest of the stockholder in such business. Notwithstanding
anything in these by-laws to the contrary, no business shall be conducted at an
annual meeting except in accordance with the procedures set forth in this
Section 11 of Article II. The board of directors shall, if the facts warrant,
determine that the business was not properly brought before the meeting and in
accordance with the provisions of this Section 11 of Article II; and if it
should so determine, the board shall so declare to the meeting and any such
business not properly brought before the meeting shall not be transacted.

     Section 12.   ACTION BY WRITTEN CONSENT. Any action required or permitted
to be taken at any meeting of the stockholders of the Corporation may be taken
by written consent in lieu of a meeting of the stockholders of the Corporation
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted and shall be
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Such delivery shall be by hand or by certified or
registered mail, return receipt requested.

                                   ARTICLE III
                                    DIRECTORS

     Section 1.    GENERAL POWERS. The business and affairs of the Corporation
shall be managed by or under the direction of the board of directors. In
addition to such powers as are herein and in the certificate of incorporation
expressly conferred upon it, the board of directors shall have and may exercise
all the powers of the Corporation, subject to the provisions of the laws of
Delaware, the certificate of incorporation and these by-laws.

     Section 2.    NUMBER, ELECTION AND TERM OF OFFICE. The number of directors
which shall constitute the board shall be nine (9), but the number of directors
may be changed and established from time to time by resolution adopted by
affirmative vote of 50.1% of the outstanding shares of the Corporation's common
stock; provided that no reduction in the number of directors constituting the
board shall result in the removal of any director from the board during such
director's term of office. The board of directors shall not change the number of
directors without shareholder approval as provided in the foregoing sentence.
The directors shall be elected by a plurality of the votes of the shares present
in person or represented by proxy at the meeting and entitled to vote in the
election of directors; provided that, whenever the holders of any class or
series of capital stock of the Corporation are entitled to elect one or more
directors pursuant to the provisions of the certificate of incorporation of the
Corporation (including, but not limited to, for purposes of these by-laws,
pursuant to any duly authorized certificate of designation), such directors
shall be elected by a plurality of the votes of such class

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or series present in person or represented by proxy at the meeting and entitled
to vote in the election of such directors. The directors shall be elected in
this manner at the applicable annual meeting of the stockholders as set forth in
Article II, Section 1, except as provided in Section 4 of this Article III. Each
director elected shall hold office until a successor is duly elected and
qualified or until his or her earlier death, resignation or removal as
hereinafter provided.

     Section 3.    REMOVAL AND RESIGNATION. A director may be removed at any
time with or without cause upon a majority vote of the shares of common stock
voting at a meeting or by stockholders holding a majority of the outstanding
shares of the Corporation's common stock acting by written consent in lieu of a
meeting. Any director may resign at any time upon written notice to the
Corporation.

     Section 4.    VACANCIES. Vacancies and newly created directorships
resulting from any increase in the total number of directors established by the
shareholders pursuant to Section 2 of this Article III may be filled only by the
affirmative vote of the majority of the total number of directors then in
office, though less than a quorum, by a sole remaining director or by the
affirmative vote of 50.1% of the outstanding shares of the Corporation's common
stock. Notwithstanding the foregoing, the board may not fill a vacancy with any
director that was not nominated or designated in accordance with Article IV of
the Shareholders Agreement, dated as of March 5, 2003, by and among the
Corporation, MatlinPatterson Global Opportunities Partners L.P. and the other
parties identified therein (the "Shareholders Agreement"); provided that the
foregoing restriction shall be terminated upon any termination of Article IV of
the Shareholders Agreement. Any director elected to fill a vacancy resulting
from an increase in the number of directors shall hold office until a successor
is duly elected and qualified. A director elected to fill a vacancy not
resulting from an increase in the number of directors shall have the same
remaining term as that of his predecessor. Each director so chosen shall hold
office until a successor is duly elected and qualified or until his or her
earlier death, resignation or removal as herein provided. Whenever holders of
any class or classes of stock or series thereof are entitled by the provisions
of the certificate of incorporation to elect one or more directors, vacancies
and newly created directorships of such class or classes or series may only be
filled by the affirmative vote of the majority of the total number of directors
elected by such class or classes or series thereof then in office, or by a sole
remaining director so elected.

     Section 5.    NOMINATIONS.

            (a)    Subject to Section 4 of this Article III, only persons who
are nominated in accordance with the procedures set forth in these by-laws shall
be eligible to serve as directors. Nominations of persons for election to the
board of directors of the Corporation may be made at a meeting of stockholders
(i) by or at the direction of the board of directors or (ii) by any stockholder
of the Corporation who was a stockholder of record at the time of giving of
notice provided for in this by-law, who is entitled to vote for the election of
directors at the meeting and who shall have complied with the notice procedures
set forth below in Section 5(b) of this Article III.

            (b)    In order for a stockholder to nominate a person for election
to the board of directors of the Corporation at a meeting of stockholders, such
stockholder shall have delivered timely notice of such stockholder's intent to
make such nomination in writing to the secretary of

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the Corporation. To be timely, a stockholder's notice must (i) be delivered to
or mailed and received at the principal executive offices of the Corporation at
any time prior to the date of such meeting of the stockholders; and (ii) comply
with all applicable requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder with respect to the matters
set forth in this Section 5 of Article III. Such stockholder's notice shall set
forth (i) as to each person whom the stockholder proposes to nominate for
election as a director at such meeting all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (ii) as to the stockholder giving the notice
(A) the name and address, as they appear on the Corporation's books, of such
stockholder and (B) the class and number of shares of the Corporation which are
beneficially owned by such stockholder and also which are owned of record by
such stockholder; and (iii) as to the beneficial owner, if any, on whose behalf
the nomination is made, (A) the name and address of such person and (B) the
class and number of shares of the Corporation which are beneficially owned by
such person. At the request of the board of directors, any person nominated by
the board of directors for election as a director shall furnish to the secretary
of the Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee.

            (c)    The board of directors shall, if the facts warrant, determine
that a nomination was not made in accordance with the procedures prescribed by
the by-laws, and if the board should so determine, the board shall so declare to
the meeting and the defective nomination shall be disregarded.

     Section 6.    ANNUAL MEETINGS. The annual meeting of the board of directors
shall be held without other notice than this by-law immediately after, and at
the same place as, the annual meeting of stockholders.

     Section 7.    OTHER MEETINGS AND NOTICE. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by the
chairman of the board, at least two of the directors then in office, or the
secretary of the Corporation on at least 24 hours notice to each director,
either personally, by telephone, mail, telecopy or e-mail, which notice shall
set forth the date, time and place of such special meeting. Regular meetings and
special meetings may be held at any place within or outside of the State of
Delaware.

     Section 8.    CHAIRMAN OF THE BOARD, QUORUM, REQUIRED VOTE AND ADJOURNMENT.
The board of directors shall elect, by the affirmative vote of the majority of
the total number of directors then in office, a chairman of the board, who shall
preside at all meetings of the stockholders and board of directors at which he
or she is present. If the chairman of the board is not present at a meeting of
the stockholders or the board of directors, the president (if the president is a
director and is not also the chairman of the board) shall preside at such
meeting, and, if the president is not present at such meeting, a majority of the
directors present at such meeting shall elect one of their members to so
preside. A majority of the total number of directors then in office shall
constitute a quorum for the transaction of business. Unless by

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express provision of an applicable law, the Corporation's certificate of
incorporation or these by-laws a different vote is required, the vote of a
majority of directors present at a meeting at which a quorum is present shall be
the act of the board of directors. If a quorum shall not be present at any
meeting of the board of directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.

     Section 9.    COMMITTEES. The board of directors may, by resolution passed
by a majority of the total number of directors then in office, designate one or
more committees, each committee to consist of one or more of the directors of
the Corporation, which to the extent provided in such resolution or these
by-laws shall have, and may exercise, the powers of the board of directors in
the management and affairs of the Corporation, except as otherwise limited by
law. The board of directors may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. Such committee or committees shall have such name
or names as may be determined from time to time by resolution adopted by the
board of directors. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.

     Section 10.   COMMITTEE RULES. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. Unless otherwise provided in such a
resolution, in the event that a member and that member's alternate, if
alternates are designated by the board of directors as provided in Section 9 of
this Article III, of such committee is or are absent or disqualified, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not such member or members constitute a quorum, may unanimously
appoint another member of the board of directors to act at the meeting in place
of any such absent or disqualified member.

     Section 11.   COMMUNICATIONS EQUIPMENT. Members of the board of directors
or any committee thereof may participate in and act at any meeting of such board
or committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
and speak with each other, and participation in the meeting pursuant to this
Section 11 shall constitute presence in person at the meeting.

     Section 12.   WAIVER OF NOTICE AND PRESUMPTION OF ASSENT. Any member of the
board of directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.

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     Section 13.   ACTION BY WRITTEN CONSENT. Unless otherwise restricted by the
certificate of incorporation, any action required or permitted to be taken at
any meeting of the board of directors, or of any committee thereof, may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.

                                   ARTICLE IV
                                    OFFICERS

     Section 1.    NUMBER. The officers of the Corporation shall be elected by
the board of directors and shall consist of a chairman of the board, chief
executive officer, president, one or more vice-presidents, a chief operating
officer, a chief financial officer, an executive vice president, a secretary, a
treasurer and such other officers and assistant officers as may be deemed
necessary or desirable by the board of directors. Any number of offices may be
held by the same person. In its discretion, the board of directors may choose
not to fill any office for any period as it may deem advisable, except that the
offices of president and secretary shall be filled as expeditiously as possible.

     Section 2.    ELECTION AND TERM OF OFFICE. The officers of the Corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as convenient.
Vacancies may be filled or new offices created and filled at any meeting of the
board of directors. Each officer shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.

     Section 3.    REMOVAL. Any officer or agent elected by the board of
directors may be removed by the board of directors at its discretion, with or
without cause, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed.

     Section 4.    VACANCIES. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors.

     Section 5.    COMPENSATION. Compensation of all officers shall be fixed by
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the Corporation.

     Section 6.    CHAIRMAN OF THE BOARD. The chairman of the board shall be the
chief executive officer of the Corporation, and shall have the powers and
perform the duties incident to that position. Subject to the powers of the board
of directors, he or she shall be in the general and active charge of the entire
business and affairs of the Corporation, and shall be its chief policy-making
officer. He or she shall preside at all meetings of the board of directors and
stockholders and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or provided in these by-laws. The
chairman of the board is authorized to execute bonds, mortgages and other
contracts requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the Corporation.

                                        8
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     Section 7.    THE PRESIDENT. The president of the Corporation shall,
subject to the powers of the board of directors, shall have general charge of
the business, affairs and property of the Corporation, and control over its
officers, agents and employees; and shall see that all orders and resolutions of
the board of directors are carried into effect. The president shall report to
the board of directors and the chairman of the board. The president shall, in
the absence or disability of the chairman of the board and chief executive
officer, act with all of the powers and be subject to all the restrictions of
the chairman of the board and chief executive officer. The president is
authorized to execute bonds, mortgages and other contracts requiring a seal,
under the seal of the Corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the board of directors to some other
officer or agent of the Corporation. The president shall have such other powers
and perform such other duties as may be prescribed by the chairman of the board
or the board of directors or as may be provided in these by-laws.

     Section 8.    CHIEF OPERATING OFFICER. The chief operating officer of the
Corporation, if any, subject to the powers of the board of directors, shall have
general and active management of the business of the Corporation; and shall see
that all orders and resolutions of the board of directors are carried into
effect. The chief operating officer shall have such other powers and perform
such other duties as may be prescribed by the board of directors or as may be
provided in these by-laws.

     Section 9.    CHIEF FINANCIAL OFFICER. The chief financial officer of the
Corporation shall, under the direction of the chairman of the board and chief
executive officer, be responsible for all financial and accounting matters and
for the direction of the offices of treasurer and controller. The chief
financial officer shall have such other powers and perform such other duties as
may be prescribed by the chairman of the board and chief executive officer or
the board of directors or as may be provided in these by-laws.

     Section 10.   VICE-PRESIDENTS. The vice-president, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors or the chairman of the board, shall, in the absence or disability of
the president, act with all of the powers and be subject to all the restrictions
of the president. The vice-presidents shall also perform such other duties and
have such other powers as the board of directors, the chairman of the board, the
president or these by-laws may, from time to time, prescribe. The vice-
presidents may also be designated as executive vice-presidents or senior
vice-presidents, as the board of directors may from time to time prescribe.

     Section 11.   THE SECRETARY AND ASSISTANT SECRETARIES. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose or shall ensure that
his or her designee attends each such meeting to act in such capacity. Under the
chairman of the board's supervision, the secretary shall give, or cause to be
given, all notices required to be given by these by-laws or by law; shall have
such powers and perform such duties as the board of directors, the chairman of
the board, the president or these by-laws may, from time to time, prescribe; and
shall have custody of the corporate seal of the Corporation. The secretary, or
an assistant secretary, shall have authority to affix the corporate seal to any
instrument requiring it and when so affixed, it may be attested by his or her
signature

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or by the signature of such assistant secretary. The board of directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his or her signature. The assistant secretary, or if
there be more than one, any of the assistant secretaries in the order determined
by the board of directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors, the
chairman of the board, the president, or secretary may, from time to time,
prescribe.

     Section 12.   THE TREASURER AND ASSISTANT TREASURER. The treasurer shall
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation; shall deposit all monies and other valuable effects in the name and
to the credit of the Corporation as may be ordered by the chairman of the board,
the chief financial officer or the board of directors; shall cause the funds of
the Corporation to be disbursed when such disbursements have been duly
authorized, taking proper vouchers for such disbursements; and shall render to
the chairman of the board, the chief financial officer and the board of
directors, at its regular meeting or when the board of directors so requires, an
account of the Corporation; shall have such powers and perform such duties as
the board of directors, the chairman of the board, the chief financial officer
or these by-laws may, from time to time, prescribe. If required by the board of
directors, the treasurer shall give the Corporation a bond (which shall be
rendered every six years) in such sums and with such surety or sureties as shall
be satisfactory to the board of directors for the faithful performance of the
duties of the office of treasurer and for the restoration to the Corporation, in
case of death, resignation, retirement, or removal from office, of all books,
papers, vouchers, money, and other property of whatever kind in the possession
or under the control of the treasurer belonging to the Corporation. The
assistant treasurer, or if there are more than one, the assistant treasurers in
the order determined by the board of directors shall, in the absence or
disability of the treasurer, perform the duties and exercise the powers of the
treasurer. The assistant treasurers shall perform such other duties and have
such other powers as the board of directors, the chairman of the board, the
chief financial officer, treasurer or these by-laws may, from time to time,
prescribe.

     Section 13.   OTHER OFFICERS, ASSISTANT OFFICERS AND AGENTS. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.

     Section 14.   ABSENCE OR DISABILITY OF OFFICERS. In the case of the absence
or disability of any officer of the Corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person selected by it.

                                    ARTICLE V
                INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS

     Section 1.    RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved (including
involvement as a witness) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative

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(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
director or officer of the Corporation or, while a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter, an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director or officer or
in any other capacity while serving as a director or officer, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than permitted prior thereto), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA exercise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith and such indemnification shall continue as to
an indemnitee who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided in Section 2 of
Article V with respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the board of directors of the Corporation. The right
to indemnification conferred in this Section 1 of Article V shall be a contract
right and shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advance of expenses"); provided, however, that, if and to the
extent that the Delaware General Corporation Law requires, an advance of
expenses incurred by an indemnitee in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such indemnitee, including, without limitation, service to an employee benefit
plan) shall be made only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be indemnified for such
expenses under this Section 1 of Article V or otherwise. The Corporation may, by
action of its board of directors, provide indemnification to employees and
agents of the Corporation with the same scope and effect as the foregoing
indemnification of directors and officers.

     Section 2.    PROCEDURE FOR INDEMNIFICATION. Any indemnification of a
director or officer of the Corporation or advance of expenses under Section 1 of
this Article V shall be made promptly, and in any event within forty-five (45)
days (or, in the case of an advance of expenses, twenty (20) days), upon the
written request of the director or officer. If a determination by the
Corporation that the director or officer is entitled to indemnification pursuant
to this Article V is required, and the Corporation fails to respond within sixty
(60) days to a written request for indemnity, the Corporation shall be deemed to
have approved the request. If the Corporation denies a written request for
indemnification or advance of expenses, in whole or in part, or if payment in
full pursuant to such request is not made within forty-five (45) days (or, in
the case of an advance of expenses, twenty (20) days), the right to
indemnification or advances as granted by this Article V shall be enforceable by
the director or officer in any court of competent jurisdiction. Such person's
costs and expenses incurred in connection with successfully establishing his or
her right to indemnification, in whole or in part, in any such action shall also

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be indemnified by the Corporation. It shall be a defense to any such action
(other than an action brought to enforce a claim for the advance of expenses
where the undertaking required pursuant to Section 1 of this Article V, if any,
has been tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the Delaware General
Corporation Law for the Corporation to indemnify the claimant for the amount
claimed, but the burden of such defense shall be on the Corporation. Neither the
failure of the Corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the Delaware General Corporation Law, nor an actual determination
by the Corporation (including its board of directors, independent legal counsel,
or its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct. The procedure for
indemnification of other employees and agents for whom indemnification is
provided pursuant to Section 1 of this Article V shall be the same procedure set
forth in this Section 2 for directors or officers, unless otherwise set forth in
the action of the board of directors providing indemnification for such employee
or agent.

     Section 3.    SERVICE FOR SUBSIDIARIES. Any person serving as a director,
officer, employee or agent of a Subsidiary shall be conclusively presumed to be
serving in such capacity at the request of the Corporation.

     Section 4.    RELIANCE. Persons who after the date of the adoption of this
provision become or remain directors or officers of the Corporation or who,
while a director or officer of the Corporation, become or remain a director,
officer, employee or agent of a Subsidiary, shall be conclusively presumed to
have relied on the rights to indemnity, advance of expenses and other rights
contained in this Article V in entering into or continuing such service. The
rights to indemnification and to the advance of expenses conferred in this
Article V shall apply to claims made against an indemnitee arising out of acts
or omissions which occurred or occur both prior and subsequent to the adoption
hereof.

     Section 5.    NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification and
to the advance of expenses conferred in this Article V shall not be exclusive of
any other right which any person may have or hereafter acquire under the
Certificate of Incorporation or under any statute, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.

     Section 6.    INSURANCE. The Corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee or agent of the Corporation or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss asserted against him or her and incurred by him or
her in any such capacity, whether or not the Corporation would have the power to
indemnify such person against such expenses, liability or loss under the
Delaware General Corporation Law.

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                                   ARTICLE VI
                              CERTIFICATES OF STOCK

     Section 1.    FORM. Every holder of stock in the Corporation shall be
entitled to have a certificate, signed by, or in the name of the Corporation by
the chairman of the board, the president or a vice-president and the secretary
or an assistant secretary of the Corporation, certifying the number of shares
owned by such holder in the Corporation. If such a certificate is countersigned
(1) by a transfer agent or an assistant transfer agent other than the
Corporation or its employee or (2) by a registrar, other than the Corporation or
its employee, the signature of any such chairman of the board, president,
vice-president, secretary, or assistant secretary may be facsimiles. In case any
officer or officers who have signed, or whose facsimile signature or signatures
have been used on, any such certificate or certificates shall cease to be such
officer or officers of the Corporation whether because of death, resignation or
otherwise before such certificate or certificates have been delivered by the
Corporation, such certificate or certificates may nevertheless be issued and
delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures have been used thereon
had not ceased to be such officer or officers of the Corporation. All
certificates for shares shall be consecutively numbered or otherwise identified.
The name of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the books of the
Corporation. Shares of stock of the Corporation shall only be transferred on the
books of the Corporation by the holder of record thereof or by such holder's
attorney duly authorized in writing, upon surrender to the Corporation of the
certificate or certificates for such shares endorsed by the appropriate person
or persons, with such evidence of the authenticity of such endorsement,
transfer, authorization, and other matters as the Corporation may reasonably
require, and accompanied by all necessary stock transfer stamps. In that event,
it shall be the duty of the Corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate or certificates, and record the
transaction on its books. The board of directors may appoint a bank or trust
company organized under the laws of the United States or any state thereof to
act as its transfer agent or registrar, or both in connection with the transfer
of any class or series of securities of the Corporation.

     Section 2.    LOST CERTIFICATES. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the Corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the Corporation
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the Corporation a bond
sufficient to indemnify the Corporation against any claim that may be made
against the Corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.

     Section 3.    FIXING A RECORD DATE FOR STOCKHOLDER MEETINGS. In order that
the Corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty (60) nor less than

                                       13
<Page>

ten (10) days before the date of such meeting. If no record date is fixed by the
board of directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be the close of business
on the next day preceding the day on which notice is first given. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.

     Section 4.    FIXING A RECORD DATE FOR OTHER PURPOSES. In order that the
Corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty (60) days prior to such action. If no record date is fixed,
the record date for determining stockholders for any such purpose shall be at
the close of business on the day on which the board of directors adopts the
resolution relating thereto.

     Section 5.    REGISTERED STOCKHOLDERS. Prior to the surrender to the
Corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the Corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner. The Corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof.

     Section 6.    SUBSCRIPTIONS FOR STOCK. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the Corporation may proceed to collect the
amount due in the same manner as any debt due the Corporation.

                                   ARTICLE VII
                               GENERAL PROVISIONS

     Section 1.    DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, in accordance with applicable law. Dividends may be paid in cash, in
property, or in shares of the capital stock, subject to the provisions of the
certificate of incorporation. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
any other purpose and the directors may modify or abolish any such reserve in
the manner in which it was created.

                                       14
<Page>

     Section 2.    CHECKS, DRAFTS OR ORDERS. All checks, drafts, or other orders
for the payment of money by or to the Corporation and all notes and other
evidences of indebtedness issued in the name of the Corporation shall be signed
by such officer or officers, agent or agents of the Corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.

     Section 3.    CONTRACTS. In addition to the powers otherwise granted to
officers pursuant to Article IV hereof, the board of directors may authorize any
officer or officers, or any agent or agents, of the Corporation to enter into
any contract or to execute and deliver any instrument in the name of and on
behalf of the Corporation, and such authority may be general or confined to
specific instances.

     Section 4.    LOANS. The Corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
Corporation or of its subsidiaries, including any officer or employee who is a
director of the Corporation or its subsidiaries, whenever, in the judgment of
the directors, such loan, guaranty or assistance may reasonably be expected to
benefit the Corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the Corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the Corporation at
common law or under any statute.

     Section 5.    FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the board of directors.

     Section 6.    CORPORATE SEAL. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the Corporation and the words "Corporate Seal, Delaware."
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.

     Section 7.    VOTING SECURITIES OWNED BY CORPORATION. Voting securities in
any other corporation held by the Corporation shall be voted by an officer of
the Corporation or other person as authorized or directed by the board of
directors, which authorization or direction may be general or confined to
specific instances. Any person authorized to vote securities shall have the
power to appoint proxies, with general power of substitution.

     Section 8.    INSPECTION OF BOOKS AND RECORDS. Any stockholder of record,
in person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the Corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the Corporation at its registered
office in the State of Delaware or at its principal place of business. The
Corporation shall have a reasonable amount of time to respond to any such
request.

                                       15
<Page>

     Section 9.    SECTION HEADINGS. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.

     Section 10.   INCONSISTENT PROVISIONS. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.

                                  ARTICLE VIII
                                   AMENDMENTS

     These by-laws may be amended, altered, or repealed and new by-laws adopted
at any meeting of the board of directors by the affirmative vote of the majority
of the total number of directors then in office; provided that any amendment,
alteration or repeal of Sections 1, 2 or 9 of Article II, Sections 2, 3, 4 or 5
of Article III, Section 8 of Article VII, Article VIII or any amendment,
alteration or repeal of Article V that results in an adverse effect upon the
indemnification provided to directors therein, in each of the foregoing cases,
pursuant to the affirmative vote of the majority of the total number of
directors then in office also shall require the approval of at least one Non-GOF
Board Member (as such term is defined in the Shareholders Agreement); provided
further that the foregoing approval of at least one Non-GOF Board Member shall
only be required if both (a) at least one Non-GOF Board Member has the right to
a seat on the board of directors pursuant to the Shareholders Agreement, and (b)
at the time such approval is sought one of the following is true (i) at least
one Non-GOF Board Member is a member of the board of directors, (ii) if a
Non-GOF Board Member is not a member of the board of directors, a Non-GOF Board
Member shall have been a member of the board of directors within sixty days of
such time, or (iii) if a Non-GOF Board Member is not, and, within sixty days of
such time, has not been, a member of the board of directors, a nomination or
designation of a proposed Non-GOF Board Member shall have been made in good
faith pursuant to the terms of the Shareholders Agreement and not withdrawn, and
such nominee or designee shall not have refused or declined appointment to the
board of directors. The fact that the power to adopt, amend, alter, or repeal
the by-laws has been conferred upon the board of directors shall not divest the
stockholders of such powers as set forth in the certificate of incorporation.

                                       16

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.1
<SEQUENCE>5
<FILENAME>a2111067zex-4_1.txt
<DESCRIPTION>EXHIBIT 4.1
<TEXT>
<Page>

                                                                    EXHIBIT 4.1

================================================================================

                                    INDENTURE


                            DATED AS OF MARCH 5, 2003


                                      AMONG


                         POLYMER GROUP, INC., AS ISSUER,


                           THE GUARANTORS NAMED HEREIN


                                       AND


                      WILMINGTON TRUST COMPANY, AS TRUSTEE


                             -----------------------


                                   $50,000,000


                   10% CONVERTIBLE SUBORDINATED NOTES DUE 2007


================================================================================

<Page>

                                TABLE OF CONTENTS

<Table>
<S>                                                                                              <C>
                                            ARTICLE ONE
                             DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01.   Definitions.......................................................................1
SECTION 1.02.   Incorporation by Reference of Trust Indenture Act................................21
SECTION 1.03.   Rules of Construction............................................................22

                                            ARTICLE TWO
                                             THE NOTES
SECTION 2.01.   Form and Dating..................................................................22
SECTION 2.02.   Execution and Authentication.....................................................23
SECTION 2.03.   Registrar and Paying Agent.......................................................24
SECTION 2.04.   Paying Agent To Hold Assets in Trust.............................................24
SECTION 2.05.   Holder Lists.....................................................................25
SECTION 2.06.   Transfer and Exchange............................................................25
SECTION 2.07.   Replacement Notes................................................................26
SECTION 2.08.   Outstanding Notes................................................................26
SECTION 2.09.   Treasury Notes...................................................................26
SECTION 2.10.   Temporary Notes..................................................................27
SECTION 2.11.   Cancellation.....................................................................27
SECTION 2.12.   Defaulted Interest...............................................................27
SECTION 2.13.   CUSIP Number.....................................................................27
SECTION 2.14.   Deposit of Moneys................................................................28
SECTION 2.15.   Book-Entry Provisions for Global Notes...........................................28

                                           ARTICLE THREE
                                             REDEMPTION
SECTION 3.01.   Notices to Trustee...............................................................29
SECTION 3.02.   Selection of Notes To Be Redeemed................................................29
SECTION 3.03.   Notice of Redemption.............................................................30
SECTION 3.04.   Effect of Notice of Redemption...................................................31
SECTION 3.05.   Deposit of Redemption Price......................................................31
SECTION 3.06.   Notes Redeemed in Part...........................................................31

                                            ARTICLE FOUR
                                             COVENANTS
SECTION 4.01.   Payment of Notes.................................................................31
SECTION 4.02.   Maintenance of Office or Agency..................................................32
SECTION 4.03.   Transactions with Affiliates.....................................................32
SECTION 4.04.   Limitation on Indebtedness.......................................................33
SECTION 4.05.   Disposition of Proceeds of Asset Sales...........................................34
SECTION 4.06.   Limitation on Restricted Payments................................................36
SECTION 4.07.   Corporate Existence..............................................................38
SECTION 4.08.   Notice of Defaults...............................................................38
SECTION 4.09.   Compliance Certificate...........................................................39
SECTION 4.10.   Designation of Unrestricted Subsidiaries.........................................39
</Table>

                                       -i-
<Page>

<Table>
<S>                                                                                              <C>
SECTION 4.11.   Limitation on Liens..............................................................40
SECTION 4.12.   Future Domestic Restricted Subsidiary Guarantors.................................40

                                            ARTICLE FIVE
                                   MERGERS; SUCCESSOR CORPORATION
SECTION 5.01.   Mergers, Sale of Assets, etc.....................................................41
SECTION 5.02.   Successor Corporation Substituted................................................42

                                            ARTICLE SIX
                                        DEFAULT AND REMEDIES
SECTION 6.01.   Events of Default................................................................42
SECTION 6.02.   Acceleration.....................................................................43
SECTION 6.03.   Other Remedies...................................................................44
SECTION 6.04.   Waiver of Past Default...........................................................44
SECTION 6.05.   Control by Majority..............................................................45
SECTION 6.06.   Limitation on Suits..............................................................45
SECTION 6.07.   Rights of Holders To Receive Payment.............................................45
SECTION 6.08.   Collection Suit By Trustee.......................................................46
SECTION 6.09.   Trustee May File Proofs of Claim.................................................46
SECTION 6.10.   Priorities.......................................................................46
SECTION 6.11.   Undertaking for Costs............................................................47

                                           ARTICLE SEVEN
                                              TRUSTEE
SECTION 7.01.   Duties of Trustee................................................................47
SECTION 7.02.   Rights of Trustee................................................................48
SECTION 7.03.   Individual Rights of Trustee.....................................................49
SECTION 7.04.   Trustee's Disclaimer.............................................................49
SECTION 7.05.   Notice of Defaults...............................................................50
SECTION 7.06.   Reports by Trustee to Holders....................................................50
SECTION 7.07.   Compensation and Indemnity.......................................................50
SECTION 7.08.   Replacement of Trustee...........................................................51
SECTION 7.09.   Successor Trustee by Merger, etc.................................................52
SECTION 7.10.   Eligibility; Disqualification....................................................52
SECTION 7.11.   Preferential Collection of Claims Against Company................................53

                                           ARTICLE EIGHT
                                       SUBORDINATION OF NOTES
SECTION 8.01.   Notes Subordinated to Senior Indebtedness........................................53
SECTION 8.02.   No Payment on Notes in Certain Circumstances.....................................53
SECTION 8.03.   Payment Over of Proceeds upon Dissolution, etc...................................54
SECTION 8.04.   Subrogation......................................................................55
SECTION 8.05.   Obligations of Company Unconditional.............................................56
SECTION 8.06.   Notice to Trustee................................................................56
SECTION 8.07.   Reliance on Judicial Order or Certificate of Liquidating Agent...................57
SECTION 8.08.   Trustee's Relation to Senior Indebtedness........................................57
</Table>

                                      -ii-
<Page>

<Table>
<S>                                                                                              <C>
SECTION 8.09.   Subordination Rights Not Impaired by Acts or Omissions of the Company or
                Holders of Senior Indebtedness...................................................58
SECTION 8.10.   Holders Authorize Trustee To Effectuate Subordination of Notes...................58
SECTION 8.11.   This Article Not To Prevent Events of Default....................................58
SECTION 8.12.   Trustee's Compensation Not Prejudiced............................................58
SECTION 8.13.   No Waiver of Subordination Provisions............................................58
SECTION 8.14.   Subordination Provisions Not Applicable to Money Held in Trust for Holders;
                Payments May Be Paid Prior to Dissolution........................................59
SECTION 8.15.   Acceleration of Notes............................................................59

                                            ARTICLE NINE
                                       DISCHARGE OF INDENTURE
SECTION 9.01.   Termination of Company's Obligations.............................................59
SECTION 9.02.   Application of Trust Money.......................................................61
SECTION 9.03.   Repayment to Company.............................................................61
SECTION 9.04.   Reinstatement....................................................................61

                                            ARTICLE TEN
                                AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01.  Without Consent of Holders.......................................................62
SECTION 10.02.  With Consent of Holders..........................................................63
SECTION 10.03.  Compliance with Trust Indenture Act..............................................64
SECTION 10.04.  Record Date for Consents and Effect of Consents..................................64
SECTION 10.05.  Notation on or Exchange of Notes.................................................64
SECTION 10.06.  Trustee To Sign Amendments, etc..................................................65

                                           ARTICLE ELEVEN
                                             GUARANTEE
SECTION 11.01.  Unconditional Guarantee..........................................................65
SECTION 11.02.  Severability.....................................................................67
SECTION 11.03.  Release of a Guarantor...........................................................67
SECTION 11.04.  Limitation of Guarantor's Liability..............................................67
SECTION 11.05.  Contribution.....................................................................68
SECTION 11.06.  Execution of Note Guarantee......................................................68
SECTION 11.07.  Subordination of Subrogation and Other Rights....................................68

                                           ARTICLE TWELVE
                                     SUBORDINATION OF GUARANTEE
SECTION 12.01.  Guarantee Obligations Subordinated to Guarantor Senior Indebtedness..............69
SECTION 12.02.  No Payment on Guarantees in Certain Circumstances................................69
SECTION 12.03.  Payment Over Proceeds upon Dissolution, etc......................................70
SECTION 12.04.  Subrogation......................................................................71
SECTION 12.05.  Obligations of Guarantors Unconditional..........................................72
SECTION 12.06.  Notice to Trustee................................................................72
SECTION 12.07.  Reliance on Judicial Order or Certificate of Liquidating Agent...................73
SECTION 12.08.  Trustee's Relation to Guarantor Senior Indebtedness..............................73
</Table>

                                      -iii-
<Page>

<Table>
<S>                                                                                          <C>
SECTION 12.09.  Subordination Rights Not Impaired by Acts or Omissions of the Guarantors
                or Holders of Guarantor Senior Indebtedness......................................74
SECTION 12.10.  Holders Authorize Trustee To Effectuate Subordination of Guarantee...............74
SECTION 12.11.  This Article Not To Prevent Events of Default....................................74
SECTION 12.12.  Trustee's Compensation Not Prejudiced............................................74
SECTION 12.13.  No Waiver of Guarantee Subordination Provisions..................................74
SECTION 12.14.  Payments May Be Paid Prior to Dissolution........................................75

                                          ARTICLE THIRTEEN
                                             CONVERSION
SECTION 13.01.  Conversion Privilege.............................................................75
SECTION 13.02.  Conversion Procedure.............................................................76
SECTION 13.03.  Fractional Shares................................................................77
SECTION 13.04.  Taxes on Conversion..............................................................77
SECTION 13.05.  Company to Provide Stock.........................................................77
SECTION 13.06.  Adjustment for Change in Capital Stock...........................................77
SECTION 13.07.  Adjustment for Issuances of Common Stock.........................................78
SECTION 13.08.  When Adjustment May Be Deferred..................................................81
SECTION 13.09.  When No Adjustment Required......................................................81
SECTION 13.10.  Notice of Adjustment.............................................................81
SECTION 13.11.  Voluntary Increase...............................................................81
SECTION 13.12.  Notice of Certain Transactions...................................................82
SECTION 13.13.  Reorganization of Company; Special Distributions.................................82
SECTION 13.14.  Company Determination Final......................................................83
SECTION 13.15.  Trustee's Adjustment Disclaimer..................................................83
SECTION 13.16.  Simultaneous Adjustments.........................................................83
SECTION 13.17.  Successive Adjustments...........................................................83
SECTION 13.18.  Rights Issued in Respect of Common Stock Issued Upon Conversion..................83

                                          ARTICLE FOURTEEN
                                           MISCELLANEOUS
SECTION 14.01.  Trust Indenture Act Controls.....................................................84
SECTION 14.02.  Notices..........................................................................84
SECTION 14.03.  Communications by Holders with Other Holders.....................................85
SECTION 14.04.  Certificate and Opinion as to Conditions Precedent...............................85
SECTION 14.05.  Statements Required in Certificate...............................................86
SECTION 14.06.  Rules by Trustee, Paying Agent, Registrar........................................86
SECTION 14.07.  Governing Law....................................................................86
SECTION 14.08.  No Recourse Against Others.......................................................86
SECTION 14.09.  Successors.......................................................................86
SECTION 14.10.  Counterpart Originals............................................................87
SECTION 14.11.  Severability.....................................................................87
SECTION 14.12.  No Adverse Interpretation of Other Agreements....................................87
SECTION 14.13.  Legal Holidays...................................................................87

 SIGNATURES..................................................................................S-1
 EXHIBIT A  Form of Note.....................................................................A-1
 EXHIBIT B  Form of Legend for Global Notes..................................................B-1
</Table>

                                      -iv-
<Page>

------------

NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part
of the Indenture.

                                       -v-

<Page>

          INDENTURE dated as of March 5, 2003, among POLYMER GROUP, INC., a
Delaware corporation (the "COMPANY"), the GUARANTORS named herein and WILMINGTON
TRUST COMPANY, a Delaware banking corporation, as trustee (hereinafter the
"TRUSTEE").

          Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Notes:

                                   ARTICLE ONE

                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.   DEFINITIONS.

          "ACQUIRED INDEBTEDNESS" means Indebtedness of a Person (a) assumed in
connection with an Acquisition from such Person or (b) existing at the time such
Person becomes a Restricted Subsidiary or is merged or consolidated with or into
the Company or any Restricted Subsidiary.

          "ACQUIRED PERSON" means, with respect to any specified Person, any
other Person which merges with or into or becomes a Subsidiary of such specified
Person.

          "ACQUISITION" means (i) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) by the Company or any
Restricted Subsidiary to any other Person, or any acquisition or purchase of
Equity Interests of any other Person by the Company or any Restricted
Subsidiary, in either case pursuant to which such Person shall become a
Restricted Subsidiary or shall be consolidated with or merged into the Company
or any Restricted Subsidiary or (ii) any acquisition by the Company or any
Restricted Subsidiary of the assets of any Person which constitute substantially
all of an operating unit or line of business of such Person or which is
otherwise outside of the ordinary course of 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 purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.

          "AFFILIATE TRANSACTION" has the meaning provided in SECTION 4.03.

          "AGENT" means any Registrar, Paying Agent or co-Registrar.

          "ASSET SALE" means any direct or indirect sale, conveyance, transfer,
lease (that has the effect of a disposition) or other disposition (including,
without limitation, any merger, consolidation or sale-leaseback transaction) to
any Person other than the Company or a Wholly Owned Restricted Subsidiary, in
one transaction or a series of related transactions, of (i) any Equity Interest
of any Restricted Subsidiary (other than directors' qualifying shares, to the
extent

<Page>

mandated by applicable law); (ii) any assets of the Company or any Restricted
Subsidiary which constitute substantially all of an operating unit or line of
business of the Company or any Restricted Subsidiary; or (iii) any other
property or asset of the Company or any Restricted Subsidiary outside of the
ordinary course of business (including the receipt of proceeds paid on account
of the loss of or damage to any property or asset and awards of compensation for
any asset taken by condemnation, eminent domain or similar proceedings). For the
purposes of this definition, the term "Asset Sale" shall not include (a) any
transaction consummated in compliance with SECTION 5.01 and the creation of any
Lien not prohibited by SECTION 4.11; (b) sales of property or equipment that has
become worn out, obsolete or damaged or otherwise unsuitable for use in
connection with the business of the Company or any Restricted Subsidiary, as the
case may be; (c) any transaction consummated in compliance with SECTION 4.06;
(d) any transfers of properties and assets between Wholly Owned Restricted
Subsidiaries; (e) any transaction pursuant to which the Company or any
Restricted Subsidiary transfers property to a Person and the Company or such
Restricted Subsidiary leases such property from such Person; PROVIDED, HOWEVER,
that such transaction complies with SECTION 4.04; (f) sales of Investments (i)
that were originally made pursuant to clauses (a), (b), (c) or (d) of the
definition of "Permitted Investments" or (ii) to the extent that such
Investments were treated as Restricted Payments; and (g) any Qualified
Securitization Transaction. In addition, solely for purposes of SECTION 4.05,
any sale, conveyance, transfer, lease or other disposition of any property or
asset, whether in one transaction or a series of related transactions, involving
assets with a Fair Market Value not in excess of $25.0 million in any fiscal
year shall be deemed not to be an Asset Sale; PROVIDED, FURTHER, that any sale,
conveyance, transfer, lease or other disposition of any property or assets,
including without limitation the Chicopee Sale consummated on or prior to the
Issue Date shall be excluded in any determination made pursuant to this
sentence.

          "BANKRUPTCY LAW" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.

          "BOARD OF DIRECTORS" means the Board of Directors of the Company or
any Guarantor, as the case may be, or any authorized committee of such Board of
Directors.

          "BOARD RESOLUTION" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.

          "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which banking institutions are not required to be open in New York, New York.

          "CAPITAL LEASE OBLIGATION" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be properly capitalized on the balance sheet in
accordance with GAAP.

          "CAPITAL STOCK" means any and all shares or other equivalents (however
designated) of capital stock, including all common stock and all preferred
stock, in the case of a corporation, partnership interests or other equivalents
(however designated) in the case of a partnership, membership interests or other
equivalents (however designated) in the case of a limited liability company, or
common shares of beneficial interest or other equivalents (however designated)
in the case of a trust.

                                       -2-
<Page>

          "CASH EQUIVALENTS" means: (a) U.S. dollars; (b) securities issued or
directly and fully guaranteed or insured by the U.S. government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition; (c) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500 million; (d) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(b) and (c) above entered into with any financial institution meeting the
qualifications specified in clause (c) above; (e) commercial paper rated P-1,
A-1 or the equivalent thereof by Moody's Investor Services, Inc. or Standard &
Poor's Rating Group, respectively, and in each case maturing within six months
after the date of acquisition; and (f) corporate securities having a rating
equal to or higher than BBB-- and Baa3, or the equivalents thereof, by both
Standard & Poor's Ratings Group and Moody's Investor Services, Inc.,
respectively, if both such entities rate the securities, or having such rating
from one of such entities if only one such entity is rating such securities.

          "CHANGE OF CONTROL" means the occurrence of any of the following
events (whether or not approved by the Board of Directors of the Company): (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 Rule 13d-3 and 13d-5 under the Exchange Act,
except that a Person 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 or only after the passage of time, upon the happening of
an event or otherwise), directly or indirectly, of more than 50% of the total
voting power of the then outstanding Voting Equity Interests of the Company;
(ii) the Company consolidates with, or merges with or into, another Person
(other than the Company or any Wholly Owned Restricted Subsidiary) or the
Company or any Significant Restricted Subsidiary sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of the
assets of the Company and its Subsidiaries (determined on a consolidated basis)
to any Person (other than the Company or any Wholly Owned Restricted
Subsidiary), other than any such transaction where immediately after such
transaction the Person or Persons that "beneficially owned" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time upon the happening of an event or otherwise) immediately prior to such
transaction, directly or indirectly, a majority of the total voting power of the
then outstanding Voting Equity Interests of the Company, as the case may be,
"beneficially own" (as so determined), directly or indirectly, a majority of the
total voting power of the then outstanding Voting Equity Interests of the
surviving or transferee Person; or (iii) the Company is liquidated or dissolved
or adopts a plan of liquidation or dissolution other than in a transaction which
complies with the provisions of Article Five.

          "CHICOPEE SALE" means the sale of the warehouse in Dayton, New Jersey,
owned by Chicopee, Inc., a Delaware corporation.

                                       -3-
<Page>

          "CLASS C DIVIDENDS" means the special annual dividend on the Company's
Class C Common Stock, par value $.01 per share, required to be paid by the
Company pursuant to its Amended and Restated Certificate of Incorporation.

          "COMMON STOCK" means shares of the Class A Common Stock, par value
$.01 per share, of the Company as of the date of this Indenture or any other
shares of capital stock of the Company into which the Class A Common Stock is
reclassified or changed.

          "COMPANY" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor.

          "COMPANY REQUEST" or "COMPANY ORDER" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President, its Chief Operating Officer, a Vice
President or its Treasurer, and by an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.

          "CONSOLIDATED COVERAGE RATIO" as of any date of determination means
the ratio of (i) the aggregate amount of Consolidated EBITDA for the four
quarter period of the most recent four consecutive fiscal quarters for which
financial statements are available ending prior to the date of such
determination (the "FOUR QUARTER PERIOD") to (ii) Consolidated Fixed Charges for
such Four Quarter Period; PROVIDED, HOWEVER, that (1) if the Company or any
Restricted Subsidiary has incurred any Indebtedness since the beginning of such
Four Quarter 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, Consolidated EBITDA and Consolidated
Fixed Charges for such Four Quarter 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 Four Quarter Period and the discharge of
any other Indebtedness repaid, repurchased or otherwise discharged with the
proceeds of such new Indebtedness as if such discharge had occurred on the first
day of such Four Quarter Period, (2) if since the beginning of such Four Quarter
Period the Company or any Restricted Subsidiary shall have made any Asset Sale,
the Consolidated EBITDA for such Four Quarter Period shall be reduced by an
amount equal to the Consolidated EBITDA (if positive) directly attributable to
the assets that are the subject of such Asset Sale for such Four Quarter Period
or increased by an amount equal to the Consolidated EBITDA (if negative)
directly attributable thereto for such Four Quarter Period and Consolidated
Fixed Charges for such Four Quarter Period shall be reduced by an amount equal
to the Consolidated Fixed Charges directly attributable to any Indebtedness of
the Company or any Restricted Subsidiary repaid, repurchased or otherwise
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Asset Sale for such Four Quarter Period
(or, if the Equity Interests of any Restricted Subsidiary are sold, the
Consolidated Fixed Charges for such Four Quarter 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), (3) if since the beginning of such Four Quarter 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 an Acquisition of assets, including any Acquisition of assets
occurring in connection with a transaction causing a calculation to be made
hereunder, which

                                       -4-
<Page>

constitutes all or substantially all of an operating unit or a line of a
business or which constitutes Replacement Assets, Consolidated EBITDA and
Consolidated Fixed Charges for such Four Quarter Period shall be calculated
after giving pro forma effect to (x) such Investment or Acquisition of assets
(including the Incurrence of any Indebtedness) as if such Investment or
Acquisition occurred on the first day of such Four Quarter Period and (y) net
cost savings that the Company reasonably believes in good faith could have been
achieved during the Four Quarter Period as a result of such Investment or
Acquisition and which cost savings could then be reflected in pro forma
financial statements under GAAP (provided that both (A) such cost savings were
identified and quantified in an Officer's Certificate delivered to the Trustee
at the time of the consummation of the Investment or Acquisition and (B) with
respect to each Investment or Acquisition completed prior to the 90th day
preceding such date of determination, actions were commenced or initiated by the
Company within 90 days of such Investment or Acquisition to effect such cost
savings identified in such Officer's Certificate) and (4) if since the beginning
of such Four Quarter 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 Four Quarter Period) shall have made any Asset Sale
or any Investment or Acquisition of assets that would have required an
adjustment pursuant to clause (2) or (3) above if made by the Company or a
Restricted Subsidiary during such Four Quarter Period, Consolidated EBITDA and
Consolidated Fixed Charges for such Four Quarter Period shall be calculated
after giving pro forma effect thereto as if such Asset Sale, Investment or
Acquisition of assets occurred on, with respect to any Investment or
Acquisition, the first day of such Four Quarter Period and, with respect to any
Asset Sale, the day prior to the first day of such Four Quarter Period. For
purposes of this definition, whenever pro forma effect is to be given to an
Acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Fixed Charges associated with any Indebtedness Incurred
in connection therewith, the pro forma calculations shall be determined in
accordance with GAAP. 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 agreement under
which Hedging Obligations are outstanding applicable to such Indebtedness if
such agreement under which such Hedging Obligations are outstanding has a
remaining term as at the date of determination in excess of 12 months);
PROVIDED, HOWEVER, that the Consolidated Fixed Charges of the Company
attributable to interest on any Indebtedness Incurred under a revolving credit
facility computed on a pro forma basis shall be computed based upon the average
daily balance of such Indebtedness during the Four Quarter Period.

          "CONSOLIDATED EBITDA" means, for any period, the Consolidated Net
Income for such period, plus the following to the extent deducted in calculating
such Consolidated Net Income: (i) Consolidated Income Tax Expense for such
period; (ii) Consolidated Interest Expense for such period; (iii) Consolidated
Non-Cash Charges for such period; and (iv) expenses relating to employee profit
sharing arising in connection with applicable Mexican statutory requirements
less (A) all non-cash items increasing Consolidated Net Income for such period
and (B) all cash payments during such period relating to non-cash charges that
were added back in determining Consolidated EBITDA in any prior period.

          "CONSOLIDATED FIXED CHARGE" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense and
(ii) the product of (x) the

                                       -5-
<Page>

amount of all dividend payments on any series of Preferred Equity Interest of
such Person (other than dividends paid solely in Qualified Equity Interests)
paid, accrued or scheduled to be paid or accrued during such period times (y) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current effective consolidated Federal, state and local tax rate
of such Person, expressed as a decimal.

          "CONSOLIDATED INCOME TAX EXPENSE" means, with respect to the Company
for any period, the provision for Federal, state, local and foreign income taxes
payable by the Company and the Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.

          "CONSOLIDATED INTEREST EXPENSE" means, with respect to the Company for
any period, without duplication, the sum of (i) the interest expense of the
Company and the Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP, including, without limitation, (a)
any amortization of debt discount, (b) the net cost under Hedging Obligations,
(c) the interest portion of any deferred payment obligation, (d) all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and (e) all capitalized interest and
all accrued interest and (ii) the interest component of Capital Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the Company
and the Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.

          "CONSOLIDATED NET INCOME" means, for any period, the consolidated net
income (loss) of the Company and the Restricted Subsidiaries; PROVIDED, HOWEVER,
that there shall not be included in such Consolidated Net Income: (i) any net
income (loss) of any Person if such person is not a Restricted Subsidiary,
except (A) to the extent of cash actually distributed by such Person during such
period to the Company or a Restricted Subsidiary as a dividend or other
distribution, (B) with respect to foreign joint ventures, to the extent that
cash is available for distribution (without restriction and not committed for
other purposes) during such period to the Company or a Restricted Subsidiary as
a dividend or other distribution, but is not distributed due to adverse tax or
other business reasons, such cash shall be included and (C) the Company's equity
in a net loss of any such Person (other than an Unrestricted Subsidiary) for
such period shall be included in determining such Consolidated Net Income; (ii)
any net income (loss) of any person acquired by the Company or a Restricted
Subsidiary in a pooling of interests transaction for any period prior to the
date of such acquisition; (iii) any net income (but not 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 by such
Restricted Subsidiary, directly or indirectly, to the Company to the extent of
such restrictions; (iv) any gain or loss realized upon the sale or other
disposition of any asset of the Company or the Restricted Subsidiaries
(including pursuant to any sale/leaseback transaction) outside of the ordinary
course of business; (v) any extraordinary gain or loss; (vi) the cumulative
effect of a change in accounting principles; (vii) any restoration to income of
any contingency reserve of an extraordinary, non-recurring or unusual nature,
except to the extent that provision for such reserve was made out of
Consolidated Net Income accrued at any time following the Issue Date; and (viii)
gains and losses resulting from foreign currency transaction adjustments.

                                       -6-
<Page>

          "CONSOLIDATED NET WORTH" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Equity Interests of such Person.

          "CONSOLIDATED NON-CASH CHARGES" means, with respect to any Person, for
any period the sum of (i) depreciation, (ii) amortization and (iii) other
non-cash expenses of such Person and its Restricted Subsidiaries reducing
Consolidated Net Income of such Person and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP (excluding,
for purposes of clause (iii) only, such charges which require an accrual of or a
reserve for cash charges for any future period).

          "CONVERSION AGENT" means Wilmington Trust Company, Delaware banking
corporation.

          "CONVERSION DATE" has the meaning provided in SECTION 13.02.

          "CONVERSION PRICE" has the meaning provided in SECTION 13.07.

          "CONVERSION RATE" has the meaning provided in SECTION 13.01.

          "CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in SECTION 14.02 or such other address as the Trustee may give
notice to the Company.

          "CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.

          "DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.

          "DEFEASANCE TRUST PAYMENT" has the meaning provided in SECTION 8.02.

          "DEPOSITORY" means, with respect to the Notes issued in the form of
one or more Global Notes, The Depository Trust Company or another Person
designated as Depository by the Company which must be a clearing agency
registered under the Exchange Act.

          "DESIGNATED GUARANTOR SENIOR INDEBTEDNESS" means, with respect to any
Guarantor, (a) any Indebtedness of such Guarantor outstanding under the
Restructured Credit Facility, (b) any Indebtedness outstanding under the
instruments governing the Senior Subordinated Notes and (c) any other Guarantor
Senior Indebtedness of such Guarantor which, at the time of determination, has
an aggregate principal amount outstanding, together with any commitments to lend
additional amounts, of at least $25.0 million, if the instrument governing such
Guarantor Senior Indebtedness expressly states that such Indebtedness is
"Designated Guarantor Senior Indebtedness" for purposes of this Indenture and a
Board Resolution setting forth such designation by the Company has been flied
with the Trustee.

          "DESIGNATED SENIOR INDEBTEDNESS" means (a) any Indebtedness
outstanding under the Restructured Credit Facility, (b) Indebtedness outstanding
under the instruments governing the Senior Subordinated Notes and (c) any other
Senior Indebtedness which, at the time of

                                       -7-
<Page>

determination, has an aggregate principal amount outstanding, together with any
commitments to lend additional amounts, of at least $25.0 million, if the
instrument governing such Senior Indebtedness expressly states that such
Indebtedness is "Designated Senior Indebtedness" for purposes of the Indenture
and a Board Resolution setting forth such designation by the Company has been
filed with the Trustee.

          "DESIGNATION" has the meaning provided in SECTION 4.10.

          "DESIGNATION AMOUNT" has the meaning provided in SECTION 4.10.

          "DISPOSITION" means, with respect to any Person, any merger,
consolidation or other business combination involving such Person (whether or
not such Person is the Surviving Person) or the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of such
Person's assets.

          "DISQUALIFIED EQUITY INTEREST" means any Equity Interest which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable at the option of the holder thereof), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable, at the option of the holder thereof
(except, in each case, upon the occurrence of a Change of Control), in whole or
in part, or exchangeable into Indebtedness on or prior to the earlier of the
maturity date of the Notes or the date on which no Notes remain outstanding.

          "DOMESTIC RESTRICTED SUBSIDIARY" means a Restricted Subsidiary of the
Company organized under the laws of the United States or any political
subdivision thereof or the operations of which are located substantially inside
the United States.

          "EQUITY INTEREST" in any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such Person, including any Preferred Equity Interests but excluding the Notes.

          "EVENT OF DEFAULT" has the meaning provided in SECTION 6.01.

          "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.

          "EXCLUDED STOCK" has the meaning provided in SECTION 13.07.

          "EXPIRATION DATE" has the meaning set forth in the definition of
"Offer to Purchase" below.

          "FAIR MARKET VALUE" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) which could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of which is under any
compulsion to complete the transaction; PROVIDED, HOWEVER, that the Fair Market
Value of any such asset or assets shall be determined conclusively by the Board
of

                                       -8-
<Page>

Directors of the Company acting in good faith, and shall be evidenced by
resolutions of the Board of Directors of the Company delivered to the Trustee.

          "FINAL MATURITY DATE" means December 31, 2007.

          "FOREIGN RESTRICTED SUBSIDIARY" means a Restricted Subsidiary of the
Company not organized under the laws of the United States or any political
subdivision thereof and the operations of which are located substantially
outside of the United States.

          "FOUR QUARTER PERIOD" has the meaning set forth in the definition of
"Consolidated Coverage Ratio" above.

          "FUNDING GUARANTOR" has the meaning provided in SECTION 11.05.

          "GAAP" means, at any date of determination, generally accepted
accounting principles in effect in the United States which are applicable at the
date of determination and which are consistently applied for all applicable
periods.

          "GLOBAL NOTES" means a permanent global note in registered form
initially representing the aggregate principal amount of Notes issued in
reliance on Section 1145 of Title 11 of the U.S. Code.

          "GUARANTEE" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.

          "GUARANTEE" means the guarantee of the Notes by each Guarantor under
the Indenture.

          "GUARANTOR" means each Domestic Restricted Subsidiary in existence on
the Issue Date.

          "GUARANTOR BLOCKAGE PERIOD" has the meaning provided in SECTION
12.02(a).

          "GUARANTOR PAYMENT BLOCKAGE NOTICE" has the meaning provided in
SECTION 12.02(a)

          "GUARANTOR SENIOR INDEBTEDNESS" means, with respect to any Guarantor,
at any date, (a) all Obligations of such Guarantor under the Restructured Credit
Facility; (b) all Obligations of such Guarantor's Guarantee of the Senior
Subordinated Notes, (c) all Hedging Obligations of such Guarantor; (d) all
Obligations of such Guarantor under stand-by letters of credit; and (e) all
other Indebtedness of such Guarantor for borrowed money, including principal,
premium, if any, and interest (including Post-Petition Interest) on such
Indebtedness unless the instrument under which such Indebtedness of such
Guarantor for money borrowed is Incurred

                                       -9-
<Page>

expressly provides that such Indebtedness for money borrowed is not senior or
superior in right of payment to such Guarantor's Guarantee of the Notes, and all
renewals, extensions, modifications, amendments or refinancings thereof.
Notwithstanding the foregoing, Guarantor Senior Indebtedness shall not include
(a) to the extent that it may constitute Indebtedness, any Obligation for
Federal, state, local or other taxes; (b) any Indebtedness among or between such
Guarantor and any Subsidiary of such Guarantor or any Affiliate of such
Guarantor or any of such Affiliate's Subsidiaries; unless, and for so long as
such Indebtedness has been pledged to secure obligations under or in respect of
Guarantor Senior Indebtedness; (c) to the extent that it may constitute
Indebtedness, any Obligation in respect of any trade payable Incurred for the
purchase of goods or materials, or for services obtained, in the ordinary course
of business; (d) that portion of any Indebtedness that is Incurred in violation
of the Indenture; (e) Indebtedness evidenced by such Guarantor's Guarantee of
the Notes; (f) Indebtedness of such Guarantor (excluding all Obligations of such
Guarantor's Guarantee of the Senior Subordinated Notes) that is expressly
subordinate or junior in right of payment to any other Indebtedness of such
Guarantor; (g) to the extent that it may constitute Indebtedness, any obligation
owing under leases (other than Capital Lease Obligations) or management
agreements; (h) any obligation that by operation of law is subordinate to any
general unsecured obligations of such Guarantor; and (i) Indebtedness of a
Guarantor to the extent such Indebtedness is owed to and held by any Federal,
state, local or other governmental authority.

          "HEDGING AGREEMENT" means, with respect to any Person, all interest
rate swap or similar agreements or foreign currency or commodity hedge, exchange
or similar agreements of such Person.

          "HEDGING OBLIGATIONS" means, with respect to any Person, the
Obligations of such Person under Hedging Agreements.

          "HOLDERS" means the registered holders of the Notes.

          "INCUR" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred" and "Incurring" shall have meanings
correlative to the foregoing). Indebtedness of any Acquired Person or any of its
Subsidiaries existing at the time such Acquired Person becomes a Restricted
Subsidiary (or is merged into or consolidated with the Company or any Restricted
Subsidiary), whether or not such Indebtedness was Incurred in connection with,
as a result of, or in contemplation of, such Acquired Person becoming a
Restricted Subsidiary (or being merged into or consolidated with the Company or
any Restricted Subsidiary), shall be deemed Incurred at the time any such
Acquired Person becomes a Restricted Subsidiary or merges into or consolidates
with the Company or any Restricted Subsidiary.

          "INDEBTEDNESS" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (a) every obligation of such Person for money
borrowed; (b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations

                                      -10-
<Page>

incurred in connection with the acquisition of property, assets or businesses;
(c) every reimbursement obligation of such Person with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account of
such Person; (d) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (but excluding trade accounts
payable incurred in the ordinary course of business and payable in accordance
with industry practices, or other accrued liabilities arising in the ordinary
course of business which are not overdue or which are being contested in good
faith); (e) every Capital Lease Obligation of such Person; (f) every net
obligation under Hedging Agreements of such Person; (g) every obligation of the
type referred to in clauses (a) through (f) of another Person and all dividends
of another Person the payment of which, in either case, such Person has
guaranteed or is responsible or liable for, directly or indirectly, as obligor,
guarantor or otherwise; and (h) any and all deferrals, renewals, extensions and
refundings of, or amendments, modifications or supplements to, any liability of
the kind described in any of the preceding clauses (a) through (g) above.
Indebtedness (a) shall never be calculated taking into account any cash and cash
equivalents held by such Person; (b) shall not include obligations of any Person
(x) arising from the honoring by a bank or other financial institution of a
check, draft or similar instrument inadvertently drawn against insufficient
funds in the ordinary course of business, PROVIDED that such obligations are
extinguished within two Business Days of their incurrence, (y) resulting from
the endorsement of negotiable instruments for collection in the ordinary course
of business and consistent with past business practices and (z) under stand-by
letters of credit to the extent collateralized by cash or Cash Equivalents; (c)
which provides that an amount less than the principal amount thereof shall be
due upon any declaration of acceleration thereof shall be deemed to be incurred
or outstanding in an amount equal to the accreted value thereof at the date of
determination; (d) shall include the liquidation preference and any mandatory
redemption payment obligations in respect of any Disqualified Equity Interests
of the Company or any Restricted Subsidiary; and (e) shall not include
obligations under performance bonds, performance guarantees, surety bonds and
appeal bonds, letters of credit or similar obligations, incurred in the ordinary
course of business.

          "INDENTURE" means this Indenture, as amended or supplemented from time
to time.

          "INDENTURE OBLIGATIONS" has the meaning provided in SECTION 11.01.

          "INSOLVENCY OR LIQUIDATION PROCEEDING" means, with respect to any
Person, any liquidation, dissolution or winding up of such Person, or any
bankruptcy, reorganization, insolvency, receivership or similar proceeding with
respect to such Person, whether voluntary or involuntary.

          "INTEREST" means, with respect to the Notes, any cash interest on the
Notes.

          "INTEREST PAYMENT DATE" means each semiannual interest payment date on
January 1 and July 1 of each year, commencing July 1, 2003.

          "INTEREST RECORD DATE" for the interest payable on any Interest
Payment Date (except a date for payment of defaulted interest) means the
December 15 or June 15 (whether or not a Business Day), as the case may be,
immediately preceding such Interest Payment Date.

                                      -11-
<Page>

          "INVESTMENT" means, with respect to any Person, any direct or indirect
loan, advance, guarantee or other extension of credit or capital contribution to
(by means of transfers of cash or other property or assets to others or payments
for property or services for the account or use of others, or otherwise), or
purchase or acquisition of capital stock, bonds, notes, debentures or other
securities or evidences of Indebtedness issued by, any other Person. For
purposes of the "Limitation on Restricted Payments" covenant, the amount of any
Investment shall be the original cost of such Investment, plus the cost of all
additions thereto, but without any other adjustments for increases or decreases
in value, or write-ups, write-downs or write-offs with respect to such
Investment; reduced by the payment of dividends or distributions in connection
with such Investment or any other amounts received in respect of such
Investment; PROVIDED, HOWEVER, that no such payment of dividends or
distributions or receipt of any such other amounts shall reduce the amount of
any Investment if such payment of dividends or distributions or receipt of any
such amounts would be included in Consolidated Net Income. If the Company or any
Restricted Subsidiary sells or otherwise disposes of any Voting Equity Interests
of any direct or indirect Restricted Subsidiary such that, after giving effect
to any such sale or disposition, the Company no longer owns, directly or
indirectly, greater than 50% of the outstanding Voting Equity Interests of such
Restricted Subsidiary, the Company shall be deemed to have made an Investment on
the date of any such sale or disposition.

          "ISSUE DATE" means the original issue date of the Notes.

          "JUNIOR SUBORDINATED INDEBTEDNESS" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness is
to rank PARI PASSU in right of payment with the Notes 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.

          "LIEN" means any lien, mortgage, charge, security interest,
hypothecation, assignment for security or encumbrance of any kind (including any
conditional sale or capital lease or other title retention agreement, any lease
in the nature thereof, and any agreement to give any security interest).

          "LIMITED ORIGINATOR RECOURSE" means a reimbursement obligation to the
Company or a Restricted Subsidiary in connection with a drawing on a letter of
credit, revolving loan commitment, cash collateral account or other such credit
enhancement issued to support Indebtedness of a Securitization Entity under a
facility for the financing of trade receivables; PROVIDED that the available
amount of any such form of credit enhancement at any time shall not exceed 15.0%
of the principal amount of such Indebtedness at such time.

          "MATURITY DATE" means the date, which is set forth on the face of the
Notes, on which the Notes will mature.

          "NET CASH PROCEEDS" means the aggregate proceeds in the form of cash
or Cash Equivalents received by the Company or any Restricted Subsidiary in
respect of any Asset Sale, including all cash or Cash Equivalents received upon
any sale, liquidation or other exchange of proceeds of Asset Sales received in a
form other than cash or Cash Equivalents, net of (a) the direct costs relating
to such Asset Sale (including, without limitation, legal, accounting and
investment banking fees, and sales commissions) and any relocation expenses
incurred as a result

                                      -12-
<Page>

thereof; (b) taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements); (c) amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such Asset Sale; (d) amounts deemed, in good faith, appropriate by the Board of
Directors of the Company to be provided as a reserve, in accordance with GAAP,
against any liabilities associated with such assets which are the subject of
such Asset Sale; including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as reflected in an officers' certificate delivered to the
Trustee (provided that the amount of any such reserves shall be deemed to
constitute Net Cash Proceeds at the time such reserves shall have been reversed
or are not otherwise required to be retained as a reserve); and (e) with respect
to Asset Sales by Restricted Subsidiaries, the portion of such cash payments
attributable to Persons holding a minority interest in such Restricted
Subsidiary.

          "NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes) of the Company or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its Restricted Subsidiaries.

          "NOTE GUARANTEE" means the Form of Note Guarantee of each Guarantor to
be endorsed on each of the Notes substantially in the form of Exhibit A hereto.

          "NOTES" means the 10% Convertible Subordinated Notes due 2007, which
are issued under this Indenture.

          "OBLIGATIONS" means any principal, interest (including, without
limitation, Post-Petition Interest), penalties, fees, indemnifications,
reimbursement obligations, damages and other liabilities payable under the
documentation governing any Indebtedness.

          "OFFER" has the meaning set forth in the definition of "Offer to
Purchase" below.

          "OFFER TO PURCHASE" means a written offer (the "OFFER") sent by or on
behalf of the Company by first-class mail, postage prepaid, to each Holder at
his address appearing in the register for the Notes on the date of the Offer
offering to purchase up to the principal amount of Notes specified in such Offer
at the purchase price specified in such Offer (as determined pursuant to the
Indenture if so required). Unless otherwise required by applicable law, the
Offer shall specify an expiration date (the "EXPIRATION DATE") of the Offer to
Purchase, which shall be not less than 20 Business Days nor more than 60 days
after the date of such Offer, and a settlement date (the "PURCHASE DATE") for
purchase of Notes to occur no later than five Business Days after the Expiration
Date. The Company shall notify the Trustee at least 5 Business Days

                                      -13-
<Page>

(or such shorter period as is acceptable to the Trustee) prior to the mailing of
the Offer of the Company's obligation to make an Offer to Purchase, and the
Offer shall be mailed by the Company or, at the Company's written request, by
the Trustee in the name and at the expense of the Company. The Offer shall
contain all the information required by applicable law to be included therein.
The Offer shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Offer to Purchase. The Offer shall also
state: (1) the Section of the Indenture pursuant to which the Offer to Purchase
is being made; (2) the Expiration Date and the Purchase Date; (3) the aggregate
principal amount of the outstanding Notes offered to be purchased by the Company
pursuant to the Offer to Purchase (including, if less than 100%, the manner by
which such amount has been determined pursuant to the Section of the Indenture
requiring the Offer to Purchase) (the "PURCHASE AMOUNT"); (4) the purchase price
to be paid by the Company for each $1,000 aggregate principal amount of Notes
accepted for payment (as specified pursuant to the Indenture) (the "PURCHASE
PRICE"); (5) that the Holder may tender all or any portion of the Notes
registered in the name of such Holder and that any portion of a Note tendered
must be tendered in an integral multiple of $1,000 principal amount; (6) the
place or places where Notes are to be surrendered for tender pursuant to the
Offer to Purchase; (7) that interest on any Note not tendered or tendered but
not purchased by the Company pursuant to the Offer to Purchase will continue to
accrue; (8) that on the Purchase Date the Purchase Price will become due and
payable upon each Note being accepted for payment pursuant to the Offer to
Purchase and that interest thereon shall cease to accrue on and after the
Purchase Date; (9) that each Holder electing to tender all or any portion of a
Note pursuant to the Offer to Purchase will be required to surrender such Note
at the place or places specified in the Offer prior to the close of business on
the Expiration Date (such Note being, if the Company or the Trustee so requires,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing); (10) that (a) if Notes in an
aggregate principal amount less than or equal to the Purchase Amount are duly
tendered and not withdrawn pursuant to the Offer to Purchase, the Company shall
purchase all such Notes and (b) if Notes in an aggregate principal amount in
excess of the Purchase Amount are tendered and not withdrawn pursuant to the
Offer to Purchase, the Company shall purchase Notes having an aggregate
principal amount equal to the Purchase Amount on a pro rata basis (with such
adjustments as may be deemed appropriate so that only Notes in denominations of
$1,000 principal amount or integral multiples thereof shall be purchased); and
(11) that in the case of any Holder whose Note is purchased only in part, the
Company shall execute and the Trustee shall, upon receipt of a written order
signed by an Officer of the Company, authenticate and deliver to the Holder of
such Note without service charge, a new Note or Notes, of any authorized
denomination as requested by such Holder, in an aggregate principal amount equal
to and in exchange for the unpurchased portion of the Note so tendered.

          An Offer to Purchase shall be governed by and effected in accordance
with the provisions above pertaining to any Offer.

          "OFFICER" means the Chairman, any Vice Chairman, the Chief Executive
Officer, the President, the Chief Operating Officer, any Vice President, the
Chief Financial Officer, the Treasurer, or the Secretary of the Company.

                                      -14-
<Page>

          "OFFICERS CERTIFICATE" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer or Assistant Secretary of the Company
complying with SECTIONS 14.04 and 14.05.

          "OPINION OF COUNSEL" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.

          "PARTICIPANT" has the meaning provided in SECTION 2.15.

          "PAYING AGENT" has the meaning provided in SECTION 2.03.

          "PAYMENT BLOCKAGE NOTICE" has the meaning provided in SECTION 8.02(a).

          "PAYMENT BLOCKAGE PERIOD" has the meaning provided in SECTION 8.02(a).

          "PERMITTED HOLDER" means MatlinPatterson Global Opportunities Partners
L.P. and its Affiliates, The InterTech Group, Inc. and its Affiliates, Golder,
Thoma, Cressey Fund III Limited Partnership and its Affiliates, Jerry Zucker and
James G. Boyd and members of either of their immediate families and trusts of
which such persons are the beneficiaries.

          "PERMITTED INDEBTEDNESS" has the meaning provided in SECTION 4.04.

          "PERMITTED INVESTMENT" means (a) Cash Equivalents; (b) Investments in
prepaid expenses, negotiable instruments held for collection and lease, utility
and workers' compensation, performance and other similar deposits; (c) Hedging
Obligations; (d) bonds, notes, debentures or other securities received as a
result of Asset Sales permitted under SECTION 4.05 not to exceed 35% of the
total consideration for such Asset Sales; (e) Investments in the Company and
Investments in a Restricted Subsidiary or a Person that, as a result of or in
connection with such Investment, becomes a Restricted Subsidiary or is merged
with or into or consolidated with the Company or another Restricted Subsidiary;
(f) Investments existing as of the Issue Date; and (g) any Investment consisting
of a guarantee by a Restricted Subsidiary of Senior Indebtedness or any
guarantee of Indebtedness otherwise permitted by the Indenture.

          "PERMITTED JUNIOR SECURITIES" means any securities of the Company or
any other Person that are (i) equity securities without special covenants or
(ii) debt securities expressly subordinated in right of payment to all Senior
Indebtedness that may at the time be outstanding, to substantially the same
extent as, or to a greater extent than, the Notes are subordinated as provided
in the Indenture, in any event pursuant to a court order so providing and as to
which (a) the rate of interest on such securities shall not exceed the effective
rate of interest on the Notes on the date of the Indenture, (b) such securities
shall not be entitled to the benefits of covenants or defaults materially more
beneficial to the holders of such securities than those in effect with respect
to the Notes on the date of the Indenture and (c) such securities shall not
provide for amortization (including sinking fund and mandatory prepayment
provisions) commencing prior to the date six months following the final
scheduled maturity date of the Senior Indebtedness (as modified by the plan of
reorganization pursuant to which such securities are issued).

                                      -15-
<Page>

          "PERMITTED LIENS" means (a) Liens on property of a Person existing at
the time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary; PROVIDED, HOWEVER, that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not secure any
property or assets of the Company or any Restricted Subsidiary other than the
property or assets subject to the Liens prior to such merger or consolidation;
(b) Liens imposed by law such as carriers', warehousemen's and mechanics' Liens
and other similar Liens arising in the ordinary course of business which secure
payment of obligations not more than 60 days past due or which are being
contested in good faith and by appropriate proceedings; (c) Liens existing on
the Issue Date; (d) Liens securing only the Notes or the Guarantees; (e) Liens
in favor of the Company or any Restricted Subsidiary (including any such Liens
securing Indebtedness, to the extent and for so long as such Indebtedness is
pledged to secure Senior Indebtedness); (f) 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, HOWEVER, that any reserve or other appropriate
provision as shall be required in conformity with GAAP shall have been made
therefor; (g) easements, reservation of rights of way, restrictions and other
similar easements, licenses, restrictions on the use of properties, or minor
imperfections of title that in the aggregate do not in any case materially
detract from the properties subject thereto or interfere with the ordinary
conduct of the business of the Company and the Restricted Subsidiaries; (h)
Liens resulting from the deposit of cash or notes in connection with contracts,
tenders or expropriation proceedings, or to secure workers' compensation, surety
or appeal bonds, costs of litigation when required by law and public and
statutory obligations or obligations under franchise arrangements entered into
in the ordinary course of business; (i) Liens securing Indebtedness consisting
of Capital Lease Obligations, Purchase Money Indebtedness, mortgage financings,
industrial revenue bonds or other monetary obligations, in each case incurred
solely for the purpose of financing all or any part of the purchase price or
cost of construction or installation of assets used in the business of the
Company or the Restricted Subsidiaries, or repairs, additions or improvements to
such assets, PROVIDED, HOWEVER, that (I) such Liens secure Indebtedness in an
amount not in excess of the original purchase price or the original cost of any
such assets or repair, addition or improvement thereto (plus an amount equal to
the reasonable fees and expenses in connection with the incurrence of such
Indebtedness), (II) such Liens do not extend to any other assets of the Company
or the Restricted Subsidiaries (and, in the case of repair, addition or
improvements to any such assets, such Lien extends only to the assets (and
improvements thereto or thereon) repaired, added to or improved), (III) the
Incurrence of such Indebtedness is permitted by SECTION 4.04 and (IV) such Liens
attach within 90 days of such purchase, construction, installation, repair,
addition or improvement; and (j) Liens to secure any refinancings, renewals,
extensions, modifications or replacements (collectively, "REFINANCING") (or
successive refinancings), in whole or in part, of any Indebtedness secured by
Liens referred to in the clauses above so long as such Lien does not extend to
any other property (other than improvements thereto).

          "PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, limited
liability limited partnership, trust, unincorporated organization or government
or any agency or political subdivision thereof.

          "PHYSICAL NOTES" means one or more certificated Notes in registered
form.

                                      -16-
<Page>

          "POST-PETITION INTEREST" means, with respect to any Indebtedness of
any Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing such Indebtedness, whether or not, pursuant to
applicable law or otherwise, the claim for such interest is allowed as a claim
in such Insolvency or Liquidation Proceeding.

          "PREFERRED EQUITY INTEREST", in any Person, means an Equity Interest
of any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such Person, over
Equity Interests of any other class in such Person.

          "PRINCIPAL" of a debt security means the principal of the security
plus, when appropriate, the premium, if any, on the security.

          "PURCHASE AMOUNT" has the meaning set forth in the definition of
"Offer to Purchase" above.

          "PURCHASE DATE" has the meaning set forth in the definition of "Offer
to Purchase" above.

          "PURCHASE MONEY INDEBTEDNESS" means Indebtedness of the Company or any
Restricted Subsidiary Incurred for the purpose of financing all or any part of
the purchase price, or the cost of construction or improvement of any property
used in the business of the Company; PROVIDED, HOWEVER, that the aggregate
principal amount of such Indebtedness does not exceed the lesser of the Fair
Market Value of such property or such purchase price or cost, including any
refinancing of such Indebtedness that does not increase the aggregate principal
amount (or accreted amount, if less) thereof as of the date of refinancing.

          "PURCHASE MONEY NOTE" means a promissory note of a Securitization
Entity evidencing a line of credit, which may be irrevocable, from the Company
or any Restricted Subsidiary of the Company in connection with a Qualified
Securitization Transaction, which note shall be repaid from cash available to
the Securitization Entity, other than amounts required to be established as
reserves pursuant to agreements, amounts paid to investors in respect of
interest, principal and other amounts owning to such investors and amounts paid
in connection with the purchase of newly generated receivables.

          "PURCHASE PRICE" has the meaning set forth in the definition of "Offer
to Purchase" above.

          "QUALIFIED EQUITY INTEREST" in any Person means any Equity Interest in
such Person other than any Disqualified Equity Interest.

          "QUALIFIED SECURITIZATION TRANSACTION" means any transaction or series
of transactions pursuant to which the Company or any of its Restricted
Subsidiaries may sell, convey or otherwise transfer to (a) a Securitization
Entity (in the case of a transfer by the Company or any of its Restricted
Subsidiaries) and (b) any other Person (in case of a transfer by

                                      -17-
<Page>

a Securitization Entity), or may grant a security interest in, any receivables
(whether now existing or arising or acquired in the future) of the Company or
any of its Restricted Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such receivables, all contracts and
contract rights and all guarantees or other obligations in respect of such
receivables, proceeds of such receivables 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 receivables (collectively, "TRANSFERRED ASSETS");
PROVIDED that in the case of any such transfer by the Company or any of its
Restricted Subsidiaries, the transferor receives cash or Purchase Money Notes in
an amount which (when aggregated with the cash and Purchase Money Notes received
by the Company and its Restricted Subsidiaries upon all other such transfers of
transferred assets during the 90 days preceding such transfer) is at least equal
to 75% of the aggregate face amount of all receivables so transferred during
such day and the 90 preceding days.

          "QUOTED PRICE" has the meaning provided in SECTION 13.01.

          "REDEMPTION DATE" when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to this Indenture.

          "REDEMPTION PRICE," when used with respect to any Note to be redeemed,
means the price fixed for such redemption pursuant to this Indenture as set
forth in the form of Note annexed hereto as Exhibit A,

          "REGISTRAR" has the meaning provided in SECTION 2.03.

          "REPLACEMENT ASSETS" has the meaning provided in SECTION 4.05.

          "RESTRICTED INVESTMENT" means any Investment other than a Permitted
Investment.

          "RESTRICTED PAYMENTS" has the meaning provided in SECTION 4.06.

          "RESTRICTED SUBSIDIARY" means any Subsidiary of the Company that has
not been designated by the Board of Directors of the Company, by a resolution of
the Board of Directors of the Company delivered to the Trustee, as an
Unrestricted Subsidiary pursuant to SECTION 4.10. Any such designation may be
revoked by a resolution of the Board of Directors of the Company delivered to
the Trustee, subject to the provisions of such covenant.

          "RESTRUCTURED CREDIT FACILITY" means the Third Amended, Restated and
Consolidated Credit Agreement, dated as of March 5, 2003, as in effect on the
date hereof, by and among the Company, the Subsidiaries of the Company
identified on the signature pages thereof and any Subsidiary that is later added
thereto, the lenders named therein, and JPMorgan Chase Bank, as Administrative
Agent, as further amended, including any deferrals, renewals, extensions,
replacements, refinancings, restructurings or refundings thereof, or amendments,
modifications or supplements thereto and any agreement providing therefor
(including any restatements thereof and any increases in the amount of the
commitment thereunder), whether by or with the same or any other lender,
creditor, group of lenders or group of creditors, and including related notes,
guarantee and note agreements and other instruments and agreements executed in
connection therewith.

                                      -18-
<Page>

          "REVOCATION" has the meaning provided in SECTION 4.10.

          "RIGHTS" has the meaning provided in SECTION 13.18.

          "RIGHTS AGREEMENT" has the meaning provided in SECTION 13.18.

          "SEC" OR "COMMISSION" means the Securities and Exchange Commission.

          "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.

          "SECURITIZATION ENTITY" means either a Wholly Owned Restricted
Subsidiary of the Company (or another Person in which the Company or any
Restricted Subsidiary of the Company makes an Investment and to which the
Company or any Restricted Subsidiary of the Company transfers receivables and
related assets) or an Unrestricted Subsidiary that engages in no activities
other than in connection with the financing of receivables and that is
designated by the Board of the 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 Restricted Subsidiary of the Company other than pursuant to Standard
Securitization Undertakings or Limited Originator Recourse, (ii) is recourse to
or obligates the Company or any Restricted Subsidiary of the Company (other than
the Securitization Entity) in any way other than pursuant to Standard
Securitization Undertakings or Limited Originator Recourse or (iii) subjects any
property or asset of the Company or any Restricted Subsidiary of the Company
(other than the Securitization Entity), directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings or Limited Originator Recourse, (b) with which
neither the Company nor any Restricted Subsidiary of the Company has any
material contract, agreement, arrangement or understanding other than on terms
no less favorable to the Company or such Restricted 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 Restricted 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 of the
Company giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.

          "SENIOR INDEBTEDNESS" means, at any date, (a) all Obligations of the
Company under the Restructured Credit Facility; (b) all Hedging Obligations of
the Company; (c) all Obligations of the Company under stand-by letters of
credit; (d) all Obligations of the Company under the Senior Subordinated Notes
and (e) all other Indebtedness of the Company for borrowed money, including
principal, premium, if any, and interest (including Post-Petition Interest) on
such Indebtedness, unless the instrument under which such Indebtedness of the
Company for money borrowed is Incurred expressly provides that such Indebtedness
for money borrowed is not senior or superior in right of payment to the Notes,
and all renewals, extensions, modifications, amendments or refinancings thereof.
Notwithstanding the foregoing, Senior

                                      -19-
<Page>

Indebtedness shall not include (a) to the extent that it may constitute
Indebtedness, any Obligation for Federal, state, local or other taxes; (b) any
Indebtedness among or between the Company and any Subsidiary of the Company or
any Affiliate of the Company or any of such Affiliate's Subsidiaries; unless and
for so long as such Indebtedness has been pledged to secure obligations under or
in respect of Senior Indebtedness; (c) to the extent that it may constitute
Indebtedness, any Obligation in respect of any trade payable Incurred for the
purchase of goods or materials, or for services obtained, in the ordinary course
of business; (d) Indebtedness of the Company that is PARI PASSU with, or
expressly subordinate or junior in right of payment to, the Notes; (e) to the
extent that it may constitute Indebtedness, any obligation owing under leases
(other than Capital Lease Obligations) or management agreements; (f) any
obligation that by operation of law is subordinate to any general unsecured
obligations of the Company; and (g) Indebtedness of the Company to the extent
such Indebtedness is owed to and held by any Federal, state, local or other
governmental authority.

          "SENIOR SUBORDINATED NOTES" means the 10% Senior Subordinated Notes
due 2007.

          "SIGNIFICANT RESTRICTED SUBSIDIARY" means, at any date of
determination, (a) any Restricted Subsidiary that, together with its
Subsidiaries that constitute Restricted Subsidiaries (i) for the most recent
fiscal year of the Company accounted for more than 20.0% of the consolidated
revenues of the Company and the Restricted Subsidiaries or (ii) as of the end of
such fiscal year, owned more than 20.0% of the consolidated assets of the
Company and the Restricted Subsidiaries, all as set forth on the consolidated
financial statements of the Company and the Restricted Subsidiaries for such
year prepared in conformity with GAAP and (b) any Restricted Subsidiary which,
when aggregated with all other Restricted Subsidiaries that are not otherwise
Significant Restricted Subsidiaries and as to which any event described in
clause (i) of Section 6.01 has occurred, would constitute a Significant
Restricted Subsidiary under clause (a) of this definition.

          "STANDARD SECURITIZATION UNDERTAKINGS" means representations,
warranties, covenants and indemnities entered into by the Company or any
Subsidiary of the Company that are reasonably customary in receivables
securitization transactions.

          "STATED MATURITY" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is due
and payable.

          "SUBORDINATED INDEBTEDNESS" means, with respect to the Company or any
Guarantor, any Indebtedness of the Company or such Guarantor, as the case may
be, which is PARI PASSU with, or expressly subordinated in right of payment to,
the Notes or such Guarantor's Guarantee, as the case may be.

          "SUBSIDIARY" means, with respect to any Person, (a) any corporation of
which the outstanding Voting Equity Interests having at least a majority of the
votes entitled to be cast in the election of directors shall at the time be
owned, directly or indirectly, through one or more Persons by such Person, or
(b) any other Person of which at least a majority of Voting Equity Interests are
at the time, directly or indirectly, owned by such first named Person.

                                      -20-
<Page>

          "SURVIVING PERSON" means, with respect to any Person involved in or
that makes any Disposition, the Person formed by or surviving such Disposition
or the Person to which such Disposition is made.

          "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Section
77aaa77bbbb), as amended, as in effect on the date of this Indenture (except as
provided in Section 10.03) until such time as the Indenture is qualified under
the TIA, and thereafter as in effect on the date on which the Indenture is
qualified under the TIA.

          "TRUSTEE" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
this Indenture and thereafter means such successor.

          "TRUST OFFICER" means any officer within the corporate trust
department (or any successor group of the Trustee) including any vice president,
assistant vice president, assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at that title shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer to
whom such trust matter is referred because of his knowledge of and familiarity
with the particular subject.

          "UNITED STATES GOVERNMENT OBLIGATIONS" means direct noncallable
obligations of the United States of America for the payment of which the full
faith and credit of the United States is pledged.

          "UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company
designated as such pursuant to SECTION 4.10. Any such designation may be revoked
by a resolution of the Board of Directors of the Company delivered to the
Trustee, subject to SECTION 4.10.

          "UNUTILIZED NET CASH PROCEEDS" has the meaning provided in SECTION
4.05(a).

          "VOTING EQUITY INTERESTS" means Equity Interests in a corporation or
other Person with voting power under ordinary circumstances entitling the
holders thereof to elect the Board of Directors or other governing body of such
corporation or Person.

          "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment of final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
aggregate principal amount of such Indebtedness.

          "WHOLLY OWNED RESTRICTED SUBSIDIARY" means any Restricted Subsidiary
all of the outstanding Voting Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Company and/or one or
more Wholly Owned Restricted Subsidiaries.

SECTION 1.02.   INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

                                      -21-
<Page>

          Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:

          "COMMISSION" means the SEC.

          "INDENTURE SECURITIES" means the Notes.

          "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 or any other
obligor on the Notes.

          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 and not
otherwise defined herein have the meanings assigned to them therein.

SECTION 1.03.   RULES OF CONSTRUCTION.

          Unless the context otherwise requires:

          (1) a term has the meaning assigned to it;

          (2) an accounting term not otherwise defined has the meaning assigned
     to it in accordance with generally accepted accounting principles in effect
     from time to time, and any other reference in this Indenture to "generally
     accepted accounting principles' refers to GAAP.

          (3) "or" is not exclusive;

          (4) words in the singular include the plural, and words in the plural
     include the singular;

          (5) provisions apply to successive events and transactions; and

          (6) "herein," "hereof" and other words of similar import refer to this
     Indenture as a whole and not to any particular Article, Section or other
     subdivision.

                                   ARTICLE TWO

                                    THE NOTES

SECTION 2.01.   FORM AND DATING.

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          The Notes and the Trustee's certificate of authentication thereof
shall be substantially in the form of EXHIBIT A hereto, which is hereby
incorporated in and expressly made a part of this Indenture. The Notes may have
notations, legends or endorsements (including the Note Guarantee) required by
law, stock exchange rule or usage. The Company and the Trustee shall approve the
form of the Notes and any notation, legend or endorsement (including the Note
Guarantee) on them. Each Note shall be dated the date of its issuance and shall
show the date of its authentication.

          The Notes offered and exchanged in reliance on Section 1145 of Title
11 of the U.S. Code shall be issued in the form of a Global Note, substantially
in the form set forth in EXHIBIT A hereto, deposited with the Trustee, as
custodian for the Depository, duly executed by the Company and authenticated by
the Trustee as hereinafter provided with the Guarantees of the Guarantors
endorsed thereon and shall bear the legend set forth in EXHIBIT B hereto. The
aggregate principal amount of the Global Note may from time to time be decreased
by adjustments made on the records of the Trustee, as custodian for the
Depository, as hereinafter provided. Notes issued in exchange for interests in a
Global Note pursuant to SECTION 2.L5 may be issued in the form of Physical Notes
in substantially the form set forth in EXHIBIT A.

SECTION 2.02.   EXECUTION AND AUTHENTICATION.

          Two Officers, or an Officer and an Assistant Secretary, shall sign, or
one Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Notes for the Company by manual or facsimile
signature.

          If an Officer or an Assistant Secretary whose signature is on a Note
was an Officer or an Assistant Secretary, as the case may be, at the time of
such execution but no longer holds that office at the time the Trustee
authenticates the Note, the Note shall be valid nevertheless.

          A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.

          The Trustee shall authenticate the Notes for original issue in an
aggregate principal amount not to exceed $50,000,000 upon receipt of a written
order of the Company signed by an Officer of the Company in the form of an
Officers' Certificate. Such written order shall specify the amount of Notes to
be authenticated and the date on which the Notes are to be authenticated,
whether the Notes are to be issued as Physical Notes or Global Notes and such
other information as the Trustee may reasonably request. The aggregate principal
amount of Notes outstanding at any time may not exceed $50,000,000 except as
provided in SECTIONS 2.07 and 2.08.

          All Notes issued under this Indenture shall vote and consent together
on all matters (as to which any of such Notes may vote or consent) as one class
and no series of Notes will have the right to vote or consent as a separate
class on any matter.

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          The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate Notes. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Notes whenever the Trustee
may do so. Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent shall have the
same rights as an Agent to deal with the Company and Affiliates of the Company.

          The Notes shall be issuable only in registered form without coupons in
denominations of $1,000 and integral multiples thereof.

SECTION 2.03.   REGISTRAR AND PAYING AGENT.

          The Company shall maintain an office or agency, which may be in the
Borough of Manhattan, The City of New York, where (a) Notes may be presented or
surrendered for registration of transfer or for exchange (the "REGISTRAR") (b)
Notes may be presented or surrendered for payment (the "PAYING AGENT") and (c)
notices and demands in respect of the Notes and this Indenture may be served.
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company, upon written notice to the Trustee, may appoint one or
more co-Registrars and one or more additional Paying Agents. The term "PAYING
AGENT" includes any additional Paying Agent. Except as provided herein, the
Company or any Guarantor may act as Paying Agent, Registrar or co-Registrar.

          The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which shall incorporate the provisions of
the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee in writing of the
name and address of any such Agent. If the Company fails to maintain a Registrar
or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
SECTION 7. 07.

          The Company initially appoints the Trustee as Registrar and Paying
Agent until such time as the Trustee has resigned or a successor has been
appointed.

SECTION 2.04.   PAYING AGENT TO HOLD ASSETS IN TRUST.

          The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest on, the Notes, and shall notify the Trustee in writing
of any Default by the Company in making any such payment. The Company at any
time may require a Paying Agent to distribute all assets held by it to the
Trustee and account for any assets disbursed and the Trustee may at any time
during the continuance of any payment Default, upon written request to a Paying
Agent, require such Paying Agent to distribute all assets held by it to the
Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent (if other than the Company), the Paying Agent shall have no further
liability for such assets. If the Company, any Guarantor or any of their
respective Affiliates acts as Paying Agent, it shall, on or before each due date
of the principal of, or interest on, the Notes, segregate and hold in trust for
the benefit of the Persons entitled thereto a sum sufficient to pay the
principal or interest so becoming due until such sums shall be paid to such

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Persons or otherwise disposed of as herein provided and will promptly notify the
Trustee of its action or failure so to act.

SECTION 2.05.   HOLDER LISTS.

          The Company shall deliver to the Trustee and 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 to the Trustee before each Interest Record
Date and at such other times as the Trustee may request in writing a list as of
such date and in such form as the Trustee may reasonably require of the names
and addresses of Holders, which list may be conclusively relied upon by the
Trustee.

SECTION 2.06.   TRANSFER AND EXCHANGE.

          Subject to the provisions of SECTIONS 2.15, when Notes are presented
to the Registrar or a co-Registrar with a request to register the transfer of
such Notes or to exchange such Notes for an equal principal amount of Notes of
other authorized denominations of the same series, the Registrar or co-Registrar
shall register the transfer or make the exchange as requested if its
requirements for such transaction are met; PROVIDED HOWEVER, that the Notes
surrendered for transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Registrar or co-Registrar, duly executed by the Holder thereof or his attorney
duly authorized in writing. To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate upon receipt of a
written order signed by an Officer of the Company in the form of an Officer's
Certificate Notes at the Registrar's or co-Registrar's written request. 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 or
similar governmental charge payable in connection therewith (other than any such
transfer taxes or other governmental charge payable upon exchanges or transfers
pursuant to SECTION 2.02, 2.10, 3.06, 4.05, or 10.05). The Registrar or
co-Registrar shall not be required to register the transfer or exchange of any
Note (i) during a period beginning at the opening of business 15 days before the
mailing of a notice of redemption of Notes and ending at the close of business
on the day of such mailing and (ii) selected for redemption in whole or in part
pursuant to Article Three hereof, except the unredeemed portion of any Note
being redeemed in part.

          Prior to the registration of any transfer by a Holder as provided
herein, the Company, the Trustee and any Agent of the Company shall treat the
person in whose name the Note is registered as the owner thereof for all
purposes whether or not the Note shall be overdue, and neither the Company, the
Trustee nor any such Agent shall be affected by notice to the contrary. Any
Holder of a beneficial interest in a Global Note shall, by acceptance of such
beneficial interest in a Global Note, agree that transfers of beneficial
interests in such Global Note may be effected only through a book entry system
maintained by the Depository (or its agent), and that ownership of a beneficial
interest in a Global Note shall be required to be reflected in a book entry.

          Each Holder of a Note agrees to indemnify the Trustee against any
liability, cost and expense that may result from the transfer, exchange or
assignment of such Holder's Note in

                                      -25-
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violation of any provision of this Indenture and/or applicable United States
federal or state securities law.

SECTION 2.07.   REPLACEMENT NOTES.

          If a mutilated Note is surrendered to the Trustee or if the Holder of
a Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall upon receipt of a written order signed
by an Officer of the Company in the form of an Officer's Certificate
authenticate a replacement Note if the Trustee's requirements for replacement of
Notes under this Indenture are met. If required by the Company or the Trustee,
such Holder must provide an indemnity bond or other indemnity, sufficient in the
judgment of both the Company and the Trustee, to protect the Company, the
Trustee and any Agent from any loss which any of them may suffer if a Note is
replaced. The Company may charge such Holder for its reasonable out-of-pocket
expenses in replacing a Note, including reasonable fees and expenses of counsel.

          Every replacement Note is an additional obligation of the Company.

SECTION 2.08.   OUTSTANDING NOTES.

          Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this SECTION 2.08 as not outstanding.
Subject to SECTION 2.09, a Note does not cease to be outstanding because the
Company or any of its Affiliates holds the Note.

          If a Note is replaced pursuant to SECTION 2.07 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
BONA FIDE purchaser. A mutilated Note ceases to be outstanding upon surrender of
such Note and replacement thereof pursuant to SECTION 2.07.

          If on a Redemption Date, Purchase Date or the Final Maturity Date the
Paying Agent holds money sufficient to pay all of the principal and interest due
on the Notes payable on that date, and is not prohibited from paying such money
to the Holders pursuant to the terms of this Indenture, then on and after that
date such Notes cease to be outstanding and interest on them ceases to accrue.

SECTION 2.09.   TREASURY NOTES.

          In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or the Guarantors or any of their respective Subsidiaries shall be
disregarded, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Trust Officer of the Trustee actually knows are so owned shall be
disregarded.

          The Company shall notify the Trustee, in writing, when it, any
Guarantor or any of their respective Subsidiaries repurchases or otherwise
acquires Notes, of the aggregate principal amount of such Notes so repurchased
or otherwise acquired.

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SECTION 2.10.   TEMPORARY NOTES

          Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon receipt of a written
order of the Company in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated.

          Temporary Notes shall be substantially in the form of definitive Notes
but may have variations that the Company considers appropriate for temporary
Notes. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate upon receipt of a written order of the Company pursuant to
SECTION 2.02 definitive Notes in exchange for temporary Notes.

SECTION 2.11.   CANCELLATION.

          The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. At the written
direction of the Company, the Trustee, or at the direction of the Trustee, the
Registrar or the Paying Agent, and no one else, shall cancel, and at the written
direction of the Company, dispose of and deliver evidence of such disposal of
all Notes surrendered for transfer, exchange, payment or cancellation. Subject
to SECTION 2.07, the Company may not issue new Notes to replace Notes that it
has paid or delivered to the Trustee for cancellation. If the Company or any
Guarantor shall acquire any of the Notes, such acquisition shall not operate as
a redemption or satisfaction of the Indebtedness represented by such Notes
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this SECTION 2.11.

SECTION 2.12.   DEFAULTED INTEREST.

          The Company shall pay interest on overdue principal from time to time
on demand at the rate of interest then borne by the Notes. The Company shall, to
the extent lawful, pay interest on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the rate
of interest then borne by the Notes.

          If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a subsequent
special record date, which date shall be the fifteenth day preceding the date
fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder, with a copy to the Trustee, a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid.

          Notwithstanding the foregoing, any interest which is paid prior to the
expiration of the 30 day period set forth in SECTION 6.01(b) shall be paid to
Holders as of the Interest Record Date for the Interest Payment Date for which
interest has not been paid.

SECTION 2.13.   CUSIP NUMBER.

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          The Company in issuing the Notes will use a "CUSIP" number and the
Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; PROVIDED, HOWEVER, that any such notice may state that
no representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any changes in CUSIP numbers.

SECTION 2.14.   DEPOSIT OF MONEYS.

          Prior to 10:00 a.m. New York City time on each Interest Payment Date,
Redemption Date, Purchase Date and the Final Maturity Date, the Company shall
deposit with the Paying Agent in immediately available funds money sufficient to
make cash payments, if any, due on such Interest Payment Date, Redemption Date,
Purchase Date or Final Maturity Date, as the case may be, in a timely manner
which permits the Paying Agent to remit payment to the Holders on such Interest
Payment Date, Redemption Date, Purchase Date or Final Maturity Date, as the case
may be.

SECTION 2.15.   BOOK-ENTRY PROVISIONS FOR GLOBAL NOTES.

          (a) The Global Notes initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
EXHIBIT B.

          Members of, or participants in, the Depository ("PARTICIPANTS") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Note, and the Depository may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of the Global Note
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 Depository or impair, as between the Depository and
Participants, the operation of customary practices governing the exercise of the
rights of a Holder of any Note.

          (b) Transfers of Global Notes shall be limited to transfers in whole,
but not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in the Global Notes may be transferred or
exchanged for Physical Notes in ACCORDANCE WITH the rules and procedures of the
Depository; PROVIDED, HOWEVER, that Physical Notes shall be transferred to all
beneficial owners in exchange for their beneficial interests in Global Notes if
(i) the Depository notifies the Company that it is unwilling or unable to
continue as Depository for any Global Note and a successor Depository is not
appointed by the Company within 90 days of such notice or (ii) an Event of
Default has occurred and is continuing and the Registrar has received a request
from the Depository to issue Physical Notes.

          (c) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Note to beneficial owners pursuant to paragraph
(b), the Registrar shall (if one or more Physical Notes are to be issued)
reflect on its books and records the date and a decrease in the principal amount
of such Global Note in an amount equal to the principal amount

                                      -28-
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of the beneficial interest in the Global Note to be transferred, and the Company
shall execute, and the Trustee shall authenticate and deliver, one or more
Physical Notes of like tenor and amount.

          (d) In connection with the transfer of Global Notes as an entirety to
beneficial owners pursuant to paragraph (b) of this SECTION 2.15, the Global
Notes shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall upon receipt of written
instructions from the Company signed by an Officer of the Company authenticate
and deliver, to each beneficial owner identified by the Depository in exchange
for its beneficial interest in the Global Notes, an equal aggregate principal
amount of Physical Notes of authorized denominations.

          (e) the Holder of any Global Note may grant proxies and otherwise
authorize any Person, including Participants and Persons that may hold interests
through Participants, to take any action which a Holder is entitled to take
under this Indenture or the Notes and the Trustee is entitled to rely upon any
electronic instructions from beneficial owners to the Holder of any Global Note.

          (f) 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 Note (including any transfers between or among Participants or beneficial
owners of interest in any Global Note) 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.

          (g) The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to this SECTION 2.15. The Company
shall have the right to inspect and make copies of all such letters, notices or
other written communications at any reasonable time upon the giving of
reasonable written notice to the Registrar.

                                  ARTICLE THREE

                                   REDEMPTION

SECTION 3.01.   NOTICES TO TRUSTEE.

          If the Company wants to redeem Notes pursuant to paragraph 5 of the
Notes at the applicable redemption price set forth thereon, it shall notify the
Trustee in writing of the Redemption Date and the principal amount of Notes to
be redeemed. The Company shall give such notice to the Trustee at least 60 days
before the Redemption Date (unless a shorter notice shall be agreed to by the
Trustee in writing), together with an Officers' Certificate stating that such
redemption will comply with the conditions contained herein.

SECTION 3.02.   SELECTION OF NOTES TO BE REDEEMED.

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          If less than all of the Notes are to be redeemed pursuant to paragraph
5 of the Notes, the Trustee shall select the Notes to be redeemed in compliance
with the requirements of the principal national securities exchange, if any, on
which the Notes are listed or, if the Notes are not then listed on a national
securities exchange, on a PRO RATA basis based upon the aggregate principal
amount of Notes held by such Holder, or in such other manner as the Trustee
shall deem fair and appropriate. The Trustee shall make the selection from the
Notes then outstanding, subject to redemption and not previously called for
redemption.

          The Trustee may select for redemption pursuant to paragraph 5 of the
Notes portions of the principal amount of Notes that have denominations equal to
or larger than $1,000 principal amount. Notes and portions of them the Trustee
so selects shall be in amounts of $1,000 principal amount or integral multiples
thereof or less than $1,000 if the redemption constitutes the remaining portion
of the Notes. Provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption.

SECTION 3.03.   NOTICE OF REDEMPTION.

          At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first-class mail to each Holder
whose Notes are to be redeemed at such Holder's registered address.

          Each notice of redemption shall identify the Notes to be redeemed
(including the CUSIP number thereon), or the portion of the principal amount to
be redeemed if any Note is to be redeemed in part only, and shall state:

          (1) the Redemption Date;

          (2) the redemption price for the Notes and accrued and unpaid
     interest, if any;

          (3) the name and address of the Paying Agent to which the Notes are to
     be surrendered for redemption;

          (4) that Notes called for redemption must be surrendered to the Paying
     Agent to collect the redemption price;

          (5) that, unless the Company defaults in making the redemption
     payment, interest on Notes or portions thereof called for redemption ceases
     to accrue on and after the Redemption Date and the only remaining right of
     the Holders is to receive payment of the redemption price upon surrender to
     the Paying Agent; and

          (6) in the case of any redemption pursuant to paragraph 5 of the
     Notes, if any Note is being redeemed in part, the portion of the principal
     amount of such Note to be redeemed and that, after the Redemption Date,
     upon surrender of such Note, a new Note or Notes in principal amount equal
     to the unredeemed portion thereof will be issued.

          At the Company's written request, the Trustee shall give the notice of
redemption on behalf of the Company, in the Company's name and at the Company's
expense.

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SECTION 3.04.   EFFECT OF NOTICE OF REDEMPTION.

          Once a notice of redemption is mailed, Notes called for redemption
become due and payable on the Redemption Date and at the redemption price. Upon
surrender to the Paying Agent, such Notes shall be paid at the redemption price,
plus accrued interest thereon, if any, to the Redemption Date, but interest
installments whose maturity is on or prior to such Redemption Date shall be
payable to the Holders of record at the close of business on the relevant
Interest Record Date.

SECTION 3.05.   DEPOSIT OF REDEMPTION PRICE.

          At least one Business Day before the Redemption Date, the Company
shall deposit with the Paying Agent (or if the Company is its own Paying Agent,
shall, on or before the Redemption Date, segregate and hold in trust) money
sufficient to pay the redemption price of and accrued interest, if any, on all
Notes to be redeemed on that date other than Notes or portions thereof called
for redemption on that date which have been delivered by the Company to the
Trustee for cancellation.

          If any Note surrendered for redemption in the manner provided in the
Notes shall not be so paid on the Redemption Date due to the failure of the
Company to deposit with the Paying Agent money sufficient to pay the redemption
price thereof, the principal and accrued and unpaid interest, if any, thereon
shall, until paid or duly provided for, bear interest as provided in SECTIONS
2.12 and 4.01 with respect to any payment default.

SECTION 3.06.   NOTES REDEEMED IN PART.

          Upon surrender of a Note that is redeemed in, part, the Trustee shall
upon receipt of a written order signed by an Officer of the Company authenticate
for the Holder a new Note equal in principal amount to the unredeemed portion of
the Note surrendered.

                                  ARTICLE FOUR

                                    COVENANTS

SECTION 4.01.   PAYMENT OF NOTES.

          The Company shall pay the principal of and interest on the Notes in
the manner provided in the Notes. An installment of principal or interest shall
be considered paid on the date due if the Trustee or Paying Agent (other than
the Company, a Guarantor or any of their respective Affiliates) holds on that
date money designated for and sufficient to pay the installment in full and is
not prohibited from paying such money to the Holders of the Notes pursuant to
the terms of this Indenture.

          The Company shall pay cash interest on overdue principal at the same
rate per annum borne by the Notes. The Company shall pay cash interest on
overdue installments of interest at the same rate per annum borne by the Notes,
to the extent lawful, as provided in SECTION 2.12.

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SECTION 4.02.   MAINTENANCE OF OFFICE OR AGENCY.

          The Company shall give prompt written notice to the Trustee of the
location of the office or agency where the Notes may be presented or surrendered
for payment, where the Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the address of the Trustee set forth in SECTION 14. The Company hereby
initially designates the Trustee at its address set forth in SECTION 14.02 as
its office or agency in The Borough of Manhattan, The City of New York, for such
purposes.

SECTION 4.03.   TRANSACTIONS WITH AFFILIATES.

          The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, conduct any business or enter into any
transaction (or series of related transactions) with or for the benefit of any
of their respective Affiliates or any officer, director or employee of the
Company or any Restricted Subsidiary (each an "AFFILIATE TRANSACTION"), unless
(i) such Affiliate Transaction is on terms which are no less favorable to the
Company or such Restricted Subsidiary, as the case may be, than would be
available in a comparable transaction with an unaffiliated third party and (ii)
(A) if such Affiliate Transaction (or series of related Affiliate Transactions)
involves aggregate payments or the transfer of other consideration between the
Company and an Affiliate of the Company having a Fair Market Value in excess of
$25.0 million, such Affiliate Transaction is in writing and the Company delivers
an Officer's Certificate to the Trustee certifying that such Affiliate
Transaction (or series of Affiliate Transactions) complies with the foregoing
provisions, (B) if such Affiliate Transaction (or series of related Affiliate
Transactions) involves aggregate payments or the transfer of other consideration
between the Company and an Affiliate of the Company having a Fair Market Value
in excess of $25.0 million, such Affiliate Transaction is in writing and a
majority of the disinterested members of the Board of Directors of the Company
shall have approved such Affiliate Transaction and determined that such
Affiliate Transaction complies with the foregoing provisions.

          Notwithstanding the foregoing, the restrictions set forth in this
covenant shall not apply to (i) transactions with or among the Company and any
Wholly Owned Restricted Subsidiary or between or among Wholly Owned Restricted
Subsidiaries; (ii) reasonable fees and compensation paid to and indemnity
provided on behalf of, officers, directors, employees, consultants or agents of
the Company or any Subsidiary of the Company as determined in good faith by the
Company's Board of Directors; (iii) the issuance of, or the payment of the
principal, interest or any other amounts due on, the Senior Subordinated Notes;
(iv) any Restricted Payments made in compliance with SECTION 4.06; (v) loans and
advances to officers, directors and employees of the Company or any Restricted
Subsidiary for travel, entertainment, moving and other relocation expenses, in
each case made in the ordinary course of business for bona fide business
purposes of the Company or a Restricted Subsidiary; (vi) entering into by the
Company and any of its consolidated Restricted Subsidiaries of a tax sharing or
similar arrangement; and

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(vii) entering into by the Company and any of its Restricted Subsidiaries a
Qualified Securitization Transaction.

SECTION 4.04.   LIMITATION ON INDEBTEDNESS.

          The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, Incur any Indebtedness (including
Acquired Indebtedness), except for Permitted Indebtedness; PROVIDED, HOWEVER,
that the Company and any Restricted Subsidiary may Incur Indebtedness if, at the
time of and immediately after giving pro forma effect to such Incurrence of
Indebtedness and the application of the proceeds therefrom, the Consolidated
Coverage Ratio would be greater than 1.0 to 1.0.

          The foregoing limitations will not apply to the Incurrence by the
Company or any Restricted Subsidiary of any of the following (collectively,
"PERMITTED INDEBTEDNESS"), each of which shall be given independent effect:

          (a) Indebtedness under the Notes, the Senior Subordinated Notes and
other indebtedness outstanding on the Issue Date;

          (b) Indebtedness Incurred pursuant to (i) the Restructured Credit
Facility and/or (ii) any other agreements or indentures governing Senior
Indebtedness if at the time of and immediately after giving effect thereto, the
aggregate consolidated Indebtedness Incurred under both clauses (i) and (ii)
would not exceed $800.0 million at any one time outstanding; PROVIDED, HOWEVER,
that such $800.0 million shall be reduced (without duplication) by the amount of
any repayment of Indebtedness under the Restructured Credit Facility pursuant to
SECTION 4.05;

          (c) Indebtedness of any Restricted Subsidiary owed to and held by the
Company or any Guarantor, other Indebtedness of the Company owed to and held by
any Guarantor which is unsecured and subordinated in right of payment to the
payment and performance of the Company's obligations under any Senior
Indebtedness, the Indenture and the Notes and Indebtedness of a Foreign
Restricted Subsidiary that is not a Guarantor owed to and held by any other
Restricted Subsidiary that is not a Guarantor; PROVIDED, HOWEVER, that an
Incurrence of Indebtedness that is not permitted by this clause (c) shall be
deemed to have occurred upon (i) any sale or other disposition of any
Indebtedness of the Company or any Restricted Subsidiary referred to in this
clause (c) to a Person (other than the Company or a Guarantor), (ii) any sale or
other disposition of Equity Interests of any Guarantor which holds Indebtedness
of the Company or another Restricted Subsidiary such that such Guarantor ceases
to be a Guarantor and (iii) the designation of a Restricted Subsidiary that is a
Guarantor and which holds Indebtedness of the Company or any other Restricted
Subsidiary as an Unrestricted Subsidiary.

          (d) the Guarantees and guarantees by any Guarantor of Indebtedness of
the Company permitted under this SECTION 4.04; PROVIDED, HOWEVER, that if such
guarantee is of Subordinated Indebtedness, then the Guarantee of such Guarantor
shall be senior to such Guarantor's guarantee of Subordinated Indebtedness;

          (e) Hedging Obligations of the Company or any Guarantor entered into
in the ordinary course of business;

                                      -33-
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          (f) Purchase Money Indebtedness and Capital Lease Obligations which do
not exceed $50.0 million in the aggregate at any one time outstanding;

          (g) Indebtedness to the extent representing a replacement, renewal,
refinancing or extension (collectively, a "REFINANCING") of outstanding
Indebtedness Incurred in compliance with the Consolidated Coverage Ratio of the
first paragraph of this covenant or clause (b) of this paragraph of this
covenant; PROVIDED, HOWEVER, that (i) any such refinancing shall not exceed the
sum of the principal amount (or accreted amount (determined in accordance with
GAAP), if less) of the Indebtedness being refinanced, plus the amount of accrued
interest thereon, plus the amount of any reasonably determined prepayment
premium necessary to accomplish such refinancing and such reasonable fees and
expenses Incurred in connection therewith, (ii) Indebtedness representing a
refinancing of Indebtedness other than Senior Indebtedness shall have a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of the Indebtedness being refinanced, (iii) Indebtedness that is pari
passu with the Notes may only be refinanced with Indebtedness that is made pari
passu with or subordinate in right of payment to the Notes and Subordinated
Indebtedness may only be refinanced with Subordinated Indebtedness, (iv) no
Restricted Subsidiary that is not a Guarantor may Incur Indebtedness to
refinance Indebtedness of the Company or any Guarantor and (v) Indebtedness of
the Company may only be refinanced by Indebtedness of the Company and
Indebtedness of a Restricted Subsidiary may only be refinanced by Indebtedness
of such Restricted Subsidiary or by the Company;

          (h) In addition to the items referred to in clauses (a) through (f)
above, Indebtedness of the Company (including any Indebtedness under the
Restructured Credit Facility that utilizes this subparagraph (h)) having an
aggregate principal amount not to exceed $200.0 million at any one time
outstanding; and

          (i) Indebtedness of a Securitization Entity in a Qualified
Securitization Transaction that is Non-Recourse Debt with respect to the Company
and its other Restricted Subsidiaries (except for Standard Securitization
Undertakings and Limited Originator Recourse).

SECTION 4.05.   DISPOSITION OF PROCEEDS OF ASSET SALES.

          (a) The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, make any Asset Sale, unless
(i) the Company or such Restricted Subsidiary, as the case may be, receives
consideration for such Asset Sale at least equal to the Fair Market Value of the
assets sold or otherwise disposed of and (ii) at least 65% of such consideration
consists of (A) cash or Cash Equivalents, or (B) properties, capital assets and
interests in joint ventures (however structured) that replace the properties and
assets that were the subject of such Asset Sale or in properties and capital
assets that will be used in the business of the Company and its Restricted
Subsidiaries as existing at such time or in businesses reasonably related
thereto (as determined in good faith by the Company's Board of Directors)
("REPLACEMENT ASSETS"). The amount of any Indebtedness (other than any
Subordinated Indebtedness) of the Company or any Restricted Subsidiary that is
actually assumed by the transferee in such Asset Sale and from which the Company
and the Restricted Subsidiaries are fully and unconditionally released shall be
deemed to be cash for purposes of determining the percentage of cash
consideration received by the Company or the Restricted Subsidiaries.

                                      -34-
<Page>

          The Company or such Restricted Subsidiary, as the case may be, may (i)
apply the Net Cash Proceeds of any Asset Sale to repay Senior Indebtedness and
permanently reduce any related commitment, or (ii) make an Investment in
Replacement Assets within 270 days of receipt thereof.

          To the extent all or part of the Net Cash Proceeds of any Asset Sale
are not applied within 270 days of such Asset Sale as described in clause (i) or
(ii) of the immediately preceding paragraph (such Net Cash Proceeds, the
"UNUTILIZED NET CASH PROCEEDS"), the Company shall, within 45 days after such
270th day, make an Offer to Purchase all outstanding Notes and other Junior
Subordinated Indebtedness, PRO RATA, up to a maximum principal amount (expressed
as a multiple of $1,000) of Notes and other Junior Subordinated Indebtedness
equal to such Unutilized Net Cash Proceeds, at a purchase price in cash equal to
100% of the principal amount thereof (or the accreted value of such other Junior
Subordinated Indebtedness, if such other Junior Subordinated Indebtedness is
issued at a discount), plus accrued and unpaid interest thereon, if any, to the
Purchase Date; PROVIDED, HOWEVER, that the Offer to Purchase may be deferred
until there are aggregate Unutilized Net Cash Proceeds equal to or in excess of
$25.0 million, at which time the entire amount of such Unutilized Net Cash
Proceeds, and not just the amount in excess of $25.0 million, shall be applied
as required pursuant to this paragraph.

          (b) With respect to any Offer to Purchase effected pursuant to this
covenant, among the Notes and other Junior Subordinated Indebtedness, to the
extent the aggregate principal amount of Notes and other Junior Subordinated
Indebtedness tendered pursuant to such Offer to Purchase exceeds the Unutilized
Net Cash Proceeds to be applied to the repurchase thereof, such Notes and other
Junior Subordinated Indebtedness shall be purchased PRO RATA based on the
aggregate principal amount of such Notes and other Junior Subordinated
Indebtedness tendered (or the accreted value of such other Junior Subordinated
Indebtedness, if such other Junior Subordinated Indebtedness is issued at a
discount) by each holder of Notes and such other Junior Subordinated
Indebtedness. To the extent the Unutilized Net Cash Proceeds exceed the
aggregate amount of Notes and other Junior Subordinated Indebtedness tendered
pursuant to such Offer to Purchase, the Company may retain and utilize any
portion of the Unutilized Net Cash Proceeds not applied to repurchase the Notes
and other Junior Subordinated Indebtedness for any purpose consistent with the
other terms of the Indenture.

          (c) On or prior to the Purchase Date specified in the Offer to
Purchase, the Company shall (i) subject to paragraph (b) of this SECTION 4.05,
accept for payment all Notes validly tendered pursuant to the Offer, (ii)
deposit with the Paying Agent or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in SECTION 2.04, money sufficient
to pay the Purchase Price of all Notes or portions thereof so accepted and (iii)
deliver or cause to be delivered to the Trustee for cancellation all Notes so
accepted together with an Officers' Certificate stating the Notes or portions
thereof accepted for payment by the Company. The Paying Agent (or the Company,
if so acting) shall promptly mail or deliver to Holders of Notes so accepted,
payment in an amount equal to the Purchase Price for such Notes, and the Trustee
shall promptly authenticate and mail or deliver to each Holder of Notes a new
Note or Notes equal in principal amount to any unpurchased portion of the Note
surrendered as requested by the Holder. Any Note not accepted for payment shall
be promptly mailed or delivered by the Company to the Holder thereof. The
Company shall publicly announce the results of the Offer on or as soon as
practicable after the Purchase Date.

                                      -35-
<Page>

          (d) In the event that the Company makes an Offer to Purchase the Notes
and other Junior Subordinated Indebtedness, the Company shall comply with any
applicable securities laws and regulations, and any violation of the provisions
of this Indenture relating to such Offer to Purchase occurring as a result of
such compliance shall not be deemed a Default or an Event of Default.

          (e) Each Holder shall be entitled to tender all or any portion of the
Notes owned by such Holder pursuant to the Offer to Purchase, subject to the
requirement that any portion of a Note tendered must be tendered in an integral
multiple of $1,000 principal amount and subject to any proration among tendering
Holders and other Junior Subordinated Indebtedness as described above.

SECTION 4.06.   LIMITATION ON RESTRICTED PAYMENTS.

          The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly,

                (i)    declare or pay any dividend or any other distribution on
     any Equity Interests of the Company or any Restricted Subsidiary or make
     any payment or distribution to the direct or indirect holders (in their
     capacities as such) of Equity Interests of the Company or any Restricted
     Subsidiary (other than Class C Dividends and any dividends, distributions
     and payments made to the Company or any Restricted Subsidiary and dividends
     or distributions payable to any Person solely in Qualified Equity Interests
     of the Company or in options, warrants or other rights to purchase
     Qualified Equity Interests of the Company);

                (ii)   purchase, redeem or otherwise acquire or retire for value
     any Equity Interests of the Company or any Restricted Subsidiary (other
     than the Notes and any Equity Interests owned by the Company or any
     Restricted Subsidiary);

                (iii)  purchase, redeem, defease or retire for value, or make
     any principal payment on, prior to any scheduled maturity, scheduled
     repayment or scheduled sinking fund payment, any Subordinated Indebtedness
     other than any such action taken on a pro-rata basis with the Notes (other
     than any Subordinated Indebtedness of any Subsidiary held by the Company);
     or

                (iv)   make any Investment in any Person (other than Permitted
     Investments)

(any such payment or any other action (other than any exception thereto)
described in (i), (ii), (iii) or (iv) each, a "RESTRICTED PAYMENT"), unless

          (a) no Default or Event of Default shall have occurred and be
continuing at the time or immediately after giving effect to such Restricted
Payment;

          (b) immediately after giving effect to such Restricted Payment, the
Company would be able to Incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the Consolidated Coverage Ratio of the first
paragraph of SECTION 4.04; and

                                      -36-
<Page>

          (c) immediately after giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments declared or made on or after the
Issue Date does not exceed an amount equal to the sum of (1) 50% of cumulative
Consolidated Net Income determined for the period (taken as one period) from the
Issue Date and ending on the last day of the most recent fiscal quarter
immediately preceding the date of such Restricted Payment for which consolidated
financial information of the Company is available (or if such cumulative
Consolidated Net Income shall be a loss, minus 100% of such loss), PLUS (2) the
aggregate net cash proceeds received by the Company either (x) as capital
contributions to the Company after the Issue Date or (y) from the issue and sale
(other than to a Restricted Subsidiary) of its Qualified Equity Interests after
the Issue Date (excluding the net proceeds from any issuance and sale of
Qualified Equity Interests financed, directly or indirectly, using funds
borrowed from the Company or any Restricted Subsidiary until and to the extent
such borrowing is repaid), PLUS (3) the principal amount (or accreted amount
(determined in accordance with GAAP), if less) of any Indebtedness of the
Company or any Restricted Subsidiary Incurred after the Issue Date which has
been converted into or exchanged for Qualified Equity Interests of the Company,
PLUS (4) without duplication of any amounts included in clause (i) above, in the
case of the disposition or repayment of, or the receipt by the Company or any
Restricted Subsidiary of any dividends or distributions from, any Investment
constituting a Restricted Payment made after the Issue Date, an amount equal to
the lesser of the amount of such Investment and the amount received by the
Company or any Restricted Subsidiary upon such disposition, repayment, dividend
or distribution, PLUS (5) in the event the Company or any Restricted Subsidiary
makes any Investment in a Person that, as a result of or in connection with such
Investment, becomes a Restricted Subsidiary, an amount equal to the Company's or
any Restricted Subsidiary's existing Investment in such Person that was
previously treated as a Restricted Payment, PLUS (6) so long as the Designation
thereof was treated as a Restricted Payment made after the Issue Date, with
respect to any Unrestricted Subsidiary that has been redesignated as a
Restricted Subsidiary after the Issue Date in accordance with SECTION 4.10, an
amount equal to the Company's Investment in such Unrestricted Subsidiary
(provided that such amount shall not in any case exceed the Designation Amount
with respect to such Restricted Subsidiary upon its Designation), PLUS (7)
$100.0 million, MINUS (8) the Designation Amount (measured as of the date of
Designation) with respect to any Subsidiary of the Company which has been
designated as an Unrestricted Subsidiary after the Issue Date in accordance with
SECTION 4.10,

          The foregoing provisions will not prevent (i) the payment of any
dividend or distribution on, or redemption of, Equity Interests within 60 days
after the date of declaration of such dividend or distribution or the giving of
formal notice of such redemption, if at the date of such declaration or giving
of such formal notice such payment or redemption would comply with the
provisions of the Indenture; (ii) the purchase, redemption, retirement or other
acquisition of any Equity Interests of the Company in exchange for, or out of
the net cash proceeds of the substantially concurrent issue and sale (other than
to a Restricted Subsidiary) of, Qualified Equity Interests of the Company;
PROVIDED, HOWEVER, that any such net cash proceeds and the value of any
Qualified Equity Interests issued in exchange for such retired Equity Interests
are excluded from clause (c)(2) of the preceding paragraph (and were not
included therein at any time) and are not used to redeem the Notes pursuant to
paragraphs 5 of the Notes; (iii) the purchase, redemption, retirement,
defeasance or other acquisition of Subordinated Indebtedness, or any other
payment thereon, made in exchange for, or out of the net cash proceeds of, a
substantially concurrent issue and sale (other than to a Restricted Subsidiary)
of (x) Qualified

                                      -37-
<Page>

Equity Interests of the Company; PROVIDED, HOWEVER, that any such net cash
proceeds and the value of any Qualified Equity Interests issued in exchange for
Subordinated Indebtedness are excluded from clauses (c)(2) and (c)(3) of the
preceding paragraph (and were not included therein at any time) and are not used
to redeem the Notes pursuant to paragraph 5 of the Notes or (y) Subordinated
Indebtedness permitted to be Incurred pursuant to clause (g) of the second
paragraph of SECTION 4.04; (iv) the making of loans or advances to officers and
directors of the Company or any Restricted Subsidiary entered into in the
ordinary course of business in an amount not to exceed $5.0 million at any one
time outstanding; (v) the repurchase, redemption, defeasance, retirement,
refinancing or acquisition for value or payment of principal of Subordinated
Indebtedness at a purchase price not greater than 110% of the principal amount
of such Subordinated Indebtedness in the event of a Change of Control, PROVIDED
that any such repurchase, redemption, defeasance, retirement, refinancing or
acquisition for value or payment of principal is offered to the Holders on a
pro-rata basis on the basis of the principal amount of Notes and Subordinated
Indebtedness outstanding; and (vi) Investments in joint ventures (however
structured) not to exceed $100.0 million at any one time outstanding; PROVIDED,
HOWEVER, that in the case of each of clauses (ii), (iii), (v) and (vi) no
Default or Event of Default shall have occurred and be continuing or would arise
therefrom.

          In determining the amount of Restricted Payments permissible under
this Section, amounts expended pursuant to clauses (i) and (iv) of the
immediately preceding paragraph shall be included as Restricted Payments. The
amount of any noncash Restricted Payment shall be deemed to be equal to the Fair
Market Value thereof at the date of the making of such Restricted Payment.

SECTION 4.07.   CORPORATE EXISTENCE.

          Subject to Article Five, the Company shall do or shall cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each
Restricted Subsidiary in accordance with the respective organizational documents
of each such Restricted Subsidiary and the rights (charter and statutory) and
material franchises of the Company and the Restricted Subsidiary, PROVIDED,
HOWEVER, that the Company shall not be required to preserve any such right or
franchise, or the corporate existence of any Restricted Subsidiary, if the Board
of Directors of the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and the
Restricted Subsidiaries, taken as a whole and the loss thereof is not materially
adverse to the Company and its Restricted Subsidiaries, taken as a whole;
PROVIDED, FURTHER, HOWEVER, that a determination of the Board of Directors of
the Company shall not be required in the event of a merger of one or more Wholly
Owned Restricted Subsidiaries of the Company with or into another Wholly Owned
Restricted Subsidiary of the Company or another Person, if the surviving Person
is a Wholly Owned Restricted Subsidiary of the Company organized under the laws
of the United States or a State thereof or of the District of Columbia or, in
the case of a Foreign Restricted Subsidiary, the jurisdiction of incorporation
or organization of such Foreign Restricted Subsidiary. This SECTION 4.07 shall
not prohibit the Company from taking any other action otherwise permitted by,
and made in accordance with, the provisions of this Indenture.

SECTION 4.08.   NOTICE OF DEFAULTS.

                                      -38-
<Page>

          (a) In the event that any Indebtedness of the Company or any of its
Subsidiaries is declared due and payable before its maturity because of the
occurrence of any default (or any event which, with notice or lapse of time, or
both, would constitute such a default) under such Indebtedness, the Company
shall promptly give written notice to the Trustee of such declaration, the
status of such default or event and what action the Company is taking or
proposes to take with respect thereto.

          (b) Upon becoming aware of any Default or Event of Default, the
Company shall promptly deliver an Officers' Certificate to the Trustee
specifying the Default or Event of Default.

SECTION 4.09.   COMPLIANCE CERTIFICATE.

          The Company shall deliver to the Trustee, within 120 days after the
close of each fiscal year a certificate signed by the principal executive
officer, principal financial officer or principal accounting officer stating
that a review of the activities of the Company has been made under the
supervision of the signing officers with a view to determining whether a Default
or Event of Default has occurred and whether or not the signers know of any
Default or Event of Default by the Company that occurred during such fiscal
year. If they do know of such a Default or Event of Default, the certificate
shall describe all such Defaults or Events of Default, their status and the
action the Company is taking or proposes to take with respect thereto. The first
certificate to be delivered by the Company pursuant to this SECTION 4.09 shall
be for the fiscal year ending January 3, 2004.

SECTION 4.10.   DESIGNATION OF UNRESTRICTED SUBSIDIARIES.

          (a) The Company may designate after the Issue Date any Subsidiary of
the Company as an Unrestricted Subsidiary under this Indenture (a "DESIGNATION")
only if:

                (i)    no Default or Event of Default shall have occurred and be
     continuing at the time of or after giving effect to such Designation;

                (ii)   at the time of and after giving effect to such
     Designation, the Company could Incur $1.00 of additional Indebtedness
     (other than Permitted Indebtedness) under the Consolidated Coverage Ratio
     of the first paragraph of SECTION 4.04; and

                (iii)  the Company would be permitted to make an Investment
     (other than a Permitted Investment) at the time of Designation (assuming
     the effectiveness of such Designation) pursuant to the first paragraph of
     SECTION 4.06 in an amount (the "DESIGNATION AMOUNT") equal to the amount of
     the Company's Investment in such Subsidiary on such date.

          Neither the Company nor any Restricted Subsidiary shall at any time
(x) provide credit support for, subject any of its property or assets (other
than the Equity Interests of any Unrestricted Subsidiary) to the satisfaction
of, or guarantee, any Indebtedness of any Unrestricted Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness), (y) be
directly or indirectly liable for any Indebtedness of any Unrestricted

                                      -39-
<Page>

Subsidiary, or (z) be directly or indirectly liable for any Indebtedness which
provides that the holder thereof may (upon notice, lapse of time or both)
declare a default thereon or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity upon the occurrence of a default
with respect to any Indebtedness of any Unrestricted Subsidiary, except for any
nonrecourse guarantee given solely to support the pledge by the Company or any
Restricted Subsidiary of the capital stock of any Unrestricted Subsidiary. For
purposes of the foregoing, the Designation of a Subsidiary of the Company as an
Unrestricted Subsidiary shall be deemed to include the Designation of all of the
Subsidiaries of such Subsidiary.

          (b) The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "REVOCATION") only if:

                (i)    no Default or Event of Default shall have occurred and be
     continuing at the time of and after giving effect to such Revocation; and

                (ii)   all Liens and Indebtedness of such Unrestricted
     Subsidiary outstanding immediately following such Revocation would, if
     Incurred at such time, have been permitted to be Incurred for all purposes
     of this Indenture.

          All Designations and Revocations must be evidenced by Board
Resolutions of the Company, delivered to the Trustee certifying compliance with
the foregoing provisions.

SECTION 4.11.   LIMITATION ON LIENS.

          The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, Incur any Liens of any kind against or
upon any of their respective properties or assets now owned or hereafter
acquired, or any proceeds therefrom or any income or profits therefrom, to
secure any Indebtedness unless contemporaneously therewith effective provision
is made, (x) in the case of the Company, to secure the Notes and all other
amounts due under this Indenture and any other class of Junior Subordinated
Indebtedness, and (y) in the case of a Restricted Subsidiary which is a
Guarantor, to secure such Restricted Subsidiary's Guarantee of the Notes and all
other amounts due under this Indenture, in each case, equally and ratably with
such Indebtedness (or, in the event that such Indebtedness is subordinated in
right of payment to the Notes or such Restricted Subsidiary's Guarantee, prior
to such Indebtedness) with a Lien on the same properties and assets securing
such Indebtedness for so long as such Indebtedness is secured by such Lien,
except for (i) Liens securing Senior Indebtedness (including, without
limitation, Indebtedness incurred under the Restructured Credit Facility); (ii)
Liens securing Indebtedness Incurred in a Qualified Securitization Transaction
by the Company and its Restricted Subsidiaries; (iii) Permitted Liens and (iv)
Liens under Hedging Agreements.

SECTION 4.12.   FUTURE DOMESTIC RESTRICTED SUBSIDIARY GUARANTORS

          In the event the Company causes or permits any Domestic Restricted
Subsidiary that is not a Guarantor to, directly or indirectly, guarantee the
payment of any Indebtedness of the Company under the Restructured Credit
Facility then the Company shall cause such Domestic Restricted Subsidiary to
simultaneously execute and deliver a supplemental indenture to this Indenture
pursuant to which it will become a Guarantor under this Indenture.

                                      -40-
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                                  ARTICLE FIVE

                         MERGERS; SUCCESSOR CORPORATION

SECTION 5.01.   MERGERS, SALE OF ASSETS, ETC.

          (a) The Company shall not consolidate with or merge with or into any
other entity and the Company shall not and shall not cause or permit any
Restricted Subsidiary to, sell, convey, assign, transfer, lease or otherwise
dispose of all or substantially all of the Company's and the Restricted
Subsidiaries properties and assets (determined on a consolidated basis for the
Company and the Restricted Subsidiaries) to any entity in a single transaction
or series of related transactions, unless: either (x) the Company shall be the
Surviving Person or (y) the Surviving Person (if other than the Company) shall
be a corporation organized and validly existing under the laws of the United
States of America or any State thereof or the District of Columbia or, if any
such Restricted Subsidiary was a Foreign Restricted Subsidiary, under the laws
of the United States of America or any state thereof or the District of Columbia
or the jurisdiction under which such Foreign Restricted Subsidiary was
organized, and shall, in any such case, expressly assume by supplemental
indentures, the due and punctual payment of the principal of, premium, if any,
and interest on all the Notes and the performance and observance of every
covenant of this Indenture to be performed or observed on the part of the
Company.

          For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all the properties and assets of one or more Restricted
Subsidiaries the Equity Interests of which constitutes all or substantially all
the properties and assets of the Company shall be deemed to be the transfer of
all or substantially all the properties and assets of the Company.

          (b) No Guarantor (other than a Guarantor whose Guarantee is to be
released in accordance with the terms of SECTION 11.03) shall consolidate with
or merge with or into another Person, whether or not such Person is affiliated
with such Guarantor and whether or not such Guarantor is the Surviving Person,
unless (1) the Surviving Person (if other than such Guarantor) is a corporation
organized and validly existing under the laws of the United States, any State
thereof or the District of Columbia or, if any such Guarantor was a Foreign
Restricted Subsidiary, under the laws of the United States of America or any
state thereof or the District of Columbia or the jurisdiction under which the
Foreign Restricted Subsidiary was organized; (ii) the Surviving Person (if other
than such Guarantor) expressly assumes by supplemental indenture all the
obligations of such Guarantor under its Guarantees of the Notes and the
performance and observance of every covenant of the Indenture to be performed or
observed by such Guarantor; (iii) at the time of and immediately after such
Disposition, no Default or Event of Default shall have occurred and be
continuing; and (iv) immediately after giving effect to any such transaction
involving the Incurrence by such Guarantor, directly or indirectly, of
additional Indebtedness (and treating any Indebtedness not previously an
obligation of such Guarantor in connection with or as a result of such
transaction as having been Incurred at the time of such transaction), the
Company could Incur, on a PRO FORMA basis after giving effect to such
transaction as if it had occurred at the beginning the latest fiscal quarter for
which consolidated financial statements of the Company are available, at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) under the
Consolidated Coverage Ratio of the first paragraph

                                      -41-
<Page>

of SECTION 4.04; PROVIDED, HOWEVER, that this paragraph shall not be a condition
to a merger or consolidation of a Guarantor if such merger or consolidation only
involves the Company and/or one or more other Guarantors. Notwithstanding the
foregoing, nothing in this covenant shall prohibit the consolidation or merger
with or into or the sale of all or substantially all of the assets or properties
of a Guarantor to any other Restricted Subsidiary that is a Guarantor.

SECTION 5.02.   SUCCESSOR CORPORATION SUBSTITUTED.

          In the event of any transaction (other than a lease) described in and
complying with the conditions listed in SECTION 5.01 in which the Company or a
Guarantor, as the case may be, is not the Surviving Person and the Surviving
Person is to assume all the Obligations of the Company under the Notes, this
Indenture or of such Guarantor under its Guarantee and the Indenture, as the
case may be, pursuant to supplemental indentures, such Surviving Person shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company or such Guarantor, as the case may be, and the Company shall be
discharged from its Obligations under this Indenture and the Notes or such
Guarantor shall be discharged from its Obligations under the Indenture and its
Guarantee, as the case may be.

                                   ARTICLE SIX

                              DEFAULT AND REMEDIES

SECTION 6.01.   EVENTS OF DEFAULT.

          Each of the following shall be an "Event of Default" for purposes of
this Indenture:

          (a) failure to pay principal of (or premium, if any, on) any Note when
due (whether or not prohibited by the provisions of Article Eight);

          (b) failure to pay any interest on any Note when due, continued for 30
days or more (whether or not prohibited by the provisions of Article Eight);

          (c) default in the payment of principal of or interest on any Note
required to be purchased pursuant to any Offer to Purchase required by this
Indenture when due and payable or failure to pay on the Purchase Date the
Purchase Price for any Note validly tendered pursuant any Offer to Purchase
required by this Indenture (whether or not prohibited by the provisions of
Article Eight);

          (d) failure to perform or comply with any of the provisions of SECTION
5.01;

          (e) failure to perform any other covenant, warranty or agreement of
the Company under this Indenture or in the Notes or of the Guarantors under this
Indenture or in the Guarantees continued for 30 days or more after written
notice to the Company by the Trustee or the Holders of at least 25% in aggregate
principal amount of the outstanding Notes;

          (f) Default or defaults under the terms of one or more instruments
evidencing or securing Indebtedness of the Company or any of its Restricted
Subsidiaries having an

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outstanding principal amount of $50.0 million or more individually or in the
aggregate that has resulted in the acceleration of the payment of such
Indebtedness or failure by the Company or any of its Restricted Subsidiaries to
pay principal of at least $50.0 million when due at the stated maturity of any
such Indebtedness and such default or defaults shall have continued after any
applicable grace period and shall not have been cured or waived within 10 days
after the occurrence thereof;

          (g) the rendering of a final judgment or judgments (not subject to
appeal) against the Company or any of its Restricted Subsidiaries in an amount
of $50.0 million or more (net of any amounts covered by reputable and
creditworthy insurance companies) which remains undischarged or unstayed for a
period of 60 days after the date on which the right to appeal has expired;

          (h) the Company or any Significant Restricted Subsidiary pursuant to
or within the meaning of any Bankruptcy Law: (i) admits in writing its inability
to pay its debts generally as they become due; (ii) commences a voluntary case
or proceeding; (iii) consents to the entry of an order for relief against it in
an involuntary case or proceeding; (iv) consents or acquiesces in the
institution of a bankruptcy or insolvency proceeding against it; (v) consents to
the appointment of a Custodian of it or for all or substantially all of its
property; or (vi) makes a general assignment for the benefit of its creditors,
or takes any action to authorize or effect any of the foregoing;

          (i) 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 Restricted Subsidiary in an involuntary case or proceeding or (ii)
appoints a Custodian of the Company or any Significant Restricted Subsidiary of
the Company for all or substantially all of its properties, or orders the
liquidation of the Company or any Significant Restricted Subsidiary, and in each
case the order or decree remains unstayed and in effect for 60 days; or

          (j) other than as provided in or pursuant to any Guarantee or the
Indenture, the Guarantee of any Guarantor that constitutes a Significant
Restricted Subsidiary ceases to be in full force and effect or is declared null
and void and unenforceable or found to be invalid or any Guarantor that is a
Significant Restricted Subsidiary denies its liability under its Guarantee
(other than by reason of a release of such Guarantor from its Guarantee in
accordance with the terms of the Indenture and such Guarantee).

SECTION 6.02.   ACCELERATION.

          If an Event of Default with respect to the Notes (other than an Event
of Default with respect to the Company described in clause (h) of SECTION 6.01)
occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the outstanding Notes by notice in writing to the
Company may declare the unpaid principal of (and premium, if any) and accrued
interest to the date of acceleration on all outstanding Notes to be due and
payable immediately and, upon any such declaration, such principal amount (and
premium, if any) and accrued interest, notwithstanding anything contained in
this Indenture or the Notes to the contrary, shall become immediately due and
payable; PROVIDED, HOWEVER, that so long as the Restructured Credit Facility
shall be in full force and effect, if an Event of Default shall have

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occurred and be continuing (other than an Event of Default with respect to the
Company described in clause (h) of SECTION 6.01), the Notes shall not become due
and payable until the earlier to occur of (x) five Business Days following
delivery of a written notice of such acceleration of the Notes to the agent
under the Restructured Credit Facility and (y) the acceleration (IPSO FACTO or
otherwise) of any Indebtedness under the Restructured Credit Facility. If an
Event of Default specified in clause (h) of SECTION 6.01 with respect to the
Company occurs under the Indenture, the Notes will IPSO FACTO become immediately
due and payable without any declaration or other act on the part of the Trustee
or any Holder of the Notes.

          After a declaration of acceleration, but before a judgment or decree
of the money due in respect of the Notes has been obtained, the Holders of not
less than a majority in aggregate principal amount of the Notes then outstanding
by written notice to the Trustee may rescind an acceleration and its
consequences if all existing Events of Default (other than the, nonpayment of
principal of and interest on the Notes which has become due solely by virtue of
such acceleration) have been cured or waived and if the rescission would not
conflict with any judgment or decree. 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 by proceeding at law or in equity to collect the
payment of principal of or interest on the Notes or to enforce the performance
of any provision of the Notes or this Indenture.

          The Trustee may maintain a proceeding even if it does not possess any
of the Notes 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 maturing
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 to the extent permitted by
law.

SECTION 6.04.   WAIVER OF PAST DEFAULT.

          Subject to SECTIONS 2.09, 6.07 and 10.02, prior to the declaration of
acceleration of the Notes, the Holders of not less than a majority in aggregate
principal amount of the outstanding Notes by written notice to the Trustee may
waive an existing Default or Event of Default and its consequences, except a
Default in the payment of principal of or interest on any Note as specified in
clauses (a), (b) and (c) of SECTION 6.01 or a Default in respect of any term or
provision of this Indenture that may not be amended or modified without the
consent of each Holder affected as provided in SECTION 10.02. The Company shall
deliver to the Trustee an Officers' Certificate stating that the requisite
percentage of Holders have consented to such waiver and attaching copies of such
consents. In case of any such waiver, the Company, the Trustee and the Holders
shall be restored to their former positions and rights hereunder and under the
Notes, respectively. This paragraph of this SECTION 6.04 shall be in lieu of
Section 316(a)(l)(B) of the TIA and such Section 316(a)(l)(B) of the TIA is
hereby expressly excluded from this Indenture and the Notes, as permitted by the
TIA.

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          Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred for every
purpose of this Indenture and the Notes, but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.

SECTION 6.05.   CONTROL BY MAJORITY.

          Subject to SECTION 2.09, the Holders of a majority in principal amount
of the outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture that the Trustee determines may be
unduly prejudicial to the rights of another Holder, it being understood that the
Trustee shall have no duty (subject to SECTION 7.01) to ascertain whether or not
such actions or forbearances are unduly prejudicial to such holders, or that may
involve the Trustee in personal liability; PROVIDED, HOWEVER, that the Trustee
may take any other action deemed proper by the Trustee which is not inconsistent
with such direction. In the event the Trustee takes any action or follows any
direction pursuant to this Indenture, the Trustee shall be entitled to
indemnification satisfactory to it in its sole discretion against any loss or
expense caused by taking such action or following such direction. This SECTION
6.05 shall be in lieu of Section 3l6(a)(1)(A) of the TIA, and such Section
3l6(a)(l)(A) of the TIA is hereby expressly excluded from this Indenture and the
Notes, as permitted by the TIA.

SECTION 6.06.   LIMITATION ON SUITS.

          No Holder of any Notes will have any right to institute a proceeding
with respect to the Notes, the Indentures or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default thereunder and unless the Holders of at least 25% of
the aggregate principal amount of the outstanding Notes shall have made written
request, and offered indemnity to the Trustee (satisfactory to the Trustee in
its sole discretion) to institute such proceeding as the Trustee, and the
Trustee shall have not have received from the Holders of a majority in aggregate
principal amount of such outstanding Notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
However, such limitations do not apply to a suit instituted by a Holder of such
a Note for enforcement of payment of the principal of and premium, if any, or
interest on such Notes on or after the respective due dates expressed in such
Note.

          A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.

SECTION 6.07.   RIGHTS OF HOLDERS TO RECEIVE PAYMENT.

          Notwithstanding any other provision of this Indenture, but subject in
any event to the provisions of Articles Eight and Twelve, the right of any
Holder to receive payment of principal of or interest on a Note, on or after the
respective due dates expressed in the Note, 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 the Holder.

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SECTION 6.08.   COLLECTION SUIT BY TRUSTEE.

          If an Event of Default in payment of principal or interest specified
in SECTION 6.01(a), (b) or (c) 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 Notes for the whole amount of principal and accrued
interest remaining unpaid, together with interest overdue on principal and to
the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate per annum borne by the Notes
and such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.

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 (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company (or any
other obligor upon the Notes), its creditors or its property and shall be
entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same, and any
Custodian in any such judicial proceedings is hereby authorized by each Holder
to make such 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 to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under SECTION 7.07. To the extent that the payment of
any such amount due to the Trustee under Section 7.07 out of the estate in any
such proceeding shall be denied for any reason, payment of the same shall be
secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities, and properties which the Holders may be entitled
to receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding; PROVIDED, HOWEVER, that the Trustee may, on behalf of the Holders,
vote for the election of a trustee in bankruptcy or similar official and may be
a member of the creditors' committee.

SECTION 6.10.   PRIORITIES.

          If the Trustee collects any money or property pursuant to this Article
Six, it shall pay out the money or property in the following order:

          First: to the Trustee, its agents and attorneys for amounts due under
SECTION 7.07, including payment of all compensation, expense and liabilities
incurred (including reasonable fees and expenses of the Trustee's agent and
outside counsel), and all advances, if any, made, by the Trustee and the costs
and expenses of collection;

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          Second: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal and
interest, respectively; and

          Third: to the Company or to such party as a court of competent
jurisdiction shall direct.

          The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to the Holders pursuant to this
SECTION 6.10.

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 6.11 shall not apply to a suit by the Trustee, a suit by
a Holder or group of Holders of more than 10% in aggregate principal amount of
the outstanding Notes, or to any suit instituted by any Holder for the
enforcement or the payment of the principal or interest on any Notes on or after
the respective due dates expressed in the Note.

                                  ARTICLE SEVEN

                                     TRUSTEE

SECTION 7.01.   DUTIES OF TRUSTEE.

          (a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of 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 man would
exercise or use under the circumstances in the conduct of his own affairs.

          (b) Except during the continuance of an Event of Default:

                (1)    The Trustee shall not be liable except for the
     performance of such duties as are specifically set forth herein. The duties
     of the Trustee shall be determined solely by the express provisions of this
     Indenture. The Trustee need perform only those duties that are specifically
     set forth in this Indenture and no others, and no implied covenants or
     obligations shall be read into this Indenture against the Trustee; and

                (2)    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 conforming to
     the requirements of this Indenture; however, in the case of any such
     certificates or opinions which by any provision hereof are specifically
     required to be furnished to the Trustee, the Trustee shall examine such
     certificates and opinions to determine whether or not they conform to the

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     requirements of this Indenture (but need not confirm or investigate the
     accuracy of the mathematical calculations or other facts stated therein).

          (c) The Trustee shall not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

                (1)    This paragraph does not limit the effect of paragraph (b)
     of this SECTION 7.01;

                (2)    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

                (3)    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.

          (d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or take any action at the request or direction of Holders
if it shall have reasonable grounds for believing that repayment of such funds
is not assured to it or it does not receive from such Holders an indemnity
satisfactory to it in its sole discretion against such risk, liability, loss,
fee or expense which might be incurred by it in compliance with such request or
direction.

          (e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this SECTION 7.01.

          (f) 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. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.

SECTION 7.02.   RIGHTS OF TRUSTEE.

          Subject to SECTION 7.01:

          (a) The Trustee may conclusively rely on any document 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 and/or an Opinion of Counsel, which shall conform to the
provisions of SECTIONS 14.04 and 14.05. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such certificate
or opinion.

          (c) The Trustee may act through attorneys and agents of its selection
and shall not be responsible for the misconduct or negligence of any agent or
attorney (other than an agent who is an employee of the Trustee) appointed with
due care.

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          (d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized or within
its rights or powers.

          (e) Before the Trustee acts or refrains from acting, it may consult
with counsel and the advice or opinion of such counsel as to matters of law
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) Any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution.

          (g) 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 it in its sole
discretion against the costs, expenses and liabilities which might be incurred
by it in compliance with such request or direction.

          (h) 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, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, 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.

          (i) The Trustee shall not be deemed to have notice of any Event of
Default unless a Trust Officer of the Trustee has actual knowledge thereof or
unless the Trustee shall have received written notice thereof at the Corporate
Trust Office of the Trustee, and such notice references the Notes and this
Indenture. As used herein, the term "ACTUAL KNOWLEDGE" means the actual fact or
statement of knowing, without any duty to make any investigation with regard
thereto.

          (j) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.

          (k) The permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty and the Trustee shall not be
answerable for other than its negligence or willful misconduct.

SECTION 7.03.   INDIVIDUAL RIGHTS OF TRUSTEE.

          The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee, subject to
SECTION 7.10 hereof. Any Agent may do the same with like rights. However, the
Trustee is subject to SECTIONS 7.10 and 7.11.

SECTION 7.04.   TRUSTEE'S DISCLAIMER.

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          The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee, it shall not be accountable for the Company's use of the
proceeds from the Notes, and it shall not be responsible for any statement of
the Company in this Indenture or any document issued in connection with the sale
of Notes or any statement in the Notes other than the Trustee's certificate of
authentication.

SECTION 7.05.   NOTICE OF DEFAULTS.

          If a Default or an Event of Default occurs and is continuing and the
Trustee has actual knowledge of such Defaults or Events of Default, the Trustee
shall mail to each Holder notice of the Default or Event of Default within 90
days after the occurrence thereof. Except in the case of a Default or an Event
of Default in payment of principal of or interest on any Note or a Default or
Event of Default in complying with SECTION 5.01, 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 interest of Holders. This
SECTION 7.05 shall be in lieu of the proviso to Section 315(b) of the TIA and
such proviso to Section 315(b) of the TIA is hereby expressly excluded from this
Indenture and the Notes, as permitted by the TIA.

SECTION 7.06.   REPORTS BY TRUSTEE TO HOLDERS.

          If required by TIA Section 313(a), within 60 days after each May 15
beginning with the May 15 following the date of this Indenture, the Trustee
shall mail to each Holder a report dated as of such May 15 that complies with
TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b), (c)
and (d).

          A copy of each such report at the time of its mailing to Holders shall
be filed with the SEC and each stock exchange, if any, on which the Notes are
listed.

          The Company shall promptly notify the Trustee in writing if the Notes
become listed on any stock exchange or of any delisting thereof.

SECTION 7.07.   COMPENSATION AND INDEMNITY.

          The Company shall pay to the Trustee from time to time, and the
Trustee shall be entitled to, such compensation as the Company and the Trustee
shall from time to time agree in writing for its services. 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 disbursements, expenses and advances, including all costs and
expenses of collection (including reasonable fees, disbursements and expenses of
its agents and outside counsel) incurred or made by it in addition to the
compensation for its services except any such disbursements, expenses and
advances as may be attributable to the Trustee's negligence or willful
misconduct. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents, accountants, experts and
outside counsel and any taxes or other expenses incurred by a trust created
pursuant to SECTION 9.01 hereof.

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          The Company shall indemnify the Trustee for, and hold it harmless
against any and all loss, damage, claims, liability or expense, including taxes
(other than franchise taxes imposed on the Trustee and taxes based upon,
measured by or determined by the income of the Trustee), arising out of or in
connection with the acceptance or administration of this Indenture, the trust or
trusts hereunder, or the performance of its duties under this Indenture,
including the costs and expenses of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except to the extent that such loss, damage,
claim, liability or expense is due to its own negligence or willful misconduct.
The Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. However, the failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee shall cooperate in
the defense (and may employ its own counsel) at the Company's expense; PROVIDED,
HOWEVER, that the Company's reimbursement obligation with respect to counsel
employed by the Trustee will be limited to the reasonable fees and expenses of
such counsel.

          The Company need not pay for any settlement made without its written
consent, which consent shall not be unreasonably withheld or delayed or
conditioned.

          To secure the Company's payment obligations in this SECTION 7.07, the
Trustee shall have a Lien prior to the Holders of Notes against all money or
property held or collected by the Trustee, in its capacity as Trustee, except
money or property held in trust to pay principal of or interest on particular
Notes or the Purchase Price or redemption price of any Notes to be purchased
pursuant to an Offer to Purchase or redeemed.

          When the Trustee incurs expenses or renders services after an Event of
Default specified in SECTION 6.01(h) occurs, the expenses (including the
reasonable fees and expenses of its agents and counsel) and the compensation for
the services shall be preferred over the status of the Holders in a proceeding
under any Bankruptcy Law and are intended to constitute expenses of
administration under any Bankruptcy Law. The Company's obligations under this
SECTION 7.07 and any claim arising hereunder shall survive the, resignation or
removal of any Trustee, the discharge of the Company's obligations pursuant to
Article Nine and any rejection or termination under any Bankruptcy Law.

SECTION 7.08.   REPLACEMENT OF TRUSTEE.

          The Trustee may resign at any time by so notifying the Company in
writing. The Holders of a majority in principal amount of the outstanding Notes
may remove the Trustee by so notifying the Trustee and the Company in writing
and may appoint a successor Trustee with the Company's consent. The Company may
remove the Trustee if:

          (a) the Trustee fails to comply with SECTION 7.10;

          (b) the Trustee is adjudged a bankrupt or an insolvent under any
Bankruptcy Law;

          (c) a custodian or other public officer takes charge of the Trustee or
its property; or

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          (d) the Trustee becomes incapable of acting.

          If the Trustee resigns or is removed 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. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the Notes may appoint a successor Trustee
to replace the successor Trustee appointed by the Company.

          A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. As promptly as
practicable after that, the retiring Trustee shall transfer, after payment of
all sums then owing to the Trustee pursuant to SECTION 7.07, all property held
by it as Trustee to the successor Trustee, subject to the Lien provided in
SECTION 7.07, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have the rights, powers and duties of
the Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.

          If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Notes may
petition, at the expense of the Company, any court of competent jurisdiction for
the appointment of a successor Trustee.

          If the Trustee fails to comply with SECTION 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

          Notwithstanding replacement of the Trustee pursuant to this SECTION
7.08, the Company's obligations under SECTION 7.07 shall continue for the
benefit of the retiring Trustee.

SECTION 7.09.   SUCCESSOR TRUSTEE BY MERGER, ETC.

          If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or banking corporation, the resulting, surviving or transferee
corporation or banking corporation without any further act shall be the
successor Trustee.

SECTION 7.10.   ELIGIBILITY; DISQUALIFICATION.

          This Indenture shall always have a Trustee which shall be eligible to
act as Trustee under TIA Sections 310(a)(1) and 310(a)(2). 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. If the Trustee has or shall
acquire any "conflicting interest" within the meaning of TIA Section 310(b), the
Trustee and the Company shall comply with the provisions 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. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this SECTION 7.10, the Trustee shall resign
immediately in the manner and with the effect hereinbefore specified in this
Article Seven.

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SECTION 7.11.   PREFERENTIAL COLLECTION OF CLAIMS AGAINST 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
therein.

                                  ARTICLE EIGHT

                             SUBORDINATION OF NOTES

SECTION 8.01.   NOTES SUBORDINATED TO SENIOR INDEBTEDNESS.

          The Company covenants and agrees, and the Trustee and each Holder of
the Notes by his acceptance thereof likewise covenant and agree, that all Notes
shall be issued subject to the provisions of this Article Eight; and each person
holding any Note, whether upon original issue or upon transfer, assignment or
exchange thereof, accepts and agrees that all payments of the principal of and
interest on the Notes by the Company shall, to the extent and in the manner set
forth in this Article Eight, be subordinated and junior in right of payment to
the prior payment in full in cash of all amounts payable under Senior
Indebtedness.

SECTION 8.02.   NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES.

          (a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities and excluding any payment from funds
held in trust for the benefit of Holders pursuant to Article Nine (a "DEFEASANCE
TRUST PAYMENT")) by or on behalf of the Company of principal of, premium, if
any, or interest on the Notes, whether pursuant to the terms of the Notes, upon
acceleration, pursuant to an Offer to Purchase or otherwise, shall be made if,
at the time of such payment, there exists a default in the payment of all or any
portion of the obligations on any Designated Senior Indebtedness, whether at
maturity, on account of mandatory redemption or prepayment, acceleration or
otherwise, and such default shall not have been cured or waived or the benefits
of this sentence waived by or on behalf of the holders of such Designated Senior
Indebtedness. In addition, during the continuance of any non-payment event of
default with respect to any Designated Senior Indebtedness pursuant to which the
maturity thereof may be immediately accelerated, and upon receipt by the Trustee
of written notice (a "PAYMENT BLOCKAGE NOTICE") from the holder or holders of
such Designated Senior Indebtedness or the trustee or agent acting on behalf of
such Designated Senior Indebtedness, then, unless and until such event of
default has been cured or waived or has ceased to exist or such Designated
Senior Indebtedness has been discharged or repaid in full in cash or the
benefits of these provisions have been waived by the holders of such Designated
Senior Indebtedness, no direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities and excluding any Defeasance Trust
Payment) shall be made by or on behalf of the Company of principal of, premium,
if any, or interest on the Notes, to such Holders, during a period (a "PAYMENT
BLOCKAGE PERIOD") commencing on the date of receipt of such notice by the
Trustee and ending 179 days thereafter; PROVIDED HOWEVER, that so long as any
Indebtedness remains outstanding under the Restructured Credit Facility or any
replacement, renewal, refinancing or extension thereof, no Payment Blockage
Notice may be initiated to block payment of principal or interest on the Notes
pursuant to the terms of this Section 8.02(a) except by the Administrative

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Agent (or similar authorized party) under the Restructured Credit Facility or
any replacement, renewal, refinancing or extension thereof.

          Notwithstanding anything herein or in the Notes to the contrary, (x)
in no event shall a Payment Blockage Period extend beyond 179 days from the date
the Payment Blockage Notice in respect thereof was given, (y) there shall be a
period of at least 181 consecutive days in each 360-day period when no Payment
Blockage Period is in effect and (z) not more than one Payment Blockage Period
may be commenced with respect to the Notes during any period of 360 consecutive
days. No event of default that existed or was continuing on the date of
commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period (to the extent the
holder of Designated Senior Indebtedness, or trustee or agent, giving notice
commencing such Payment Blockage Period had knowledge of such existing or
continuing event of default) may be, or be made, the basis for the commencement
of any other Payment Blockage Period by the holder or holders of such Designated
Senior Indebtedness or the trustee or agent acting on behalf of such Designated
Senior Indebtedness, whether or not within a period of 360 consecutive days,
unless such event of default has been cured or waived for a period of not less
than 90 consecutive days.

          (b) In the event that, notwithstanding the foregoing, the Company
shall have made payment to the Trustee or any Holder when such payment is
prohibited by SECTION 8.02(a), such payment shall be held in trust for the
benefit of, and shall be paid over or delivered by the Trustee (if the Notice
required by SECTION 8.06 has been received by the Trustee) or the Holder to, the
holders of Designated Senior Indebtedness or their respective representatives,
or to the trustee or trustees under any indenture pursuant to which any of such
Designated Senior Indebtedness may have been issued, as their respective
interests may appear, but only to the extent that, upon notice from the Trustee
to the holders of Designated Senior Indebtedness that such prohibited payment
has been made, the holders of the Designated Senior Indebtedness (or their
representative or representatives or a trustee or trustees) notify the Trustee
in writing of the amounts then due and owing on the Designated Senior
Indebtedness, if any, and only the amounts specified in such notice to the
Trustee shall be paid to the holders of Designated Senior Indebtedness.

SECTION 8.03.   PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.

          (a) Upon any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities and
excluding any Defeasance Trust Payment), upon any dissolution or winding-up or
total liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
Senior Indebtedness shall first be paid in full in cash before the Holders of
the Notes or the Trustee on behalf of such Holders shall be entitled to receive
any payment by the Company of the principal of, premium, if any, or interest on
the Notes, or any payment by the Company to acquire any of the Notes for cash,
property or securities, or any distribution by the Company with respect to the
Notes of any cash, property or securities (excluding any payment or distribution
of Permitted Junior Securities and excluding any Defeasance Trust Payment).
Before any payment may be made by, or on behalf of, the Company of the principal
of, premium, if any, or interest on the Notes upon any such dissolution or
winding-up or total liquidation or reorganization, any

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payment or distribution of assets or securities of the Company of any kind or
character, whether in cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities and excluding any Defeasance Trust
Payment), to which the Holders of the Notes or the Trustee on their behalf would
be entitled, but for the subordination provisions of this Indenture, shall be
made by the Company or by any receiver, trustee in bankruptcy, liquidation
trustee, agent or other Person making such payment or distribution, directly to
the holders of the Senior Indebtedness (pro rata to such holders on the basis of
the respective amounts of Senior Indebtedness held by such holders) or their
representatives or to the trustee or trustees or agent or agents under any
agreement or indenture pursuant to which any of such Senior Indebtedness may
have been issued, as their respective interests may appear, to the extent
necessary to pay all such Senior Indebtedness in full in cash after giving
effect to any prior or concurrent payment, distribution or provision therefor to
or for the holders of such Senior Indebtedness.

          (b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of the Company of any kind or character, whether in cash, property
or securities (excluding any payment or distribution of Permitted Junior
Securities and excluding any Defeasance Trust Payment), shall be paid by the
Company to the Trustee or any Holder of Notes at a time when such payment or
distribution is prohibited by SECTION 8.03(a) and before all obligations in
respect of Senior Indebtedness are paid in full in cash, such payment or
distribution shall be received and held in trust for the benefit of, and shall
be paid over or delivered by the Trustee (if the Notice required by SECTION 8.06
has been received by the Trustee) or the Holder to, the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders) or their respective representatives,
or to the trustee or trustees or agent or agents under any indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their respective
interests may appear, for application to the payment of Senior Indebtedness
remaining unpaid until all such Senior Indebtedness has been paid in full in
cash after giving effect to any prior or concurrent payment, distribution or
provision therefor to or for the holders of such Senior Indebtedness.

          The consolidation of the Company with, or the merger of the Company
with or into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided in Article Five shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this SECTION 8.03
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article Five.

SECTION 8.04.   SUBROGATION.

          Upon the payment in full in cash of all Senior Indebtedness, or
provision for payment, the Holders of the Notes shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company made on such Senior
Indebtedness until the principal of and interest on the Notes shall be paid in
full in cash; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of any cash, property or
securities to which the Holders of the Notes or the Trustee on their behalf
would be entitled except for the provisions of this Article

                                      -55-
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Eight, and no payment over pursuant to the provisions of this Article Eight to
the holders of Senior Indebtedness by Holders of the Notes or the Trustee on
their behalf shall, as between the Company, its creditors other than holders of
Senior Indebtedness, and the Holders of the Notes, be deemed to be a payment by
the Company to or on account of the Senior Indebtedness. It is understood that
the provisions of this Article Eight are and are intended solely for the purpose
of defining the relative rights of the Holders of the Notes, on the one hand,
and the holders of the Senior Indebtedness, on the other hand.

          If any payment or distribution to which the Holders of the Notes would
otherwise have been entitled but for the provisions of this Article Eight shall
have been applied, pursuant to the provisions of this Article Eight, to the
payment of all amounts payable under Senior Indebtedness, then and in such case,
the Holders of the Notes shall be entitled to receive from the holders of such
Senior Indebtedness any payments or distributions received by such holders of
Senior Indebtedness in excess of the amount required to make payment in full in
cash of such Senior Indebtedness.

SECTION 8.05.   OBLIGATIONS OF COMPANY UNCONDITIONAL.

          Nothing contained in this Article Eight or elsewhere in this Indenture
or in the Notes is intended to or shall impair, as among the Company and the
Holders of the Notes, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Notes the principal of and interest
on the Notes as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of the
Holders of the Notes and creditors of the Company other than the holders of the
Senior Indebtedness, nor shall anything herein or therein prevent the Holder of
any Note or the Trustee on their behalf from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article Eight of the holders of the Senior
Indebtedness in respect of cash, property or securities of the Company received
upon the exercise of any such remedy.

          Without limiting the generality of the foregoing, nothing contained in
this Article Eight shall restrict the right of the Trustee or the Holders of
Notes to take any action to declare the Notes to be due and payable prior to
their stated maturity pursuant to SECTION 6.01 or to pursue any rights or
remedies hereunder; PROVIDED, HOWEVER, that all Senior Indebtedness then due and
payable shall first be paid in full in cash before the Holders of the Notes or
the Trustee are entitled to receive any direct or indirect payment from the
Company of principal of or interest on the Notes.

SECTION 8.06.   NOTICE TO TRUSTEE.

          The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Notes pursuant to the provisions of this
Article Eight. Notwithstanding anything contained in this Indenture to the
contrary, the Trustee shall not be charged with knowledge of the existence of
any event of default with respect to any Senior Indebtedness or of any other
facts which would prohibit the making of any payment to or by the Trustee unless
and until the Trustee shall have received notice in writing at its Corporate
Trust Office to that effect signed by an Officer of the

                                      -56-
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Company, or by a holder of Senior Indebtedness or trustee or agent therefor; and
prior to the receipt of any such written notice, the Trustee shall, subject to
Article Seven, be entitled to assume that no such facts exist; PROVIDED,
HOWEVER, that if the Trustee shall not have received the notice provided for in
this SECTION 8.06 at least two Business Days prior to the date upon which by the
terms of this Indenture any moneys shall become payable for any purpose
(including, without limitation, the payment of the principal of or interest on
any Note), then, regardless of anything herein to the contrary, the Trustee
shall have full power and authority to receive any moneys from the Company and
to apply the same to the purpose for which they were received, and shall not be
affected by any notice to the contrary which may be received by it on or after
such prior date; nor shall the Trustee be charged with knowledge of the curing
of any such default or the elimination of the act or condition preventing any
such payment unless and until the Trustee shall have received an Officers'
Certificate to such effect. Nothing contained in this SECTION 8.06 shall limit
the right of the holders of Senior Indebtedness to recover payments as
contemplated by SECTION 8.03. The Trustee shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself or itself to
be a holder of any Senior Indebtedness (or a trustee on behalf of, or other
representative of, such holder) to establish that such notice has been given by
a holder of such Senior Indebtedness or a trustee or representative on behalf of
any such holder.

          In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Eight, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Eight, and if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.

SECTION 8.07.   RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.

          Upon any payment or distribution of assets or securities referred to
in this Article Eight, the Trustee and the Holders of the Notes shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which bankruptcy, dissolution, winding-up, liquidation or
reorganization proceedings are pending, or upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, delivered to the Trustee or to the Holders of the Notes
for the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
Eight.

SECTION 8.08.   TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS.

          The Trustee and any Paying Agent shall be entitled to all the rights
set forth in this Article Eight with respect to any Senior Indebtedness which
may at any time be held by it in its individual or any other capacity to the
same extent as any other holder of Senior Indebtedness,

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and nothing in this Indenture shall deprive the Trustee or any Paying Agent of
any of its rights as such holder.

          With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Eight, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness (except as provided in
SECTION 8.03(b)). The Trustee shall not be liable to any such holders if the
Trustee shall in good faith mistakenly pay over or distribute to Holders of
Notes or to the Company or to any other person cash, property or securities to
which any holders of Senior Indebtedness shall be entitled by virtue of this
Article Eight or otherwise.

SECTION 8.09.   SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE
                COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS.

          No right of any present or future holders of any Senior Indebtedness
to enforce subordination as provided herein 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 by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
The provisions of this Article Eight are intended to be for the benefit of, and
shall be enforceable directly by, the holders of Senior Indebtedness.

SECTION 8.10.   HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF NOTES.

          Each Holder of Notes by his acceptance of such Notes authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Eight, and appoints the Trustee his attorney-in-fact for such purposes,
including, in the event of any dissolution, winding-up, total liquidation or
reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the business and assets
of the Company, the filing of a claim for the unpaid balance of its or his Notes
in the form required in those proceedings.

SECTION 8.11.   THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT.

          The failure to make a payment on account of principal of or interest
on the Notes by reason of any provision of this Article Eight shall not be
construed as preventing the occurrence of an Event of Default specified in
clauses (a), (b) or (c) of SECTION 6.01.

SECTION 8.12.   TRUSTEE'S COMPENSATION NOT PREJUDICED.

          Nothing in this Article Eight shall apply to amounts due to the
Trustee pursuant to other sections in this Indenture.

SECTION 8.13.   NO WAIVER OF SUBORDINATION PROVISIONS.

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          Without in any way limiting the generality of SECTION 8.09, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Notes, without
incurring responsibility to the Holders of the Notes and without impairing or
releasing the subordination provided in this Article Eight or the obligations
hereunder of the Holders of the Notes to the holders of Senior Indebtedness, do
any one or more of the following: (a) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding or secured; (b) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (c) release any Person liable in any manner for the collection of
Senior Indebtedness; and (d) exercise or refrain from exercising any rights
against the Company and any other Person.

SECTION 8.14.   SUBORDINATION PROVISIONS NOT APPLICABLE TO MONEY HELD IN TRUST
                FOR HOLDERS; PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION.

          All money and United States Government Obligations deposited in trust
with the Trustee pursuant to and in accordance with Article Nine shall be for
the sole benefit of the Holders and shall not be subject to this Article Eight.

          Nothing contained in this Article Eight or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in SECTION
8.02, from making payments of principal of and interest on the Notes or from
depositing with the Trustee any moneys for such payments or from effecting a
termination of the Company's and the Guarantors' obligations under the Notes and
this Indenture as provided in Article Nine, or (ii) the application by the
Trustee of any moneys deposited with it for the purpose of making such payments
of principal of and interest on the Notes, to the holders entitled thereto
unless at least two Business Days prior to the date upon which such payment
becomes due and payable, the Trustee shall have received the written notice
provided for in SECTION 8.02(b) or in SECTION 8.06. The Company shall give
prompt written notice to the Trustee of any dissolution, winding-up, liquidation
or reorganization of the Company.

SECTION 8.15.   ACCELERATION OF NOTES.

          If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly notify holders of the Senior Indebtedness of the
acceleration.

                                  ARTICLE NINE

                             DISCHARGE OF INDENTURE

SECTION 9.01.   TERMINATION OF COMPANY'S OBLIGATIONS.

          Subject to the provisions of Article Eight, the Company may terminate
its and the Guarantors' substantive obligations in respect of the Notes by
delivering all outstanding Notes to the Trustee for cancellation and paying all
sums payable by it on account of principal of and interest on all Notes or
otherwise. In addition to the foregoing, subject to the provisions of Article
Eight with respect to the creation of the defeasance trust provided for in the
following

                                      -59-
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clause (i), the Company may, PROVIDED that no Default or Event of Default has
occurred and is continuing or would arise therefrom (or, with respect to a
Default or Event of Default specified in SECTION 6.01(h), occurs at any time on
or prior to the 91st calendar day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until after such
91st day)) under the Indenture and PROVIDED that no default under any Senior
Indebtedness would result therefrom, terminate its and the Guarantors'
substantive obligations in respect of the Notes (except for its obligations to
pay the principal of (and premium, if any, on) and the interest on the Notes and
the Guarantor's Guarantee thereof) by (i) depositing with the Trustee, under the
terms of an irrevocable trust agreement, money or United States Government
Obligations sufficient (without reinvestment) to pay all remaining Indebtedness
on the Notes, (ii) delivering to the Trustee either an Opinion of Counsel or a
ruling directed to the Trustee from the Internal Revenue Service 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 termination of obligations, (iii)
delivering to the Trustee an Opinion of Counsel to the effect that the Company's
exercise of its option under this SECTION 9.01 will not result in any of the
Company, the Trustee or the trust created by the Company's deposit of funds
pursuant to this provision becoming or being deemed to be an "investment
company" under the Investment Company Act of 1940, as amended (the "INVESTMENT
COMPANY ACT"), and (iv) delivering to the Trustee an Officer's Certificate and
an Opinion of Counsel each stating, among other things, compliance with all
conditions precedent provided for herein in form and substance reasonably
satisfactory. In addition, subject to the provisions of Article Eight with
respect to the creation of the defeasance trust provided for in the following
clause (i), the Company may, PROVIDED that no Default or Event of Default has
occurred and is continuing or would arise therefrom (or, with respect to a
Default or Event of Default specified in SECTION 6.01(h), occurs at any time on
or prior to the 91st calendar day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until after such
91st day)) under the Indenture and PROVIDED that no default under any Senior
Indebtedness would result therefrom, terminate all of its and the Guarantors'
substantive obligations in respect of the Notes (including its obligations to
pay the principal of (and premium, if any, on) and interest on the Notes and the
Guarantors' Guarantee thereof) by (i) depositing with the Trustee, under the
terms of an irrevocable trust agreement, money or United States Government
Obligations sufficient (without reinvestment) to pay all remaining Indebtedness
on the Notes, (ii) delivering to the Trustee either a ruling directed to the
Trustee from the Internal Revenue Service to the effect that the Holders of the
Notes will not recognize income, gain or loss for Federal income tax purposes as
a result of such deposit and termination of obligations or an Opinion of Counsel
addressed to the Trustee based upon such a ruling or based on a change in the
applicable Federal tax law since the date of this Indenture to such effect,
(iii) delivering to the Trustee an Opinion of Counsel to the effect that the
Company's exercise of its option under this SECTION 9.01 will not result in any
of the Company, the Trustee or the trust created by the Company's deposit of
funds pursuant to this provision becoming or being deemed to be an "investment
company" under the Investment Company Act and (iv) delivering to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating, among other
things, compliance with all conditions precedent provided for herein in form and
substance reasonably satisfactory to the Trustee.

          Notwithstanding the foregoing paragraph, the Company's obligations in
SECTIONS 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 2.13 and 4.01 (but not with
respect to termination of substantive obligations pursuant to the third sentence
of the foregoing paragraph), 4.02, 7.07,

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7.08, 9.03 and 9.04 shall survive until the Notes are no longer outstanding.
Thereafter the Company's obligations in SECTIONS 7.07, 9.03 and 9.04 shall
survive.

          After such delivery or irrevocable deposit and delivery of an
Officers' Certificate and Opinion of Counsel, the Trustee upon request shall
acknowledge in writing the discharge of the Company's and the Guarantors'
obligations under the Notes and this Indenture except for those surviving
obligations specified above.

          The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the United States Government
Obligations deposited pursuant to this Section 9.01 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding Notes.

SECTION 9.02.   APPLICATION OF TRUST MONEY.

          The Trustee shall hold in trust money or United States Government
Obligations deposited with it pursuant to Section 9.01, and shall apply the
deposited money and the money from United States Government Obligations in
accordance with this Indenture solely to the payment of principal of and
interest on the Notes.

SECTION 9.03.   REPAYMENT TO COMPANY.

          Subject to Sections 7.07 and 9.01, the Trustee shall promptly pay to
the Company upon written request any excess money held by it at any time. The
Trustee shall pay to the Company upon written request any money held by it for
the payment of principal or interest that remains unclaimed for two years;
PROVIDED, HOWEVER, that the Trustee before being required to make any payment
may at the expense of the Company cause to be published once in a newspaper of
general circulation in The City of New York or mail to each Holder entitled to
such money notice that such money remains unclaimed and that, after a date
specified therein which shall be at least 30 days from the date of such
publication or mailing, any unclaimed balance of such money then remaining shall
be repaid to the Company. After payment to the Company, Holders entitled to
money must look solely to the Company for payment as general creditors unless an
applicable abandoned property law designates another person and all liability of
the Trustee or Paying Agent with respect to such money shall thereupon cease.

SECTION 9.04.   REINSTATEMENT.

          If the Trustee is unable to apply any money or United States
Government Obligations in accordance with Section 9.01 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 and the Guarantors' obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 9.01 until such time as the Trustee is permitted to apply all such money
or United States Government Obligations in accordance with Section 9.01;
PROVIDED, HOWEVER, that if the Company has made any payment of interest on or
principal of any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of

                                      -61-
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such Notes to receive such payment from the money or United Sates Government
Obligations held by the Trustee.

                                   ARTICLE TEN

                       AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 10.01.  WITHOUT CONSENT OF HOLDERS.

          The Company and the Guarantors when authorized by a resolution of
their respective Boards of Directors, and the Trustee may amend or supplement
this Indenture or the Notes without notice to or consent of any Holder:

          (a) to cure any ambiguity, defect or inconsistency; PROVIDED, HOWEVER,
that such amendment or supplement does not adversely affect the rights of any
Holder;

          (b) to effect the assumption by a successor Person of all obligations
of the Company under the Notes and his Indenture in connection with any
transaction complying with Article Five of this Indenture;

          (c) to provide for uncertificated Notes in addition to or in place of
certificated Notes;

          (d) to comply with any requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;

          (e) to make any change that would provide any additional benefit or
rights to the Holders;

          (f) to make any other change that does not adversely affect the rights
of any Holder under this Indenture;

          (g) to evidence the succession of another Person to any Guarantor and
the assumption by any such successor of the covenants of such Guarantor herein
and in the Guarantee in connection with any transaction complying with Article
Five of this Indenture;

          (h) to add to the covenants of the Company or the Guarantors for the
benefit of the Holders, or to surrender any right or power herein conferred upon
the Company or any Guarantor;

          (i) to secure the Notes pursuant to the requirements of SECTION 4.11
or otherwise; or

          (j) to reflect the release of a Guarantor from its obligations with
respect to its Guarantee in accordance with the provisions of SECTION 11.03;

PROVIDED, HOWEVER that the Company has delivered to the Trustee an Opinion of
Counsel stating that such amendment or supplement complies with the provisions
of this SECTION 10.01.

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SECTION 10.02.  WITH CONSENT OF HOLDERS.

          Subject to SECTION 6.07 and ARTICLE XIII, the Company and the
Guarantors, when authorized by a resolution of their respective Boards of
Directors, and the Trustee may amend or supplement this Indenture or the Notes
with the written consent of the Holders of at least a majority in principal
amount of the outstanding Notes (including consents obtained in connection with
a tender offer or exchange offer for the Notes). Subject to SECTION 6.07, the
Holders of a majority in principal amount of the outstanding Notes may waive
compliance by the Company or any Guarantor with any provision of this Indenture
or the Notes. However, without the consent of each Holder affected, an
amendment, supplement or waiver, including a waiver pursuant to SECTION 6.04,
may not:

          (a) change the Stated Maturity of the principal of or any installment
of interest on any such Note or alter the optional redemption or repurchase
provisions of any such Note or this Indenture in a manner adverse to the Holders
of the Notes;

          (b) reduce the principal amount of (or the premium, if any) of any
such Note;

          (c) reduce the rate of or extend the time for payment of interest on
any such Note;

          (d) change the place or currency of payment of principal of (or
premium, if any) or interest on any such Note;

          (e) modify any provisions of SECTION 6.04 (other than to add sections
of this Indenture or the Notes subject thereto) or 6.07 or this SECTION 10.02
(other than to add sections of this Indenture or the Notes which may not be
amended, supplemented or waived without the consent of each Holder affected);

          (f) reduce the percentage of the principal amount of outstanding Notes
necessary for amendment to or waiver of compliance with any provision of this
Indenture or the Notes or for waiver of any Default in respect thereof;

          (g) waive a Default in the payment of principal of, interest on, or
redemption payment with respect to, the Notes (except a rescission of
acceleration of the Notes by the Holders thereof as provided in SECTION 6.02 and
a waiver of the payment default that resulted from such acceleration);

          (h) modify the ranking or priority of any Note or the Guarantee in
respect thereof of any Guarantor or modify the definition of Senior Indebtedness
or Guarantor Senior Indebtedness or amend or modify any of the provisions of
Article Eight or Article Twelve in any manner adverse to the Holders of the
Notes;

          (i) release any Significant Restricted Subsidiary that is a Guarantor
from any of its obligations under its Guarantee or this Indenture otherwise than
in accordance with this Indenture;

          (j) impair the right to institute suit for the enforcement of any
payment on or with respect to the Notes; or

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          (k) impair the conversion rights of a Holder.

          An amendment under this SECTION 10.02 may not make any change under
Article Eight or Article Twelve hereof that adversely affects in any material
respect the rights of any holder of Senior Indebtedness or Guarantor Senior
Indebtedness, as the case may be, then outstanding unless the holders of such
Senior Indebtedness or Guarantor Senior Indebtedness, as the case may be, (or
any representative thereof authorized to give a consent) shall have consented to
such change.

          It shall not be necessary for the consent of the Holders under this
SECTION 10.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.

          After an amendment, supplement or waiver under this SECTION 10.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.

SECTION 10.03.  COMPLIANCE WITH TRUST INDENTURE ACT.

          Every amendment to or supplement of this Indenture or the Notes shall
comply with the TIA as then in effect.

SECTION 10.04.  RECORD DATE FOR CONSENTS AND EFFECT OF CONSENTS.

          The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders of Notes entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then those persons
who were Holders of Notes at such record date (or their duly designated
proxies), and only those persons, shall be entitled to consent to such
amendment, supplement or waiver or to revoke any consent previously given,
whether or not such persons continue to be Holders of such Notes after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date. The Trustee is entitled to rely upon any electronic
instruction from beneficial owners to the Holders of any Global Note.

          After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (a)
through (j) of SECTION 10.02. In that case the amendment, supplement or waiver
shall bind each Holder of a Note who has consented to it and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note.

SECTION 10.05.  NOTATION ON OR EXCHANGE OF NOTES.

          If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of the Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms.

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Failure to make the appropriate notation or issue a new Note shall not affect
the validity and effect of such amendment, supplement or waiver.

SECTION 10.06.  TRUSTEE TO SIGN AMENDMENTS, ETC.

          The Trustee shall be entitled to receive, and shall be fully protected
in relying upon, an Opinion of Counsel, among other things, stating that the
execution of any amendment, supplement or waiver authorized pursuant to this
Article Ten is authorized or permitted by this Indenture that all conditions
precedent under this Indenture with respect to such amendment, supplement or
waiver have been satisfied and that such amendment, supplement or waiver
constitutes the legal, valid and binding obligation of the Company and the
Guarantors, enforceable in accordance with its terms (subject to customary
exceptions). The Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver which affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise. In signing any amendment,
supplement or waiver, the Trustee shall be entitled to receive an indemnity
satisfactory to it.

                                 ARTICLE ELEVEN

                                    GUARANTEE

SECTION 11.01.  UNCONDITIONAL GUARANTEE.

          (a) Each Guarantor hereby unconditionally, jointly and severally,
guarantees (each, a "GUARANTEE") to each Holder of a Note authenticated by the
Trustee and to the Trustee and its successors and assigns that the principal of
and interest on the Notes will be promptly paid in full when due, subject to any
applicable grace period, whether at maturity, by acceleration or otherwise, and
interest on the overdue principal and interest on any overdue interest on the
Notes to the extent lawful, and all other obligations of the Company to the
Holders or the Trustee hereunder or under the Notes will be promptly paid in
full or performed, all in accordance with the terms hereof and thereof (all of
the foregoing being hereinafter collectively called the "INDENTURE
OBLIGATIONS"); subject, however, to the limitations set forth in SECTION 11.04.
Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that the Guarantee will not be discharged except by complete
performance of the obligations continued in the Notes, this Indenture, and this
Guarantee. If any Holder or the Trustee is required by any court or otherwise to
return to the Company, any Guarantor, or any custodian, trustee, liquidator or
other similar official acting in relation to the Company or any Guarantor, any
amount paid by the Company or any Guarantor to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Guarantor further agrees that, as between each Guarantor,
on the one hand, and the Holders and the Trustee, on the other hand, (x) the
maturity

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of the obligations guaranteed hereby may be accelerated as provided in Article
Six for the purpose of this Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article Six, such obligations (whether or not due and payable)
shall become due and payable by each Guarantor for the purpose of this
Guarantee.

          Each Guarantor further agrees that the Indenture Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
such Guarantor and that such Guarantor will remain bound under this ARTICLE 11
notwithstanding any extension or renewal of any Indenture Obligation.

          (b) Each Guarantor waives notice of any default under the Notes or the
Indenture Obligations. The obligations of each Guarantor hereunder shall not be
affected by (i) any extension or renewal of any thereof; (ii) any rescission,
waiver, amendment or modification of any of the terms or provisions of this
Indenture, the Notes or any other agreement; (iii) the release of any security
held by any Holder or the Trustee for the Indenture Obligations or any of them;
(iv) the failure of any Holder or the Trustee to exercise any right or remedy
against any other guarantor of the Indenture Obligations; or (v) except as set
forth in SECTION 11.03, any change in ownership of such Guarantor.

          (c) Each Guarantor further agrees that its 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
Indenture Obligations.

          (d) The obligations of each Guarantor hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason (other
than payment of the Indenture Obligations in full), 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 Indenture
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each 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 Notes or any
other agreement, by any waiver or modification of any thereof, by any default,
failure or delay, willful or otherwise, in the performance of the Indenture
Obligations, or by any other act or thing or omission or delay to do any other
act or thing that may or might in any manner or to any extent vary the risk of
such Guarantor or would otherwise operate as a discharge of such Guarantor as a
matter of law or equity.

          (e) In furtherance of the foregoing and not in limitation of any other
right that any Holder or the Trustee has at law or at equity against any
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of, premium, if any, or interest on any Indenture 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 Indenture Obligation, each
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 amount of such Indenture
Obligations, (ii) accrued and unpaid interest on such

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Indenture Obligations (but only to the extent not prohibited by law) and (iii)
all other monetary Indenture Obligations of the Company to the Holders and the
Trustee.

          (f) Each Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee in enforcing any
rights under this Section; PROVIDED that if the Trustee fails to enforce any
rights under this Section, each Guarantor agrees to pay the reasonable
attorney's fees of one legal counsel to represent Holders of Notes representing
not less than 25% in aggregate principal amount of the Notes then outstanding in
connection with enforcing any rights hereunder.

SECTION 11.02.  SEVERABILITY.

          In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

SECTION 11.03.  RELEASE OF A GUARANTOR.

          If the Notes are defeased in accordance with the terms of this
Indenture, or if SECTION 5.01(b) is complied with, or if, subject to the
requirements of SECTION 5.01(a), all or substantially all of the assets of any
Guarantor or all of the Equity Interests of any Guarantor are sold (including by
issuance or otherwise) by the Company in a transaction constituting an Asset
Sale and (x) the Net Cash Proceeds from such Asset Sale are used in accordance
with SECTION 4.05 or (y) the Company delivers to the Trustee an Officers'
Certificate to the effect that the Net Cash Proceeds from such Asset Sale shall
be used in accordance with SECTION 4.05 and within the time limits specified by
SECTION 4.05, then each Guarantor (in the case of defeasance) or such Guarantor
(in the case of compliance with SECTION 5.01(b) or in the event of a sale or
other disposition of all of the Equity Interests of such Guarantor) or the
corporation acquiring such assets (in the event of a sale or other disposition
of all or substantially all of the assets of such Guarantor) shall be released
and discharged from all obligations under this Article Eleven without any
further action required on the part of the Trustee or any Holder. The Trustee
shall, at the sole cost and expense of the Company and upon receipt at the
reasonable request of the Trustee of an Opinion of Counsel that the provisions
of this SECTION 11.03 have been complied with, deliver an appropriate instrument
evidencing such release upon receipt of a request by the Company accompanied by
an Officers' Certificate certifying as to the compliance with this SECTION
11.03. Any Guarantor not so released remains liable for the full amount of
principal of and interest on the Notes and the other obligations of the Company
hereunder as provided in this Article Eleven.

SECTION 11.04.  LIMITATION OF GUARANTOR'S LIABILITY.

          Each Guarantor, and by its acceptance hereof each Holder, hereby
confirms that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of title 11 of the United States Code, as amended, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar U.S. Federal or state or other applicable law. To effectuate the
foregoing intention, the Holders and each Guarantor hereby irrevocably agree
that the obligations of each

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Guarantor under its Guarantee shall be listed to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor (including any Senior Indebtedness Incurred after the Issue Date) and
after giving effect to any collections from or payments made by or on behalf of
any other Guarantor in respect of the obligations of such other Guarantor under
its Guarantee or pursuant to SECTION 11.05, result in the obligations of such
Guarantor under its Guarantee not constituting such a fraudulent transfer or
conveyance under Federal or state law.

SECTION 11.05.  CONTRIBUTION.

          In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "FUNDING GUARANTOR") under the
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount, based on the net assets of each Guarantor
(including the Funding Guarantor), determined in accordance with GAAP, subject
to SECTION 11.04, for all payments, damages and expenses incurred by such
Funding Guarantor in discharging the Company's obligations with respect to the
Notes or any other Guarantor's obligations with respect to the Guarantee.

SECTION 11.06.  EXECUTION OF NOTE GUARANTEE.

          To further evidence their Guarantee to the Holders, each of the
Guarantors hereby agrees to execute a Note Guarantee to be endorsed on each Note
ordered by a writing signed by an Officer of the Company to be authenticated and
delivered by the Trustee. Each Guarantor hereby agrees that its Guarantee set
forth in SECTION 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a Note Guarantee. Each such Note Guarantee shall
be signed on behalf of each Guarantor by its Chairman of the Board, its
President or one of its Vice Presidents prior to the authentication of the Note
on which it is endorsed, and the delivery of such Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of such Note
Guarantee on behalf of such Guarantor. Such signature upon the Note Guarantee
may be manual or facsimile signature of such officer and may be imprinted or
otherwise reproduced on the Note Guarantee, and in case such officer who shall
have signed the Note Guarantee shall cease to be such officer before the Note on
which such Note Guarantee is endorsed shall have been authenticated and
delivered by the Trustee or disposed of by the Company, such Note nevertheless
may be authenticated and delivered or disposed of as though the Person who
signed the Note Guarantee had not ceased to be such officer of such Guarantor.

SECTION 11.07.  SUBORDINATION OF SUBROGATION AND OTHER RIGHTS.

          Each Guarantor hereby agrees that any claim against the Company that
arises from the payment, performance or enforcement of such Guarantor's
obligations under its Guarantee or this Indenture, including, without
limitation, any right of subrogation, shall be subject and subordinate to, and
no payment with respect to any such claim of such Guarantor shall be made
before, the payment in full in cash of all outstanding Notes in accordance with
the provisions provided therefor in this Indenture.

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                                 ARTICLE TWELVE

                           SUBORDINATION OF GUARANTEE

SECTION 12.01.  GUARANTEE OBLIGATIONS SUBORDINATED TO GUARANTOR SENIOR
                INDEBTEDNESS.

          Each Guarantor covenants and agrees, and the Trustee and each Holder
of the Notes by his acceptance thereof likewise covenant and agree, that the
Guarantee of such Guarantor shall be issued subject to the provisions of this
Article Twelve; and each person holding any Note, whether upon original issue or
upon transfer, assignment or exchange thereof, accepts and agrees that all
payments of the principal of and interest on the Notes pursuant to the Guarantee
made by or on behalf of any Guarantor shall, to the extent and in the manner set
forth in this Article Twelve, be subordinated and junior in right of payment to
the prior payment in full in cash of all amounts payable under Guarantor Senior
Indebtedness of such Guarantor.

SECTION 12.02.  NO PAYMENT ON GUARANTEES IN CERTAIN CIRCUMSTANCES.

          (a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities) by or on behalf of any Guarantor of
principal of or interest on the Notes pursuant to such Guarantor's Guarantee,
whether pursuant to the terms of the Notes, upon acceleration or otherwise,
shall be made if, at the time of such payment, there exists a default in the
payment of all or any portion of the obligations on any Designated Guarantor
Senior Indebtedness of such Guarantor, whether at maturity, on account of
mandatory redemption or prepayment, acceleration or otherwise, and such default
shall not have been cured or waived or the benefits of this sentence waived by
or on behalf of the holders of such Designated Guarantor Senior Indebtedness. In
addition, during the continuance of any nonpayment event of default with respect
to any Designated Guarantor Senior Indebtedness pursuant to which the maturity
thereof may be immediately accelerated, and upon receipt by the Trustee of
written notice (the "GUARANTOR PAYMENT BLOCKAGE NOTICE") from the holder or
holders of such Designated Guarantor Senior Indebtedness or the trustee or agent
acting on behalf of such Designated Guarantor Senior Indebtedness, then, unless
and until such nonpayment event of default has been cured or waived or has
ceased to exist or such Designated Guarantor Senior Indebtedness has been
discharged or paid in full in cash or the benefits of these provisions have been
waived by the holders of such Designated Guarantor Senior Indebtedness, no
direct or indirect payment (excluding any payment or distribution of Permitted
Junior Securities) shall be made by or on behalf of such Guarantor of principal
or interest on the Notes during a period (a "GUARANTOR BLOCKAGE PERIOD")
commencing on the date of receipt of such notice by the Trustee and ending 179
days thereafter; PROVIDED HOWEVER, that so long as any Indebtedness remains
outstanding under the Restructured Credit Facility or any replacement, renewal,
refinancing or extension thereof, no Guarantor Payment Blockage Notice may be
initiated to block payment of principal or interest on the Notes pursuant to the
terms of this Section 12.02(a) except by the Administrative Agent (or similar
authorized party) under the Restructured Credit Facility or any replacement,
renewal, refinancing or extension thereof.

          Notwithstanding anything herein or in the Notes to the contrary, (x)
in no event shall a Guarantor Blockage Period extend beyond 179 days from the
date the Guarantor Payment Blockage Notice in respect thereof was given, (y)
there shall be a period of at least 181 consecutive days in each 360 day period
when no Guarantor Blockage Period is in effect and (z)

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not more than one Guarantor Blockage Period may be commenced with respect to any
Guarantor during any period of 360 consecutive days. No nonpayment event of
default that existed or was continuing on the date of commencement of any
Guarantor Blockage Period with respect to the Designated Guarantor Senior
Indebtedness initiating such Guarantor Blockage Period (to the extent the holder
of Designated Guarantor Senior Indebtedness, or trustee or agent, giving notice
commencing such Guarantor Blockage Period had knowledge of such existing or
continuing event of default) may be, or be made, the basis for the commencement
of any other Guarantor Blockage Period by the holder or holders of such
Designated Guarantor Senior Indebtedness or the trustee or agent acting on
behalf of such Designated Guarantor Senior Indebtedness, whether or not within a
period of 360 consecutive days, unless such nonpayment event of default has been
cured or waived for a period of not less than 90 consecutive days.

          (b) In the event that, notwithstanding the foregoing, any payment
shall be made directly to the Trustee or any Holder when such payment is
prohibited by SECTION 12.02(a), such payment shall be held in trust for the
benefit of, and shall be paid over or delivered by the Trustee (if the Notice
required by SECTION 12.06 has been received by the Trustee) or the Holder to,
the holders of such Designated Guarantor Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Designated Guarantor Senior Indebtedness may have been issued,
as their respective interests may appear, but only to the extent that, upon
notice from the Trustee to the holders of such Designated Guarantor Senior
Indebtedness that such prohibited payment has been made, the holders of such
Designated Guarantor Senior Indebtedness (or their representative or
representatives or a trustee or trustees) notify the Trustee in writing of the
amounts then due and owing on such Designated Guarantor Senior Indebtedness, if
any, and only the amounts specified in such notice to the Trustee shall be paid
to the holders of such Designated Guarantor Senior Indebtedness.

SECTION 12.03.  PAYMENT OVER PROCEEDS UPON DISSOLUTION, ETC.

          (a) Upon any payment or distribution of assets or securities of any
Guarantor of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities), upon any
dissolution or winding up or total liquidation or reorganization of such
Guarantor, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Guarantor Senior Indebtedness of such
Guarantor shall first be paid in full in cash before the Holders of the Notes or
the Trustee on behalf of such Holders shall be entitled to receive any payment
by such Guarantor of the principal of or interest on the Notes pursuant to such
Guarantor's Guarantee, or any payment to acquire any of the Notes for cash,
property or securities, or any distribution with respect to the Notes of any
cash, property or securities (excluding any payment or distribution of Permitted
Junior Securities). Before any payment may be made by, or on behalf of, any
Guarantor of the principal of or interest on the Notes upon any such dissolution
or winding up or total liquidation or reorganization, any payment or
distribution of assets or securities of such Guarantor of any kind or character,
whether in cash, property or securities (excluding any payment or distribution
of Permitted Junior Securities), to which the Holders of the Notes or the
Trustee on their behalf would be entitled, but for the subordination provisions
of this Indenture, shall be made by such Guarantor or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, directly to the holders of the Guarantor Senior

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Indebtedness of such Guarantor (PRO RATA to such holders on the basis of the
respective amounts of such Guarantor Senior Indebtedness held by such holders)
or their representatives or to the trustee or trustees or agent or agents under
any agreement or indenture pursuant to which any of such Guarantor Senior
Indebtedness may have been issued, as their respective interests may appear, to
the extent necessary to pay all such Guarantor Senior Indebtedness in full in
cash after giving effect to any prior or concurrent payment, distribution or
provision therefor to or for the holders of such Guarantor Senior Indebtedness.

          (b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of any Guarantor of any kind or character, whether in cash,
property or securities (excluding any payment or distribution of Permitted
Junior Securities), shall be made directly to the Trustee or any Holder of Notes
at a time when such payment or distribution is prohibited by SECTION 12.03(a)
and before all obligations in respect of the Guarantor Senior Indebtedness of
such Guarantor are paid in full in cash, such payment or distribution shall be
received and held in trust for the benefit of, and shall be paid over or
delivered by the Trustee (if the Notice required by SECTION 12.06 has been
received by the Trustee) or the Holder to, the holders of such Guarantor Senior
Indebtedness (PRO RATA to such holders on the basis of the respective amounts of
such Guarantor Senior Indebtedness held by such holders) or their respective
representatives, or to the trustee or trustees or agent or agents under any
indenture pursuant to which any of such Guarantor Senior Indebtedness may have
been issued, as their respective interests may appear, for application to the
payment of such Guarantor Senior Indebtedness remaining unpaid until all such
Guarantor Senior Indebtedness has been paid in full in cash after giving effect
to any prior or concurrent payment, distribution or provision therefor to or for
the holders of such Guarantor Senior Indebtedness.

          The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution of
any Guarantor following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation upon the terms
and conditions provided in Article Five shall not be deemed a dissolution,
winding up, liquidation or reorganization for the purposes of this SECTION 12.03
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article Five.

SECTION 12.04.  SUBROGATION.

          Upon the payment in full in cash of all Guarantor Senior Indebtedness
of a Guarantor, or provision for payment, the Holders of the Notes shall be
subrogated to the rights of the holders of such Guarantor Senior Indebtedness to
receive payments or distributions of cash, property or securities of such
Guarantor made on such Guarantor Senior Indebtedness until the principal of and
interest on the Notes shall be paid in full in cash; and, for the purposes of
such subrogation, no payments or distributions to the holders of such Guarantor
Senior Indebtedness of any cash, property or securities to which the Holders of
the Notes or the Trustee on their behalf would be entitled except for the
provisions of this Article Twelve, and no payment over pursuant to the
provisions of this Article Twelve to the holders of such Guarantor Senior
Indebtedness by Holders of the Notes or the Trustee on their behalf shall, as
between such Guarantor, its creditors other than holders of such Guarantor
Senior Indebtedness, and the

                                      -71-
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Holders of the Notes, be deemed to be a payment by such Guarantor to or on
account of such Guarantor Senior Indebtedness. It is understood that the
provisions of this Article Twelve are and are intended solely for the purpose of
defining the relative rights of the Holders of the Notes, on the one hand, and
the holders of Guarantor Senior Indebtedness of each Guarantor, on the other
hand.

          If any payment or distribution to which the Holders of the Notes would
otherwise have been entitled but for the provisions of this Article Twelve shall
have been applied, pursuant to the provisions of this Article Twelve, to the
payment of all amounts payable under Guarantor Senior Indebtedness, then and in
such case, the Holders of the Notes shall be entitled to receive from the
holders of such Guarantor Senior Indebtedness any payments or distributions
received by such holders of Guarantor Senior Indebtedness in excess of the
amount required to make payment in full in cash of such Guarantor Senior
Indebtedness.

SECTION 12.05.  OBLIGATIONS OF GUARANTORS UNCONDITIONAL.

          Nothing contained in this Article Twelve or elsewhere in this
Indenture or in the Notes or the Guarantees is intended to or shall impair, as
among each of the Guarantors and the Holders of the Notes, the obligation of
each Guarantor, which is absolute and unconditional, to pay to the Holders of
the Notes the principal of and interest on the Notes as and when the same shall
become due and payable in accordance with the terms of the Guarantee of such
Guarantor, or is intended to or shall affect the relative rights of the Holders
of the Notes and creditors of any Guarantor other than the holders of Guarantor
Senior Indebtedness of such Guarantor, nor shall anything herein or therein
prevent the Holder of any Note or the Trustee on their behalf from exercising
all remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article Twelve of the
holders of Guarantor Senior Indebtedness in respect of cash, property or
securities of any Guarantor received upon the exercise of any such remedy.

          Without limiting the generality of the foregoing, nothing contained in
this Article Twelve shall restrict the right of the Trustee or the Holders of
Notes to take any action to declare the Notes to be due and payable prior to
their stated maturity pursuant to SECTION 6.01 or to pursue any rights or
remedies hereunder; PROVIDED, HOWEVER, that all Guarantor Senior Indebtedness of
any Guarantor then due and payable shall first be paid in full before the
Holders of the Notes or the Trustee are entitled to receive any direct or
indirect payment from such Guarantor of principal of or interest on the Notes
pursuant to such Guarantor's Guarantee.

SECTION 12.06.  NOTICE TO TRUSTEE.

          The Company and each Guarantor shall give prompt written notice to the
Trustee of any fact known to the Company or such Guarantor which would prohibit
the making of any payment to or by the Trustee in respect of the Notes pursuant
to the provisions of this Article Twelve. Notwithstanding anything in this
Indenture to the contrary, the Trustee shall not be charged with knowledge of
the existence of any event of default with respect to any Guarantor Senior
Indebtedness or of any other facts which would prohibit the making of any
payment to or by the Trustee unless and until the Trustee shall have received
notice in writing at its Corporate Trust Office to that effect signed by an
Officer of the Company or such Guarantor, or by a holder

                                      -72-
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of Guarantor Senior Indebtedness or trustee or agent therefor; and prior to the
receipt of any such written notice, the Trustee shall, subject to Article Seven,
be entitled to assume that no such facts exist; PROVIDED, HOWEVER, that if the
Trustee shall not have received the notice provided for in this SECTION 12.06 at
least two Business Days prior to the date upon which by the terms of this
Indenture any moneys shall become payable for any purpose (including, without
limitation, the payment of the principal of or interest on any Note), then,
regardless of anything herein to the contrary, the Trustee shall have full power
and authority to receive any moneys from any Guarantor and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such prior date;
nor shall the Trustee be charged with knowledge of the curing of any such
default or the elimination of the act or condition preventing any such payment
unless and until the Trustee shall have received an Officers' Certificate to
such effect. Nothing contained in this SECTION 12.06 shall limit the right of
the holders of Guarantor Senior Indebtedness to recover payments as contemplated
by SECTION 12.03. The Trustee shall be entitled to rely on the delivery to it of
a written notice by a Person representing himself or itself to be a holder of
any Guarantor Senior Indebtedness (or a trustee on behalf of, or other
representative of, such holder) to establish that such notice has been given by
a holder of such Guarantor Senior Indebtedness or a trustee or representative on
behalf of any such holder.

          In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Guarantor Senior Indebtedness to participate in any payment or distribution
pursuant to this Article Twelve, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Guarantor Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article Twelve, and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.

SECTION 12.07.  RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.

          Upon any payment or distribution of assets or securities of a
Guarantor referred to in this Article Twelve, the Trustee and the Holders of the
Notes shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which bankruptcy, dissolution, winding up, liquidation
or reorganization proceedings are pending, or upon a certificate of the
receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Trustee or to the Holders
of the Notes for the purpose of ascertaining the persons entitled to participate
in such distribution, the holders of Guarantor Senior Indebtedness of such
Guarantor and other indebtedness of such Guarantor, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Twelve.

SECTION 12.08.  TRUSTEE'S RELATION TO GUARANTOR SENIOR INDEBTEDNESS.

          The Trustee and any Paying Agent shall be entitled to all the rights
set forth in this Article Twelve with respect to any Guarantor Senior
Indebtedness which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of

                                      -73-
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Guarantor Senior Indebtedness, and nothing in this Indenture shall deprive the
Trustee or any Paying Agent of any of its rights as such holder.

          With respect to the holders of Guarantor Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Twelve, and no implied
covenants or obligations with respect to the holders of Guarantor Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior
Indebtedness (except as provided in SECTION 12.03(b)). The Trustee shall not be
liable to any such holders if the Trustee shall in good faith mistakenly pay
over or distribute to Holders of Notes or to the Company or to any other person
cash, property or securities to which any holders of Guarantor Senior
Indebtedness shall be entitled by virtue of this Article Twelve or otherwise.

SECTION 12.09.  SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE
                GUARANTORS OR HOLDERS OF GUARANTOR SENIOR INDEBTEDNESS.

          No right of any present or future holders of any Guarantor Senior
Indebtedness to enforce subordination as provided herein shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
any Guarantor or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by any Guarantor with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with. The provisions of this Article Twelve are intended to
be for the benefit of, and shall be enforceable directly by, the holders of
Guarantor Senior Indebtedness.

SECTION 12.10.  HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF
                GUARANTEE.

          Each Holder of Notes by his acceptance of such Notes authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Twelve, and appoints the Trustee his attorney-in-fact for such purposes,
including, in the event of any dissolution, winding up, total liquidation or
reorganization of any Guarantor (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards liquidation of the
business and assets of such Guarantor, the filing of a claim for the unpaid
balance of its or his Notes in the form required in those proceedings.

SECTION 12.11.  THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT.

          The failure to make a payment on account of principal of or interest
on the Notes by reason of any provision of this Article Twelve shall not be
construed as preventing the occurrence of an Event of Default specified in
clauses (a), (b) or (c) of SECTION 6.01.

SECTION 12.12.  TRUSTEE'S COMPENSATION NOT PREJUDICED

          Nothing in this Article Twelve shall apply to amounts due to the
Trustee pursuant to other sections in this Indenture.

SECTION 12.13.  NO WAIVER OF GUARANTEE SUBORDINATION PROVISIONS.

                                      -74-
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          Without in any way limiting the generality of SECTION 12.09, the
holders of Guarantor Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the Notes,
without incurring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article Twelve or the
obligations hereunder of the Holders of the Notes to the holders of Guarantor
Senior Indebtedness, do any one or more of the following: (a) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
Guarantor Senior Indebtedness or any instrument evidencing the same or any
agreement under which Guarantor Senior Indebtedness is outstanding or secured;
(b) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Guarantor Senior Indebtedness; (c) release any
Person liable in any manner for the collection of Guarantor Senior Indebtedness;
and (d) exercise or refrain from exercising any rights against any Guarantor and
any other Person.

SECTION 12.14.  PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION.

          Nothing contained in this Article Twelve or elsewhere in this
Indenture shall prevent (i) a Guarantor, except under the conditions described
in SECTION 12.02, from making payments of principal of and interest on the
Notes, or from depositing with the Trustee any moneys for such payments, or (ii)
the application by the Trustee of any moneys deposited with it for the purpose
of making such payments of principal of and interest on the Notes, to the
holders entitled thereto unless at least two Business Days prior to the date
upon which such payment becomes due and payable, the Trustee shall have received
the written notice provided for in SECTION 12.02(b) or in SECTION 12.06. The
Guarantors shall give prompt written notice to the Trustee of any dissolution,
winding up, liquidation or reorganization of such Guarantor.

                                ARTICLE THIRTEEN

                                   CONVERSION

SECTION 13.01.  CONVERSION PRIVILEGE.

          A Holder of a Note may convert such Note into Common Stock at any time
during the period stated in paragraph 9 of the Notes. The number of shares of
Common Stock issuable upon conversion of a Note per $1,000 of principal amount
thereof shall be that set forth in paragraph 9 in the Notes, subject to
adjustment as herein set forth (the "CONVERSION RATE").

          A Holder may convert a portion of the principal amount of a Note if
the portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to conversion of all of a Note also apply to conversion of
a portion, of a Note.

          "QUOTED PRICE" means, for any given day, the last reported per share
sales price (or, if no sales price is reported, the average of the bid and ask
or, if more than one in either case, the average of the average bid and average
ask prices, on such day) of the Common Stock on The Nasdaq Stock Market or, in
the event shares of Common stock are not listed on The Nasdaq Stock Market, in
the composite transactions for such other national or regional securities
exchange upon which the Common Stock is listed, or, if the shares of Common
Stock are not listed on a national or regional securities exchange, as quoted on
the National Association of Securities Dealers Automated Quotation System or by
the National Quotation Bureau

                                      -75-
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Incorporated. In the absence of one or more such quotations, the Company shall
be entitled to determine the "Quoted Price" on the basis of such quotations as
it considers appropriate.

SECTION 13.02.  CONVERSION PROCEDURE.

          To convert a Note a Holder must satisfy the requirements in paragraph
9 of the Note. The date on which the Holder satisfies all those requirements is
the conversion date (the "CONVERSION DATE"). As soon as practicable after the
Conversion Date but in any event no later than the seventh Business Day
following the Conversion Date, the Company shall deliver to the Holder, through
the Conversion Agent, a certificate for the full number of shares of Common
Stock issuable upon conversion and cash in lieu of any fractional shares
determined pursuant to SECTION 13.03. The Company shall determine such full
number of shares and the amounts of the required cash with respect to any
fractional share, and shall set forth such information in an Officer's
Certificate delivered to the Conversion Agent. The Conversion Agent shall have
no duties or responsibilities under this paragraph unless and until it has
received such certificate. Upon satisfaction of the conditions set forth in
paragraph 9 relating to the conversion of the Notes and the subsequent
conversion of any Note, the Company shall deliver notice of such conversion to
the Trustee within 15 Business Days of such conversion, and the Trustee shall
not be charged with knowledge of any facts contained in such notice and shall
not be responsible for taking any action in respect thereof (or liable for
failing to take any such action) until such time as the Trustee shall have
received such notice.

          The person in whose name the certificate for the Common Stock is
registered shall be treated as a stockholder of record on and after the
Conversion Date; PROVIDED, HOWEVER, that no surrender of a Note on any date when
the stock transfer books of the Company shall be closed shall be effective to
constitute the person or persons entitled to receive the shares of Common Stock
upon such conversion as the record holder or holders of such shares of Common
Stock on such date, but such surrender shall be effective to constitute the
person or persons entitled to receive such shares of Common Stock as the record
holder or holders thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open regardless of whether
the last day on which a Note may be converted occurs in the interim. Such
conversion shall be at the Conversion Rate in effect on the date that such Note
shall have been surrendered for conversion, as if the stock transfer books of
the Company had not been closed. Upon conversion of a Note, such person shall no
longer be a Holder of such Note.

          No payment or adjustment will be made for dividends on or other
distribution with respect to any Common Stock except as provided in this Article
Thirteen. On conversion of a Note, that portion of accrued and unpaid interest
with respect to the converted Note shall not be cancelled, extinguished or
forfeited, but rather shall be paid in full to the Holder thereof in cash
through the Conversion Date.

          If the Holder converts more than one Note at the same time, the number
of shares of Common Stock issuable shall be based on the total principal amount
of the Notes converted.

          Upon surrender of a Note that is converted in part, the Company shall
execute, and the Trustee shall upon receipt of a written order signed by an
Officer of the Company,

                                      -76-
<Page>

authenticate and deliver to the Holder, a new Note in an authorized denomination
equal in principal amount to the unconverted portion of the Note surrendered.

          If the last day on which a Note may be converted is not a Business Day
in a place where the Conversion Agent is located, the Note in order to be
converted must be surrendered to that Conversion Agent on or before the Business
Day immediately preceding such date.

SECTION 13.03.  FRACTIONAL SHARES.

          The Company will not issue a fractional share of Common Stock upon
conversion of a Note. Instead, the Company will deliver cash for the current
market value of the fractional share. The current market value of a fractional
share shall be determined to the nearest 1/1000th of a share by multiplying the
Quoted Price, on the last Business Day prior to the Conversion Date of a full
share by the fractional amount and rounding the product to the nearest whole
cent.

SECTION 13.04.  TAXES ON CONVERSION.

          If a Holder converts a Note, the Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon the conversion. However, in the event that certificates for shares of
Common Stock are to be issued in a name other than the name of the Holder of the
Note converted, such Note, when surrendered for conversion, shall be accompanied
by an instrument of assignment or transfer, in form satisfactory to the Company,
duly executed by the registered holder thereof or his duly authorized attorney.
In addition, the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
such certificates in a name other than that of the Holder of the converted Note,
and the Company shall not be required to issue or deliver such certificates
unless or until the person or persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid or is not applicable.

SECTION 13.05.  COMPANY TO PROVIDE STOCK.

          The Company shall, prior to issuance of any Notes hereunder, and from
time to time as may be necessary, reserve out of its authorized but unissued
Common Stock a sufficient number of shares of Common Stock to permit the
conversion of the Notes.

          All shares of Common Stock delivered upon conversion of the Notes
shall be newly issued shares or treasury shares, shall be duly and validly
issued and fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim.

          The Company will endeavor promptly to comply with all Federal and
state securities laws regulating the offer and delivery of shares of Common
Stock upon conversion of Notes, if any, and will list or cause to have quoted
such shares of Common Stock on each national securities exchange or in the
over-the-counter market or such other market on which the Common Stock is then
listed or quoted.

SECTION 13.06.  ADJUSTMENT FOR CHANGE IN CAPITAL STOCK.

                                      -77-
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          If, after the Issue Date, the Company:

                    (A) pays a dividend or makes a distribution on its Common
stock in shares of its Common Stock;

                    (B) subdivides its outstanding shares of Common Stock into a
greater number of shares;

                    (C) combines its outstanding shares of Common Stock into a
smaller number of shares;

                    (D) pays a dividend or makes a distribution on its Common
Stock in shares of its Capital Stock (other than Common Stock or rights,
warrants or options for its Capital Stock); or

                    (E) issues by reclassification of its Common Stock any
shares of its Capital Stock (other than rights, warrants or options for its
Capital Stock),

then the conversion privilege, the Conversion Price and the Conversion Rate in
effect immediately prior to such action shall be adjusted so that the Holder of
a Note thereafter converted may receive the number of shares of Capital Stock of
the Company which such Holder would have owned immediately following such action
if such Holder had converted the Note immediately prior to such action.

          The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.

          If after an adjustment a Holder of a Note upon conversion of such Note
may receive shares of two or more classes of Capital Stock of the Company, the
Conversion Rate shall thereafter be subject to adjustment upon the occurrence of
an action taken with respect to any such class of, Capital Stock as is
contemplated by this Article Thirteen with respect to the Common Stock on terms
comparable to those applicable to Common Stock in this Article Thirteen.

SECTION 13.07.  ADJUSTMENT FOR ISSUANCES OF COMMON STOCK

          If after the Issue Date, the Company shall issue any shares of Common
Stock (including shares of Common Stock deemed to be issued pursuant to
subparagraph (C) below) other than Excluded Stock (as defined below), without
consideration or for a consideration per share less the Conversion Price (as
defined below) in effect immediately prior to such issuance (or deemed issuance)
of Common Stock, then the Conversion Rate in effect immediately prior to each
such issuance shall be adjusted in accordance with the formula:

           R'   =    R   X                 (O + N)
                             -----------------------------------
                                     (O + ((N X P) / M))

     where:

                                      -78-
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     R'=  the adjusted Conversion Rate.

     R =  the current Conversion Rate.

     O =  number of shares of Common Stock outstanding immediately prior to the
          issuance or deemed issuance to which this SECTION 13.07 is being
          applied.

     N =  the number of additional shares of Common Stock offered pursuant to
          the issuance or deemed issuance to which this SECTION 13.07 is being
          applied.

     P =  the offering price per share of the additional shares of Common Stock
          issued pursuant to the issuance or deemed issuance to which this
          SECTION 13.07 is being applied.

     M =  the Conversion Price in effect immediately prior to the issuance or
          deemed issuance to which this SECTION 13.07 is being applied.

          The adjustment shall become effective immediately upon the issuance or
deemed issuance to which this SECTION 13.07 applies.

          No adjustment shall be made under this SECTION 13.07 if the
application of the formula sated above in this SECTION 13.07 would result in a
value of R' that is less than the value of R.

          For the purposes of any adjustment of the Conversion Rate pursuant to
the formula above, the following provisions shall be applicable:

                    (A) In the case of the issuance of Common Stock for cash in
a public offering or private placement, the consideration shall be deemed to be
the amount of cash paid therefor after deducting therefrom any discounts,
commissions or placement fees payable by the Company to any underwriter or
placement agent in connection with the issuance and sale thereof; PROVIDED that
such deduction shall not exceed in the aggregate seven percent (7%) of the gross
proceeds of such sale or issuance.

                    (B) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof (such fair market value
being determined in good faith by the Board of Directors of the Company),
irrespective of any accounting treatment.

                    (C) The issuance after the Issue Date of options to purchase
or rights to subscribe for Common Stock, securities by their terms convertible
into or exchangeable for Common Stock, or options to purchase or rights to
subscribe for such convertible or exchangeable securities shall be deemed to be
an issuance of Common Stock for purposes of this SECTION 13.07. In the case of
any such issuance of options to purchase or rights to subscribe for Common
Stock, securities by their terms convertible into or exchangeable for Common
Stock, or options to purchase or rights to subscribe for such convertible or
exchange securities:

                                      -79-
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          (1) the aggregate maximum number of shares of Common Stock deliverable
     upon exercise of such options to purchase or rights to subscribe for Common
     Stock shall be deemed to have been issued at the time such options or
     rights were issued and for a consideration equal to the consideration
     (determined in the manner provided in subparagraphs (A) and (B) above), if
     any, received by the Company upon the issuance of such options or rights
     plus the minimum purchase price provided in such options or rights for the
     Common Stock covered thereby;

          (2) the aggregate maximum number of shares of Common Stock deliverable
     upon conversion of or in exchange for any such convertible or exchangeable
     securities or upon the exercise of options to purchase or rights to
     subscribe for such convertible or exchangeable securities and subsequent
     conversion or exchange thereof shall be deemed to have been issued at the
     time such securities, options, or rights were issued and for a
     consideration equal to the consideration received by the Company for any
     such securities and related options or rights (excluding any cash received
     on account of accrued interest or accrued dividends), plus the additional
     consideration, if any, to be received by the Company upon the conversion or
     exchange of such securities or the exercise of any related options or
     rights (the consideration in each case to be determined in the manner
     provided in subparagraphs (A) and (B) above);

          (3) on any change in the number of shares or exercise price of Common
     Stock deliverable upon exercise of any such options or rights or
     conversions of or exchange for such securities, including any change
     resulting from the antidilution provisions thereof, the applicable
     Conversion Rate shall forthwith be readjusted to such Conversion Rate as
     would have been obtained had the adjustment made upon the issuance of such
     options, rights or securities not exercised, converted or exchanged prior
     to such change or options or rights related to such securities not
     exercised, converted or exchanged prior to such change been made upon the
     basis of such change; and

          (4) on the expiration of any such options or rights, the termination
     of any such rights to convert or exchange or the expiration of any options
     or rights related to such convertible or exchangeable securities, the
     applicable Conversion Rate shall forthwith be readjusted to such Conversion
     Rate as would have been obtained had the adjustment made upon the issuance
     of such options, rights, securities or options or rights related to such
     securities been made upon the basis of the issuance of only the number of
     shares of Common Stock actually issued upon the exercise of such options or
     rights, upon the conversion or exchange of such securities, or upon the
     exercise of the options or rights related to such securities and subsequent
     conversion or exchange thereof.

          For purposes of this SECTION 13.07, "Excluded Stock" means (A) up to
2,000,000 shares of Common Stock, and options therefor, issued or granted from
time to time to employees, directors and officers of and consultants to the
Company pursuant to agreements, plans or arrangements approved by the Board of
Directors; (B) shares of Common Stock issued upon conversion of the Notes; (C)
shares of Common Stock issued by the Company in transactions that are covered by
SECTION 13.06; (D) shares of Common Stock issued or deemed issued as a result of
the antidilution provisions of the Class B Common Stock of the Company; (E)
shares issued upon exercise of the Series A Warrants and Series B Warrants to
purchase

                                      -80-
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Class D Common Stock and Class E Common Stock, respectively, of the Company
issued by the Company on the Issue Date; and (F) shares of Common Stock issued
upon conversion of the Class B, C, D and E Common Stock of the Company.

          For purposes of this SECTION 13.07, "Conversion Price" means the
quotient obtained by dividing (A) $50,000,000 by (B) the product of the
Conversion Rate multiplied by $50,000. The initial Conversion Price shall be
$7.29.

SECTION 13.08.  WHEN ADJUSTMENT MAY BE DEFERRED.

          No adjustment in the Conversion Rate need be made unless the
adjustment would require an increase or decrease of at least one share in the
Conversion Rate. Any adjustments that are not made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Article Thirteen shall be made to the nearest cent or to the nearest 1/1,000th
of a share, as the case may be.

SECTION 13.09.  WHEN NO ADJUSTMENT REQUIRED.

          No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest or for
rights to purchase Capital Stock pursuant to any future dividend or distribution
which the Company determines to be comparable in purpose and in effect to the
dividend and subsequent distribution of Rights contemplated by the Rights
Agreement, if any.

          No adjustment need be made for a change in the par value or no par
value of the Common Stock.

SECTION 13.10.  NOTICE OF ADJUSTMENT.

          Whenever the Conversion Rate is adjusted, the Company shall promptly
mail to the Noteholders a notice of the adjustment. The Company shall file with
the Trustee and the Conversion Agent such notice and a certificate from the
Company's independent public accountants briefly stating the facts requiring the
adjustment and the manner of computing it. The certificate shall be conclusive
evidence that the adjustment is correct. Neither the Trustee nor any Conversion
Agent shall be under any duty or responsibility with respect to any such
certificate except to exhibit the same to any Holder desiring inspection
thereof.

SECTION 13.11.  VOLUNTARY INCREASE.

          The Company from time to time may increase the Conversion Rate by any
amount for any period of time. Whenever the Conversion Rate is increased, the
Company shall mail to the Noteholders and file with the Trustee and the
Conversion Agent a notice of the increase. The Company shall mail the notice at
least 15 days before the date the increased Conversion Rate takes effect. The
notice shall state the increased Conversion Rate and the period it will be in
effect.

          A voluntary increase of the Conversion Rate does not change or adjust
the Conversion Rate otherwise in effect for purposes of SECTION 13.06 or 13.07.

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SECTION 13.12.  NOTICE OF CERTAIN TRANSACTIONS.

          If:

          (A)   the Company takes any action that would require an adjustment in
                the Conversion Rate pursuant to SECTION 13.06 or 13.07 (unless
                no adjustment is to occur pursuant to SECTION 13.07); or

          (B)   the Company takes any action that would require a supplemental
                indenture pursuant to SECTION 13.13; or

          (C)   there is a liquidation or dissolution of the Company;

then the Company shall mail to the Noteholders and file with the Trustee and the
Conversion Agent a notice stating the proposed record date for a dividend or
distribution or the proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, binding share exchange, transfer,
liquidation or dissolution. The Company shall file and mail the notice at least
15 days before such date. Failure to file or mail the notice or any defect in it
shall not affect the validity of the transaction.

SECTION 13.13.  REORGANIZATION OF COMPANY; SPECIAL DISTRIBUTIONS.

          If the Company is a party to a transaction subject to SECTION 5.01 or
a merger or binding share exchange which reclassifies or changes its outstanding
Common Stock, the person obligated to deliver securities, cash or other assets
upon conversion of Notes shall enter into a supplemental indenture. If the
issuer of securities deliverable upon conversion of the Notes is an Affiliate of
the successor Company, that issuer shall join in the supplemental indenture.

          The supplemental indenture shall provide that the Holder of a Note may
convert it into the kind and amount of securities, cash or other assets which
such Holder would have received immediately after the consolidation, merger,
binding share exchange or transfer if such Holder had converted the Note
immediately before the effective date of the transaction. The supplemental
indenture shall provide for adjustments which shall be as nearly equivalent as
may be practical to the adjustments provided for in this Article Thirteen. The
successor Company shall mail to the Noteholders a notice briefly describing the
supplemental indenture.

          If this Section applies, neither SECTION 13.06 nor 13.07 applies.

          If the Company makes a distribution to all holders of its Common Stock
of any of its assets, or debt securities or any rights, warrants or options to
purchase securities of the Company, then, from and after the record date for
determining the holders of Common Stock entitled to receive the distribution, a
Holder of a Note that converts such Note in accordance with the provisions of
this Indenture would upon such conversion be entitled to receive, in addition to
the shares of Common Stock into which the Note is convertible, the kind and
amount of securities, cash or other assets comprising the distribution that such
Holder would have received if such Holder had converted the Note immediately
prior to the record date for determining the holders of Common Stock entitled to
receive the distribution.

                                      -82-
<Page>

SECTION 13.14.  COMPANY DETERMINATION FINAL.

          Any determination that the Company or the Board of Directors must make
pursuant to SECTION 13.01, 13.03, 13.06, 13.07, 13.08, 13.09, 13.13 or 13.16 is
conclusive.

SECTION 13.15.  TRUSTEE'S ADJUSTMENT DISCLAIMER.

          The Trustee has no duty to determine when an adjustment under this
Article Thirteen should be made, how it should be made or what it should be, but
may accept as conclusive evidence of the correctness of any such adjustment, and
shall be protected in relying upon, any notice or certificate with respect
thereto which the Company delivers to the Trustee pursuant to this Indenture.
The Trustee has no duty to determine whether a supplemental indenture under
SECTION 13.14 need be entered into or whether any provisions of any supplemental
indenture are correct, but may accept as conclusive evidence of the correctness
thereof, and shall be protected in relying upon, any notice or certificate with
respect thereto which the Company delivers to the Trustee pursuant to this
Indenture. The Trustee shall not be accountable for and makes no representation
as to the validity or value of any securities or assets issued upon conversion
of Notes. The Trustee shall not be responsible for the Company's failure to
comply with this Article Thirteen. Each Conversion Agent shall have the same
protection under this SECTION 13.16 as the Trustee.

SECTION 13.16.  SIMULTANEOUS ADJUSTMENTS.

          In the event that this Article Thirteen requires adjustments to the
Conversion Rate under more than one of SECTIONS 13.06 or 13.07, and the record
dates for the distributions giving rise to such adjustments shall occur on the
same date, then such adjustments shall be made by applying, first, the
provisions of SECTION 13.06 and second, the provisions of SECTION 13.07.

SECTION 13.17.  SUCCESSIVE ADJUSTMENTS.

          After an adjustment to the Conversion Rate under this Article
Thirteen, any subsequent event requiring an adjustment under this Article
Thirteen shall cause an adjustment to the Conversion Rate as so adjusted.

SECTION 13.18.  RIGHTS ISSUED IN RESPECT OF COMMON STOCK ISSUED UPON CONVERSION.

          Each share of Common Stock issued upon conversion of Notes pursuant to
this Article Thirteen shall be entitled to receive the appropriate number of
preferred share purchase rights (the "Rights"), if any, and the certificates
representing the Common Stock issued upon such conversion shall bear such
legends, if any, in each case as provided by and subject to the terms of any
shareholder rights agreement (in each case, a "RIGHTS AGREEMENT") as in effect
at the time of such conversion. Notwithstanding anything else to the contrary in
this Article Thirteen there shall not be any adjustment to the conversion
privilege or Conversion Rate as a result of (i) the distribution of separate
certificates representing the Rights, (ii) the occurrence of certain events
entitling holders of Rights to receive, upon exercise thereof, Common Stock of
the Company or Capital Stock of another corporation or (iii) the exercise of
such Rights in accordance with a Rights Agreement.

                                      -83-
<Page>

                                ARTICLE FOURTEEN

                                  MISCELLANEOUS

SECTION 14.01.  TRUST INDENTURE ACT CONTROLS.

          This Indenture is subject to the provisions of the TIA that are
required to be a part of this Indenture, and shall, to the extent applicable, be
governed by such provisions. If any provision of this Indenture modifies any TIA
provision that may be so modified, such TIA provision shall be deemed to apply
to this Indenture as so modified, If any provision of this Indenture excludes
any TIA provision that may be so excluded, such TIA provision shall be excluded
from this Indenture.

          The provisions of TIA Sections 310 through 317 that impose duties on
any Person (including the provisions automatically deemed included unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.

SECTION 14.02.  NOTICES.

          Any notice or communication shall be sufficiently given if in writing
and delivered in person, by facsimile and confirmed by overnight courier, or
mailed by first class mail addressed as follows:

          if to the Company or to the Guarantors:

          Polymer Group, Inc.
          4838 Jenkins Avenue
          N. Charleston, South Carolina 29405
          Attention:  Chief Financial Officer
          Facsimile:  (803) 747-4092
          Telephone:  (803) 744-5174

          with a copy, which shall not constitute notice, to:

          Kirkland & Ellis
          200 East Randolph Drive
          Chicago, Illinois 60601
          Attention:  H. Kurt von Moltke, Esq.
          Facsimile:  (312) 861-2200
          Telephone:  (312) 861-2000

                                      -84-
<Page>

          if to the Trustee:

          Wilmington Trust Company
          Rodney Square North
          1100 N. Market Street
          Wilmington, Delaware 19890
          Attention:   Corporate Trust Administration
          Facsimile:   (302) 651-8882

          with a copy, which shall not constitute notice, to:

          Nixon Peabody LLP
          937 Madison Avenue
          New York, New York 10022
          Attention:   Bart Pisella
          Facsimile:   (212) 940-3111

          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, first class, postage prepaid, to a
Holder including any notice delivered in connection with TIA Section 310(b), TIA
Section 313(c), TIA Section 314(a) and TIA Section 315(b), shall be mailed to
him at his address as set forth on the Note Register and shall be sufficiently
given to him if so mailed within the time prescribed. To the extent required by
the TIA, any notice or communication shall also be mailed to any Person
described in TIA Section 313(c).

          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. Except for a
notice to the Trustee, which is deemed given only when received, if a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.

SECTION 14.03.  COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.

          Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and any other person shall have the
protection of TIA Section 312(c).

SECTION 14.04.  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 at the request of the Trustee:

          (1) an Officers' Certificate in form and substance 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

                                      -85-
<Page>

          (2) an Opinion of Counsel in form and substance satisfactory to the
     Trustee stating that, among other things, in the opinion of such counsel,
     all such conditions precedent (including any compliance with covenants
     which constitutes a condition precedent) have been complied with; PROVIDED,
     HOWEVER, that with respect to matters of fact an Opinion of Counsel may
     rely on an Officers' Certificate or certificates of public officials.

SECTION 14.05.  STATEMENTS REQUIRED IN CERTIFICATE.

          Each certificate with respect to compliance with a condition or
covenant provided for in this Indenture shall include:

          (1) a statement that the person making such certificate has read such
     covenant or condition;

          (2) a brief statement as to the nature and scope of the examination or
     investigation upon which the statements contained in such certificate are
     based;

          (3) a statement that, in the opinion of such person, 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

          (4) a statement as to whether or not, in the opinion of such person,
     such condition or covenant has been complied with.

SECTION 14.06.  RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.

          The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Paying Agent or Registrar may make reasonable rules for its
functions.

SECTION 14.07.  GOVERNING LAW.

          The laws of the State of New York shall govern this Indenture, the
Notes and the Note Guarantees without regard to principles of conflicts of law.

SECTION 14.08.  NO RECOURSE AGAINST OTHERS.

          A director, officer, employee or stockholder, as such, of the Company
or any of its Affiliates shall not have any liability for any obligations of the
Company or any of its Affiliates under the Notes, the Guarantee of such
Guarantor or this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes and the Guarantees.

SECTION 14.09.  SUCCESSORS.

                                      -86-
<Page>

          All agreements of the Company in this Indenture and the Notes shall
bind its successor. All agreements of each Guarantor in this Indenture and such
Guarantor's Guarantee shall bind its successor. All agreements of the Trustee in
this Indenture shall bind its successor.

SECTION 14.10.  COUNTERPART 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.

SECTION 14.11.  SEVERABILITY.

          In case any provision in this Indenture, in the Notes or in the
Guarantee shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, and a Holder shall have no claim therefor against any party
hereto.

SECTION 14.12.  NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

          This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.

SECTION 14.13.  LEGAL HOLIDAYS.

          If a payment date is a not a Business Day at a place of payment,
payment may be made at that place on the next succeeding Business Day, and no
interest shall accrue for the intervening period.

                            [Signature Pages Follow]

                                      -87-
<Page>

                                   SIGNATURES

          IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.

                                    POLYMER GROUP, INC.


                                    By: /s/ James G. Boyd
                                        ----------------------------------------
                                    Name:  James G. Boyd
                                    Title: Ex. VP, Treasurer and CFO

                                    PGI POLYMER, INC.
                                    PGI EUROPE, INC.
                                    PNA CORP.
                                    FNA POLYMER CORP.
                                    FABRENE CORP.
                                    FABRENE GROUP, L.L.C.
                                    FIBERTECH GROUP, INC.
                                    TECHNETICS GROUP, INC.
                                    FIBERGOL CORPORATION
                                    CHICOPEE, INC.
                                    DOMINION TEXTILE (USA) INC.
                                    POLY-BOND INC.
                                    LORETEX CORPORATION
                                    FNA ACQUISITION, INC.
                                    FABPRO ORIENTED POLYMERS, INC.
                                    PGI ASSET MANAGEMENT COMPANY
                                    PGI SERVICING COMPANY
                                    PRISTINE BRANDS CORPORATION
                                    POLYIONIX SEPARATION TECHNOLOGIES, INC.
                                    BONLAM (S.C.), INC.

                                    as Guarantors


                                    By: /s/ James G. Boyd
                                        ----------------------------------------
                                    Name:  James G. Boyd
                                    Title: Ex. VP, Treasurer and CFO

                                    WILMINGTON TRUST COMPANY, as Trustee

                                    By: /s/ James J. McGinley
                                        ----------------------------------------
                                    Name:  James J. McGinley
                                    Title: Authorized Signer

                                      -88-
<Page>

                                                                       EXHIBIT A

                                 [FORM OF NOTE]

                               POLYMER GROUP, INC.
                        10% Convertible Subordinated Note
                              due December 31, 2007

                                                       CUSIP No.: [     ]
No. [    ]                                                       $[     ]

          POLYMER GROUP, INC., a Delaware corporation (the "Company", which term
includes any successor corporation), for value received promises to pay to [] or
registered assigns, the principal sum of [    ] Dollars, on December 31, 2007.

          Interest Payment Dates: January 1 and July 1, commencing on July 1,
2003.

          Interest Record Dates:  December 15 and June 15.

          Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.

          IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.

                                        POLYMER GROUP, INC.

                                        By:
                                            ------------------------------------
                                             Name:
                                             Title:


                                        By:
                                            ------------------------------------
                                             Name:
                                             Title:

Dated: [      ]

                                       A-1
<Page>

                [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]

          This is one of the 10% Convertible Subordinated Notes due December 31,
2007 described in the within-mentioned Indenture.

Dated: [   ]
                                        WILMINGTON TRUST COMPANY,
                                        as Trustee

                                        By:
                                            ------------------------------------
                                            Authorized Signatory

                                       A-2
<Page>

                                (REVERSE OF NOTE)

                               POLYMER GROUP, INC.
                        10% Convertible Subordinated Note
                              due December 31, 2007

1.   Interest.

          POLYMER GROUP, INC., a Delaware corporation (the "Company"), promises
to pay interest on the principal amount of this Note at the rate per annum shown
above. Cash interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from _______, 2003. The
Company will pay interest semi-annually in arrears on each Interest Payment
Date, commencing July 1, 2003. Interest will be computed on the basis of a
360-day year of twelve 30-day months.

          The Company shall pay interest on overdue principal from time to time
on demand and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful from time to time on demand, in
each case at the rate borne by the Notes.

2.   Method of Payment.

          The Company shall pay interest on the Notes (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Interest Record Date immediately preceding the Interest Payment Date even
if the Notes are canceled on registration of transfer or registration of
exchange after such Interest Record Date. Holders must surrender Notes to a
Paying Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by wire transfer of Federal funds
(provided that the Paying Agent shall have received wire instructions on or
prior to the relevant Interest Record Date), or interest by check payable in
such U.S. Legal Tender. The Company may deliver any such interest payment to the
Paying Agent or to a Holder at the Holder's registered address.

3.   Paying Agent and Registrar.

          Initially, Wilmington Trust Company (the "Trustee") will act as Paying
Agent and Registrar. The Company may change any Paying Agent or Registrar
without notice to the Holders. The Company or any of its Subsidiaries may,
subject to certain exceptions, act as Registrar.

4.   Indenture and Guarantees.

          The Company issued the Notes under an Indenture, dated as of March 5,
2003 (the "Indenture"), by and among the Company, the Guarantors and the
Trustee. Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. This Note is one of a duly authorized issue of Notes
of the Company designated as its 10% Convertible Subordinated Notes due 2007,
limited (except as otherwise provided in the Indenture) in aggregate principal
amount to $50,000,000, which may be issued under the Indenture. The terms

                                       A-3
<Page>

of the Notes 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) (the "TIA"), as in effect on the date of the Indenture (except as
otherwisE indicated in the Indenture) until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA. Notwithstanding anything to the contrary
herein, the Notes are subject to all such terms, and holders of Notes are
referred to the Indenture and the TIA for a statement of them. The Notes are
general unsecured obligations of the Company. The Notes are subordinated in
right of payment to all Senior Indebtedness of the Company to the extent and in
the manner provided in the Indenture. Each Holder of a Note, by accepting a
Note, agrees to such subordination, authorizes the Trustee to give effect to
such subordination and appoints the Trustee as attorney-in-fact for such
purpose.

          Payment on the Notes is guaranteed (each, a "Guarantee"), on a
subordinated junior basis, jointly and severally, by each Domestic Restricted
Subsidiary of the Company existing on the Issue Date (each, a "Guarantor")
pursuant to Article Eleven and Article Twelve of the Indenture. In addition, in
certain circumstances subject to certain exceptions, the Indenture requires the
Company to cause each Domestic Restricted Subsidiary formed, created or acquired
after the Issue Date to become a party to the Indenture as a Guarantor and
guarantee payment on the Notes pursuant to Article Eleven and Article Twelve of
the Indenture. In certain circumstances, the Guarantees may be released.

5.   Optional Redemption.

          The Notes will be redeemable at the option of the Company, in whole or
in part, at any time, at a redemption price equal to the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the Redemption
Date (subject to the right of holders of record on the relevant Interest Record
Date to receive interest due on the relevant Interest Payment Date) if the
Quoted Price exceeds 130% of the Conversion Price per share for 20 trading days
in a period of 30 consecutive trading days.

6.   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
Notes to be redeemed at its registered address. The Trustee may select for
redemption portions of the principal amount of Notes that have denominations
equal to or larger than $1,000 principal amount. Notes and portions of them that
the Trustee so selects shall be in amounts of $1,000 principal amount or
integral multiples thereof.

          If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in a principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation 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 the Company has deposited with the Paying Agent for the Notes funds in
satisfaction of the redemption price pursuant to the Indenture and the Paying
Agent is not prohibited from paying such funds to the Holders pursuant to the
terms of the Indenture.

                                       A-4
<Page>

7.   Limitation on Disposition of Assets.

          The Company is, subject to certain conditions and certain exceptions,
obligated to make an Offer to Purchase Notes at a purchase price equal to 100%
of the principal amount thereof, plus accrued and unpaid interest thereon, if
any, to the Purchase Date (subject to the right of Holders of record on the
relevant Interest Record Date to receive interest due on the relevant Interest
Payment Date) with the proceeds of certain asset dispositions.

8.   Denominations; Transfer; Exchange.

          The Notes are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000. A Holder shall register the transfer of
or exchange of Notes in accordance with the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay certain transfer taxes or similar governmental charges
payable in connection therewith as permitted by the Indenture. The Registrar
need not register the transfer of or exchange any Notes or portions thereof
selected for redemption, except the unredeemed portion of any Note being
redeemed in part.

9.   Conversion

          Subject to the next two succeeding sentences, a Holder of a Note may
convert such Note into Common Stock of the Company at any time before the close
of business on December 31, 2007. If the last day on which a Note may be
converted is not a Business Day in a place where the Conversion Agent is
located, the Note in order to be converted must be surrendered to that
Conversion Agent on or before the Business Day immediately preceding such date.
If the Note is called for redemption, the Holder may convert it at any time
before the close of business on the Redemption Date. A Note in respect of which
a Holder has delivered a notice of exercise of the option to require the Company
to purchase such Note may be converted only if the notice of exercise is
withdrawn in accordance with the terms of the Indenture.

          The initial Conversion Rate is 137.14286 shares of Common Stock per
$1,000 principal amount, subject to adjustment in certain events described in
the Indenture. The Company will deliver cash or a check in lieu of any
fractional share of Common Stock.

          To convert a Note a Holder must (1) complete and manually sign the
conversion notice attached to the Note (or complete and manually sign a
facsimile of such notice) and deliver such notice to the Conversion Agent, the
Company and the Trustee, (2) surrender the Note to a Conversion Agent, if such
Holder holds a Physical Note, (3) furnish appropriate endorsements and transfer
documents if required by the Conversion Agent, the Company or the Trustee and
(4) if required, pay all transfer or similar taxes.

          A Holder may convert a portion of a Note if the principal amount of
such portion is $1,000 or an integral multiple of $1,000. No payment or
adjustment will be made for dividends on the Common Stock except as provided in
the Indenture.

          The Conversion Rate will be adjusted in accordance with Article XIII
of the Indenture. The Company from time to time may voluntarily increase the
Conversion Rate.

                                       A-5
<Page>

          If the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of its assets, or upon
certain distributions described in the Indenture, the right to convert a Note
into Common Stock may be changed into a right to convert it into securities,
cash or other assets of the Company or another person.

10.  Persons Deemed Owners.

          The registered Holder of a Note shall be treated as the owner of it
for all purposes.

11.  Unclaimed Funds.

          If funds for the payment of principal or interest remain unclaimed for
two years, the Trustee and the Paying Agent will repay the funds to the Company
at its written request. After that, all liability of the Trustee and such Paying
Agent with respect to such funds shall cease.

12.  Legal Defeasance and Covenant Defeasance.

          The Company and the Guarantors may be discharged from their
obligations under the Indenture, the Notes and the Guarantees, except for
certain provisions thereof, and may be discharged from obligations to comply
with certain covenants contained in the Indenture, the Notes and the Guarantees,
in each case upon satisfaction of certain conditions specified in the Indenture.

13.  Amendment; Supplement; Waiver.

          Subject to certain exceptions, the Indenture, the Notes and the
Guarantees may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Notes then
outstanding, and any existing Default or Event of Default or compliance with any
provision may be waived with the consent of the Holders of a majority in
aggregate principal amount of the Notes then outstanding. Without notice to or
consent of any Holder, the parties thereto may amend or supplement the
Indenture, the Notes and the Guarantees to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Notes in addition
to or in place of certificated Notes or comply with any requirements of the SEC
in connection with the qualification of the Indenture under the TIA, or make any
other change that does not materially adversely affect the rights of any Holder
of a Note.

14.  Restrictive Covenants.

          The Indenture contains certain covenants that, among other things,
limit the ability of the Company and the Restricted Subsidiaries to make
restricted payments, to incur indebtedness, to create liens, to sell assets, to
permit restrictions on dividends and other payments by Restricted Subsidiaries
to the Company, to consolidate, merge or sell all or substantially all of its
assets, to engage in transactions with affiliates or certain other related
persons. The limitations are subject to a number of important qualifications and
exceptions. The Company must report annually to the Trustee on compliance with
such limitations.

                                       A-6
<Page>

15.  Defaults and Remedies.

          If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Notes then outstanding
may declare all the Notes to be due and payable immediately in the manner and
with the effect provided in the Indenture. Holders of Notes may not enforce the
Indenture, the Notes or the Guarantees except as provided in the Indenture. The
Trustee is not obligated to enforce the Indenture, the Notes or the Guarantees
unless it has received indemnity satisfactory to it. The Indenture permits,
subject to certain limitations therein provided, Holders of a majority in
aggregate principal amount of the Notes then outstanding to direct the Trustee
in its exercise of any trust or power. The Trustee may withhold from Holders of
Notes notice of certain continuing Defaults or Events of Default if it
determines that withholding notice is in their interest.

16.  Trustee Dealings with Company.

          The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Notes and may otherwise deal with
the Company, its Subsidiaries or their respective Affiliates as if it were not
the Trustee.

17.  No Recourse Against Others.

          No director, officer, employee or stockholder, as such, of the Company
or any of its Affiliates shall have any liability for any obligation of the
Company or any of its Affiliates under the Notes, the Guarantee of such
Guarantor or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes and the Guarantees.

18.  Authentication.

          This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on this Note.

19.  Abbreviations and Defined Terms.

          Customary abbreviations may be used in the name of a Holder of a Note
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).

20.  CUSIP Numbers.

          Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.

                                       A-7
<Page>

21.  Governing Law.

          The laws of the State of New York shall govern the Indenture, this
Note and any Guarantee thereof without regard to principles of conflicts of
laws.

                                       A-8
<Page>

                            [FORM OF NOTE GUARANTEE]

                     CONVERTIBLE SUBORDINATED NOTE GUARANTEE

          The Guarantor (as defined in the Indenture referred to in the Note
upon which this notation is endorsed) hereby unconditionally guarantees on a
junior subordinated basis (such Guarantee by the Guarantor being referred to
herein as the "Guarantee") the due and punctual payment of the principal of,
premium, if any, and interest on the Notes, whether at maturity, by acceleration
or otherwise, the due and punctual payment of interest on the overdue principal,
premium and interest on the Notes, and the due and punctual performance of all
other obligations of the Company to the Holders or the Trustee, all in
accordance with the terms set forth in Article Eleven of the Indenture.

          The obligations of the Guarantor to the Holders of Notes and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth, and
are expressly subordinated and subject in right of payment to the prior payment
in full of all Guarantor Senior Indebtedness (as defined in the Indenture) of
such Guarantor, to the extent and in the manner provided in Article Eleven and
Article Twelve of the Indenture, and reference is hereby made to such Indenture
for the precise terms of the Guarantee therein made.

          This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Notes upon which this Note Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.

          This Note Guarantee shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles of conflicts
of law.

This Note Guarantee is subject to release upon the terms set forth in the
Indenture.

                                        PGI POLYMER, INC.
                                        PGI EUROPE, INC.
                                        PNA CORP.
                                        FNA POLYMER CORP.
                                        FABRENE GROUP, INC.
                                        FABRENE CORP.
                                        FABRENE GROUP, L.L.C.
                                        FIBERTECH GROUP, INC.
                                        TECHNETICS GROUP, INC.
                                        FIBERGOL CORPORATION
                                        CHICOPEE HOLDINGS B.V.
                                        CHICOPEE, INC.
                                        DOMINION TEXTILE (USA) INC.
                                        POLY-BOND INC.
                                        LORETEX CORPORATION
                                        FNA ACQUISITION, INC.
                                        FABPRO ORIENTED POLYMERS, INC.

                                       A-9
<Page>

                                        PGI ASSET MANAGEMENT COMPANY
                                        PGI SERVICING COMPANY
                                        PRISTINE BRANDS CORPORATION
                                        POLYIONIX SEPARATION TECHNOLOGIES, INC.
                                        BONLAM (S.C.), INC.

                                        By: -------------------------------
                                            Name:
                                            Title:

                                      A-10
<Page>

                                 ASSIGNMENT FORM

I or we assign and transfer this Note to

________________________________________________________________________________
(Print or type name, address and zip code of assignee or transferee)

________________________________________________________________________________
(Insert Social Security or other identifying number of assignee or transferee)

and irrevocably appoint ________________________________________________________

agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.

Dated:                               Signed:
      -----------------                      --------------------------------
                                             (Signed exactly as name appears
                                             on the other side of this Note)

Signature Guarantee:
                     -----------------------------------------------------------
                     Participant in a recognized Signature Guarantee Medallion
                     Program (or other signature guarantor program reasonably
                     acceptable to the Trustee)

                                      A-11
<Page>

                       OPTION OF HOLDER TO ELECT PURCHASE

          If you want to elect to have this Note purchased by the Company
pursuant to Section 4.05 of the Indenture, check the appropriate box:

Section 4.05 / /

          If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.05 of the Indenture, state the amount:
$_____________

Dated:                               Signed:
      -----------------                      --------------------------------
                                             (Signed exactly as name appears
                                             on the other side of this Security)

Signature Guarantee:
                     -----------------------------------------------------------
                     Participant in a recognized Signature Guarantee Medallion
                     Program (or other signature guarantor program reasonably
                     acceptable to the Trustee)

                                      A-12
<Page>

                            FORM OF CONVERSION NOTICE

To: CONVERSION AGENT

     The undersigned beneficial owner of the Note hereby irrevocably exercises
the option to convert this Note, or portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Class A Common Stock
of Polymer Group, Inc. in accordance with the terms of the Indenture referred to
in this Note, and directs that the shares issuable and deliverable upon the
conversion, together with any check in payment in lieu of fractional shares and
Notes representing any unconverted principal amount hereof, be issued and
delivered to the beneficial owner hereof unless a different name has been
indicated below. If shares or any portion of this Note not exchanged are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto. Any amount required to be
paid by the undersigned on account of interest and taxes accompanies this Note.

Dated:

Fill in for registration of shares if to be       ______________________________
   delivered, and Notes if to be
   issued, other than to and in the name of       ______________________________
   the beneficial owner
   (Please Print):

                                                 -------------------------------
                                                 Signature(s)
                                                 Principal amount to be
                                                 exchanged (if less than
_____________________________________            all);
                (Name)                           _______________________________
_____________________________________                      $__,000
           (Street Address)
_____________________________________            _______________________________
      (City, State and Zip Code)                 Social Security or other
                                                 Taxpayer Identification
                                                 Number

Signature Guarantee:

--------------------------------------------------------

Signatures must be guaranteed by an eligible Guarantor Institution (banks,
brokers, dealers, savings and loan associations and credit unions) with
membership in an approved signature guarantee medallion program pursuant to
Securities and Exchange Commission Rule 17Ad-15 if shares are to be issued, or
Notes are to be delivered, other than to and in the name of the registered
holder(s).

                                      A-13
<Page>

                                                                       EXHIBIT B

                         FORM OF LEGEND FOR GLOBAL NOTES

          Any Global Note authenticated and delivered hereunder shall bear a
legend in substantially the following form:

          THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE
FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS
NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

          UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN 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 NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE.

                                       B-1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.2
<SEQUENCE>6
<FILENAME>a2111067zex-4_2.txt
<DESCRIPTION>EXHIBIT 4.2
<TEXT>
<Page>

                                                                  EXECUTION COPY

                                                                    Exhibit 4.2

                  SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT

          SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT, dated as of March 5, 2003
(the "EFFECTIVE DATE"), between POLYMER GROUP, INC., a Delaware corporation (the
"BORROWER"), each of the entities identified under the caption "GUARANTORS" on
the signature pages hereto (individually and together with any entity that shall
become a guarantor hereunder pursuant to Section 6.01(h) hereof, a "GUARANTOR",
and, together with the Borrower, the "OBLIGORS") and MATLINPATTERSON GLOBAL
OPPORTUNITIES PARTNERS LP, a Delaware limited partnership ("GOF").

          WHEREAS, on May 11, 2002, the Borrower and its domestic subsidiaries
(other than Bonlam (S.C.), Inc., for which the petition date was April 23, 2002)
filed voluntary petitions for reorganization under chapter 11 of title 11 of the
United States Code in the United States Bankruptcy Court for the District of
South Carolina (the "BANKRUPTCY COURT");

          WHEREAS, on January 3, 2003, the Bankruptcy Court issued an order
confirming the Borrower's and its domestic subsidiaries' Joint Second Amended
Modified Plan of Reorganization (the "PLAN") and on January 16, 2003 the
Bankruptcy Court entered a supplemental order confirming the Plan;

          WHEREAS, (a) the Plan and the Credit Agreement contemplate that GOF
shall issue or cause to be issued a letter of credit in favor of the
Administrative Agent, as beneficiary, in the face amount of $25,000,000, in
substantially the form of EXHIBIT A hereto (the "LETTER OF CREDIT"); and (b)
such Letter of Credit shall, in accordance with the terms thereof and of the
Credit Agreement, support the payments due under the Credit Agreement from the
Borrower to the Administrative Agent on December 31, 2003, June 30, 2004 and
December 31, 2004 to the extent that the Borrower fails to meet such payment
obligations;

          WHEREAS, GOF has caused, or, simultaneously with the execution and
delivery of this Agreement, is causing, the Letter of Credit to be issued; and

          WHEREAS, the Plan requires (and the Credit Agreement contemplates)
that, upon any drawing under the Letter of Credit, the Borrower shall issue to
GOF senior subordinated promissory notes in the face amount of such drawing,
with such additional terms and conditions as are more fully set forth in this
Agreement.

          NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:

<Page>

                                    ARTICLE I
                                   DEFINITIONS

          Section 1.01. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):

          "ACQUIRED INDEBTEDNESS" means Indebtedness of a Person (a) assumed in
connection with an Acquisition from such Person or (b) existing at the time such
Person becomes a Restricted Subsidiary or is merged or consolidated with or into
the Borrower or any Subsidiary.

          "ACQUIRED PERSON" means, with respect to any specified Person, any
other Person which merges with or into or becomes a Subsidiary of such specified
Person.

          "ACQUISITION" means (i) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) by the Borrower or any
Restricted Subsidiary to any other Person, or any acquisition or purchase of
Equity Interests of any other Person by the Borrower or any Restricted
Subsidiary, in either case pursuant to which such Person shall become a
Restricted Subsidiary or shall be consolidated with or merged into the Borrower
or any Restricted Subsidiary or (ii) any acquisition by the Borrower or any
Restricted Subsidiary of the assets of any Person which constitute substantially
all of an operating unit or line of business of such Person or which is
otherwise outside of the ordinary course of business.

          "ADMINISTRATIVE AGENT" means JPMorgan Chase Bank, as administrative
agent under the Credit Agreement, together with any successor thereto.

          "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. The term "control," "controlling",
"controlled by" or "under common control with" with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities by agreement or otherwise.

          "AFFILIATE TRANSACTION" has the meaning set forth in Section 6.01(b).

          "AGREEMENT" means this Senior Subordinated Note Purchase Agreement, as
the same may be amended, supplemented or otherwise modified from time to time.

          "ASSET SALE" means any direct or indirect sale, conveyance, transfer,
lease (that has the effect of a disposition) or other disposition (including,
without limitation, any merger, consolidation or sale-leaseback transaction) to
any Person other than the Borrower or a Wholly Owned Restricted Subsidiary, in
one transaction or a series of related transactions, of (i) any Equity Interest
of any Restricted Subsidiary (other than directors' qualifying shares, to the
extent mandated by applicable law); (ii) any assets of the Borrower or any
Restricted Subsidiary which constitute substantially all of an operating unit or
line of business of the Borrower or any Restricted Subsidiary; or (iii) any
other property or asset of the Borrower or any Restricted

                                        2
<Page>

Subsidiary outside of the ordinary course of business (including the receipt of
proceeds paid on account of the loss of or damage to any property or asset and
awards of compensation for any asset taken by condemnation, eminent domain or
similar proceedings). For the purposes of this definition, the term "Asset Sale"
shall not include (a) any transaction consummated in compliance with SECTION
6.02 and the creation of any Lien not prohibited by SECTION 6.01(g); (b) sales
of property or equipment that has become worn out, obsolete or damaged or
otherwise unsuitable for use in connection with the business of the Borrower or
any Restricted Subsidiary, as the case may be; (c) any transaction consummated
in compliance with SECTION 6.01(d); (d) any transfers of properties and assets
between Wholly Owned Restricted Subsidiaries; (e) any transaction pursuant to
which the Borrower or any Restricted Subsidiary transfers property to a Person
and the Borrower or such Restricted Subsidiary leases such property from such
Person; provided, however, that such transaction complies with SECTIONS 6.01(d)
AND (e); (f) sales of Investments (i) that were originally made pursuant to
clauses (a), (b), (c) or (d) of the definition of Permitted Investments or (ii)
to the extent that such Investments were treated as Restricted Payments; and (g)
any Qualified Securitization Transaction. In addition, solely for purposes of
SECTION 6.01(d), any sale, conveyance, transfer, lease or other disposition of
any property or asset, whether in one transaction or a series of related
transactions, involving assets with a Fair Market Value not in excess of
$25,000,000 in any fiscal year shall be deemed not to be an Asset Sale;
provided, further, that any sale, conveyance, transfer, lease or other
disposition of any property or assets, including without limitation the Chicopee
Sale consummated on or prior to the Effective Date shall be excluded in any
determination made pursuant to this sentence.

          "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by GOF or an Eligible Assignee and an Eligible Assignee in substantially
the form of EXHIBIT B hereto.

          "BANKRUPTCY CODE" means Title I of the Bankruptcy Reform Act of 1978,
as amended from time to time, as set forth in sections 101 et seq. of Title 11
of the United States Code, and applicable portions of Titles 18 and 28 of the
United States Code.

          "BANKRUPTCY COURT" has the meaning set forth in the first whereas
clause.

          "BANKRUPTCY LAW" means the Bankruptcy Code or any similar Federal,
state or foreign law for the relief of debtors.

          "BONLAM" means Bonlam S.A. de C.V., a corporation duly organized and
validly existing under the laws of Mexico.

          "BORROWER" has the meaning set forth in the first introductory
paragraph hereto.

          "BORROWING" has the meaning set forth in Section 2.01.

          "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which banking institutions are not required by law or authorized to close in
New York, New York.

          "BYLAWS" means the Bylaws of the Borrower in substantially the form
attached as EXHIBIT C hereto.

                                        3
<Page>

          "CAPITAL LEASE OBLIGATIONS" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be properly capitalized on the balance sheet in
accordance with GAAP.

          "CAPITAL STOCK" means any and all shares or other equivalents (however
designated) of capital stock, including all common stock and all preferred
stock, in the case of a corporation, partnership interests or other equivalents
(however designated) in the case of a partnership, membership interests or other
equivalents (however designated) in the case of a limited liability company, or
common shares of beneficial interest or other equivalents (however designated)
in the case of a trust.

          "CASH EQUIVALENTS" means: (a) U.S. Dollars; (b) securities issued or
directly and fully guaranteed or insured by the U.S. government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition; (c) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500,000,000; (d) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(b) and (c) above entered into with any financial institution meeting the
qualifications specified in clause (c) above; (e) commercial paper rated P-1,
A-1 or the equivalent thereof by Moody's or S&P, respectively, and in each case
maturing within six months after the date of acquisition; and (f) corporate
securities having a rating equal to or higher than BBB -- and Baa3, or the
equivalents thereof, by both S&P and Moody's, respectively, if both such
entities rate the securities, or having such rating from one of such entities if
only one such entity is rating such securities.

          "CERCLA" has the meaning set forth in Section 5.01(m)(iii).

          "CERCLIS" has the meaning set forth in Section 5.01(m)(iii).

          "CERTIFICATE OF INCORPORATION" means the Borrower's Amended and
Restated Certificate of Incorporation in substantially the form of EXHIBIT D
hereto.

          "CHANGE OF CONTROL" means the occurrence of any of the following
events (whether or not approved by the Board of Directors of the Borrower): (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 Rule 13d-3 and 13d-5 under the Exchange Act,
except that a Person 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 or only after the passage of time, upon the happening of
an event or otherwise), directly or indirectly, of more than 50% of the total
voting power of the then outstanding Voting Equity Interests of the Borrower;
(ii) the Borrower consolidates with, or merges with or into, another Person
(other than the Borrower or any Wholly Owned Restricted Subsidiary) or the
Borrower or any Significant Restricted Subsidiary sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of the
assets of

                                        4
<Page>

the Borrower and its Subsidiaries (determined on a consolidated basis) to any
Person (other than the Borrower or any Wholly Owned Restricted Subsidiary),
other than any such transaction where immediately after such transaction the
Person or Persons that "beneficially owned" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a Person shall be deemed to have "beneficial
ownership" of all securities that such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time upon the
happening of an event or otherwise) immediately prior to such transaction,
directly or indirectly, a majority of the total voting power of the then
outstanding Voting Equity Interests of the Borrower, as the case may be,
"beneficially own" (as so determined), directly or indirectly, a majority of the
total voting power of the then outstanding Voting Equity Interests of the
surviving or transferee Person; or (iii) the Borrower is liquidated or dissolved
or adopts a plan of liquidation or dissolution other than in a transaction which
complies with the provisions of Section 6.02.

          "CHICOPEE SALE" means the sale of the warehouse in Dayton, New Jersey,
owned by Chicopee, Inc., a Delaware corporation.

          "CLASS C DIVIDENDS" means the special annual dividend on the
Borrower's Class C Common Stock, par value $.01 per share, required to be paid
by the Borrower pursuant to its Amended and Restated Certificate of
Incorporation.

          "CONSOLIDATED COVERAGE RATIO" as of any date of determination means
the ratio of (i) the aggregate amount of Consolidated EBITDA for the four
quarter period of the most recent four consecutive fiscal quarters for which
financial statements are available ending prior to the date of such
determination (the "FOUR QUARTER PERIOD") to (ii) Consolidated Fixed Charges for
such Four Quarter Period; provided, however, that (1) if the Borrower or any
Restricted Subsidiary has incurred any Indebtedness since the beginning of such
Four Quarter 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, Consolidated EBITDA and Consolidated
Fixed Charges for such Four Quarter 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 Four Quarter Period and the discharge of
any other Indebtedness repaid, repurchased or otherwise discharged with the
proceeds of such new Indebtedness as if such discharge had occurred on the first
day of such Four Quarter Period, (2) if since the beginning of such Four Quarter
Period the Borrower or any Restricted Subsidiary shall have made any Asset Sale,
the Consolidated EBITDA for such Four Quarter Period shall be reduced by an
amount equal to the Consolidated EBITDA (if positive) directly attributable to
the assets that are the subject of such Asset Sale for such Four Quarter Period
or increased by an amount equal to the Consolidated EBITDA (if negative)
directly attributable thereto for such Four Quarter Period and Consolidated
Fixed Charges for such Four Quarter Period shall be reduced by an amount equal
to the Consolidated Fixed Charges directly attributable to any Indebtedness of
the Borrower or any Restricted Subsidiary repaid, repurchased or otherwise
discharged with respect to the Borrower and its continuing Restricted
Subsidiaries in connection with such Asset Sale for such Four Quarter Period
(or, if the Equity Interests of any Restricted Subsidiary are sold, the
Consolidated Fixed Charges for such Four Quarter Period directly attributable to
the Indebtedness of such Restricted Subsidiary to the extent the Borrower and
its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale), (3) if since the beginning of such Four

                                        5
<Page>

Quarter Period the Borrower or any Restricted Subsidiary (by merger or
otherwise) shall have made an Investment in any such Restricted Subsidiary (or
any Person that becomes a Restricted Subsidiary) 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 or a line of a business or which
constitutes Replacement Assets, Consolidated EBITDA and Consolidated Fixed
Charges for such Four Quarter Period shall be calculated after giving pro forma
effect to (x) such Investment or Acquisition of assets (including the Incurrence
of any Indebtedness) as if such Investment or Acquisition occurred on the first
day of such Four Quarter Period and (y) net cost savings that the Borrower
reasonably believes in good faith could have been achieved during the Four
Quarter Period as a result of such Investment or Acquisition and which cost
savings could then be reflected in pro forma financial statements under GAAP
(provided that both (A) such cost savings were identified and quantified in an
Officer's Certificate delivered to the each of the holders of Senior
Subordinated Notes at the time of the consummation of the Investment or
Acquisition and (B) with respect to each Investment or Acquisition completed
prior to the 90th day preceding such date of determination, actions were
commenced or initiated by the Borrower within 90 days of such Investment or
Acquisition to effect such cost savings identified in such Officer's
Certificate) and (4) if since the beginning of such Four Quarter Period any
Person (that subsequently became a Restricted Subsidiary or was merged with or
into the Borrower or any Restricted Subsidiary since the beginning of such Four
Quarter Period) shall have made any Asset Sale or any Investment or Acquisition
of assets that would have required an adjustment pursuant to clause (2) or (3)
above if made by the Borrower or a Restricted Subsidiary during such Four
Quarter Period, Consolidated EBITDA and Consolidated Fixed Charges for such Four
Quarter Period shall be calculated after giving pro forma effect thereto as if
such Asset Sale, Investment or Acquisition of assets occurred on, with respect
to any Investment or Acquisition, the first day of such Four Quarter Period and,
with respect to any Asset Sale, the day prior to the first day of such Four
Quarter Period. For purposes of this definition, whenever pro forma effect is to
be given to an Acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Fixed Charges associated with any
Indebtedness Incurred in connection therewith, the pro forma calculations shall
be determined in accordance with GAAP. 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 agreement under which Hedging Obligations are outstanding applicable
to such Indebtedness if such agreement under which such Hedging Obligations are
outstanding has a remaining term as at the date of determination in excess of 12
months); PROVIDED, HOWEVER, that the Consolidated Fixed Charges of the Borrower
attributable to interest on any Indebtedness Incurred under a revolving credit
facility computed on a pro forma basis shall be computed based upon the average
daily balance of such Indebtedness during the Four Quarter Period.

          "CONSOLIDATED EBITDA" means, for any period, the Consolidated Net
Income for such period, plus the following to the extent deducted in calculating
such Consolidated Net Income: (i) Consolidated Income Tax Expense for such
period; (ii) Consolidated Interest Expense for such period; (iii) Consolidated
Non-Cash Charges for such period; and (iv) expenses relating to employee profit
sharing arising in connection with applicable Mexican statutory

                                        6
<Page>

requirements less (A) all non-cash items increasing Consolidated Net Income for
such period and (B) all cash payments during such period relating to non-cash
charges that were added back in determining Consolidated EBITDA in any prior
period.

          "CONSOLIDATED FIXED CHARGE" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense and
(ii) the product of (x) the amount of all dividend payments on any series of
Preferred Equity Interest of such Person (other than dividends paid solely in
Qualified Equity Interests) paid, accrued or scheduled to be paid or accrued
during such period times (y) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective consolidated
Federal, state and local tax rate of such Person, expressed as a decimal.

          "CONSOLIDATED INCOME TAX EXPENSE" means, with respect to the Borrower
for any period, the provision for Federal, state, local and foreign income taxes
payable by the Borrower and the Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.

          "CONSOLIDATED INTEREST EXPENSE" means, with respect to the Borrower
for any period, without duplication, the sum of (i) the interest expense of the
Borrower and the Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP, including, without limitation, (a)
any amortization of debt discount, (b) the net cost under Hedging Obligations,
(c) the interest portion of any deferred payment obligation, (d) all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and (e) all capitalized interest and
all accrued interest and (ii) the interest component of Capital Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the Borrower
and the Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.

          "CONSOLIDATED NET INCOME" means, for any period, the consolidated net
income (loss) of the Borrower and the Restricted Subsidiaries; provided,
however, that there shall not be included in such Consolidated Net Income: (i)
any net income (loss) of any Person if such person is not a Restricted
Subsidiary, except (A) to the extent of cash actually distributed by such Person
during such period to the Borrower or a Restricted Subsidiary as a dividend or
other distribution, (B) with respect to foreign joint ventures, to the extent
that cash is available for distribution (without restriction and not committed
for other purposes) during such period to the Borrower or a Restricted
Subsidiary as a dividend or other distribution, but is not distributed due to
adverse tax or other business reasons, such cash shall be included and (C) the
Borrower's equity in a net loss of any such Person (other than an Unrestricted
Subsidiary) for such period shall be included in determining such Consolidated
Net Income; (ii) any net income (loss) of any person acquired by the Borrower or
a Restricted Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition; (iii) any net income (but not 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 by such Restricted Subsidiary, directly or indirectly, to the
Borrower to the extent of such restrictions; (iv) any gain or loss realized upon
the sale or other disposition of any asset of the Borrower or the Restricted
Subsidiaries (including pursuant to any sale/leaseback transaction) outside of
the ordinary course of business; (v) any

                                        7
<Page>

extraordinary gain or loss; (vi) the cumulative effect of a change in accounting
principles; (vii) any restoration to income of any contingency reserve of an
extraordinary, non-recurring or unusual nature, except to the extent that
provision for such reserve was made out of Consolidated Net Income accrued at
any time following the Effective Date; and (viii) gains and losses resulting
from foreign currency transaction adjustments.

          "CONSOLIDATED NON-CASH CHARGES" means, with respect to any Person, for
any period the sum of (i) depreciation, (ii) amortization and (iii) other
non-cash expenses of such Person and its Restricted Subsidiaries reducing
Consolidated Net Income of such Person and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP (excluding,
for purposes of clause (iii) only, such charges which require an accrual of or a
reserve for cash charges for any future period).

          "CREDIT AGREEMENT" means the Third Amended, Restated and Consolidated
Credit Agreement, dated as of March 5, 2003, as in effect on the date hereof,
between the Borrower, the Subsidiaries of the Borrower identified on the
signature pages thereof and any Subsidiary that is later added thereto, the
lenders named therein, and JPMorgan Chase Bank, as administrative agent, as
further amended, including any deferrals, renewals, extensions, replacements,
refinancings, restructurings or refundings thereof, or amendments, modifications
or supplements thereto and any agreement providing therefor (including any
restatements thereof and any increases in the amount of the commitment
thereunder), whether by or with the same or any other lender, creditor, group of
lenders or group of creditors, and including related notes, guarantee and note
agreements and other instruments and agreements executed in connection
therewith..

          "CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.

          "DEBTOR SUBSIDIARY" means a Subsidiary of the Borrower that is subject
to the Plan.

          "DEFAULT" means any event that is or with the passage of time or
giving of notice or both, would be an Event of Default.

          "DESIGNATED GUARANTOR SENIOR INDEBTEDNESS" means, with respect to any
Guarantor, any Indebtedness of such Guarantor outstanding under the Credit
Agreement.

          "DESIGNATED SENIOR INDEBTEDNESS" means (a) any Indebtedness
outstanding under the Credit Agreement, and (b) any other Senior Indebtedness
which, at the time of determination, has an aggregate principal amount
outstanding, together with any commitments to lend additional amounts, of at
least $25,000,000, if the instrument governing such Senior Indebtedness
expressly states that such Indebtedness is "Designated Senior Indebtedness" for
purposes of this Agreement and a resolution of the Borrower's Board of Directors
setting forth such designation by the Borrower has been delivered to each of the
holders of Senior Subordinated Notes.

          "DESIGNATION" has the meaning set forth in Section 6.01(i).

          "DESIGNATION AMOUNT" has the meaning set forth in Section 6.01(i).

                                        8
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          "DISCLOSURE STATEMENT" means the Amended Modified Disclosure Statement
of the Borrower and its Debtor Subsidiaries.

          "DISPOSITION" means, with respect to any Person, any merger,
consolidation or other business combination involving such Person (whether or
not such Person is the Surviving Person) or the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of such
Person's assets.

          "DISQUALIFIED EQUITY INTEREST" means any Equity Interest which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable at the option of the holder thereof), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable, at the option of the holder thereof
(except, in each case, upon the occurrence of a Change of Control), in whole or
in part, or exchangeable into Indebtedness on or prior to Termination Date.

          "DOMESTIC RESTRICTED SUBSIDIARY" means a Restricted Subsidiary of the
Borrower organized under the laws of the United States or any political
subdivision thereof or the operations of which are located substantially inside
the United States.

          "EFFECTIVE DATE" has the meaning set forth in the first introductory
paragraph hereto.

          "ELIGIBLE ASSIGNEE" means, (a) any Affiliate of GOF, and (b) any other
Person or Persons approved by GOF, or by an assignee pursuant to this Agreement,
as applicable, and, so long as no Event of Default shall have occurred and be
continuing, approved by the Borrower, which approval shall not be unreasonably
delayed, conditioned or withheld.

          "ENVIRONMENTAL CLAIMS" means, with respect to any Person, any written
notice, claim, demand or other written communication (collectively, a "CLAIM")
by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (ii) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law. The term "Environmental Claim"
shall include, without limitation, any claim by any Governmental Authority for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and any claim by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence of Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.

          "ENVIRONMENTAL LAWS" means all laws, rules, regulations, codes,
ordinances, technical standards, orders, decrees, judgments, injunctions,
notices or binding agreements issued, promulgated or entered into by any
Governmental Authority, relating in any way to the environment, preservation or
reclamation of natural resources, the management, Release or threatened Release
of any Hazardous Material or to health and safety matters.

                                        9
<Page>

          "EQUITY INTEREST" in any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such Person, including any Preferred Equity Interests but excluding the Junior
Subordinated Convertible Notes.

          "EQUITY RIGHTS" means, with respect to any Person, any outstanding
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders' or voting trust
agreements) for the issuance, sale, registration or voting of, or outstanding
securities convertible into, any additional shares of capital stock of any
class, or partnership or other ownership interests of any type in, such Person.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

          "ERISA AFFILIATE" means any corporation or trade or business that is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Internal Revenue Code of which the Borrower is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and
Section 412(c)(11) of the Internal Revenue Code and the lien created under
Section 302(f) of ERISA and Section 412(n) of the Internal Revenue Code,
described in Section 414(m) or (o) of the Internal Revenue Code of which the
Borrower is a member.

          "ERISA PLAN" means an employee benefit or other plan established or
maintained by the Borrower or any ERISA Affiliate and that is covered by Title
IV of ERISA, other than a Multiemployer Plan.

          "EVENT OF DEFAULT" has the meaning specified in Section 7.01.

          "EXCHANGE ACT" means the Securities Exchange Act of 1934, as the same
may be amended from time to time.

          "FAIR MARKET VALUE" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) which could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of which is under any
compulsion to complete the transaction; provided, however, that the Fair Market
Value of any such asset or assets shall be determined conclusively by the Board
of Directors of the Borrower acting in good faith, and shall be evidenced by
resolutions of the Board of Directors of the Borrower delivered to each of the
holders of Senior Subordinated Notes.

          "FOREIGN CORRUPT PRACTICES ACT" means the U.S. Foreign Corrupt
Practices Act of 1977, as amended from time to time.

          "FOREIGN RESTRICTED SUBSIDIARY" means a Restricted Subsidiary of the
Borrower not organized under the laws of the United States or any political
subdivision thereof and the operations of which are located substantially
outside of the United States.

                                       10
<Page>

          "FOUR QUARTER PERIOD" has the meaning set forth in the definition of
Consolidated Coverage Ratio.

          "FUNDING GUARANTOR" has the meaning set forth in Section 3.05.

          "GAAP" has the meaning specified in Section 1.03.

          "GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

          "GOF" has the meaning set forth in the first introductory paragraph
hereto.

          "GOF NOMINEE" means any member of the Borrower's Board of Directors
that was nominated or designated by GOF pursuant to the Shareholders Agreement
or otherwise.

          "GUARANTEE" has the meaning set forth in Section 3.01.

          "GUARANTEE OBLIGATIONS" has the meaning set forth in Section 3.01.

          "GURANTOR(S)" has the meaning set forth in the first introductory
paragraph hereto.

          "GUARANTOR BLOCKAGE PERIOD" has the meaning set forth in
Section 3.08(a).

          "GUARANTOR PAYMENT BLOCKAGE NOTICE" has the meaning set forth in
Section 3.08(a).

          "GUARANTOR SENIOR INDEBTEDNESS" means, with respect to any Guarantor,
at any date, (a) all Obligations of such Guarantor under the Credit Agreement;
(b) all Hedging Obligations of such Guarantor; (c) all Obligations of such
Guarantor under stand-by letters of credit; and (d) all other Indebtedness of
such Guarantor for borrowed money, including principal, premium, if any, and
interest (including Post-Petition Interest) on such Indebtedness unless the
instrument under which such Indebtedness of such Guarantor for money borrowed is
Incurred expressly provides that such Indebtedness for money borrowed is not
senior or superior in right of payment to such Guarantor's Guarantee of the
Senior Subordinated Notes, and all renewals, extensions, modifications,
amendments or refinancings thereof. Notwithstanding the foregoing, Guarantor
Senior Indebtedness shall not include (a) to the extent that it may constitute
Indebtedness, any Obligation for Federal, state, local or other taxes; (b) any
Indebtedness among or between such Guarantor and any Subsidiary of such
Guarantor or any Affiliate of such Guarantor or any of such Affiliate's
Subsidiaries; unless, and for so long as such Indebtedness has been pledged to
secure obligations under or in respect of Guarantor Senior Indebtedness; (c) to
the extent that it may constitute Indebtedness, any Obligation in respect of any
trade payable Incurred for the purchase of goods or materials, or for services
obtained, in the ordinary course of business; (d) that portion of any
Indebtedness that is Incurred in violation of this Agreement; (e) Indebtedness
evidenced by such Guarantor's Guarantee of the Senior Subordinated Notes; (f)
Indebtedness of such Guarantor that is expressly subordinate or junior in right
of payment to any other Indebtedness of such Guarantor; (g) to the extent that
it may

                                       11
<Page>

constitute Indebtedness, any obligation owing under leases (other than Capital
Lease Obligations) or management agreements; (h) any obligation that by
operation of law is subordinate to any general unsecured obligations of such
Guarantor; and (i) Indebtedness of a Guarantor to the extent such Indebtedness
is owed to and held by any Federal, state, local or other governmental
authority.

          "HAZARDOUS MATERIALS" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.

          "HEDGING AGREEMENTS" means, with respect to any Person, agreements
with respect to all interest rate swap or similar agreements or foreign currency
or commodity hedge, exchange or similar agreements of such Person.

          "HEDGING OBLIGATIONS" means, with respect to any Person, the
Obligations of such Person under Hedging Agreements.

          "HSR ACT" has the meaning set forth in Section 4.01(i).

          "INCUR" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred" and "Incurring" shall have meanings
correlative to the foregoing). Indebtedness of any Acquired Person or any of its
Subsidiaries existing at the time such Acquired Person becomes a Restricted
Subsidiary (or is merged into or consolidated with the Borrower or any
Restricted Subsidiary), whether or not such Indebtedness was Incurred in
connection with, as a result of, or in contemplation of, such Acquired Person
becoming a Restricted Subsidiary (or being merged into or consolidated with the
Borrower or any Restricted Subsidiary), shall be deemed Incurred at the time any
such Acquired Person becomes a Restricted Subsidiary or merges into or
consolidates with the Borrower or any Restricted Subsidiary.

          "INDEBTEDNESS" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (a) every obligation of such Person for money
borrowed; (b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses; (c) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person; (d)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable incurred in the
ordinary course of business and payable in accordance with industry practices,
or other accrued liabilities arising in the ordinary course of business which
are not overdue or which are being contested in good faith); (e) every Capital
Lease Obligation of such

                                       12
<Page>

Person; (f) every net obligation under Hedging Agreements of such Person; (g)
every obligation of the type referred to in clauses (a) through (f) of another
Person and all dividends of another Person the payment of which, in either case,
such Person has guaranteed or is responsible or liable for, directly or
indirectly, as obligor, guarantor or otherwise; and (h) any and all deferrals,
renewals, extensions and refundings of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (a) through (g) above. Indebtedness (a) shall never be calculated taking
into account any cash and cash equivalents held by such Person; (b) shall not
include obligations of any Person (x) arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds in the ordinary course of
business, provided that such obligations are extinguished within two Business
Days of their incurrence, (y) resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business and consistent
with past business practices and (z) under stand-by letters of credit to the
extent collateralized by cash or Cash Equivalents; (c) which provides that an
amount less than the principal amount thereof shall be due upon any declaration
of acceleration thereof shall be deemed to be incurred or outstanding in an
amount equal to the accreted value thereof at the date of determination; (d)
shall include the liquidation preference and any mandatory redemption payment
obligations in respect of any Disqualified Equity Interests of the Borrower or
any Restricted Subsidiary; and (e) shall not include obligations under
performance bonds, performance guarantees, surety bonds and appeal bonds,
letters of credit or similar obligations, incurred in the ordinary course of
business.

          "INDENTURE" means the Indenture, dated as of the date hereof, among
the Borrower, Wilmington Trust Company and the other parties thereto relating to
the Junior Subordinated Convertible Notes.

          "INSOLVENCY OR LIQUIDATION PROCEEDING" means, with respect to any
Person, any liquidation, dissolution or winding up of such Person, or any
bankruptcy, reorganization, insolvency, receivership or similar proceeding with
respect to such Person, whether voluntary or involuntary.

          "INTERCOMPANY NOTES" means, collectively, the Bonlam Intercompany
Notes (as defined in the Credit Agreement) and the Fabrene Intercompany Notes
(as defined in the Credit Agreement).

          "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.

          "INVESTMENT" means, with respect to any Person, any direct or indirect
loan, advance, guarantee or other extension of credit or capital contribution to
(by means of transfers of cash or other property or assets to others or payments
for property or services for the account or use of others, or otherwise), or
purchase or acquisition of capital stock, bonds, notes, debentures or other
securities or evidences of Indebtedness issued by, any other Person. For
purposes of the "Limitation on Restricted Payments" covenant, the amount of any
Investment shall be the original cost of such Investment, plus the cost of all
additions thereto, but without any other adjustments for increases or decreases
in value, or write-ups, write-downs or write-offs with respect to such
Investment; reduced by the payment of dividends or distributions in

                                       13
<Page>

connection with such Investment or any other amounts received in respect of such
Investment; provided, however, that no such payment of dividends or
distributions or receipt of any such other amounts shall reduce the amount of
any Investment if such payment of dividends or distributions or receipt of any
such amounts would be included in Consolidated Net Income. If the Borrower or
any Restricted Subsidiary sells or otherwise disposes of any Voting Equity
Interests of any direct or indirect Restricted Subsidiary such that, after
giving effect to any such sale or disposition, the Borrower no longer owns,
directly or indirectly, greater than 50% of the outstanding Voting Equity
Interests of such Restricted Subsidiary, the Borrower shall be deemed to have
made an Investment on the date of any such sale or disposition.

          "JUNIOR SUBORDINATED CONVERTIBLE NOTES" means the 10% convertible
subordinated notes due December 2007 to be issued pursuant to the Plan.

          "LETTER OF CREDIT" has the meaning set forth in the third whereas
clause.

          "LIEN" means any lien, mortgage, charge, security interest,
hypothecation, assignment for security or encumbrance of any kind (including any
conditional sale or capital lease or other title retention agreement, any lease
in the nature thereof, any any agreement to give any security interest).

          "LIMITED ORIGINATOR RECOURSE" means a reimbursement obligation to the
Borrower or a Restricted Subsidiary in connection with a drawing on a letter of
credit, revolving loan commitment, cash collateral account or other such credit
enhancement issued to support Indebtedness of a Securitization Entity under a
facility for the financing of trade receivables; provided that the available
amount of any such form of credit enhancement at any time shall not exceed 15.0%
of the principal amount of such Indebtedness at such time.

          "MARGIN STOCK" means "margin stock" within the meaning of Regulations
U and X.

          "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, properties or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole, or (b) the ability of the
Borrower to perform its material obligations hereunder or under the Senior
Subordinated Note or (c) the validity or enforceability of this Agreement or the
Senior Subordinated Notes, including the rights or remedies of GOF hereunder or
thereunder, other than arising solely as a result of any action or inaction of
GOF.

          "MATURITY DATE" means December 1, 2007.

          "MOODY'S" means Moody's Investors Service, Inc. and its successors.

          "MULTIEMPLOYER PLAN" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Borrower or
any ERISA Affiliate and which is covered by Title IV of ERISA.

          "NET CASH PROCEEDS" means the aggregate proceeds in the form of cash
or Cash Equivalents received by the Borrower or any Restricted Subsidiary in
respect of any Asset Sale,

                                       14
<Page>

including all cash or Cash Equivalents received upon any sale, liquidation or
other exchange of proceeds of Asset Sales received in a form other than cash or
Cash Equivalents, net of (a) the direct costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees,
and sales commissions) and any relocation expenses incurred as a result thereof;
(b) taxes paid or payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements); (c)
amounts required to be applied to the repayment of Indebtedness secured by a
Lien on the asset or assets that were the subject of such Asset Sale; (d)
amounts deemed, in good faith, appropriate by the Board of Directors of the
Borrower to be provided as a reserve, in accordance with GAAP, against any
liabilities associated with such assets which are the subject of such Asset
Sale; including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
reflected in an Officer's Certificate delivered to each of the holders of Senior
Subordinated Notes (provided that the amount of any such reserves shall be
deemed to constitute Net Cash Proceeds at the time such reserves shall have been
reversed or are not otherwise required to be retained as a reserve); and (e)
with respect to Asset Sales by Restricted Subsidiaries, the portion of such cash
payments attributable to Persons holding a minority interest in such Restricted
Subsidiary.

          "NEW INVESTMENT" means the purchase by certain creditors of the
Borrower and its Debtor Subsidiaries of Junior Subordinated Convertible Notes
for a total purchase price of $50,000,000 pursuant to the terms and conditions
of the Plan.

          "NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the
Borrower nor any Restricted Subsidiary (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Senior Subordinated Notes) of the Borrower or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Borrower or any of its
Restricted Subsidiaries.

          "NPL" has the meaning set forth in Section 5.01(m)(iii).

          "OBLIGATIONS" means any principal, interest (including, without
limitation, Post-Petition Interest), penalties, fees, indemnifications,
reimbursement obligations, damages and other liabilities payable under the
documentation governing any Indebtedness.

          "OBLIGORS" has the meaning set forth in the first introductory
paragraph hereto.

          "OFFICER'S CERTIFICATE" means a certificate signed by the Borrower's
or Guarantor's president, chief executive officer, chief operating officer, or
its chief financial officer (or, if no such officer exists, an officer or
manager with substantially similar authority) on behalf

                                       15
<Page>

of the Borrower or a Guarantor, as applicable, stating that (i) the officer
signing such certificate has made or has caused to be made such investigations
as are necessary in order to permit him to verify the accuracy of the
information set forth in such certificate and (ii) to the best of such officer's
actual knowledge, after making the investigations required by clause (i), does
not misstate any material fact and does not omit to state any fact necessary to
make the certificate not misleading.

          "OPERATING DIVISIONS" means the Nonwovens, Oriented Polymers and
Corporate operating divisions of the Borrower and its Subsidiaries.

          "OPINION OF COUNSEL" means a written opinion from legal counsel who is
reasonably acceptable to GOF; provided that if GOF shall assign all of its
interest in the Senior Subordinated Note, such counsel shall be reasonably
acceptable to the holders of a majority of the principal amount outstanding
under all Senior Subordinated Notes. The counsel may be an employee of or
counsel to the Borrower, GOF or any other holder of a Senior Subordinated Note.

          "ORGANIZATIONAL DOCUMENTS" means the certificate of incorporation,
articles of organization, bylaws, operating agreement, partnership agreement,
and/or other organizational and governing documents (including all those that
govern or impact the appointment, election, and/or removal of directors,
managers, managing partners or persons of equivalent authority), as the case may
be, of a Person (other than an individual).

          "OTHER TAXES" has the meaning specified in Section 2.05(b).

          "PAYMENT BLOCKAGE NOTICE" has the meaning set forth in
Section 8.02(a).

          "PAYMENT BLOCKAGE PERIOD" has the meaning set forth in Section
8.02(a).

          "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

          "PERMITTED HOLDER" means MatlinPatterson Global Opportunities Partners
L.P. and its Affiliates, The InterTech Group, Inc. and its Affiliates, Golder,
Thoma, Cressey Fund III Limited Partnership and its Affiliates, Jerry Zucker and
James G. Boyd and members of either of their immediate families and trusts of
which such persons are the beneficiaries.

          "PERMITTED INDEBTEDNESS" has the meaning set forth in Section 6.01(c).

          "PERMITTED INVESTMENTS" means (a) Cash Equivalents; (b) Investments in
prepaid expenses, negotiable instruments held for collection and lease, utility
and workers' compensation, performance and other similar deposits; (c) Hedging
Obligations; (d) bonds, notes, debentures or other securities received as a
result of Asset Sales permitted under SECTION 6.01(d) not to exceed 35% of the
total consideration for such Asset Sales; (e) Investments in the Borrower and
Investments in a Restricted Subsidiary or a Person that, as a result of or in
connection with such Investment, becomes a Restricted Subsidiary or is merged
with or into or consolidated with the Borrower or another Restricted Subsidiary;
(f) Investments existing as of

                                       16
<Page>

the Effective Date; and (g) any Investment consisting of a guarantee by a
Restricted Subsidiary of Senior Indebtedness or any guarantee of Indebtedness
otherwise permitted by this Agreement.

          "PERMITTED JUNIOR SECURITIES" means any securities of the Borrower or
any other Person that are (i) equity securities without special covenants or
(ii) debt securities expressly subordinated in right of payment to the Senior
Subordinated Notes and all Senior Indebtedness that may at the time be
outstanding, to substantially the same extent as, or to a greater extent than,
the Junior Subordinated Convertible Notes are subordinated as provided in the
Indenture, in any event pursuant to a court order so providing as to which (a)
the rate of interest on such securities shall not exceed the effective rate of
interest on the Senior Subordinated Notes on the date of this Agreement, (b)
such securities shall not be entitled to the benefits of covenants or defaults
materially more beneficial to the holders of such securities than those in
effect with respect to the Senior Subordinated Notes on the date of this
Agreement and (c) such securities shall not provide for amortization (including
sinking fund and mandatory prepayment provisions) commencing prior to the date
six months following the final scheduled maturity date of the Senior
Subordinated Notes and Senior Indebtedness (as modified by the plan of
reorganization pursuant to which such securities are issued).

          "PERMITTED LIENS" means (a) Liens on property of a Person existing at
the time such Person is merged into or consolidated with the Borrower or any
Restricted Subsidiary; provided, however, that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not secure any
property or assets of the Borrower or any Restricted Subsidiary other than the
property or assets subject to the Liens prior to such merger or consolidation;
(b) Liens imposed by law such as carriers', warehousemen's and mechanics' Liens
and other similar Liens arising in the ordinary course of business which secure
payment of obligations not more than 60 days past due or which are being
contested in good faith and by appropriate proceedings; (c) Liens existing on
the Effective Date; (d) Liens securing only the Senior Subordinated Notes, the
Guarantees or the Junior Subordinated Convertible Notes or guarantees thereof;
(e) Liens in favor of the Borrower or any Restricted Subsidiary (including any
such Liens securing Indebtedness, to the extent and for so long as such
Indebtedness is pledged to secure Senior Indebtedness); (f) 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, however, that any reserve or
other appropriate provision as shall be required in conformity with GAAP shall
have been made therefor; (g) easements, reservation of rights of way,
restrictions and other similar easements, licenses, restrictions on the use of
properties, or minor imperfections of title that in the aggregate do not in any
case materially detract from the properties subject thereto or interfere with
the ordinary conduct of the business of the Borrower and the Restricted
Subsidiaries; (h) Liens resulting from the deposit of cash or notes in
connection with contracts, tenders or expropriation proceedings, or to secure
workers' compensation, surety or appeal bonds, costs of litigation when required
by law and public and statutory obligations or obligations under franchise
arrangements entered into in the ordinary course of business; (i) Liens securing
Indebtedness consisting of Capital Lease Obligations, Purchase Money
Indebtedness, mortgage financings, industrial revenue bonds or other monetary
obligations, in each case incurred solely for the purpose of financing all or
any part of the purchase price or cost of construction or installation of assets
used

                                       17
<Page>

in the business of the Borrower or the Restricted Subsidiaries, or repairs,
additions or improvements to such assets, provided, however, that (I) such Liens
secure Indebtedness in an amount not in excess of the original purchase price or
the original cost of any such assets or repair, addition or improvement thereto
(plus an amount equal to the reasonable fees and expenses in connection with the
incurrence of such Indebtedness), (II) such Liens do not extend to any other
assets of the Borrower or the Restricted Subsidiaries (and, in the case of
repair, addition or improvements to any such assets, such Lien extends only to
the assets (and improvements thereto or thereon) repaired, added to or
improved), (III) the Incurrence of such Indebtedness is permitted by
SECTION 6.01(c) and (IV) such Liens attach within 90 days of such purchase,
construction, installation, repair, addition or improvement; and (j) Liens to
secure any refinancings, renewals, extensions, modifications or replacements (or
successive refinancings), in whole or in part, of any Indebtedness secured by
Liens referred to in the clauses above so long as such Lien does not extend to
any other property (other than improvements thereto).

          "PERSON" means any individual, corporation, partnership, joint
venture, association, joint stock company, limited liability company, limited
liability partnership, trust, unincorporated organization, or a government or
any agency or political subdivision thereof.

          "PLAN" has the meaning set forth in the second whereas clause.

          "POST-PETITION INTEREST" means, with respect to any Indebtedness of
any Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing such Indebtedness, whether or not, pursuant to
applicable law or otherwise, the claim for such interest is allowed as a claim
in such Insolvency or Liquidation Proceeding.

          "PREFERRED EQUITY INTEREST" in any Person, means an Equity Interest of
any class or classes (however designated) which is preferred as to the payment
of dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over Equity
Interests of any other class in such Person.

          "PROPERTY" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.

          "PURCHASE MONEY INDEBTEDNESS" means Indebtedness of the Borrower or
any Restricted Subsidiary Incurred for the purpose of financing all or any part
of the purchase price, or the cost of construction or improvement of any
property used in the business of the Borrower; provided, however, that the
aggregate principal amount of such Indebtedness does not exceed the lesser of
the Fair Market Value of such property or such purchase price or cost, including
any refinancing of such Indebtedness that does not increase the aggregate
principal amount (or accreted amount, if less) thereof as of the date of
refinancing.

          "PURCHASE MONEY NOTE" means a promissory note of a Securitization
Entity evidencing a line of credit, which may be irrevocable, from the Borrower
or any Restricted

                                       18
<Page>

Subsidiary in connection with a Qualified Securitization Transaction, which note
shall be repaid from cash available to the Securitization Entity, other than
amounts required to be established as reserves pursuant to agreements, amounts
paid to investors in respect of interest, principal and other amounts owning to
such investors and amounts paid in connection with the purchase of newly
generated receivables.

          "QUALIFIED EQUITY INTEREST" in any Person means any Equity Interest in
such Person other than any Disqualified Equity Interest.

          "QUALIFIED SECURITIZATION TRANSACTION" means any transaction or series
of transactions pursuant to which the Borrower or any of its Restricted
Subsidiaries may sell, convey or otherwise transfer to (a) a Securitization
Entity (in the case of a transfer by the Borrower or any of its Restricted
Subsidiaries) and (b) any other Person (in case of a transfer by a
Securitization Entity), or may grant a security interest in, any receivables
(whether now existing or arising or acquired in the future) of the Borrower or
any of its Restricted Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such receivables, all contracts and
contract rights and all guarantees or other obligations in respect of such
receivables, proceeds of such receivables 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 receivables (collectively, "TRANSFERRED ASSETS");
provided that in the case of any such transfer by the Borrower or any of its
Restricted Subsidiaries, the transferor receives cash or Purchase Money Notes in
an amount which (when aggregated with the cash and Purchase Money Notes received
by the Borrower and its Restricted Subsidiaries upon all other such transfers of
Transferred Assets during the 90 days preceding such transfer) is at least equal
to 75% of the aggregate face amount of all receivables so transferred during
such day and the 90 preceding days.

          "REGULATIONS A, D, U AND X" means, respectively, Regulations A, D, U
and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified or supplemented and in effect from time
to time.

          "RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.

          "REPLACEMENT ASSETS" has the meaning set forth in Section 6.01(d).

          "RESTRICTED PAYMENT" has the meaning set forth in Section 6.01(e).

          "RESTRICTED SUBSIDIARY" means any Subsidiary of the Borrower that has
not been designated by the Board of Directors of the Borrower, by a resolution
of the Board of Directors of the Borrower delivered to each of the holders of
Senior Subordinated Notes, as an Unrestricted Subsidiary pursuant to
SECTION 6.01(i). Any such designation may be revoked by a resolution of the
Board of Directors of the Borrower delivered to each of the holders of Senior
Subordinated Notes, subject to the provisions of such covenant.

                                       19
<Page>

          "REVOCATION" has the meaning set forth in Section 6.01(i).

          "S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies; and its successors.

          "SECURITIZATION ENTITY" means either a Wholly Owned Restricted
Subsidiary of the Borrower (or another Person in which the Borrower or any
Restricted Subsidiary makes an Investment and to which the Borrower or any
Restricted Subsidiary transfers receivables and related assets) or an
Unrestricted Subsidiary that engages in no activities other than in connection
with the financing of receivables and that is designated by the Board of the
Directors of the Borrower (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 Borrower or any Restricted Subsidiary other
than pursuant to Standard Securitization Undertakings or Limited Originator
Recourse, (ii) is recourse to or obligates the Borrower or any Restricted
Subsidiary (other than the Securitization Entity) in any way other than pursuant
to Standard Securitization Undertakings or Limited Originator Recourse or (iii)
subjects any property or asset of the Borrower or any Restricted Subsidiary
(other than the Securitization Entity), directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings or Limited Originator Recourse, (b) with which
neither the Borrower nor any Restricted Subsidiary has any material contract,
agreement, arrangement or understanding other than on terms no less favorable to
the Borrower or such Restricted Subsidiary than those that might be obtained at
the time from Persons that are not Affiliates of the Borrower, other than fees
payable in the ordinary course of business in connection with servicing
receivables of such entity and (c) to which neither the Borrower nor any
Restricted Subsidiary of the Borrower 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
Borrower shall be evidenced to each of the holders of Senior Subordinated Notes
by delivery thereto of a certified copy of the resolution of the Board of
Directors of the Borrower giving effect to such designation and an Officer's
Certificate certifying that such designation complied with the foregoing
conditions.

          "SENIOR INDEBTEDNESS" means, at any date, (a) all Obligations of the
Borrower under the Credit Agreement; (b) all Hedging Obligations of the
Borrower; (c) all Obligations of the Borrower under stand-by letters of credit;
and (d) all other Indebtedness of the Borrower for borrowed money, including
principal, premium, if any, and interest (including Post-Petition Interest) on
such Indebtedness, unless the instrument under which such Indebtedness of the
Borrower for money borrowed is Incurred expressly provides that such
Indebtedness for money borrowed is not senior or superior in right of payment to
the Senior Subordinated Notes, and all renewals, extensions, modifications,
amendments or refinancings thereof. Notwithstanding the foregoing, Senior
Indebtedness shall not include (a) to the extent that it may constitute
Indebtedness, any Obligation for Federal, state, local or other taxes; (b) any
Indebtedness among or between the Borrower and any Subsidiary of the Borrower or
any Affiliate of the Borrower or any of such Affiliate's Subsidiaries; unless
and for so long as such Indebtedness has been pledged to secure obligations
under or in respect of Senior Indebtedness; (c) to the extent that it may
constitute Indebtedness, any Obligation in respect of any trade payable incurred
for the purchase of goods or materials, or for services obtained, in the
ordinary course of business;

                                       20
<Page>

(d) Indebtedness of the Borrower that is PARI PASSU with, or expressly
subordinate or junior in right of payment to, the Senior Subordinated Notes; (e)
to the extent that it may constitute Indebtedness, any obligation owing under
leases (other than Capital Lease Obligations) or management agreements; (f) any
obligation that by operation of law is subordinate to any general unsecured
obligations of the Borrower; and (g) Indebtedness of the Borrower to the extent
such Indebtedness is owed to and held by any Federal, state, local or other
governmental authority.

          "SENIOR SUBORDINATED NOTE(S)" has the meaning set forth in
Section 2.01.

          "SHAREHOLDERS AGREEMENT" means the Shareholders Agreement dated as of
March 5, 2003, between the Borrower, GOF and the other parties identified
therein.

          "SHAREHOLDER RIGHTS PLAN" means the Borrower's shareholder rights plan
or "poison pill" embodied in the Rights Agreement, dated as of April 15, 1996,
by and among the Borrower and First Union Nation Bank of North Carolina.

          "SIGNIFICANT RESTRICTED SUBSIDIARY" means, at any date of
determination, (a) any Restricted Subsidiary that, together with its
Subsidiaries that constitute Restricted Subsidiaries (i) for the most recent
fiscal year of the Borrower accounted for more than 20.0% of the consolidated
revenues of the Borrower and the Restricted Subsidiaries or (ii) as of the end
of such fiscal year, owned more than 20.0% of the consolidated assets of the
Borrower and the Restricted Subsidiaries, all as set forth on the consolidated
financial statements of the Borrower and the Restricted Subsidiaries for such
year prepared in conformity with GAAP and (b) any Restricted Subsidiary which,
when aggregated with all other Restricted Subsidiaries that are not otherwise
Significant Restricted Subsidiaries and as to which any event described in
clause (h) of Section 7.01 has occurred, would constitute a Significant
Restricted Subsidiary under clause (a) of this definition.

          "STANDARD SECURITIZATION UNDERTAKINGS" means representations,
warranties, covenants and indemnities entered into by the Borrower or any
Subsidiary of the Borrower that are reasonably customary in receivables
securitization transactions.

          "SUBORDINATED INDEBTEDNESS" means, with respect to the Borrower or any
Guarantor, any Indebtedness of the Borrower or such Guarantor, as the case may
be, which is pari passu with, or expressly subordinated in right of payment to,
the Senior Subordinated Notes or such Guarantor's Guarantee, as the case may be,
including without limitation, the Junior Subordinated Convertible Notes.

          "SUBSIDIARY" means, with respect to any Person, (a) any corporation of
which the outstanding Voting Equity Interests having at least a majority of the
votes entitled to be cast in the election of directors shall at the time be
owned, directly or indirectly, through one or more Persons by such Person, or
(b) any other Person of which at least a majority of Voting Equity Interests are
at the time, directly or indirectly, owned by such first named Person.

                                       21
<Page>

          "SURVIVING PERSON" means, with respect to any Person involved in or
that makes any Disposition, the Person formed by or surviving such Disposition
or the Person to which such Disposition is made.

          "TAXES" has the meaning specified in Section 2.05(a).

          "TERMINATION DATE" means the date and time at which each of the
following conditions are satisfied: (a) the passage of the dates December 31,
2003, June 30, 2004 and December 31, 2004, regardless of whether the Borrower
has timely made the payments due to the Administrative Agent under the Credit
Agreement thereon; (b) the payment by the Obligors of all amounts owed to GOF
and any other holders of Senior Subordinated Notes hereunder and under the
Senior Subordinated Notes (including any and all costs and expenses), to the
reasonable satisfaction of GOF, or, if GOF shall have assigned all of its
interest in the Senior Subordinated Note, to the reasonable satisfaction of the
holders of a majority of the principal amount outstanding under all Senior
Subordinated Notes immediately prior to such payment; and (c) the termination of
the Letter of Credit.

          "TRANSFERRED ASSETS" has the meaning set forth in the definition of
Qualified Securitization Transaction.

          "UNITED STATES" and " U. S. " each means United States of America.

          "UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Borrower
designated as such pursuant to SECTION 6.01(i). Any such designation may be
revoked by a resolution of the Board of Directors of the Borrower delivered to
each of the holders of Senior Subordinated Notes, subject to SECTION 6.01(i).

          "UNUTILIZED NET CASH PROCEEDS" has the meaning set forth in
Section 6.01(d)(iii).

          "VOTING EQUITY INTERESTS" means Equity Interests in a corporation or
other Person with voting power under ordinary circumstances entitling the
holders thereof to elect the Board of Directors or other governing body of such
corporation or Person.

          "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment of final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
aggregate principal amount of such Indebtedness.

          "WHOLLY OWNED RESTRICTED SUBSIDIARY" means any Restricted Subsidiary
all of the outstanding Voting Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Borrower and/or one
or more Wholly Owned Restricted Subsidiaries.

                                       22
<Page>

          Section 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".

          Section 1.03. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles ("GAAP").

          Section 1.04. REFERENCES TO CREDIT AGREEMENT. Wherever this Agreement
defines a term by reference to the Credit Agreement, such term shall have the
definition ascribed to it in the Credit Agreement, and, in the event the Credit
Agreement is terminated, or amended, modified or restated to remove the
definition of such term, then the term so defined shall have the meaning
ascribed thereto in the version of the Credit Agreement existing immediately
prior to such termination, amendment, modification or restatement.

                                   ARTICLE II
                AMOUNT AND TERMS OF THE SENIOR SUBORDINATED NOTE

          Section 2.01. INITIAL ISSUANCE OF SENIOR SUBORDINATED NOTE; AGGREGATE
PRINCIPAL AMOUNT. Simultaneously with the execution and delivery of this
Agreement, the Borrower is issuing and delivering to GOF a note in substantially
the form of EXHIBIT E hereto (the "SENIOR SUBORDINATED NOTE", and, together with
any additional Senior Subordinated Notes issued pursuant to Section 9.06(d), if
any, the "SENIOR SUBORDINATED NOTES") with a principal amount of TWENTY FIVE
MILLION DOLLARS ($25,000,000.00); PROVIDED, HOWEVER, that in accordance with
Section 2.03 and the terms of the Senior Subordinated Note, the Borrower shall
only be required to pay such amount thereof as equals the sum of each drawing
under the Letter of Credit by the Administrative Agent (each such drawing being
referred to herein as a "BORROWING"), plus accrued interest and any other costs
and expenses due hereunder or under the Senior Subordinated Notes.

          Section 2.02. INTEREST.

          (a)    INTEREST. The Borrower shall pay to GOF and its assigns
interest on the amount of each Borrowing from the date thereof, semi-annually in
arrears on January 1 and July 1 of each year, at a rate of 10% per annum,
subject to adjustment pursuant to Section 2.02(b).

          (b)    DEFAULT INTEREST. Upon the occurrence and during the
continuance of an Event of Default, the Borrower shall pay interest on the
aggregate unpaid principal amount of the Borrowings at the rate per annum set
forth in Section 2.02(a) PLUS 2% on demand. The Borrower shall, to the extent
lawful, pay interest on overdue interest at the rate of 12% per annum.

          (c)    COMPUTATIONS. All computations of interest shall be made on the
basis of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable.

          Section 2.03. REPAYMENT.

                                       23
<Page>

          (a)    REPAYMENT ON MATURITY. Subject to Article VIII, on the Maturity
Date, the Borrower shall be liable to pay to GOF and its assigns in US Dollars
an amount equal to the sum of each Borrowing, together with all accrued and
unpaid interest and any other amounts then owing to GOF and its assigns in
respect thereof (including for costs and expenses).

          (b)    MANDATORY PREPAYMENT. Subject to Article VIII and the terms and
provisions of the Credit Agreement, within 1 Business Day of the consummation of
a Change of Control transaction, the Borrower shall prepay in US Dollars the
aggregate principal amount of all Borrowings, together with all accrued and
unpaid interest outstanding under the Senior Subordinated Notes, together with
all other amounts then owing to GOF and its assigns in respect thereof
(including for costs and expenses).

          (c)    OPTIONAL PREPAYMENT. Subject to Article VIII and the terms and
provisions of the Credit Agreement, the Borrower may, at its option, prepay its
obligations under this Agreement and the Senior Subordinated Notes in whole or
in part at any time, without penalty, upon 3 Business Days prior notice to the
holders of the Senior Subordinated Notes; PROVIDED that all accrued and unpaid
interest and any costs or expenses owing to GOF and its assigns in respect of
the prepaid amount shall be simultaneously paid.

          Section 2.04. PROCEEDS OF LETTER OF CREDIT. The Borrower shall have no
direct access to the proceeds of drawings under the Letter of Credit, and such
proceeds shall be received directly by the Administrative Agent and applied in
accordance with the Credit Agreement.

          Section 2.05. TAXES.

          (a)    Any and all payments by the Obligors hereunder or under the
Senior Subordinated Notes shall be made, or applied in accordance with
Section 2.03, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto ("TAXES") excluding Taxes based on the net
income of a Person. Notwithstanding the foregoing, if the Obligors shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Senior Subordinated Notes, (i) the sum payable, or
applied in accordance with Section 2.03, shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.05), GOF receives or is entitled to
receive or have applied under Section 2.03 an amount equal to the sum it would
have received had no such deductions been made, (ii) the Obligors shall make
such deductions and (iii) the Obligors shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.

          (b)    In addition, the Obligors shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or under the Senior
Subordinated Notes or from the execution, delivery or registration of,
performing under, or otherwise with respect to, this Agreement or the Senior
Subordinated Notes (hereinafter referred to as "OTHER TAXES").

          (c)    The Obligors shall indemnify GOF and any other holders of
Senior Subordinated Notes for the full amount of Taxes and Other Taxes
(including, without limitation,

                                       24
<Page>

any Taxes imposed by any jurisdiction on amounts payable under this
Section 2.05) imposed on or paid by GOF and such other holders and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. Any indemnification payment shall be made within 30 days from the date
GOF or such other holders make written demand therefor.

          (d)    Within 30 days after the date of any payment of Taxes and Other
Taxes, the Obligors shall furnish GOF and any other holders of Senior
Subordinated Notes the original or a certified copy of a receipt evidencing
payment thereof.

          Section 2.06. INCREASED COSTS. If, due to either (i) the introduction
of or any change after the date hereof, in or in the interpretation of any law
or regulation or (ii) the compliance with any guideline or request introduced
after the date hereof, from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to GOF and any other holders of Senior Subordinated Notes of making or
keeping the Letter of Credit available or carrying the Senior Subordinated Notes
(excluding for purposes of this Section 2.06 any such increased costs resulting
from (i) Taxes or Other Taxes (as to which Section 2.05 shall govern) and (ii)
changes in the basis of taxation of overall net income or overall gross income
by the United States), then the Borrower shall from time to time, upon demand by
GOF or such other holders, pay to GOF and such other holders additional amounts
sufficient to compensate GOF and any such other holders for such increased cost.
A certificate as to the amount of such increased cost, submitted to the Borrower
by GOF or any such other holder, shall be conclusive and binding for all
purposes, absent manifest error.

                                   ARTICLE III
                                    GUARANTEE

          Section 3.01. UNCONDITIONAL GUARANTEE.

          (a)    Each Guarantor hereby unconditionally, jointly and severally,
guarantees (each, a "GUARANTEE") to GOF and any other holders of Senior
Subordinated Notes that the principal of, interest on and all other amounts
owing in respect of the Senior Subordinated Notes will be promptly paid in full
when due, subject to any applicable grace period, whether at maturity, by
acceleration or otherwise, and interest on the overdue principal and interest on
any overdue interest on the Senior Subordinated to the extent lawful, and all
other obligations of the Borrower to GOF and its successors and assigns under
the Senior Subordinated Notes will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof (all of the foregoing being
hereinafter called the "GUARANTEE OBLIGATIONS"); subject, however, to the
limitations set forth in SECTION 3.04. Each Guarantor hereby agrees that its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Senior Subordinated Notes or this Agreement,
the absence of any action to enforce the same, any waiver or consent by GOF or
its successors or assigns with respect to any provisions hereof or thereof, the
recovery of any judgment against the Borrower, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Borrower, any right to require a proceeding
first against the Borrower, protest, notice and all demands whatsoever and
covenants that the Guarantee will not be discharged except by complete
performance of the

                                       25
<Page>

obligations continued in the Senior Subordinated Notes, this Agreement, and this
Guarantee. If GOF or its successors or assigns is required by any court or
otherwise to return to the Borrower, any Guarantor, or any custodian, trustee,
liquidator or other similar official acting in relation to the Borrower or any
Guarantor, any amount paid by the Borrower or any Guarantor to GOF or such
successor or assign, this Guarantee, to the extent theretofore discharged, shall
be reinstated in full force and effect. Each Guarantor further agrees that, as
between each Guarantor, on the one hand, and GOF and its successors and assigns,
on the other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article VII for the purpose of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in Article VII, such
obligations (whether or not due and payable) shall become due and payable by
each Guarantor for the purpose of this Guarantee.

          Each Guarantor further agrees that the Guarantee Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
such Guarantor and that such Guarantor will remain bound under this Article III
notwithstanding any extension or renewal of any Guarantee Obligation.

          (b)    Each Guarantor waives notice of any default under the Senior
Subordinated Notes or the Guarantee Obligations. The obligations of each
Guarantor hereunder shall not be affected by (i) any extension or renewal of any
thereof; (ii) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Agreement, the Senior Subordinated Notes or any
other agreement; (iii) the release of any security held by any holder of Senior
Subordinated Notes for the Guarantee Obligations or any of them; (iv) the
failure of any holder of Senior Subordinated Notes to exercise any right or
remedy against any other guarantor of the Guarantee Obligations; or (v) except
as set forth in Section 3.03, any change in ownership of such Guarantor.

          (c)    Each Guarantor further agrees that its 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 of Senior Subordinated Notes to any security held for payment
of the Guarantee Obligations.

          (d)    The obligations of each Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason
(other than payment of the Guarantee Obligations in full), 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
Guarantee Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Guarantor herein shall not be discharged or
impaired or otherwise affected by the failure of any holder of Senior
Subordinated Notes to assert any claim or demand or to enforce any remedy under
this Agreement, the Senior Subordinated Notes or any other agreement, by any
waiver or modification of any thereof, by any default, failure or delay, willful
or otherwise, in the performance of the Guarantee Obligations, or by any other
act or thing or omission or delay to do any other act or thing that may or might
in any manner or to any extent

                                       26
<Page>

vary the risk of such Guarantor or would otherwise operate as a discharge of
such Guarantor as a matter of law or equity.

          (e)    In furtherance of the foregoing and not in limitation of any
other right that any holder of Senior Subordinated Notes has at law or at equity
against any Guarantor by virtue hereof, upon the failure of the Borrower to pay
the principal of or interest on any Guarantee 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 Guarantee Obligation, each
Guarantor hereby promises to and shall, upon receipt of written demand by GOF,
forthwith pay, or cause to be paid, in cash, to the holders of Senior
Subordinated Notes Holders an amount equal to the sum of (i) the unpaid amount
of such Guarantee Obligations, (ii) accrued and unpaid interest on such
Guarantee Obligations (but only to the extent not prohibited by law) and (iii)
all other monetary Guarantee Obligations of the Borrower to the holders of the
Senior Subordinated Notes.

          Section 3.02. SEVERABILITY. In case any provision of this Guarantee
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

          Section 3.03. RELEASE OF A GUARANTOR. If the Senior Subordinated Notes
are defeased in accordance with the terms of this Agreement, or if
SECTION 6.02(b) is complied with, or if, subject to the requirements of
SECTION 6.02(a), all or substantially all of the assets of any Guarantor or all
of the Equity Interests of any Guarantor are sold (including by issuance or
otherwise) by the Borrower in a transaction constituting an Asset Sale and (x)
the Net Cash Proceeds from such Asset Sale are used in accordance with
SECTION 6.01(d) or (y) the Borrower delivers to each holder of Senior
Subordinated Notes an Officer's Certificate to the effect that the Net Cash
Proceeds from such Asset Sale shall be used in accordance with SECTION 6.01(d)
and within the time limits specified by SECTION 6.01(d), then each Guarantor (in
the case of defeasance) or such Guarantor (in the case of compliance with
SECTION 6.02(b) or in the event of a sale or other disposition of all of the
Equity Interests of such Guarantor) or the corporation acquiring such assets (in
the event of a sale or other disposition of all or substantially all of the
assets of such Guarantor) shall be released and discharged from all obligations
under this Article III without any further action required on the part of GOF or
its successors or assigns. GOF or its successors or assigns shall, at the sole
cost and expense of the Borrower and upon receipt at the reasonable request of
GOF of an Opinion of Counsel that the provisions of this SECTION 3.03 have been
complied with, deliver an appropriate instrument evidencing such release upon
receipt of a request by the Borrower accompanied by an Officer's Certificate
certifying as to the compliance with this SECTION 3.03. Any Guarantor not so
released remains liable for the full amount of principal of and interest on the
Senior Subordinated Notes and the other obligations of the Borrower hereunder as
provided in this Article III.

          Section 3.04. LIMITATION OF A GUARANTOR'S LIABILITY. Each Guarantor,
and by its acceptance hereof GOF, hereby confirms that it is the intention of
all such parties that the guarantee by such Guarantor pursuant to its Guarantee
not constitute a fraudulent transfer or conveyance for purposes of title 11 of
the United States Code, as amended, the Uniform

                                       27
<Page>

Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
U.S. Federal or state or other applicable law. To effectuate the foregoing
intention, GOF and each Guarantor hereby irrevocably agree that the obligations
of each Guarantor under its Guarantee shall be listed to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor (including any Senior Indebtedness Incurred after the Effective Date)
and after giving effect to any collections from or payments made by or on behalf
of any other Guarantor in respect of the obligations of such other Guarantor
under its Guarantee or pursuant to SECTION 3.05, result in the obligations of
such Guarantor under its Guarantee not constituting such a fraudulent transfer
or conveyance under Federal or state law.

          Section 3.05. CONTRIBUTION. In order to provide for just and equitable
contribution among the Guarantors, the Guarantors agree, inter se, that in the
event any payment or distribution is made by any Guarantor (a "FUNDING
GUARANTOR") under the Guarantee, such Funding Guarantor shall be entitled to a
contribution from all other Guarantors in a pro rata amount, based on the net
assets of each Guarantor (including the Funding Guarantor), determined in
accordance with GAAP, subject to SECTION 3.04, for all payments, damages and
expenses incurred by such Funding Guarantor in discharging the Borrower's
obligations with respect to the Senior Subordinated Notes or any other
Guarantor's obligations with respect to the Guarantee.

          Section 3.06. SUBORDINATION OF SUBROGATION AND OTHER RIGHTS. Each
Guarantor hereby agrees that any claim against the Borrower that arises from the
payment, performance or enforcement of such Guarantor's obligations under its
Guarantee or this Agreement, including, without limitation, any right of
subrogation, shall be subject and subordinate to, and no payment with respect to
any such claim of such Guarantor shall be made before, the payment in full in
cash of the outstanding Senior Subordinated Notes in accordance with the
provisions provided therefor in this Agreement.

          Section 3.07. GUARANTEE OBLIGATIONS SUBORDINATED TO GUARANTOR SENIOR
INDEBTEDNESS. Each Guarantor covenants and agrees, and GOF by his acceptance
thereof likewise covenants and agrees, that the Guarantee of such Guarantor
shall be issued subject to the provisions of this Article III; and each person
holding any Senior Subordinated Note, whether GOF upon original issue to or upon
transfer, assignment or exchange thereof, accepts and agrees that all payments
of the principal of and interest on the Senior Subordinated Notes, and all other
amounts payable under this Agreement, pursuant to the Guarantee made by or on
behalf of any Guarantor shall, to the extent and in the manner set forth in this
Article III, be subordinated and junior in right of payment to the prior payment
in full in cash of all amounts payable under Guarantor Senior Indebtedness of
such Guarantor.

          Section 3.08. NO PAYMENT ON GUARANTEES IN CERTAIN CIRCUMSTANCES.

          (a)    No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities but including any payment
constituting any distribution in respect of any other Indebtedness that is
subordinated to the Guarantees) by or on behalf of any Guarantor of principal of
or interest on the Senior Subordinated Notes pursuant to such Guarantor's
Guarantee, whether pursuant to the terms of the Senior Subordinated Note, upon
acceleration or

                                       28
<Page>

otherwise, shall be made if, at the time of such payment, there exists a default
in the payment of all or any portion of the obligations on any Designated
Guarantor Senior Indebtedness of such Guarantor, whether at maturity, on account
of mandatory redemption or prepayment, acceleration or otherwise, and such
default shall not have been cured or waived or the benefits of this sentence
waived by or on behalf of the holders of such Designated Guarantor Senior
Indebtedness. In addition, during the continuance of any nonpayment event of
default with respect to any Designated Guarantor Senior Indebtedness pursuant to
which the maturity thereof may be immediately accelerated, and upon receipt by
the Trustee of written notice (the "GUARANTOR PAYMENT BLOCKAGE NOTICE") from the
holder or holders of such Designated Guarantor Senior Indebtedness or the
trustee or agent acting on behalf of such Designated Guarantor Senior
Indebtedness, then, unless and until such nonpayment event of default has been
cured or waived or has ceased to exist or such Designated Guarantor Senior
Indebtedness has been discharged or paid in full in cash or the benefits of
these provisions have been waived by the holders of such Designated Guarantor
Senior Indebtedness, no direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities) shall be made by or on behalf of
such Guarantor of principal or interest on the Senior Subordinated Notes during
a period (a "GUARANTOR BLOCKAGE PERIOD") commencing on the date of receipt of
such notice by GOF and its successors and assigns and ending 179 days
thereafter; provided however, that so long as any Indebtedness remains
outstanding under the Credit Agreement or any replacement, renewal, refinancing
or extension thereof, no Guarantor Payment Blockage Notice may be initiated to
block payment of principal or interest on the Senior Subordinated Notes pursuant
to the terms of this Section 3.08(a) except by the Administrative Agent (or
similar authorized party) under the Credit Agreement or any replacement,
renewal, refinancing or extension thereof.

          (b)    Notwithstanding anything herein or in the Senior Subordinated
Notes to the contrary, (x) in no event shall a Guarantor Blockage Period extend
beyond 179 days from the date the Guarantor Payment Blockage Notice in respect
thereof was given, (y) there shall be a period of at least 181 consecutive days
in each 360 day period when no Guarantor Blockage Period is in effect and (z)
not more than one Guarantor Blockage Period may be commenced with respect to any
Guarantor during any period of 360 consecutive days. No nonpayment event of
default that existed or was continuing on the date of commencement of any
Guarantor Blockage Period with respect to the Designated Guarantor Senior
Indebtedness initiating such Guarantor Blockage Period (to the extent the holder
of Designated Guarantor Senior Indebtedness, or trustee or agent, giving notice
commencing such Guarantor Blockage Period had knowledge of such existing or
continuing event of default) may be, or be made, the basis for the commencement
of any other Guarantor Blockage Period by the holder or holders of such
Designated Guarantor Senior Indebtedness or the trustee or agent acting on
behalf of such Designated Guarantor Senior Indebtedness, whether or not within a
period of 360 consecutive days, unless such nonpayment event of default has been
cured or waived for a period of not less than 90 consecutive days.

          (c)    In the event that, notwithstanding the foregoing, any payment
shall be made directly to the holders of Senior Subordinated Notes when such
payment is prohibited by Section 3.08(a), such payment shall be held in trust
for the benefit of, and shall be paid over or delivered by the recipient thereof
(if notice of the conditions prohibiting such payment under

                                       29
<Page>

Section 3.08(a) has been received by the holders of Senior Subordinated Notes)
to the holders of such Designated Guarantor Senior Indebtedness or their
respective representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Designated Guarantor Senior Indebtedness may have
been issued, as their respective interests may appear, but only to the extent
that, upon notice from the holders of Senior Subordinated Notes to the holders
of such Designated Guarantor Senior Indebtedness that such prohibited payment
has been made, the holders of such Designated Guarantor Senior Indebtedness (or
their representative or representatives or a trustee or trustees) notify the
holders of Senior Subordinated Notes in writing of the amounts then due and
owing on such Designated Guarantor Senior Indebtedness, if any, and only the
amounts specified in such notice to the holders of Senior Subordinated Notes
shall be paid to the holders of such Designated Guarantor Senior Indebtedness.

          Section 3.09 PAYMENT OVER PROCEEDS UPON DISSOLUTION, ETC.

          (a)    Upon any payment or distribution of assets or securities of any
Guarantor of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities), upon any
dissolution or winding up or total liquidation or reorganization of such
Guarantor, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Guarantor Senior Indebtedness of such
Guarantor shall first be paid in full in cash before the holders of Senior
Subordinated Notes shall be entitled to receive any payment by such Guarantor of
the principal of or interest on the Senior Subordinated Notes pursuant to such
Guarantor's Guarantee, or any payment to acquire any of the Senior Subordinated
Notes for cash, property or securities, or any distribution with respect to the
Senior Subordinated Notes of any cash, property or securities (excluding any
payment or distribution of Permitted Junior Securities). Before any payment may
be made by, or on behalf of, any Guarantor of the principal of or interest on
the Senior Subordinated Notes upon any such dissolution or winding up or total
liquidation or reorganization, any payment or distribution of assets or
securities of such Guarantor of any kind or character, whether in cash, property
or securities (excluding any payment or distribution of Permitted Junior
Securities), to which GOF or its successors or assigns would be entitled in
respect of the Senior Subordinated Notes, but for the subordination provisions
of this Agreement, shall be made by such Guarantor or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, directly to the holders of the Guarantor Senior Indebtedness of
such Guarantor (pro rata to such holders on the basis of the respective amounts
of such Guarantor Senior Indebtedness held by such holders) or their
representatives or to the trustee or trustees or agent or agents under any
agreement or indenture pursuant to which any of such Guarantor Senior
Indebtedness may have been issued, as their respective interests may appear, to
the extent necessary to pay all such Guarantor Senior Indebtedness in full in
cash after giving effect to any prior or concurrent payment, distribution or
provision therefor to or for the holders of such Guarantor Senior Indebtedness.

          (b)    In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of any Guarantor of any kind or character, whether in cash,
property or securities (excluding any payment or distribution of Permitted
Junior Securities), shall be made directly to holders of the Senior

                                       30
<Page>

Subordinated Notes at a time when such payment or distribution is prohibited by
Section 3.09(a) and before all obligations in respect of the Guarantor Senior
Indebtedness of such Guarantor are paid in full in cash, such payment or
distribution shall be received and held in trust for the benefit of, and shall
be paid over or delivered by the recipient thereof (if notice of the conditions
prohibiting such payment under Section 3.09(a) has been received thereby) to,
the holders of such Guarantor Senior Indebtedness (pro rata to such holders on
the basis of the respective amounts of such Guarantor Senior Indebtedness held
by such holders) or their respective representatives, or to the trustee or
trustees or agent or agents under any indenture pursuant to which any of such
Guarantor Senior Indebtedness may have been issued, as their respective
interests may appear, for application to the payment of such Guarantor Senior
Indebtedness remaining unpaid until all such Guarantor Senior Indebtedness has
been paid in full in cash after giving effect to any prior or concurrent
payment, distribution or provision therefor to or for the holders of such
Guarantor Senior Indebtedness.

          (c)    The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution of
any Guarantor following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation upon the terms
and conditions provided in Section 6.02 shall not be deemed a dissolution,
winding up, liquidation or reorganization for the purposes of this Section 3.09
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Section 6.02.

          Section 3.10 SUBROGATION.

          (a)    Upon the payment in full in cash of all Guarantor Senior
Indebtedness of a Guarantor, or provision for payment, GOF and its successors or
assigns shall be subrogated to the rights of the holders of such Guarantor
Senior Indebtedness to receive payments or distributions of cash, property or
securities of such Guarantor made on such Guarantor Senior Indebtedness until
the principal of and interest on the Senior Subordinated Notes shall be paid in
full in cash; and, for the purposes of such subrogation, no payments or
distributions to the holders of such Guarantor Senior Indebtedness of any cash,
property or securities to which GOF and its successors and assigns would be
entitled except for the provisions of this Article III, and no payment over
pursuant to the provisions of this Article III to the holders of such Guarantor
Senior Indebtedness by GOF and its successors and assigns, as between such
Guarantor, its creditors other than holders of such Guarantor Senior
Indebtedness, and GOF and its successors and assigns, be deemed to be a payment
by such Guarantor to or on account of such Guarantor Senior Indebtedness. It is
understood that the provisions of this Article III are and are intended solely
for the purpose of defining the relative rights of the holders of the Senior
Subordinated Notes solely in their capacity as such, on the one hand, and the
holders of Guarantor Senior Indebtedness of each Guarantor, on the other hand.

          (b)    If any payment or distribution to which the GOF or its
successors or assigns would otherwise have been entitled but for the provisions
of this Article III shall have been applied, pursuant to the provisions of this
Article III, to the payment of all amounts payable under Guarantor Senior
Indebtedness, then and in such case, GOF and it successors or assigns shall be
entitled to receive from the holders of such Guarantor Senior Indebtedness any
payments

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<Page>

or distributions received by such holders of Guarantor Senior Indebtedness in
excess of the amount required to make payment in full in cash of such Guarantor
Senior Indebtedness.

          Section 3.11 OBLIGATIONS OF GUARANTORS UNCONDITIONAL.

          (a)    Nothing contained in this Article III or elsewhere in this
Agreement or in the Senior Subordinated Notes or the Guarantees is intended to
or shall impair, as among each of the Guarantors and GOF or its successors and
assigns, the obligation of each Guarantor, which is absolute and unconditional,
to pay to GOF and/or its successors and assigns the principal of, interest on
the Senior Subordinated Notes as and when the same shall become due and payable
in accordance with the terms of the Guarantee of such Guarantor, or is intended
to or shall affect the relative rights of GOF and/or its successors and assigns
and creditors of any Guarantor other than the holders of Guarantor Senior
Indebtedness of such Guarantor, nor shall anything herein or therein prevent GOF
and/or its successors and assigns from exercising all remedies otherwise
permitted by applicable law upon default under this Agreement, subject to the
rights, if any, under this Article III of the holders of Guarantor Senior
Indebtedness in respect of cash, property or securities of any Guarantor
received upon the exercise of any such remedy.

          (b)    Without limiting the generality of the foregoing, nothing
contained in this Article III shall restrict the right of GOF or its successors
or assigns to take any action to declare the Senior Subordinated Notes to be due
and payable prior to its stated maturity pursuant to SECTIONS 7.01 AND 7.02 or
to pursue any rights or remedies hereunder; provided, however, that all
Guarantor Senior Indebtedness of any Guarantor then due and payable shall first
be paid in full before GOF and/or its successors and assigns are entitled to
receive any direct or indirect payment from such Guarantor of principal of,
interest on the Senior Subordinated Notes pursuant to such Guarantor's
Guarantee.

          Section 3.12 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets or securities of a Guarantor
referred to in this Article III, GOF and/or its successors or assigns shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which bankruptcy, dissolution, winding up, liquidation or
reorganization proceedings are pending, or upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, delivered to GOF and/or its successors or assigns for
the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of Guarantor Senior Indebtedness of such Guarantor and
other indebtedness of such Guarantor, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article III.

          Section 3.13 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
THE GUARANTORS OR HOLDERS OF GUARANTEE SENIOR INDEBTEDNESS. No right of any
present or future holders of any Guarantor Senior Indebtedness to enforce
subordination as provided herein shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of any Guarantor or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
any Guarantor with the terms of this Agreement, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with. The
provisions of this

                                       32
<Page>

Article III are intended to be for the benefit of, and shall be enforceable
directly by, the holders of Guarantor Senior Indebtedness.

          Section 3.14 THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT. The
failure to make a payment on account of principal of or interest on the Senior
Subordinated Notes by reason of any provision of this Article III shall not be
construed as preventing the occurrence of an Event of Default specified in
clauses (a), (b) or (c) of Section 7.01.

          Section 3.15 NO WAIVER OF GUARANTEE SUBORDINATION PROVISIONS. Without
in any way limiting the generality of Section 3.13, the holders of Guarantor
Senior Indebtedness may, at any time and from time to time, without the consent
of or notice to GOF and/or its successors or assigns, without incurring
responsibility to GOF and/or its successors or assigns and without impairing or
releasing the subordination provided in this Article III or the obligations
hereunder of GOF and/or its successors and assigns to the holders of Guarantor
Senior Indebtedness, do any one or more of the following: (a) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
Guarantor Senior Indebtedness or any instrument evidencing the same or any
agreement under which Guarantor Senior Indebtedness is outstanding or secured;
(b) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Guarantor Senior Indebtedness; (c) release any
Person liable in any manner for the collection of Guarantor Senior Indebtedness;
and (d) exercise or refrain from exercising any rights against any Guarantor and
any other Person.

          Section 3.16 PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION. Nothing
contained in this Article III or elsewhere in this Agreement shall prevent a
Guarantor, except under the conditions described in Section 3.08, from making
payments of principal of and interest on the Senior Subordinated Notes unless at
least two Business Days prior to the date upon which such payment becomes due
and payable, the Borrower and such Guarantor shall have received the written
notice provided for in Section 3.08(b). The Guarantors shall give prompt written
notice to GOF and/or its successors and assigns of any dissolution, winding up,
liquidation or reorganization of such Guarantor.

                                   ARTICLE IV
                              CONDITIONS PRECEDENT

          Section 4.01. CONDITIONS PRECEDENT. The obligation of GOF to cause the
Letter of Credit to be issued is subject to the satisfaction of the following
conditions precedent, each to the reasonable satisfaction of GOF, or the waiver
thereof by GOF in its sole discretion:

          (a)    BORROWER'S CERTIFICATE OF INCORPORATION. The Certificate
Incorporation shall have been filed with the Secretary of State of the State of
Delaware and, in any event, shall have been amended to satisfy the requirements
of the Plan and the Bankruptcy Code, including, without limitation, to contain
the following terms and provisions, each to the reasonable satisfaction of GOF:

                 (i)     The Borrower's authorized Capital Stock, and the
                         designated shares in each class or series of Capital
                         Stock, shall be limited to

                                       33
<Page>

                         such number of shares as is necessary for the issuances
                         contemplated by the Plan, including conversion or
                         exercise of all convertible or exercisable securities
                         to be issued thereunder, including applicable
                         anti-dilution protection;

                 (ii)    The stockholders of the Borrower shall be authorized to
                         take action by written consent in lieu of a meeting
                         thereof;

                 (iii)   The Borrower's Board of Directors shall not be
                         classified;

                 (iv)    The provisions of the Borrower's certificate of
                         incorporation as of May 11, 2002 that require an
                         affirmative vote of 80% of the voting Capital Stock for
                         the taking of certain actions shall be amended to
                         provide that such actions may be taken with the
                         affirmative vote of 50% of the voting Capital Stock;
                         and

                 (v)     The issuance of non-voting capital equity securities
                         shall be prohibited, but only to the extent required by
                         Section 1123(a)(6) of the Bankruptcy Code.

          (b)    BORROWER'S BYLAWS. The Bylaws shall have been adopted by the
Borrower, and, in any event, shall have been amended to satisfy the requirements
of the Plan and the Bankruptcy Code, including, without limitation, to contain
the following terms and provisions, each to the reasonable satisfaction of GOF:

                 (i)     Shareholders holding a minimum of 25% of the Borrower's
                         Common Stock shall be authorized to call special
                         meetings of the shareholders;

                 (ii)    The notice requirements for shareholders to place
                         matters on the ballot for consideration at annual and
                         special meetings shall not be unduly prohibitive and,
                         in any event, shall be to GOF's reasonable
                         satisfaction;

                 (iii)   Shareholders shall be authorized to take action by
                         written consent in lieu of a meeting thereof; and

                 (iv)    The Borrower's officers shall be prohibited from
                         exercising voting rights of any securities held by the
                         Borrower without express authorization from the
                         Borrower's Board of Directors.

          (c)    ORGANIZATIONAL DOCUMENTS OF DEBTOR SUBSIDIARIES. The
certificate or articles of incorporation and by-laws of each Debtor Subsidiary
shall be amended as necessary to satisfy the provisions of the Plan and the
Bankruptcy Code, and shall include, among other things, pursuant to
Section 1123(a)(6) of the Bankruptcy Code, a provision prohibiting the issuance
of non-voting equity securities, but only to the extent required by
Section 1123(a)(6) of the Bankruptcy Code.

                                       34
<Page>

                                       35
<Page>

          (d)    ORGANIZATION DOCUMENTS OF SUBSIDIARIES AND CERTAIN AFFILIATES.
In addition to the requirements of Section 4.01(c) above, the Organizational
Documents of the Borrower's Subsidiaries and Affiliates (excluding GOF) shall,
to the reasonable satisfaction of GOF:

                 (i)     prohibit their respective officers from exercising
                         voting rights of any securities by such Subsidiaries
                         and Affiliates without express authorization from such
                         Subsidiary's or Affiliate's Board of Directors or other
                         applicable governing body; and

                 (ii)    provide that the shareholders, members, partners or
                         other equity holders, as the case may be, of such
                         Subsidiary or Affiliate shall be permitted to remove as
                         of the Effective Date, at any time and from time to
                         time thereafter, any director, manager, managing
                         partner or person of equivalent authority, with or
                         without cause at any time, through action by a majority
                         in interest of such shareholders, members, partners or
                         other equity holders (which action may, at the option
                         thereof and to the extent permissible by law, be taken
                         in writing or pursuant to a meeting thereof).

          (e)    SHAREHOLDER RIGHTS PLAN. The Shareholder Rights Plan shall have
been rejected by the Bankruptcy Court and terminated.

          (f)    SHAREHOLDERS AGREEMENT. The Shareholders Agreement shall have
been executed and delivered by each of the parties thereto.

          (g)    DOCUMENTS TO BE DELIVERED. GOF shall have received the
following documents, each dated the Effective Date (unless otherwise provided
herein or unless previously provided in accordance with this Section 4.01), in
form and substance satisfactory to GOF:

                 (i)     The Senior Subordinated Note to the order of GOF in the
                         amount of $25,000,000.00, subject to the terms hereof
                         and thereof;

                 (ii)    Certified copies of all documents and instruments,
                         including all authorizations, consents and approvals
                         of, evidence of all other actions by, and notices and
                         filings with, all governmental authorities and
                         regulatory bodies or other Persons to whom the Obligors
                         have contractual obligations as shall be required for
                         the execution, delivery and performance of this
                         Agreement by the Obligors, including those consents and
                         approvals required by Section 4.01(i);

                 (iii)   An Officer's Certificate (the statements made in which
                         certificate shall be true on and as of the Effective
                         Date), of

                                       36
<Page>

                         each Obligor certifying as to: (A) the truth of the
                         representations and warranties made by such Obligor in
                         this Agreement immediately before and immediately after
                         giving effect to the execution and delivery hereof and
                         the issuance of the Senior Subordinated Note; and (B)
                         the satisfaction, as of the Effective Date, of all
                         conditions precedent set forth in this Section 4.01
                         that are to be performed or satisfied by such Obligor;
                         provided that the Borrower's Officer's Certificate
                         shall certify the satisfaction of all conditions
                         precedent set forth in this Section 4.01;

                 (iv)    A signed copy of a certificate of the Secretary or an
                         Assistant Secretary or other appropriate officer of the
                         Borrower certifying (A) as to true and complete copies
                         of the Certificate of Incorporation and Bylaws and the
                         Organizational Documents of each of the Borrower's
                         Subsidiaries as in effect on the Effective Date and the
                         absence of any amendments to the charter or by-laws
                         since such dates; and (B) the names and true signatures
                         of the officers of the Borrower authorized to sign this
                         Agreement, and the other documents to be delivered
                         hereunder; and

                 (v)     A signed copy of a certificate of the Secretary or an
                         Assistant Secretary or other appropriate officer or
                         manager of each Obligor (other than the Borrower)
                         certifying (A) as to true and complete copies of the
                         Organizational Documents of such Obligor as in effect
                         on the Effective Date and the absence of any amendments
                         to the charter or by-laws since such dates; and (B) the
                         names and true signatures of the officers of such
                         Obligor authorized to sign this Agreement, and the
                         other documents to be delivered hereunder.

          (h)    ENVIRONMENTAL DUE DILIGENCE. GOF shall not have given the
Borrower written notice that GOF, in its sole discretion, has determined that
the results of its environmental diligence review were not reasonably
satisfactory.

          (i)    CONSENTS AND APPROVALS. The Borrower, its Debtor Subsidiaries
and the other Obligors, if any, shall have obtained all governmental consents
and made all governmental filings required or reasonably advisable in connection
with the transactions contemplated by the Plan (including without limitation,
any consents and filings required or reasonably advisable pursuant to the
Hart-Scott-Rodino Antitrust Act (the "HSR ACT"), any applicable foreign
antitrust law or regulation, and the New Jersey Industrial Site Recovery Act)
prior to the applicable deadlines, filing periods or other timeframes associated
with such consents and filings, and the applicable waiting period under the

                                       37
<Page>

HSR Act or any applicable foreign antitrust law or regulation, if any, shall
have expired or been terminated.

          (j)    CREDIT AGREEMENT. The closing of the Credit Agreement shall
have occurred, or shall occur substantially simultaneously with the execution
and delivery hereof.

          (k)    NEW INVESTMENT. The closing of the New Investment shall have
occurred, or shall occur substantially simultaneously with the execution and
delivery hereof.

          (l)    MANAGEMENT LETTERS. On or before the Confirmation Date, Jerry
Zucker and James Boyd shall have executed and delivered a letter in the form of
Exhibit L and Exhibit M, respectively, to the Disclosure Statement, unless this
condition is waived in writing by GOF.

          (m)    COMPLIANCE WITH PLAN. The Borrower and its Debtor Subsidiaries
shall be in compliance with the material terms and provisions of the Plan
immediately prior to the execution and delivery of this Agreement.

          (n)    ADDITIONAL INFORMATION AND DOCUMENTS. Each Obligor shall have
provided GOF with such additional information and shall have executed and
delivered such additional documents as may be reasonably requested by GOF.

                                    ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

          Section 5.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
Borrower and each Obligor hereby jointly and severally represents and warrants
to GOF as of the Effective Date as follows:

          (a)    CORPORATE EXISTENCE. The Borrower and each of its Subsidiaries
(a) is a corporation, partnership, limited liability company, or other entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite corporate or other power
and authority, and has all material governmental licenses, authorizations,
consents and approvals necessary to own its assets and carry on its business as
now being or as proposed to be conducted; and (c) is qualified to do business
and is in good standing in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to
qualify could have a Material Adverse Effect.

          (b)    FINANCIAL CONDITION. The Borrower has heretofore furnished to
GOF the following financial statements: (i) the audited consolidated balance
sheets of the Borrower and its consolidated Subsidiaries and the related audited
consolidated statements of operations, shareholders' equity (deficit) and cash
flows of the Borrower and its consolidated Subsidiaries for the fiscal year
ended December 29, 2001, reported on by Ernst & Young LLP; (ii) the unaudited
consolidated balance sheets of the Borrower and its consolidated Subsidiaries
and the

                                       38
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related unaudited consolidated statements of operations, shareholders' equity
(deficit) and cash flows of the Borrower and its consolidated Subsidiaries for
the nine-month period ended September 28, 2002; and (iii) pro forma consolidated
balance sheets of the Borrower and its consolidated Subsidiaries, and related
consolidated statements of shareholders' equity (deficit) as at December 28,
2002, which balance sheets and statements reflect the consummation of the Plan
as if the same had been consummated on said date.

     All such financial statements fairly present the respective actual or pro
forma financial condition, as applicable, of the Borrower and its consolidated
Subsidiaries as at the respective dates, and the respective actual results of
operations for the respective periods ended on said respective dates, all in
accordance with GAAP and practices applied on a consistent basis; provided that,
as to projections, the Borrower and its consolidated Subsidiaries represent only
that such projections have been prepared in good faith based on estimates and
assumptions believed by the Borrower and its consolidated subsidiaries to be
reasonable as of the date such projections were prepared. None of the Borrower
or any of its Subsidiaries has on the date hereof any material contingent
liabilities, material liabilities for Taxes, material unusual forward or
long-term commitments or material unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided for in
said respective balance sheets as at said respective dates. Since September 28,
2002, there has been no material adverse change in the financial condition,
operation, business or prospects of the Borrower and its consolidated
Subsidiaries taken as a whole from that set forth in the respective financial
statements as at such date.

          (c)    LITIGATION. Except as set forth in Schedule 5.01(c) hereto,
there are no legal or arbitral proceedings, or any proceedings by or before any
governmental or regulatory authority or agency, now pending or (to the knowledge
of any Obligor) threatened against the Borrower or any of the Borrower's
Subsidiaries which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect.

          (d)    NO BREACH. None of the execution and delivery of this Agreement
and the Senior Subordinated Note, the consummation of the transactions herein
and therein contemplated or compliance with the terms and provisions hereof and
thereof will conflict with or result in a breach of, or require any consent
under, the Organizational Documents of the Borrower, any other Obligor or any of
the Borrower's other Subsidiaries, if any, or any applicable law or regulation,
or any order, writ, injunction or decree of any court or Governmental Authority,
or any agreement or instrument to which the Borrower, any other Obligor or any
of the Borrower's other Subsidiaries, if any, is a party or by which any of them
or any of their Property is bound or to which any of them is subject, or
constitute a default under any such agreement or instrument, or result in the
creation or imposition of any Lien upon any Property of the Borrower, any other
Obligor, or any of the Borrower's other Subsidiaries, if any, pursuant to the
terms of any such agreement or instrument.

          (e)    ACTION. Each Obligor has all necessary corporate or other
power, authority and legal right to execute, deliver and perform its obligations
under this Agreement and the Senior Subordinated Note, as the case may be; the
execution, delivery and performance by each

                                       39
<Page>

Obligor of this Agreement and the Senior Subordinated Note, as the case may be,
has been duly authorized by all necessary corporate or other action on the part
of each Obligor (including, without limitation, any required shareholder
approvals); and this Agreement has been duly and validly executed and delivered
by each Obligor and constitutes, and the Senior Subordinated Note, as the case
may be, constitutes, its legal, valid and binding obligation, enforceable
against each Obligor in accordance with the terms hereof and thereof, except as
such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or similar laws of general applicability affecting
the enforcement of creditors' rights and (b) the application of general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

          (f)    APPROVALS. No authorizations, approvals (other than the
approval of the Bankruptcy Court, which has previously been obtained) or
consents of (including any exchange control approval), and no filings or
registrations with, any governmental or regulatory authority or agency, or any
securities exchange, are necessary for the execution, delivery or performance by
each Obligor of this Agreement or by the Borrower of the Senior Subordinated
Note or for the legality, validity or enforceability hereof or thereof.

          (g)    USE OF CREDIT. None of the Obligors is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of buying or carrying Margin
Stock, and no part of the proceeds of any extension of credit hereunder will be
used to buy or carry any Margin Stock in violation of the applicable provisions
of Regulations U and X.

          (h)    ERISA. Each ERISA Plan, and, to the knowledge of each Obligor,
each Multiemployer Plan, is in compliance in all material respects with, and has
been administered in all material respects in compliance with, the applicable
provisions of ERISA, the Internal Revenue Code and any other Federal or state
law, and no event or condition has occurred and is continuing as to which any
Obligor would be under an obligation to furnish a report to GOF under
Section 6.01(a) hereof.

          (i)    TAXES. The Borrower and its Subsidiaries (other than their
respective Foreign Subsidiaries) are members of an affiliated group of
corporations filing consolidated returns for Federal income tax purposes, of
which the Borrower is the "common parent" (within the meaning of Section 1504 of
the Internal Revenue Code) of such group. There is no tax sharing, tax
allocation or similar agreement currently in effect providing for the manner in
which tax payments owing by the members of such affiliated group (whether in
respect of Federal, state or foreign income or other Taxes) are allocated among
the members of the group. The Borrower and its Subsidiaries have filed (either
directly, or indirectly through the Borrower) all United States Federal, and all
foreign, income tax returns and all other material tax returns that are required
to be filed by them and have paid (either directly, or indirectly through the
Borrower) all Taxes due pursuant to such returns or pursuant to any assessment
received by the Borrower or any of its Subsidiaries. The charges, accruals and
reserves on the books of the Borrower and the Borrower's Subsidiaries in respect
of Taxes and other governmental charges are, in the opinion of the Borrower,
adequate.

                                       40
<Page>

          (j)    INVESTMENT COMPANY ACT. Neither the Borrower nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.

          (k)    PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower nor
any of its Subsidiaries is a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.

          (l)    MATERIAL AGREEMENTS AND LIENS.

                 (i)     INDEBTEDNESS. Part A of Schedule 4.01(l) hereto is a
                         complete and correct list, as of the date of this
                         Agreement (and after giving effect to the transactions
                         contemplated to occur on the Effective Date), of each
                         credit agreement, loan agreement, indenture, purchase
                         agreement, lease, guarantee, letter of credit or other
                         arrangement (excluding this Agreement) providing for or
                         otherwise relating to any Indebtedness or any extension
                         of credit (or commitment for any extension of credit)
                         to, or guarantee by, the Borrower and its Subsidiaries,
                         the aggregate principal or face amount of which equals
                         or exceeds (or may equal or exceed) U.S. $100,000, and
                         the aggregate principal or face amount outstanding or
                         that may become outstanding under each such arrangement
                         is correctly described in Part A of said
                         Schedule 4.01(l).

                 (ii)    LIENS. Part B of Schedule 4.01(l) hereto is a complete
                         and correct list, as of the date of this Agreement (and
                         after giving effect to the transactions contemplated to
                         occur on the Effective Date), of each Lien securing
                         Indebtedness of any Person the aggregate principal or
                         face amount of which equals or exceeds (or may equal or
                         exceed) U.S. $100,000 and covering any Property of the
                         Borrower or its Subsidiaries, and the aggregate
                         Indebtedness secured (or which may be secured) by each
                         such Lien and the Property covered by each such Lien is
                         correctly described in Part B of said Schedule 4.01(l).

          (m)    ENVIRONMENTAL MATTERS. The Borrower and each of its
Subsidiaries has obtained all environmental, health and safety permits, licenses
and other authorizations required under all Environmental Laws to carry on its
business as now being or as proposed to be conducted, except to the extent
failure to have any such permit, license or authorization would not have a
Material Adverse Effect. Each of such permits, licenses and authorizations is in
full force and effect and the Borrower and each of its Subsidiaries is in
compliance with the terms and conditions thereof, and is also in compliance with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained

                                       41
<Page>

in any applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply
therewith would not have a Material Adverse Effect.

          In addition, except as set forth in Schedule 4.01(m) hereto:

                 (i)     NO PENDING ENVIRONMENTAL MATTERS. No notice,
                         notification, demand, request for information,
                         citation, summons or order has been issued, no
                         complaint has been filed, no penalty has been assessed
                         and no investigation or review is pending or threatened
                         by any governmental or other entity with respect to any
                         alleged failure by the Borrower or any of its
                         Subsidiaries to have any environmental, health or
                         safety permit, license or other authorization required
                         under any Environmental Law in connection with the
                         conduct of the business of the Borrower or any of its
                         Subsidiaries or with respect to any generation,
                         treatment, storage, recycling, transportation,
                         discharge or disposal, or any Release of any Hazardous
                         Materials generated by the Borrower or any of its
                         Subsidiaries which alleged failure, generation,
                         treatment, storage, recycling, transportation,
                         discharge or disposal or Release would have a Material
                         Adverse Effect.

                 (ii)    NO TREATMENT FACILITIES OR RELEASES. Except to the
                         extent the same could not reasonably be expected to
                         have a Material Adverse Effect: (A) neither the
                         Borrower nor any of its Subsidiaries owns, operates or
                         leases a treatment, storage or disposal facility
                         requiring a permit under the Resource Conservation and
                         Recovery Act of 1976, as amended, or under any
                         comparable state or local statute; (B) no
                         polychlorinated biphenyls (PCB's) is or has been
                         present at any site or facility now or previously
                         owned, operated or leased by the Borrower or any of its
                         Subsidiaries; (C) no asbestos or asbestos-containing
                         materials is or has been present at any site or
                         facility now or previously owned, operated or leased by
                         the Borrower or any of its Subsidiaries; (D) there are
                         no underground storage tanks or surface impoundments
                         for Hazardous Materials, active or abandoned, at any
                         site or facility now or previously owned, operated or
                         leased by the Borrower or any of its Subsidiaries; (E)
                         no Hazardous Materials have been Released at, on or
                         under any site or facility now or previously owned,
                         operated or leased by the Borrower or any of its
                         Subsidiaries in a reportable quantity established by
                         statute, ordinance, rule, regulation or order; and (F)
                         no Hazardous Materials have been otherwise Released at,
                         on or under any site or facility now or previously
                         owned, operated or leased by the Borrower or any of its
                         Subsidiaries.

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<Page>

                 (iii)   NO HAZARDOUS MATERIAL TRANSPORTED TO NPL SITES. Neither
                         the Borrower nor any of its Subsidiaries has
                         transported or arranged for the transportation of any
                         Hazardous Material to any location that is listed on
                         the National Priorities List ("NPL") under the
                         Comprehensive Environmental Response, Compensation and
                         Liability Act of 1980, as amended ("CERCLA"), listed
                         for possible inclusion on the NPL by the Environmental
                         Protection Agency in the Comprehensive Environmental
                         Response and Liability Information System, as provided
                         for by 40 C.F.R. Section 300.5 ("CERCLIS"), or on any
                         similar state, local or foreign list or that is the
                         subject of Federal, state, local or foreign enforcement
                         actions or other investigations that may lead to
                         Environmental Claims against the Borrower or any of its
                         Subsidiaries, in each case to the extent such
                         Environmental Claims could reasonably be expected to
                         have a Material Adverse Effect.

                 (iv)    NO NOTIFICATIONS OR LISTINGS. No oral or written
                         notification of a Release of a Hazardous Material has
                         been filed by or on behalf of the Borrower or any of
                         its Subsidiaries and no site or facility now or
                         previously owned, operated or leased by the Borrower or
                         any of its Subsidiaries is listed or proposed for
                         listing on the NPL, CERCLIS or any similar state or
                         foreign list of sites requiring investigation or
                         clean-up.

                 (v)     NO LIENS OR RESTRICTIONS. No Liens have arisen under or
                         pursuant to any Environmental Laws on any site or
                         facility owned, operated or leased by the Borrower or
                         any of its Subsidiaries, and neither the Borrower nor
                         any of its Subsidiaries has received any notification
                         (or otherwise has any knowledge) of any government
                         action that has been taken or is in process that could
                         subject any such site or facility to such Liens, and
                         neither the Borrower nor any of its Subsidiaries would
                         be required to place any notice or restriction relating
                         to the presence of Hazardous Materials at any site or
                         facility owned by it in any deed to the real property
                         on which such site or facility is located.

                 (vi)    FULL DISCLOSURE. There have been no so-called "Phase I"
                         or "Phase II" environmental investigations or other
                         analyses conducted by or that are in the possession of
                         the Borrower or any of its Subsidiaries in relation to
                         any site or facility now or previously owned, operated
                         or leased by the Borrower or any of its Subsidiaries
                         which have not been made available to GOF.

                                       43
<Page>

          (n)    CAPITALIZATION.

                 (i)     OUTSTANDING EQUITY. The authorized Capital Stock of the
                         Borrower and each of the Subsidiaries will consist as
                         of the Effective Date, after giving effect to the
                         transactions contemplated to occur on or before the
                         Effective Date, of the aggregate number of shares of
                         common and preferred stock, having the respective par
                         values and series, in each case as listed in Schedule
                         4.01(n) hereto. On the Effective Date, after giving
                         effect to the transactions contemplated to occur on or
                         before the Effective Date, the number of shares of
                         common stock and each series of preferred stock of the
                         Borrower and each of its Subsidiaries will be duly and
                         validly issued and outstanding as listed in said
                         Schedule 4.01(n) and will be owned beneficially and of
                         record by the Persons as listed in said Schedule
                         4.01(n).

                 (ii)    OUTSTANDING EQUITY RIGHTS. As of the Effective Date,
                         after giving effect to the transactions contemplated to
                         occur on or before the Effective Date, except as set
                         forth in Schedule 4.01(n) hereto, (A) there will be no
                         outstanding Equity Rights with respect to the Borrower
                         or any of its Subsidiaries and (B) there will be no
                         outstanding obligations of the Borrower or any of its
                         Subsidiaries to repurchase, redeem, or otherwise
                         acquire any shares of Capital Stock of the Borrower or
                         any of its Subsidiaries nor will there be any
                         outstanding obligations of the Borrower any of its
                         Subsidiaries to make payments to any Person, such as
                         "phantom stock" payments, where the amount thereof is
                         calculated with reference to the fair market value or
                         equity value of the Borrower or any of its
                         Subsidiaries.

          (o)    SUBSIDIARIES AND INVESTMENTS.

                 (i)     SUBSIDIARIES. Set forth in Part A of Schedule 4.01(o)
                         hereto is a complete and correct list of all of the
                         Borrower's Subsidiaries as of the Effective Date after
                         giving effect to the transactions contemplated to occur
                         on or before the Effective Date, together with, for
                         each such Subsidiary, (A) the jurisdiction of
                         organization of such Subsidiary, (B) each Person
                         holding ownership interests in such Subsidiary and (C)
                         the nature of the ownership interests held by each such
                         Person and the percentage of ownership of such
                         Subsidiary represented by such ownership interests.
                         Except as disclosed in Part A of Schedule 4.01(o)
                         hereto, (x) the Borrower and its Subsidiaries own, or
                         will own on the Effective Date, free and clear of
                         Liens, and have the unencumbered right to vote, all
                         outstanding ownership interests in each Person shown to
                         be held by

                                       44
<Page>

                         them in Part A of Schedule 4.01(o) hereto, (y) all of
                         the issued and outstanding Capital Stock of each such
                         Person organized as a corporation is validly issued,
                         fully paid and nonassessable and (z) (except as
                         disclosed in Schedule 4.01) there are no outstanding
                         Equity Rights with respect to such Person.

                 (ii)    INVESTMENTS. Set forth in Part B of Schedule 4.01(o)
                         hereto is a complete and correct list of all
                         Investments (other than Investments disclosed in Part A
                         of said Schedule 4.01(o) hereto and Permitted
                         Investments) held by the Borrower and its Subsidiaries
                         in any Person on the date hereof, or that will be held
                         on the Effective Date after giving effect to the
                         transactions contemplated to occur on or before the
                         Effective Date, and, for each such Investment, (x) the
                         identity of the Person or Persons holding such
                         Investment and (y) the nature of such Investment.
                         Except as disclosed in Part B of Schedule 4.01 hereto,
                         the Borrower and each of its Subsidiaries owns, or will
                         own, free and clear of all Liens, all such Investments.

                 (iii)   ABSENCE OF CERTAIN RESTRICTIONS. Except as provided for
                         in the Intercompany Notes Agreements (as defined in the
                         Credit Agreement), neither the Borrower nor any of its
                         Subsidiaries is, on the date hereof, subject to any
                         indenture, agreement, instrument or other arrangement
                         of the type described in Section 9.16(e) of the Credit
                         Agreement.

          (p)    TITLE TO ASSETS. The Borrower and each of its Subsidiaries on
the Effective Date will own and have good and marketable title (subject only to
Permitted Liens) to the material Properties shown to be owned in the most recent
financial statements referred to in Section 5.01(b)(iii) hereof (other than
Properties disposed of in the ordinary course of business or otherwise permitted
to be disposed of pursuant to Section 6.01(d) hereof or in accordance with the
Plan). The Borrower and each of its Subsidiaries on the Effective Date will own
(or have available for use under lease, license or other arrangements entered
into with any other Person) good and marketable title to, and enjoy on the
Effective Date, peaceful and undisturbed possession of, all Properties (subject
only to Permitted Liens) that are necessary for the operation and conduct of
their businesses.

          (q)    TRUE AND COMPLETE DISCLOSURE. All written information furnished
after the date hereof by the Obligors to GOF, in its capacity as a holder of the
Senior Subordinated Note, in connection with this Agreement and the Senior
Subordinated Note and the transactions contemplated hereby and thereby will be
true, complete and accurate in every material respect, or (in the case of
projections) based on reasonable estimates, on the date as of which such
information is stated or certified.

          (s)    REAL PROPERTY. Set forth on Schedule 4.01(s) attached hereto is
a list of all of the real property interests of the Borrower and its
Subsidiaries on the Effective Date, after

                                       45
<Page>

giving effect to the transactions contemplated to occur on or before the
Effective Date, indicating in each case whether the respective Property is owned
or leased, the identity of the owner or lessee and the location of the
respective Property. All such leases necessary for the conduct of the business
of the Borrower or its Subsidiaries are valid and subsisting and are in full
force and effect, except for such failures to be valid, subsisting and in full
force and effect as would not, individually or in the aggregate, have a Material
Adverse Effect. Each of the Borrower and its Subsidiaries enjoys peaceful and
undisturbed possession under all such leases, and each of the Borrower and its
Subsidiaries has complied with all material obligations under all leases to
which it is a party, except where the failure to so comply could not reasonably
be expected to have a Material Adverse Effect.

          Section 5.02. REPRESENTATIONS AND WARRANTIES OF GOF. GOF hereby
represents and warrants as of the Effective Date as follows:

          (a)    DUE ORGANIZATION, ETC. GOF is a limited partnership duly
organized and validly existing under the laws of the State of Delaware.

          (b)    CORPORATE POWER, ETC. GOF has full power and authority to enter
into, deliver and perform its obligations under this Agreement and the Senior
Subordinated Note and to consummate each of the transactions contemplated hereby
and thereby, and has taken all necessary action to authorize the execution,
delivery and performance by it of this Agreement.

          (c)    NO CONFLICT. Neither the execution and delivery of this
Agreement, nor the performance by GOF of its obligations hereunder, will
conflict in any material respect with or result in a material breach of, or
constitute a material default under, any applicable laws or any indenture,
mortgage, deed of trust or other material instrument or agreement to which GOF
is a party or is bound.

          (d)    APPROVALS, ETC. No order, license, consent, authorization or
approval of, or exemption by, or notice to or registration with, any
Governmental Authority or regulatory body, and no filing, recording, publication
or registration in any public office or any other place, is required in
connection with the execution, delivery and performance by GOF of any this
Agreement, or for the legality, validity, binding effect or enforceability
hereof, except such orders, licenses, consents, authorizations and approvals as
have been duly obtained or made and are in full force and effect, or will be
obtained and made after the date hereof, as permitted by the applicable
Governmental Authority or regulatory body.

                                   ARTICLE VI
                                    COVENANTS

          Section 6.01. GENERAL COVENANTS. The Borrower and the other Obligors,
as the case may be, covenant and agree as follows:

          (a)    DELIVERY OF INFORMATION. The Obligors shall deliver to GOF
(PROVIDED, HOWEVER, that GOF may suspend delivery of any of the information set
forth in the following

                                       46
<Page>

clauses (i) through (xii), or any subset of such information, by delivering
written notice to the Borrower, with such suspension to continue until GOF
delivers written notice to the Borrower directing the resumption of the delivery
thereof):

                 (i)     as soon as available and in any event within (x) 45
days after the end of each monthly accounting period for the fiscal year of the
Borrower ending January 3, 2004 and (y) 30 days after the end of each monthly
accounting period of each fiscal of the Borrower commencing with the fiscal year
ending January 1, 2005 (unless such monthly accounting period ends on the end of
a fiscal quarter or fiscal year, in which case the provisions of paragraph (ii)
and (iii) below shall apply), consolidated statements of income, retained
earnings and cash flows of the Borrower and its Restricted Subsidiaries (and,
separately stated, of the Borrower and its Restricted Subsidiaries, and, with
respect to statements of income, Operating Divisions) for such period and for
the period from the beginning of the respective fiscal year to the end of such
period, and the related consolidated balance sheets of the Borrower and its
Restricted Subsidiaries as at the end of such period (and, separately stated, of
the Borrower and its Restricted Subsidiaries, and, with respect to statements of
income, Operating Divisions), setting forth in each case in comparative form the
corresponding consolidated figures for the corresponding period in the preceding
fiscal year, accompanied by a certificate of a senior financial officer of the
Borrower, which certificate shall state that said consolidated financial
statements fairly present the consolidated financial condition and results of
operations of the Borrower and its Restricted Subsidiaries (or of the Borrower
and its Restricted Subsidiaries and Operating Divisions, as the case may be), in
each case in accordance with GAAP, consistently applied, as at the end of, and
for, such period (subject to the absence of footnote disclosures and to normal
year-end audit adjustments);

                 (ii)    as soon as available and in any event within (x) 60
days after the end of each quarterly fiscal period for the fiscal year ending
January 3, 2004 and (y) 45 days after the end of each quarterly fiscal period of
each fiscal year of the Borrower commencing with the fiscal year ending January
1, 2005 (unless such quarterly fiscal period ends on the end of a fiscal year,
in which case the provisions of paragraph (iii) below shall apply), consolidated
statements of income, retained earnings and cash flows of the Borrower and its
Restricted Subsidiaries (and, separately stated, of the Borrower and its
Restricted Subsidiaries, and, with respect to statements of income, Operating
Divisions) for such period and for the period from the beginning of the
respective fiscal year to the end of such period, and the related consolidated
balance sheets of the Borrower and its Restricted Subsidiaries as at the end of
such period (and, separately stated, of the Borrower and its Restricted
Subsidiaries, and, with respect to statements of in come, Operating Divisions),
setting forth in each case in comparative form the corresponding consolidated
figures for the corresponding period in the preceding fiscal year, accompanied
by a certificate of a senior financial officer of the Borrower, which
certificate shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of the
Borrower and its Restricted Subsidiaries (or of the Borrower, its Restricted
Subsidiaries and Operating Divisions, as the case may be), in each case in
accordance with GAAP, consistently applied, as at the end of, and for, such
period (subject to the absence of footnote disclosures and to normal year-end
audit adjustments);

                                       47
<Page>

                 (iii)   as soon as available and in any event within (x) 120
days after the end of the fiscal year of the Borrower ending January 3, 2004 and
(y) 90 days after the end of each fiscal year of the Borrower commencing with
the fiscal year ending January 1, 2005, consolidated statements of income,
retained earnings and cash flows of the Borrower and its Restricted Subsidiaries
(and, separately stated, of the Borrower and its Restricted Subsidiaries and
Operating Divisions) for such fiscal year and the related consolidated balance
sheets of the Borrower and its Restricted Subsidiaries (and, separately stated,
of the Borrower and its Restricted Subsidiaries and Operating Divisions) as at
the end of such fiscal year, setting forth in each case in comparative form the
corresponding consolidated figures for the preceding fiscal year, and
accompanied by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall state that said consolidated
financial statements fairly present the consolidated financial condition and
results of operations of the Borrower and its Restricted Subsidiaries (or of the
Borrower and its Restricted Subsidiaries and Operating Divisions, as the case
may be) as at the end of, and for, such fiscal year in accordance with GAAP,
consistently applied;

                 (iv)    promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, which any of the
Borrower or its Subsidiaries shall have filed with the Securities and Exchange
Commission (or any governmental agency substituted therefor) or any national
securities exchange;

                 (v)     promptly upon the mailing thereof to the holders of any
publicly-traded debt or equity securities of any of the Borrower or its
Subsidiaries, copies of all financial statements, certificates, reports, proxy
statements and other notices or information so mailed;

                 (vi)    as soon as possible, and in any event within 10 days
after any Obligor knows or has reason to believe that any of the events or
conditions specified below with respect to any ERISA Plan or Multiemployer Plan
has occurred or exists, a statement signed by a senior financial officer of such
Obligor or its Subsidiary setting forth details respecting such event or
condition and the action, if any, that the Obligors and their ERISA Affiliates
propose to take with respect thereto (and a copy of any report or notice
required to be filed with or given to PBGC by the Borrower or an ERISA Affiliate
with respect to such event or condition): (A) any reportable event, as defined
in Section 4043(c) of ERISA and the regulations issued thereunder, with respect
to an ERISA Plan, as to which the PBGC has not by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event (PROVIDED that a failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, including, without limitation, the failure to make on or before its due
date a required installment under Section 412(m) of the Internal Revenue Code or
Section 302(e) of ERISA, shall be a reportable event regardless of the issuance
of any waivers in accordance with Section 412(d) of the Internal Revenue Code);
and any request for a waiver under Section 412(d) of the Internal Revenue Code
for any ERISA Plan; (B) the distribution under Section 4041 of ERISA of a notice
of intent to terminate any ERISA Plan or any action taken by the Borrower or an
ERISA Affiliate to terminate any ERISA Plan; (C) the institution by the PBGC of
proceedings under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any ERISA Plan, or the receipt by

                                       48
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the Borrower or any ERISA Affiliate of a notice from a Multiemployer Plan that
such action has been taken by the PBGC with respect to such Multiemployer Plan;
(D) the complete or partial withdrawal from a Multiemployer Plan by the Borrower
or any ERISA Affiliate that results in liability under Section 4201 or 4204 of
ERISA (including the obligation to satisfy secondary liability as a result of a
purchaser default) or the receipt by the Borrower or any ERISA Affiliate of
notice from a Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA; (E) the institution of a proceeding by
a fiduciary of any Multiemployer Plan against the Borrower or any ERISA
Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed
within 30 days; and (F) the adoption of an amendment to any ERISA Plan that,
pursuant to Section 401(a)(29) of the Internal Revenue Code or Section 307 of
ERISA, would require security to be provided to the ERISA Plan in accordance
with the provisions of said Sections;

                 (vii)   as soon as available and in any event within 30 days
after the beginning of each fiscal year of the Borrower, (A) a projection
(setting forth an itemization of the principal assumptions relating thereto) for
such fiscal year of the Borrower of the anticipated income statement, cash flow
statement and changes in financial position of the Borrower, and the related
balance sheets and (B) promptly after any material change in such projections
(either positive or negative) becomes known, notice of such change;

                 (viii)  promptly after any Obligor has reason to believe that
any Default has occurred under this Agreement or the Senior Subordinated Notes,
a notice of such Default describing the same in reasonable detail and, together
with such notice or as soon thereafter as possible, a description of the action
that such Obligor has taken or proposes to take with respect thereto;

                 (ix)    promptly after the Borrower has reason to believe that
any default has occurred under the Credit Agreement, and in any event no later
than notice thereof is delivered to the Administrative Agent, a notice of such
default describing the same in reasonable detail and, together with such notice
or as soon thereafter as possible, a description of the action that the Borrower
has taken or proposes to take with respect thereto;

                 (x)     immediately after the Borrower or any of its
Subsidiaries has reason to believe that it may not timely make any of the
payments due under the Credit Agreement from the Borrower to the Administrative
Agent on December 31, 2003, June 30, 2004 and December 31, 2004, a notice of
such fact, describing the reason for such determination in reasonable detail
and, together with such notice or as soon thereafter as possible, a description
of the action that the Borrower has taken or proposes to take to remedy such
situation;

                 (xi)    immediately upon the addition of any guarantor under
the Credit Agreement pursuant to Section 9.16(b) thereof or otherwise, notice of
such addition, copies of the Guaranty Agreement executed by such additional
guarantor and a statement of the basis for such addition;

                                       49
<Page>

                 (xii)   from time to time such other information regarding the
financial condition, operations, business or prospects of the Borrower or any of
its Subsidiaries (including, without limitation, any ERISA Plan or Multiemployer
Plan and any reports or other information required to be filed under ERISA) as
GOF may reasonably request; and

                 (xiii)  the Borrower shall deliver to GOF, within 120 days
after the close of each fiscal year a certificate signed by the principal
executive officer, principal financial officer or principal accounting officer
stating that a review of the activities of the Borrower has been made under the
supervision of the signing officers with a view to determining whether a Default
or Event of Default has occurred and whether or not the signers know of any
Default or Event of Default by the Borrower that occurred during such fiscal
year. If they do know of such a Default or Event of Default, the certificate
shall describe all such Defaults or Events of Default, their status and the
action the Borrower is taking or proposes to take with respect thereto. The
first certificate to be delivered by the Borrower pursuant to this
SECTION 6.01(a) shall be for the fiscal year ending January 3, 2004.

          (b)    TRANSACTIONS WITH AFFILIATES. The Borrower shall not, and shall
not cause or permit any Restricted Subsidiary to, directly or indirectly,
conduct any business or enter into any transaction (or series of related
transactions) with or for the benefit of any of their respective Affiliates or
any officer, director or employee of the Borrower or any Restricted Subsidiary
(each an "AFFILIATE TRANSACTION"), unless (i) such Affiliate Transaction is on
terms which are no less favorable to the Borrower or such Restricted Subsidiary,
as the case may be, than would be available in a comparable transaction with an
unaffiliated third party and (ii) (A) if such Affiliate Transaction (or series
of related Affiliate Transactions) involves aggregate payments or the transfer
of other consideration between the Borrower and an Affiliate of the Borrower
having a Fair Market Value in excess of $25,000,000, such Affiliate Transaction
is in writing and the Borrower delivers an Officer's Certificate to each holder
of Senior Subordinated Notes certifying that such Affiliate Transaction (or
series of Affiliate Transactions) complies with the foregoing provisions, (B) if
such Affiliate Transaction (or series of related Affiliate Transactions)
involves aggregate payments or the transfer of other consideration between the
Borrower and an Affiliate of the Borrower having a Fair Market Value in excess
of $25,000,000, such Affiliate Transaction is in writing and a majority of the
disinterested members of the Board of Directors of the Borrower shall have
approved such Affiliate Transaction and determined that such Affiliate
Transaction complies with the foregoing provisions.

          Notwithstanding the foregoing, the restrictions set forth in this
covenant shall not apply to (i) transactions with or among the Borrower and any
Wholly Owned Restricted Subsidiary or between or among Wholly Owned Restricted
Subsidiaries; (ii) reasonable fees and compensation paid to and indemnity
provided on behalf of, officers, directors, employees, consultants or agents of
the Borrower or any Subsidiary as determined in good faith by the Borrower's
Board of Directors; (iii) any transactions undertaken pursuant to any
contractual obligations or rights in existence on the Effective Date (as in
effect on the Effective Date), including without limitation redemption features
in any outstanding securities or the issuance of, or the payment of the
principal, interest or any other amounts due on, the Junior Subordinated
Convertible Notes; (iv) any Restricted Payments made in compliance with
SECTION 6.01(e);

                                       50
<Page>

(v) loans and advances to officers, directors and employees of the Borrower or
any Restricted Subsidiary for travel, entertainment, moving and other relocation
expenses, in each case made in the ordinary course of business for bona fide
business purposes of the Borrower or a Restricted Subsidiary; (v) entering into
by the Borrower and any of its consolidated Restricted Subsidiaries of a tax
sharing or similar arrangement; and (vii) entering into by the Borrower and any
Restricted Subsidiary a Qualified Securitization Transaction.

          (c)    LIMITATION ON INDEBTEDNESS. The Borrower shall not, and shall
not cause or permit any Restricted Subsidiary to, directly or indirectly, Incur
any Indebtedness (including Acquired Indebtedness), except for Permitted
Indebtedness; provided, however, that the Borrower and any Restricted Subsidiary
may Incur Indebtedness if, at the time of and immediately after giving pro forma
effect to such Incurrence of Indebtedness and the application of the proceeds
therefrom, the Consolidated Coverage Ratio would be greater than 1.0 to 1.0.

          The foregoing limitations will not apply to the Incurrence by the
Borrower or any Restricted Subsidiary of any of the following (collectively,
"PERMITTED INDEBTEDNESS"), each of which shall be given independent effect: (A)
Indebtedness under the Senior Subordinated Notes, the Junior Subordinated
Convertible Notes and other indebtedness outstanding on the Effective Date; (B)
Indebtedness Incurred pursuant to (i) the Credit Agreement and/or (ii) any other
agreements or indentures governing Senior Indebtedness if at the time of and
immediately after giving effect thereto, the aggregate consolidated Indebtedness
Incurred under both clauses (i) and (ii) would not exceed $800,000,000 at any
one time outstanding; provided, however, that such $800,000,000 shall be reduced
(without duplication) by the amount of any repayment of Indebtedness under the
Credit Agreement pursuant to SECTION 5.01(g) and any drawing under the Letter of
Credit; (C) Indebtedness of any Subsidiary of the Borrower owed to and held by
the Borrower or any Guarantor, other Indebtedness of the Borrower owed to and
held by any Guarantor which is unsecured and subordinated in right of payment to
the payment and performance of the Borrower's obligations under any Senior
Indebtedness and the Senior Subordinated Notes and Indebtedness of a Foreign
Restricted Subsidiary that is not a Guarantor owed to and held by any other
Restricted Subsidiary that is not a Guarantor; provided, however, that an
Incurrence of Indebtedness that is not permitted by this clause (C) shall be
deemed to have occurred upon (i) any sale or other disposition of any
Indebtedness of the Borrower or any Restricted Subsidiary referred to in this
clause (C) to a Person (other than the Borrower or a Guarantor), (ii) any sale
or other disposition of Equity Interests of any Guarantor which holds
Indebtedness of the Borrower or another Subsidiary of the Borrower such that
such Guarantor ceases to be a Guarantor, and (iii) the designation of a
Restricted Subsidiary that is a Guarantor and which holds Indebtedness of the
Borrower or any other Restricted Subsidiary as an Unrestricted Subsidiary; (D)
the Guarantees and guarantees by any Guarantor of Indebtedness of the Borrower
permitted under this Section 6.01(c); provided, however, that if such guarantee
is of Subordinated Indebtedness, then the Guarantee of such Guarantor shall be
senior to such Guarantor's guarantee of Subordinated Indebtedness; (E) Hedging
Obligations of the Borrower or any Guarantor entered into in the ordinary course
of business; (F) Purchase Money Indebtedness and Capital Lease Obligations which
do not exceed $50,000,000 in the aggregate at any one time outstanding; (G)
Indebtedness to the extent representing a replacement, renewal, refinancing or
extension (collectively for purposes of this Section 6.01(c), a "REFINANCING")
of outstanding Indebtedness Incurred in compliance with the Consolidated
Coverage Ratio of the

                                       51
<Page>

first paragraph of this Section 6.01(c) or clause (B) of this paragraph of this
Section 6.01(c); provided, however, that (i) any such refinancing shall not
exceed the sum of the principal amount (or accreted amount (determined in
accordance with GAAP), if less) of the Indebtedness being refinanced, plus the
amount of accrued interest thereon, plus the amount of any reasonably determined
prepayment premium necessary to accomplish such refinancing and such reasonable
fees and expenses Incurred in connection therewith, (ii) Indebtedness
representing a refinancing of Indebtedness other than Senior Indebtedness shall
have a Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of the Indebtedness being refinanced, (iii)
Indebtedness that is pari passu with the Senior Subordinated Notes may only be
refinanced with Indebtedness that is made pari passu with or subordinate in
right of payment to the Senior Subordinated Notes and Subordinated Indebtedness
may only be refinanced with Subordinated Indebtedness, (iv) no Restricted
Subsidiary that is not a Guarantor may Incur Indebtedness to refinance
Indebtedness of the Borrower or any Guarantor and (v) Indebtedness of the
Borrower may only be refinanced by Indebtedness of the Borrower and Indebtedness
of a Restricted Subsidiary may only be refinanced by Indebtedness of such
Restricted Subsidiary or by the Borrower; (H) in addition to the items referred
to in clauses (A) through (G) above, Indebtedness of the Borrower (including any
Indebtedness under the Credit Agreement that utilizes this subparagraph (H))
having an aggregate principal amount not to exceed $200,000,000 at any one time
outstanding; and (I) Indebtedness of a Securitization Entity in a Qualified
Securitization Transaction that is Non-Recourse Debt with respect to the
Borrower and its other Restricted Subsidiaries (except for Standard
Securitization Undertakings and Limited Originator Recourse).

          (d)    DISPOSITION OF PROCEEDS OF ASSET SALES.

                 (i)     The Borrower shall not, and shall not cause or permit
any Restricted Subsidiary to, directly or indirectly, make any Asset Sale,
unless (A) the Borrower or such Restricted Subsidiary, as the case may be,
receives consideration for such Asset Sale at least equal to the Fair Market
Value of the assets sold or otherwise disposed of and (B) at least 65% of such
consideration consists of (I) cash or Cash Equivalents, or (II) properties,
capital assets and interests in joint ventures (however structured) that replace
the properties and assets that were the subject of such Asset Sale or in
properties and capital assets that will be used in the business of the Borrower
and its Restricted Subsidiaries as existing at such time or in businesses
reasonably related thereto (as determined in good faith by the Borrower's Board
of Directors) ("Replacement Assets"). The amount of any Indebtedness (other than
any Subordinated Indebtedness) of the Borrower or any Restricted Subsidiary that
is actually assumed by the transferee in such Asset Sale and from which the
Borrower and the Restricted Subsidiaries are fully and unconditionally released
shall be deemed to be cash for purposes of determining the percentage of cash
consideration received by the Borrower or the Restricted Subsidiaries.

                 (ii)    The Borrower or such Restricted Subsidiary, as the case
may be, may (A) apply the Net Cash Proceeds of any Asset Sale to repay Senior
Indebtedness and permanently reduce any related commitment, or (B) make an
Investment in Replacement Assets, in each case, within 270 days of receipt
thereof.

                                       52
<Page>

                 (iii)   To the extent all or part of the Net Cash Proceeds of
any Asset Sale are not applied within 270 days of such Asset Sale as described
in clause (A) or (B) of the immediately preceding paragraph (such Net Cash
Proceeds, the "UNUTILIZED NET CASH PROCEEDS"), the Borrower shall, within 45
days after such 270th day, prepay the Senior Subordinated Notes up to a maximum
principal amount equal to the amount of such Unutilized Net Cash Proceeds in
accordance with Section 2.02(c) irrespective of whether or not an Event of
Default has occurred and is continuing.

                 (iv)    In the event GOF has assigned any portion of the Senior
Subordinated Note in accordance with the provisions hereof, any prepayment
effected pursuant to this covenant, to the extent the aggregate principal amount
outstanding under the Senior Subordinated Notes and accrued and unpaid interest
and other amounts owing in respect thereof exceeds the Unutilized Net Cash
Proceeds to be applied to the prepayment thereof, the prepayment shall be made
pro rata based on the aggregate principal amount of the Senior Subordinated
Notes held by GOF and any assignees. To the extent the Unutilized Net Cash
Proceeds exceed the aggregate principal amount outstanding under the Senior
Subordinated Notes and accrued and unpaid interest and other amounts owing in
respect thereof, the Borrower may retain and utilize any portion of the
Unutilized Net Cash Proceeds not applied to prepay Senior Subordinated Notes for
any purpose consistent with the other terms hereof.

          (e)    LIMITATION ON RESTRICTED PAYMENTS. The Borrower shall not, and
shall not cause or permit any Restricted Subsidiary to, directly or indirectly,
to:

                 (i)     declare or pay any dividend or any other distribution
on any Equity Interests of the Borrower or any Restricted Subsidiary or make any
payment or distribution to the direct or indirect holders (in their capacities
as such) of Equity Interests of the Borrower or any Restricted Subsidiary (other
than Class C Dividends and any dividends, distributions and payments made to the
Borrower or any Restricted Subsidiary and dividends or distributions payable to
any Person solely in Qualified Equity Interests of the Borrower or in options,
warrants or other rights to purchase Qualified Equity Interests of the
Borrower);

                 (ii)    purchase, redeem or otherwise acquire or retire for
value any Equity Interests of the Borrower or any Restricted Subsidiary (other
than the Senior Subordinated Notes, Junior Subordinated Convertible Notes and
any Equity Interests owned by the Borrower or any Restricted Subsidiary);

                 (iii)   purchase, redeem, defease or retire for value, or make
any principal payment on, prior to any scheduled maturity, scheduled repayment
or scheduled sinking fund payment, any Subordinated Indebtedness; or

                 (iv)    make any Investment in any Person (other than Permitted
Investments)

(any such payment or any other action (other than any exception thereto)
described in (i), (ii), (iii) or (iv) each, a "RESTRICTED PAYMENT"), unless:

                                       53
<Page>

                 (i)     no Default or Event of Default shall have occurred and
be continuing at the time or immediately after giving effect to such Restricted
Payment;

                 (ii)    immediately after giving effect to such Restricted
Payment, the Borrower would be able to Incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) under the Consolidated Coverage Ratio of the
first paragraph of Section 6.01(c); and

                 (iii)   immediately after giving effect to such Restricted
Payment, the aggregate amount of all Restricted Payments declared or made on or
after the Effective Date does not exceed an amount equal to the sum of (A) 50%
of cumulative Consolidated Net Income determined for the period (taken as one
period) from the Effective Date and ending on the last day of the most recent
fiscal quarter immediately preceding the date of such Restricted Payment for
which consolidated financial information of the Borrower is available (or if
such cumulative Consolidated Net Income shall be a loss, minus 100% of such
loss), plus (B) the aggregate net cash proceeds received by the Borrower either
(x) as capital contributions to the Borrower after the Effective Date or (y)
from the issue and sale (other than to a Restricted Subsidiary) of its Qualified
Equity Interests after the Effective Date (excluding the net proceeds from any
issuance and sale of Qualified Equity Interests financed, directly or
indirectly, using funds borrowed from the Borrower or any Restricted Subsidiary
until and to the extent such borrowing is repaid), plus (C) the principal amount
(or accreted amount (determined in accordance with GAAP), if less) of any
Indebtedness of the Borrower or any Restricted Subsidiary Incurred after the
Effective Date which has been converted into or exchanged for Qualified Equity
Interests of the Borrower, plus (D) without duplication of any amounts included
in clause (i) above, in the case of the disposition or repayment of, or the
receipt by the Borrower or any Restricted Subsidiary of any dividends or
distributions from, any Investment constituting a Restricted Payment made after
the Effective Date, an amount equal to the lesser of the amount of such
Investment and the amount received by the Borrower or any Restricted Subsidiary
upon such disposition, repayment, dividend or distribution, plus (E) in the
event the Borrower or any Restricted Subsidiary makes any Investment in a Person
that, as a result of or in connection with such Investment, becomes a Restricted
Subsidiary, an amount equal to the Borrower's or any Restricted Subsidiary's
existing Investment in such Person that was previously treated as a Restricted
Payment, plus (F) $100,000,000.

          The foregoing provisions will not prevent (i) the payment of any
dividend or distribution on, or redemption of, Equity Interests within 60 days
after the date of declaration of such dividend or distribution or the giving of
formal notice of such redemption, if at the date of such declaration or giving
of such formal notice such payment or redemption would comply with the
provisions hereof; (ii) the purchase, redemption, retirement or other
acquisition of any Equity Interests of the Borrower in exchange for, or out of
the net cash proceeds of the substantially concurrent issue and sale (other than
to a Restricted Subsidiary) of, Qualified Equity Interests of the Borrower;
provided, however, that any such net cash proceeds and the value of any
Qualified Equity Interests issued in exchange for such retired Equity Interests
are excluded from clause (iii)(B) of the preceding paragraph (and were not
included therein at any time) and are not used to prepay the Senior Subordinated
Notes; (iii) the purchase, redemption, retirement, defeasance or

                                       54
<Page>

other acquisition of Subordinated Indebtedness, or any other payment thereon,
made in exchange for, or out of the net cash proceeds of, a substantially
concurrent issue and sale (other than to a Restricted Subsidiary) of (x)
Qualified Equity Interests of the Borrower; provided, however, that any such net
cash proceeds and the value of any Qualified Equity Interests issued in exchange
for Subordinated Indebtedness are excluded from clauses (iii)(B) and (iii)(C) of
the preceding paragraph (and were not included therein at any time) and are not
used to prepay the Senior Subordinated Notes or (y) Subordinated Indebtedness
permitted to be Incurred pursuant to clause (G) of the second paragraph of
SECTION 6.01(c); (iv) the making of loans or advances to officers and directors
of the Borrower or any Restricted Subsidiary entered into in the ordinary course
of business in an amount not to exceed $5,000,000 at any one time outstanding;
(v) the repurchase, redemption, defeasance, retirement, refinancing or
acquisition for value or payment of principal of Subordinated Indebtedness at a
purchase price not greater than 110% of the principal amount of such
Subordinated Indebtedness in the event of a Change of Control; and (vi)
Investments in joint ventures (however structured) not to exceed $100.0 million
at any one time outstanding; provided, however, that in the case of each of
clauses (ii), (iii), (v) and (vi) no Default or Event of Default shall have
occurred and be continuing or would arise therefrom.

          In determining the amount of Restricted Payments permissible under
this Section 6.01(e), amounts expended pursuant to clauses (i) and (iv) of the
immediately preceding paragraph shall be included as Restricted Payments. The
amount of any noncash Restricted Payment shall be deemed to be equal to the Fair
Market Value thereof at the date of the making of such Restricted Payment.

          (f)    CORPORATE EXISTENCE. Subject to Section 6.02, the Borrower
shall do or shall cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and the corporate, partnership or
other existence of each Restricted Subsidiary in accordance with the respective
organizational documents of each such Restricted Subsidiary and the rights
(charter and statutory) and material franchises of the Borrower and the
Restricted Subsidiary, provided, however, that the Borrower shall not be
required to preserve any such right or franchise, or the corporate existence of
any Restricted Subsidiary, if the Board of Directors of the Borrower shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Borrower and the Restricted Subsidiaries, taken as a whole
and the loss thereof is not materially adverse to the Borrower and the
Restricted Subsidiaries, taken as a whole; provided, further, however, that a
determination of the Board of Directors of the Borrower shall not be required in
the event of a merger of one or more Wholly Owned Restricted Subsidiaries with
or into another Wholly Owned Restricted Subsidiary or another Person, if the
surviving Person is a Wholly Owned Restricted Subsidiary organized under the
laws of the United States or a State thereof or of the District of Columbia or,
in the case of a Foreign Restricted Subsidiary, the jurisdiction of
incorporation or organization of such Foreign Restricted Subsidiary. This
SECTION 6.01(f) shall not prohibit the Borrower from taking any other action
otherwise permitted by, and made in accordance with, the provisions hereof.

          (g)    LIMITATION ON LIENS. The Borrower shall not, and shall not
cause or permit any of its Restricted Subsidiaries to, directly or indirectly,
Incur any Liens of any kind against or upon any of their respective properties
or assets now owned or hereafter acquired, or any proceeds therefrom or any
income or profits therefrom, to secure any Indebtedness unless

                                       55
<Page>

contemporaneously therewith effective provision is made, (i) in the case of the
Borrower, to secure the Senior Subordinated Notes and all other amounts due
hereunder, and (ii) in the case of a Restricted Subsidiary which is a Guarantor,
to secure such Restricted Subsidiary's Guarantee of the Senior Subordinated
Notes and all other amounts due under hereunder, in each case, equally and
ratably with such Indebtedness (or, in the event that such Indebtedness is
subordinated in right of payment to the Senior Subordinated Notes or such
Restricted Subsidiary's Guarantee, prior to such Indebtedness) with a Lien on
the same properties and assets securing such Indebtedness for so long as such
Indebtedness is secured by such Lien, except for (A) Liens securing Senior
Indebtedness (including, without limitation, Indebtedness incurred under the
Credit Agreement); (ii) Liens securing Indebtedness Incurred in a Qualified
Securitization Transaction by the Borrower and its Restricted Subsidiaries;
(iii) Permitted Liens and (iv) Liens under Hedging Agreements.

          (h)    FUTURE DOMESTIC RESTRICTED SUBSIDIARY GUARANTORS. In the event
that the Borrower causes or permits any Domestic Restricted Subsidiary that is
not a Guarantor to, directly or indirectly, guarantee the payment of any
Indebtedness of the Borrower under the Credit Agreement then the Borrower shall
cause such Domestic Restricted Subsidiary to simultaneously execute and deliver
a guarantee, substantially in form and substance as the guarantee executed
thereby with respect to its guarantee of indebtedness under the Credit
Agreement, pursuant to which it will become a Guarantor under this Agreement.

          (i)    DESIGNATION OF UNRESTRICTED SUBSIDIARIES.

                 (i)     The Borrower may designate after the Effective Date any
Subsidiary of the Borrower as an Unrestricted Subsidiary under this Agreement (a
"DESIGNATION") only if: (A) no Default or Event of Default shall have occurred
and be continuing at the time of or after giving effect to such Designation; (B)
at the time of and after giving effect to such Designation, the Borrower could
Incur $1.00 of additional Indebtedness (other than Permitted Indebtedness) under
the Consolidated Coverage Ratio of the first paragraph of Section 6.01(c); and
(C) the Borrower would be permitted to make an Investment (other than a
Permitted Investment) at the time of Designation (assuming the effectiveness of
such Designation) pursuant to the first paragraph of Section 6.01(e) in an
amount (the "DESIGNATION AMOUNT") equal to the amount of the Borrower's
Investment in such Subsidiary on such date.

                 (ii)    Neither the Borrower nor any Restricted Subsidiary
shall at any time (x) provide credit support for, subject any of its property or
assets (other than the Equity Interests of any Unrestricted Subsidiary) to the
satisfaction of, or guarantee, any Indebtedness of any Unrestricted Subsidiary
(including any undertaking, agreement or instrument evidencing such
Indebtedness), (y) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary, or (z) be directly or indirectly liable for any
Indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity upon the occurrence
of a default with respect to any Indebtedness of any Unrestricted Subsidiary,
except for any nonrecourse guarantee given solely to support the pledge by the
Borrower or any Restricted Subsidiary of the capital stock of any Unrestricted
Subsidiary. For purposes of the

                                       56
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foregoing, the Designation of a Subsidiary of the Borrower as an Unrestricted
Subsidiary shall be deemed to include the Designation of all of the Subsidiaries
of such Subsidiary.

                 (iii)   The Borrower may revoke any Designation of a Subsidiary
as an Unrestricted Subsidiary (a "REVOCATION") only if: (A) no Default or Event
of Default shall have occurred and be continuing at the time of and after giving
effect to such Revocation; and (B) all Liens and Indebtedness of such
Unrestricted Subsidiary outstanding immediately following such Revocation would,
if Incurred at such time, have been permitted to be Incurred for all purposes of
this Agreement.

                 (iv)    All Designations and Revocations must be evidenced by
Board Resolutions of the Borrower, delivered to each holder of Senior
Subordinated Notes, certifying compliance with the foregoing provisions.

          Section 6.02 MERGERS; SUCCESSOR CORPORATION.

          (a)    MERGERS, SALE OF ASSETS, ETC. The Borrower shall not
consolidate with or merge with or into any other entity and the Borrower shall
not and shall not cause or permit any Restricted Subsidiary to, sell, convey,
assign, transfer, lease or otherwise dispose of all or substantially all of the
Borrower's and the Restricted Subsidiaries properties and assets (determined on
a consolidated basis for the Borrower and the Restricted Subsidiaries) to any
entity in a single transaction or series of related transactions, unless: either
(i) the Borrower shall be the Surviving Person or (ii) the Surviving Person (if
other than the Borrower) shall be a corporation organized and validly existing
under the laws of the United States of America or any State thereof or the
District of Columbia or, if any such Restricted Subsidiary was a Foreign
Restricted Subsidiary, under the laws of the United States of America or any
state thereof or the District of Columbia or the jurisdiction under which such
Foreign Restricted Subsidiary was organized, and shall, in any such case,
expressly assume by supplemental agreement, the due and punctual payment of the
principal of and interest on the Senior Subordinated Notes and the performance
and observance of every covenant in this Agreement to be performed or observed
on the part of the Borrower; provided, however, that if such transaction results
in a Change of Control, the Senior Subordinated Notes shall be prepaid if
required pursuant to Section 2.02(b).

          For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all the properties and assets of one or more Restricted
Subsidiaries the Equity Interests of which constitutes all or substantially all
the properties and assets of the Borrower shall be deemed to be the transfer of
all or substantially all the properties and assets of the Borrower.

          (b)    GUARANTORS. No Guarantor (other than a Guarantor whose
Guarantee is to be released in accordance with the terms of Section 3.03) shall
consolidate with or merge with or into another Person, whether or not such
Person is affiliated with such Guarantor and whether or not such Guarantor is
the Surviving Person, unless (i) the Surviving Person (if other than such
Guarantor) is a corporation organized and validly existing under the laws of the
United States, any State thereof or the District of Columbia or, if any such
Guarantor was a Foreign Restricted Subsidiary, under the laws of the United
States of America or any state thereof or the

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District of Columbia or the jurisdiction under which the Foreign Restricted
Subsidiary was organized; (ii) the Surviving Person (if other than such
Guarantor) expressly assumes by supplemental indenture all the obligations of
such Guarantor under its Guarantees of the Senior Subordinated Notes and the
performance and observance of every covenant of the Indenture to be performed or
observed by such Guarantor; (iii) at the time of and immediately after such
Disposition, no Default or Event of Default shall have occurred and be
continuing; and (iv) immediately after giving effect to any such transaction
involving the Incurrence by such Guarantor, directly or indirectly, of
additional Indebtedness (and treating any Indebtedness not previously an
obligation of such Guarantor in connection with or as a result of such
transaction as having been Incurred at the time of such transaction), the
Borrower could Incur, on a pro forma basis after giving effect to such
transaction as if it had occurred at the beginning the latest fiscal quarter for
which consolidated financial statements of the Borrower are available, at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) under the
Consolidated Coverage Ratio of the first paragraph of Section 6.01(c); provided,
however, that this paragraph shall not be a condition to a merger or
consolidation of a Guarantor if such merger or consolidation only involves the
Borrower and/or one or more other Guarantors. Notwithstanding the foregoing,
nothing in this covenant shall prohibit the consolidation or merger with or into
or the sale of all or substantially all of the assets or properties of a
Guarantor to any other Restricted Subsidiary that is a Guarantor.

          (c)    SUCCESSOR CORPORATION SUBSTITUTED. In the event of any
transaction (other than a lease) described in and complying with the conditions
listed in SECTION 6.02(a) AND (b) in which the Borrower or a Guarantor, as the
case may be, is not the Surviving Person and the Surviving Person is to assume
all the Obligations of the Borrower under the Senior Subordinated Notes, this
Agreement or of such Guarantor under its Guarantee and this Agreement, as the
case may be, pursuant to supplemental agreements, such Surviving Person shall
succeed to, and be substituted for, and may exercise every right and power of,
the Borrower or such Guarantor, as the case may be, and the Borrower shall be
discharged from its Obligations under this Agreement and the Senior Subordinated
Notes or such Guarantor shall be discharged from its Obligations under this
Agreement and its Guarantee, as the case may be.

          Section 6.03. TERMINATION OF COVENANTS. The covenants set forth in
this Article VI shall terminate and be of not further force or effect upon the
Termination Date.

                                   ARTICLE VII
                                EVENTS OF DEFAULT

          Section 7.01. EVENTS OF DEFAULT. Each of the following shall be an
"Event of Default" for purposes of this Indenture:

          (a)    failure to pay principal of the Senior Subordinated Notes when
due (whether or not prohibited by the provisions of Article VIII);

          (b)    failure to pay any interest on any Senior Subordinated Notes
when due, continued for 30 days or more (whether or not prohibited by the
provisions of Article VIII);

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          (c)    default in the payment of principal of, or interest on, any
Senior Subordinated Notes required to be prepaid by this Agreement (whether or
not prohibited by the provisions of Article VIII);

          (d)    failure to perform or comply with any of the provisions of
Section 6.02;

          (e)    failure to perform any other covenant or agreement of the
Borrower under this Agreement or in the Senior Subordinated Note or of the
Guarantors under this Agreement for 30 days or more after written notice to the
Borrower by GOF;

          (f)    Default or defaults under the terms of one or more instruments
evidencing or securing Indebtedness of the Borrower or any of its Restricted
Subsidiaries having an outstanding principal amount of $50,000,00 or more
individually or in the aggregate that has resulted in the acceleration of the
payment of such Indebtedness or failure by the Borrower or any of its Restricted
Subsidiaries to pay principal of at least $50,000,000 when due at the stated
maturity of any such Indebtedness and such default or defaults shall have
continued after any applicable grace period and shall not have been cured or
waived within 10 days after the occurrence thereof;

          (g)    the rendering of a final judgment or judgments (not subject to
appeal) against the Borrower or any of its Restricted Subsidiaries in an amount
of $50,000,000 or more (net of any amounts covered by reputable and creditworthy
insurance companies) which remains undischarged or unstayed for a period of 60
days after the date on which the right to appeal has expired;

          (h)    the Borrower or any Significant Restricted Subsidiary pursuant
to or within the meaning of any Bankruptcy Law: (i) admits in writing its
inability to pay its debts generally as they become due; (ii) commences a
voluntary case or proceeding; (iii) consents to the entry of an order for relief
against it in an involuntary case or proceeding; (iv) consents or acquiesces in
the institution of a bankruptcy or insolvency proceeding against it; (v)
consents to the appointment of a Custodian of it or for all or substantially all
of its property; or (vi) makes a general assignment for the benefit of its
creditors, or takes any action to authorize or effect any of the foregoing;

          (i)    a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (i) is for relief against the Borrower or any
Significant Restricted Subsidiary in an involuntary case or proceeding or (ii)
appoints a Custodian of the Borrower or any Significant Restricted Subsidiary of
the Borrower for all or substantially all of its properties, or orders the
liquidation of the Borrower or any Significant Restricted Subsidiary, and, in
each case the order or decree remains unstayed and in effect for 60 days; or

          (j)    other than as provided in or pursuant to any Guarantee or this
Agreement, the Guarantee of any Guarantor that constitutes a Significant
Restricted Subsidiary ceases to be in full force and effect or is declared null
and void and unenforceable or found to be invalid or any Guarantor that is a
Significant Restricted Subsidiary denies its liability under its Guarantee

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(other than by reason of a release of such Guarantor from its Guarantee in
accordance with the terms of the Indenture and such Guarantee).

          Section 7.02 ACCELERATION. If an Event of Default with respect to the
Senior Subordinated Notes (other than an Event of Default with respect to the
Borrower described in clause (h) of SECTION 7.01) occurs and is continuing, GOF
by notice in writing to the Borrower may declare the unpaid principal of,
accrued interest to the date of acceleration on all outstanding Senior
Subordinated Notes to be due and payable immediately and, upon any such
declaration, such principal amount, accrued interest, notwithstanding anything
contained in this Agreement or the Senior Subordinated Notes to the contrary,
shall become immediately due and payable; provided, however, that so long as the
Credit Agreement shall be in full force and effect, if an Event of Default shall
have occurred and be continuing (other than an Event of Default with respect to
the Borrower described in clause (h) of SECTION 7.01), the Senior Subordinated
Notes shall not become due and payable until the earlier to occur of (x) five
Business Days following delivery of a written notice of such acceleration of the
Senior Subordinated Notes to the agent under the Credit Agreement and (y) the
acceleration (IPSO FACTO or otherwise) of any Indebtedness under the Credit
Agreement. If an Event of Default specified in clause (h) of SECTION 7.01 with
respect to the Borrower occurs, the Senior Subordinated Notes will IPSO FACTO
become immediately due and payable without any declaration or other act on the
part of GOF.

          After a declaration of acceleration, but before a judgment or decree
of the money due in respect of the Senior Subordinated Notes has been obtained,
GOF by written notice to the Borrower may rescind an acceleration and its
consequences if all existing Events of Default (other than the, nonpayment of
principal of and interest on the Senior Subordinated Notes which has become due
solely by virtue of such acceleration) have been cured or waived and if the
rescission would not conflict with any judgment or decree. No such rescission
shall affect any subsequent Default or impair any right consequent thereto.

          Section 7.03 OTHER REMEDIES. If an Event of Default occurs and is
continuing, GOF may pursue any available remedy by proceeding at law or in
equity to collect the payment of principal of or and interest on the Senior
Subordinated Notes or to enforce the performance of any provision of the Senior
Subordinated Notes or this Agreement. No remedy is exclusive of any other
remedy. All available remedies are cumulative to the extent permitted by law.

          Section 7.04 UNDERTAKING FOR COSTS. In any suit for the enforcement of
any right or remedy under this Agreement, 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 7.04 shall not apply to a suit
instituted by GOF for the enforcement or the payment of the principal or
interest on any Senior Subordinated Notes on or after the respective due dates
expressed in the Senior Subordinated Note.

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                                  ARTICLE VIII
                                  SUBORDINATION

          Section 8.01 SENIOR SUBORDINATED NOTES SUBORDINATED TO SENIOR
INDEBTEDNESS. The Borrower covenants and agrees, and GOF by its acceptance
thereof likewise covenants and agrees, that the Senior Subordinated Notes shall
be issued subject to the provisions of this Article VIII; and each person
holding any Senior Subordinated Notes, whether GOF upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees that all payments
of the principal of and interest on the Senior Subordinated Notes, and all other
amounts payable under this Agreement, by the Borrower shall, to the extent and
in the manner set forth in this Article VIII, be subordinated and junior in
right of payment to the prior payment in full in cash of all amounts payable
under Senior Indebtedness.

          Section 8.02 NO PAYMENT ON SENIOR SUBORDINATED NOTES IN CERTAIN
CIRCUMSTANCES.

          (a)    No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities but including any payment
constituting any distribution in respect of any other Indebtedness that is
subordinated to the Senior Subordinated Notes) by or on behalf of the Borrower
of principal of or interest on the Senior Subordinated Notes, whether pursuant
to the terms of the Senior Subordinated Notes, upon acceleration, pursuant to an
obligation under Article II to prepay or otherwise, shall be made if, at the
time of such payment, there exists a default in the payment of all or any
portion of the obligations on any Designated Senior Indebtedness, whether at
maturity, on account of mandatory redemption or prepayment, acceleration or
otherwise, and such default shall not have been cured or waived or the benefits
of this sentence waived by or on behalf of the holders of such Designated Senior
Indebtedness. In addition, during the continuance of any non-payment event of
default with respect to any Designated Senior Indebtedness pursuant to which the
maturity thereof may be immediately accelerated, and upon receipt by the holders
of Senior Subordinated Notes of written notice (a "PAYMENT BLOCKAGE NOTICE")
from the holder or holders of such Designated Senior Indebtedness or the trustee
or agent acting on behalf of such Designated Senior Indebtedness, then, unless
and until such event of default has been cured or waived or has ceased to exist
or such Designated Senior Indebtedness has been discharged or repaid in full in
cash or the benefits of these provisions have been waived by the holders of such
Designated Senior Indebtedness, no direct or indirect payment (excluding any
payment or distribution of Permitted Junior Securities) shall be made by or on
behalf of the Borrower of principal of or interest on the Senior Subordinated
Notes during a period (a "PAYMENT BLOCKAGE PERIOD") commencing on the date of
receipt of such notice by the holders of Senior Subordinated Notes and ending
179 days thereafter; provided however, that so long as any Indebtedness remains
outstanding under the Credit Agreement or any replacement, renewal, refinancing
or extension thereof, no Payment Blockage Notice may be initiated to block
payment of principal or interest on the Senior Subordinated Notes pursuant to
the terms of this Section 8.02(a) except by the Administrative Agent (or similar
authorized party) under the Credit Agreement or any replacement, renewal,
refinancing or extension thereof.

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          (b)    Notwithstanding anything herein or in the Senior Subordinated
Notes to the contrary, (x) in no event shall a Payment Blockage Period extend
beyond 179 days from the date the Payment Blockage Notice in respect thereof was
given, (y) there shall be a period of at least 181 consecutive days in each
360-day period when no Payment Blockage Period is in effect and (z) not more
than one Payment Blockage Period may be commenced with respect to the Senior
Subordinated Notes during any period of 360 consecutive days. No event of
default that existed or was continuing on the date of commencement of any
Payment Blockage Period with respect to the Designated Senior Indebtedness
initiating such Payment Blockage Period (to the extent the holder of Designated
Senior Indebtedness, or trustee or agent, giving notice commencing such Payment
Blockage Period had knowledge of such existing or continuing event of default)
may be, or be made, the basis for the commencement of any other Payment Blockage
Period by the holder or holders of such Designated Senior Indebtedness or the
trustee or agent acting on behalf of such Designated Senior Indebtedness,
whether or not within a period of 360 consecutive days, unless such event of
default has been cured or waived for a period of not less than 90 consecutive
days.

          (c)    In the event that, notwithstanding the foregoing, the Borrower
shall have made payment to the holders of Senior Subordinated Notes when such
payment is prohibited by Section 8.02(a), such payment shall be held in trust
for the benefit of, and shall be paid over or delivered by the recipient of such
payment (if notice of the conditions prohibiting such payment under
Section 8.02(a) has been received by the holders of Senior Subordinated Notes)
to, the holders of Designated Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Designated Senior Indebtedness may have been issued, as their
respective interests may appear, but only to the extent that, upon notice from
the holders of Senior Subordinated Notes to the holders of Designated Senior
Indebtedness that such prohibited payment has been made, the holders of the
Designated Senior Indebtedness (or their representative or representatives or a
trustee or trustees) notify each of the holders of Senior Subordinated Notes in
writing of the amounts then due and owing on the Designated Senior Indebtedness,
if any, and only the amounts specified in such notice to each of the holders of
Senior Subordinated Notes shall be paid to the holders of Designated Senior
Indebtedness.

          Section 8.03 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.

          (a)    Upon any payment or distribution of assets or securities of the
Borrower of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities), upon any
dissolution or winding-up or total liquidation or reorganization of the
Borrower, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Senior Indebtedness shall first be paid
in full in cash before any payment is made in respect of the Senior Subordinated
Notes (excluding any payment or distribution of Permitted Junior Securities).
Before any payment may be made by, or on behalf of, the Borrower of the
principal of or interest on the Senior Subordinated Notes upon any such
dissolution or winding-up or total liquidation or reorganization, any payment or
distribution of assets or securities of the Borrower of any kind or character,
whether in cash, property or securities (excluding any payment or distribution
of Permitted Junior Securities) payment shall be made by the Borrower or by any
receiver, trustee in bankruptcy, liquidation

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trustee, agent or other Person making such payment or distribution, directly to
the holders of the Senior Indebtedness (pro rata to such holders on the basis of
the respective amounts of Senior Indebtedness held by such holders) or their
representatives or to the trustee or trustees or agent or agents under any
agreement or indenture pursuant to which any of such Senior Indebtedness may
have been issued, as their respective interests may appear, to the extent
necessary to pay all such Senior Indebtedness in full in cash after giving
effect to any prior or concurrent payment, distribution or provision therefor to
or for the holders of such Senior Indebtedness.

          (b)    In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of the Borrower of any kind or character, whether in cash,
property or securities (excluding any payment or distribution of Permitted
Junior Securities), shall be paid by the Borrower to the holders of Senior
Subordinated Notes at a time when such payment or distribution is prohibited by
Section 8.03(a) and before all obligations in respect of Senior Indebtedness are
paid in full in cash, such payment or distribution shall be received and held in
trust for the benefit of, and shall be paid over or delivered by the recipient
of such payment (if notice of the conditions prohibiting such payment under
Section 8.03(a) has been received by the holders of Senior Subordinated Notes)
to the holders of Senior Indebtedness (pro rata to such holders on the basis of
the respective amounts of Senior Indebtedness held by such holders) or their
respective representatives, or to the trustee or trustees or agent or agents
under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, for application to the
payment of Senior Indebtedness remaining unpaid until all such Senior
Indebtedness has been paid in full in cash after giving effect to any prior or
concurrent payment, distribution or provision therefor to or for the holders of
such Senior Indebtedness.

          (c)    The consolidation of the Borrower with, or the merger of the
Borrower with or into, another corporation or the liquidation or dissolution of
the Borrower following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation upon the terms
and conditions provided in Section 6.02 shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 8.03
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Section 6.02.

          Section 8.04 SUBROGATION.

          (a)    Upon the payment in full in cash of all Senior Indebtedness, or
provision for payment, the holders of the Senior Subordinated Notes shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Borrower made
on such Senior Indebtedness until the principal of and interest on the Senior
Subordinated Notes shall be paid in full in cash; and, for the purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which such holders of the
Senior Subordinated Notes would be entitled except for the provisions of this
Article VIII, and no payment over pursuant to the provisions of this Article
VIII to the holders of Senior Indebtedness by holders of the Senior Subordinated
Notes, as between the Borrower, its creditors other than holders of Senior
Indebtedness, and such

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holders of the Senior Subordinated Notes, be deemed to be a payment by the
Borrower to or on account of the Senior Indebtedness. It is understood that the
provisions of this Article VIII are and are intended solely for the purpose of
defining the relative rights of such holders of the Senior Subordinated Notes,
on the one hand, and the holders of the Senior Indebtedness, on the other hand.

          (b)    If any payment or distribution to which the holders of the
Senior Subordinated Notes would otherwise have been entitled but for the
provisions of this Article VIII shall have been applied, pursuant to the
provisions of this Article VIII, to the payment of all amounts payable under
Senior Indebtedness, then and in such case, the holders of the Senior
Subordinated Notes shall be entitled to receive from the holders of such Senior
Indebtedness any payments or distributions received by such holders of Senior
Indebtedness in excess of the amount required to make payment in full in cash of
such Senior Indebtedness.

          Section 8.05 OBLIGATIONS OF BORROWER UNCONDITIONAL.

          (a)    Nothing contained in this Article VIII or elsewhere in this
Agreement or in the Senior Subordinated Notes is intended to or shall impair, as
among the Borrower and GOF, the obligation of the Borrower, which is absolute
and unconditional, to pay to GOF and its successors and assigns the principal of
and interest on the Senior Subordinated Notes as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the holders of the Senior Subordinated Notes and
creditors of the Borrower other than the holders of the Senior Indebtedness, nor
shall anything herein or therein prevent GOF and its successors or assigns from
exercising all remedies otherwise permitted by applicable law upon default under
this Agreement, subject to the rights, if any, under this Article VIII of the
holders of the Senior Indebtedness in respect of cash, property or securities of
the Borrower received upon the exercise of any such remedy.

          (b)    Without limiting the generality of the foregoing, nothing
contained in this Article VIII shall restrict the right of GOF and its
successors and assigns to take any action to declare the Senior Subordinated
Notes to be due and payable prior to its stated maturity pursuant to
SECTIONS 7.01 AND 7.02 or to pursue any rights or remedies hereunder; provided,
however, that all Senior Indebtedness then due and payable shall first be paid
in full in cash before GOF or its successors and assigns are entitled to receive
any direct or indirect payment from the Borrower of principal of or interest on
the Senior Subordinated Notes.

          Section 8.06 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets or securities referred to in
this Article VIII, the holders of the Senior Subordinated Notes shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which bankruptcy, dissolution, winding-up, liquidation or
reorganization proceedings are pending, or upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, delivered to the holders of the Senior Subordinated
Notes for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other indebtedness
of the Borrower, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article VIII.

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          Section 8.07 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
THE BORROWER OR HOLDERS OF SENIOR INDEBTEDNESS. No right of any present or
future holders of any Senior Indebtedness to enforce subordination as provided
herein shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Borrower or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Borrower with the
terms of this Agreement, regardless of any knowledge thereof which any such
holder may have or otherwise be charged with. The provisions of this Article
VIII are intended to be for the benefit of, and shall be enforceable directly
by, the holders of Senior Indebtedness.

          Section 8.08 THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT. The
failure to make a payment on account of principal of, interest on or other
amounts owing in respect of the Senior Subordinated Notes by reason of any
provision of this Article VIII shall not be construed as preventing the
occurrence of an Event of Default specified in clauses (a), (b) or (c) of
SECTION 7.01.

          Section 8.09 NO WAIVER OF SUBORDINATION PROVISIONS. Without in any way
limiting the generality of SECTION 8.07, the holders of Senior Indebtedness may,
at any time and from time to time, without the consent of or notice to the
holders of the Senior Subordinated Notes, without incurring responsibility to
the holders of the Senior Subordinated Notes and without impairing or releasing
the subordination provided in this Article VIII or the obligations hereunder of
the holders of the Senior Subordinated Notes to the holders of Senior
Indebtedness, do any one or more of the following: (a) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding or secured; (b) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (c) release any Person liable in any manner for the collection of
Senior Indebtedness; and (d) exercise or refrain from exercising any rights
against the Borrower and any other Person.

          Section 8.10 ACCELERATION OF THE SENIOR SUBORDINATED NOTES. If payment
of the Senior Subordinated Notes is accelerated because of an Event of Default,
the Borrower shall promptly notify holders of the Senior Indebtedness of the
acceleration.

                                   ARTICLE IX
                                  MISCELLANEOUS

          Section 9.01. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement or the Senior Subordinated Notes, nor consent to any departure
by any party therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Borrower and GOF, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.

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          Section 9.02. NOTICES, ETC.

          (a)    Any notice or demand authorized or required by this Agreement
to be given or made shall be sufficiently given or made when and if delivered in
person, by telecopier with a confirmation of good transmission, by FedEx or
United Parcel Service or by registered or certified U.S. mail, addressed to the
office of the party expressly designated by such party as its office for
purposes of this Agreement (until otherwise notified in accordance with this
Section), as follows:

To the Borrower or any Guarantor, to it at:

                 Polymer Group, Inc.
                 4838 Jenkins Avenue
                 North Charleston, South Carolina 29405
                 Attention: General Counsel and Chief Financial Officer
                 Telephone: (843) 566-7293
                 Fax: (843) 747-4092

With a copy to:
                 Kirkland & Ellis
                 200 East Randolph Drive
                 Chicago, Illinois 60601
                 Attention: H. Kurt von Moltke, Esq.
                 Facsimile: (312) 861-2200
                 Telephone: (312) 861-2000

To GOF:
                 MatlinPatterson Global Opportunities Partners LP
                 C/O: MatlinPatterson Global Advisers LLC
                 520 Madison Avenue
                 New York, NY 10022
                 Attention: General Counsel and Ramon Betolaza
                 Telephone: (212) 651-9000
                 Fax: (212) 651-4010

With a copy to:
                 Duncan D. Darrow, Esq.
                 Orrick, Herrington & Sutcliffe LLP
                 666 Fifth Avenue
                 New York, New York 10103
                 Telephone: (212) 506-5000
                 Fax: (212) 506-5151;

          (b)    Unless otherwise specified herein, such notices or other
communications shall be deemed effective (a) on the date delivered, if delivered
personally, (b) one Business Day after being delivered, if delivered by
telecopier with confirmation of good transmission, (c) one

                                       66
<Page>

Business Day after being sent by Federal Express or United Parcel Service, if
sent by Federal Express or United Parcel Service and delivered thereto prior to
their deadline for next-day delivery, or (d) seven Business Days after being
sent, if sent by registered or certified mail. Each of the parties hereto shall
be entitled to specify a different address by giving notice as aforesaid to each
of the other parties hereto.

          Section 9.03. NO WAIVER; REMEDIES. No failure on the part of any party
to exercise, and no delay in exercising, any right hereunder or under the Senior
Subordinated Notes shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

          Section 9.04. COSTS AND EXPENSES. The Obligors jointly and severally
agree to pay on demand all reasonable costs and expenses, if any (including,
without limitation, reasonable counsel fees and expenses), of GOF and its
successors and assigns in connection with the enforcement (whether through
negotiations or in any action, suit or litigation, any bankruptcy, insolvency or
other similar proceeding affecting creditors' rights generally or otherwise) of
this Agreement or the Senior Subordinated Notes, including, without limitation,
reasonable counsel fees and expenses in connection, with the enforcement of
rights under this Section 9.04.

          Section 9.05. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Obligors and GOF and thereafter shall be
binding upon and inure to the benefit of the Obligors and GOF and their
respective successors and assigns, except that the Borrower shall not have the
right to assign or otherwise transfer all or any part of its rights or
obligations hereunder or any interest herein, whether by agreement, merger,
change of control, by operation of law or otherwise, without the prior written
consent of GOF.

          Section 9.06. ASSIGNMENTS. (a) GOF, and any assignee permitted
pursuant to this Agreement, may assign to one or more Persons all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of the Senior Subordinated Note held by it),
PROVIDED, HOWEVER, that (i) each such assignment shall be to an Eligible
Assignee, and (ii) the parties to each such assignment shall execute and deliver
to the Borrower an Assignment and Acceptance, together with any Senior
Subordinated Note subject to such assignment. Upon such execution and delivery,
from and after the effective date specified in each Assignment and Acceptance,
(x) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of the assignor
hereunder and (y) the assignor shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of the assignor's rights and obligations under this Agreement, the
assignor shall cease to be a party hereto).

          (b)    Any Assignment and Acceptance shall contain the provisions set
out in Exhibit B of this Agreement, including without limitation the following:
(i) other than as provided in such Assignment and Acceptance, the assignor makes
no representation or warranty

                                       67
<Page>

and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the Senior
Subordinated Note or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the Senior Subordinated
Note; (ii) the assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this
Agreement or the Senior Subordinated Note; (iii) such assignee confirms that it
has received a copy of this Agreement and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the assignor and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement; (v)
such assignee confirms that it is an Eligible Assignee; and (vi) such assignee
agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it. If GOF or any Assignee wishes to assign the right to repayment arising out
of any future drawing under the Letter of Credit, the Assignment and Assumption
will so state and will further state the percentage of such rights to repayment
that are being assigned and all other agreements and information reasonably
required in connection therewith. The parties hereto hereby agree to be bound
by, and give full recognition to, such Assignment and Acceptance.

          (c)    The assignor may, in connection with any assignment or proposed
assignment pursuant to this Section 9.06, disclose to the assignee or proposed
assignee, any information relating to the Borrower furnished to such assignor by
or on behalf of the Borrower provided such proposed assignee agrees in writing
to be bound by Section 9.12 as if it were such assignor.

          (d)    Upon any assignment of all of a Senior Subordinated Note, upon
surrender of such Senior Subordinated Note to the Borrower, the Borrower
promptly shall issue, at is sole expense, a new Senior Subordinated Note payable
to the assignee. Upon any assignment of a portion of a Senior Subordinated Note,
upon surrender of such Senior Subordinated Note to the Borrower, the Borrower
promptly shall issue, at its sole expense, one or more new Senior Subordinated
Notes in accordance with the instructions of the assignor. Proper provision
shall be made in any new Senior Subordinated Notes for the apportionment of the
right to repayment arising out of any future drawing under the Letter of Credit,
in accordance with the terms of the Assignment and Assumption; provided that in
no event shall the aggregate face amount under all notes issued pursuant to this
Section 9.06(d) exceed $25,000,000, and, in no event, shall the actual principal
amount outstanding under any such notes exceed the aggregate principal amount
outstanding immediately prior to such surrender.

          Section 9.07. GOVERNING LAW. This Agreement and the Senior
Subordinated Notes shall be governed by, and construed in accordance with, the
laws of the State of New York.

          Section 9.08. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties thereto in
separate counterparts, each of

                                       68
<Page>

which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

          Section 9.09. CONSENT TO JURISDICTION. (a) The Obligors hereby
irrevocably submit to the jurisdiction of any New York State or Federal court
sitting in the City of New York, New York County and any court with jurisdiction
to hear appeals from decisions of such courts, in any action or proceeding
arising out of or relating to this Agreement or the Senior Subordinated Notes,
and the Obligors hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in such court. The Obligors
hereby irrevocably waive, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding. The Obligors hereby irrevocably consent to the service of copies of
any summons and complaint and any other process which may be served in any such
action or proceeding by certified mail, return receipt requested, or by
delivering a copy of such process to any Obligor, at its address specified in
Section 9.02 or by any other method permitted by law. The Obligors agree that a
final judgment in any such action or proceeding may be enforced in other
jurisdictions by suit on the judgment or by any other manner provided by law.

          (b)    Nothing in this Section 9.09 shall affect the right of any
party to serve legal process in any other manner permitted by law or affect the
right of any party to bring any action or proceeding against the Borrower or
their property in the courts of other jurisdictions.

          Section 9.10. WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS, AND GOF
HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE SENIOR SUBORDINATED NOTES, ANY DOCUMENT
DELIVERED HEREUNDER OR THEREUNDER, OR THE ACTIONS OF THE OBLIGORS AND GOF IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

          Section 9.11. PUBLICITY AND CONFIDENTIALITY.

          (a)    PUBLICITY. The Obligors agree that none of them will make any
press release or statement regarding the transactions contemplated hereby
without the consent of GOF. Additionally, the Obligors shall not make any
statement which is inconsistent with any press release agreed to by GOF.
Notwithstanding the foregoing, each of the parties hereto may, in documents
required to be filed by it with any regulatory body, make such statements with
respect to the transactions contemplated hereby as each may be advised is
legally necessary upon advice of its counsel.

          (b)    CONFIDENTIALITY. Except as otherwise required by law or
judicial order or decree or by any governmental regulatory agency or authority,
or any self-regulatory organization, GOF will use its best efforts to maintain
the confidentiality of all nonpublic information obtained by it hereunder, such
efforts being no less than GOF employs with respect to maintaining the
confidentiality of similar non-public information about GOF.

                                       69
<Page>

          Section 9.12. TERMINATION. Subject to the repayment by the Borrower of
all outstanding amounts, whether in the form of principal, interest or any costs
and expenses payable under this agreement and other than Sections 1 (to the
extent a definition is used in another section referred to in this
Section 9.12), 9.02, 9.04 (to the extent this section is relevant to the other
sections referred to in this Section 9.12), 9.11 and this Section 9.12, the
provisions of this Agreement shall terminate on the Termination Date. Sections 1
(to the extent a definition is used in another section referred to in this
Section 9.12), 9.02, 9.04 (to the extent this section is relevant to the other
sections referred to in this Section 9.12), 9.11 and this Section 9.12, shall
survive the Termination Date.

                   REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

                                       70
<Page>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.


                          THE BORROWER

                          POLYMER GROUP, INC.


                          By: /s/ James G. Boyd
                             Name: /s/James G. Boyd
                             Title: Ex. VP, Treasurer and CFO

                          GOF

                          MATLINPATTERSON GLOBAL OPPORTUNITIES
                          PARTNERS LP


                          By:   MatlinPatterson Global Opportunities Advisers
                                LLC, its Investment Advisor


                          By: /s/ David J. Matlin
                             Name: David J. Matlin
                             Title: CEO


         [Execution Page to Senior Subordinated Note Purchase Agreement]

<Page>

                          THE GUARANTORS

                          PGI POLYMER, INC.
                          PGI EUROPE, INC.
                          PNA CORP.
                          FNA POLYMER CORP.
                          FABRENE CORP.
                          FABRENE GROUP, L.L.C.
                          FIBERTECH GROUP, INC.
                          TECHNETICS GROUP, INC.
                          FIBERGOL CORPORATION
                          CHICOPEE, INC.
                          DOMINION TEXTILE (USA) INC.
                          POLY-BOND INC.
                          LORETEX CORPORATION
                          FNA ACQUISITION, INC.
                          FABPRO ORIENTED POLYMERS, INC.
                          PGI ASSET MANAGEMENT COMPANY
                          PGI SERVICING COMPANY
                          PRISTINE BRANDS CORPORATION
                          POLYIONIX SEPARATION TECHNOLOGIES, INC.
                          BONLAM (S.C.), INC.

                          as Guarantors


                          By: /s/ James G. Boyd
                             Name: James G. Boyd
                             Title: Ex. VP, Treasurer and CFO


         [Execution Page to Senior Subordinated Note Purchase Agreement]

<Page>

                                    EXHIBIT A

                                LETTER OF CREDIT

<Page>

                                    EXHIBIT B

                            ASSIGNMENT AND ACCEPTANCE

          Reference is made to the Senior Subordinated Note Purchase Agreement
dated as of March 5, 2003 (as amended or modified from time to time, the
"AGREEMENT") among POLYMER GROUP, INC., a Delaware corporation (the "BORROWER"),
each of the entities identified under the caption "GUARANTORS" on the signature
pages thereto (individually, a "GUARANTOR", and, together with the Borrower, the
"OBLIGORS") and MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS LP, a Delaware
limited partnership ("GOF"). Capitalized terms used herein and not defined shall
have the meanings ascribed thereto in the Agreement.

          The "Assignor" and the "Assignee" referred to on Schedule 1 hereto
agree as follows:

          1.     The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, an interest in and to
the Assignor's rights and obligations under the Agreement as of the date hereof
equal to the percentage interest specified on Schedule 1 hereto of all
outstanding rights and obligations under the Agreement. After giving effect to
such sale and assignment, the Assignee's pro rata share of the outstanding
Borrowings owing to the Assignee will be as set forth on Schedule 1 hereto.

          2.     The Assignor (i) represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Agreement or the Senior Subordinated Note or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Agreement or the Senior
Subordinated Note, or any other instrument or document furnished pursuant
thereto; (iii) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under the Agreement or the
Senior Subordinated Note or any other instrument or document furnished pursuant
thereto; and (iv) attaches the Senior Subordinated Note held by the Assignor and
requests that the Borrower exchange such Senior Subordinated Note for a new
Senior Subordinated Note payable to the order of the Assignee in an amount equal
to the amount of the Assignee's pro rata share of the outstanding Borrowings
owing to the Assignee pursuant hereto or new Senior Subordinated Notes payable
to the order of the Assignee in an amount equal to the amount of the Assignee's
pro rata share owing to the Assignee pursuant hereto and the Assignor in an
amount equal to the amount of the Assignor's pro rata share of the outstanding
Borrowings owing to the Assignor under the Agreement, respectively, as specified
on Schedule 1 hereto.

          3.     The Assignee (i) confirms that it has received a copy of the
Agreement thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will,

<Page>

independently and without reliance upon the Assignor and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Agreement; (iii)
confirms that it is an Eligible Assignee; (iv) agrees that it will perform in
accordance with their terms all of the obligations that by the terms of the
Agreement are required to be performed by the Assignor; and (vi) attaches any
U.S. Internal Revenue Service forms required under Section 2.05 of the
Agreement.

          4.     Following the execution of this Assignment and Acceptance, it
will be delivered to the Borrower. The effective date for this Assignment and
Acceptance (the "ASSIGNMENT EFFECTIVE DATE") shall be the date of receipt by the
Borrower, unless otherwise specified on Schedule 1 hereto.

          5.     Upon such receipt by the Borrower, as of the Assignment
Effective Date, (i) the Assignee shall be a party to the Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of the Assignor thereunder and (ii) the Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Agreement.

          6.     From and after the Assignment Effective Date, the Borrower
shall make all payments under the Agreement and the Senior Subordinated Note in
respect of the interest assigned hereby (including, without limitation, all
payments of principal and interest with respect thereto) to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in payments under
the Agreement and the Senior Subordinated Note for periods prior to the
Assignment Effective Date directly between themselves.

          7.     This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York, without
reference to the principals of conflicts of law thereof.

          8.     This Assignment and Acceptance may be executed in any number of
counterparts and by different 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. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.

          IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule
1 to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.

<Page>

                                   Schedule 1
                                       to
                            Assignment and Acceptance

<Table>
<S>                                                                            <C>
Percentage interest assigned:                                                   _________%

Aggregate outstanding principal amount of outstanding Borrowings assigned:     $__________

Principal amount of Senior Subordinated Note payable to Assignee:              $__________

Principal amount of Senior Subordinated Note payable to Assignor:              $__________
</Table>

Assignment Effective Date*: ___________________, 200__


                                           [NAME OF ASSIGNOR], as Assignor


                                           By
                                             ----------------------------------
                                              Title:

                                           Dated: ____________________, 200__


                                           [NAME OF ASSIGNEE], as Assignee


                                           By
                                             ----------------------------------
                                              Title:


----------
*    This date should be no earlier than five Business Days after the delivery
     of this Assignment and Acceptance to GOF.

<Page>

                                    EXHIBIT C

                                     BYLAWS

<Page>

                                    EXHIBIT D

                          CERTIFICATE OF INCORPORATION

<Page>

                                    EXHIBIT E

                       SENIOR SUBORDINATED PROMISSORY NOTE


     $25,000,000.00                                                MARCH 5, 2003


     FOR VALUE RECEIVED, POLYMER GROUP, INC., a Delaware corporation (the
"MAKER"), hereby promises to pay to the order of MATLINPATTERSON GLOBAL
OPPORTUNITIES PARTNERS LP, a Delaware corporation (the "PAYEE"), on the terms
set forth below, the sum of TWENTY FIVE MILLION UNITED STATES DOLLARS (U.S.
$25,000,000.00), or such lesser amount as equals the sum of all Borrowings,
together with interest on the unpaid principal balance of each Borrowing from
the date thereof at 10% per annum, payable in cash, semi-annually on January 1
and July 1 of each year. All capitalized terms in this Senior Subordinated
Promissory Note (this "Senior Subordinated Note") shall have the same meaning as
in the Senior Subordinated Note Purchase Agreement dated as of March 5, 2003
between the Maker and the Payee (the "AGREEMENT").

     The unpaid principal balance of, and any and all accrued and unpaid
interest on, this Senior Subordinated Note (the "AGGREGATE AMOUNT") shall be
payable in cash, subject to any repayment made by the Maker in accordance with
Section 2.03 of the Agreement, at the Maturity Date.

     If the Events of Default specified in Section 7.01(e) of the Agreement or a
Change of Control occurs, the unpaid principal and interest of this Senior
Subordinated Note, and all other amounts due hereunder, shall, at the option of
the Payee, IPSO FACTO become and be immediately due and payable in cash without
any declaration or other act on the part of the Payee. Upon the occurrence of
any other Event of Default set forth in Section 7.01, the unpaid principal and
interest of this Senior Subordinated Note, and all other amounts due hereunder,
shall, at the option of the Payee upon notice to the Borrower, become and be
immediately due and payable in cash. During the period following the occurrence
of an Event of Default until either (a) such Event of Default is remedied to the
satisfaction of the Payee, or (b) the principal and interest of this Senior
Subordinated Note is paid, default interest at a rate of 2% per annum will be
payable on the principal amount in addition to the existing 10% rate. The
Borrower shall, to the extent lawful, pay interest on overdue interest at the
rate of 12% per annum.

     The Maker agrees to pay on demand all reasonable costs and expenses,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel to the Payee in connection with the enforcement, collection, protection
or preservation (whether through negotiations, legal proceedings or otherwise)
of any of its rights under this Senior Subordinated Note.

     The Maker hereby waives demand, presentment for payment, notice of
extensions, nonpayment and protest, and agrees that any extensions or renewals
hereof shall not affect its

<Page>

liability, whether has notice of such extensions or renewals or not, and waives
any and all defenses and counterclaims with respect to this Note Senior
Subordinated.

     No waiver of any right granted hereunder or amendment hereto shall be
effective unless expressly waived or agreed to in writing by the party whose
waiver or agreement to such amendment is alleged.

     This Senior Subordinated Note and the Agreement constitute the entire
agreement of the parties with respect to the matters contained herein and
therein.

     The provisions hereof shall bind and inure to the benefit of the respective
successors and assigns of the Maker and the Payee.

     THIS SENIOR SUBORDINATED NOTE SHALL BE GOVERNED BY, AND INTERPRETED UNDER,
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICT OF LAWS.

     IN WITNESS WHEREOF, the Maker has caused this instrument to be duly
executed as of the date first written above.


                                        POLYMER GROUP, INC.


                                        By:
                                              Name:
                                              Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>7
<FILENAME>a2111067zex-10_1.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
<Page>

                                                                    EXHIBIT 10.1

                                                                  CONFORMED COPY


               ***************************************************


                               POLYMER GROUP, INC.

                                       and

                                  SUBSIDIARIES


                             -----------------------


                    THIRD AMENDED, RESTATED AND CONSOLIDATED
                                CREDIT AGREEMENT


                            Dated as of March 5, 2003


                             -----------------------


                              JPMORGAN CHASE BANK,
                             as Administrative Agent


               ***************************************************

<Page>

                                TABLE OF CONTENTS

          THIS TABLE OF CONTENTS IS NOT PART OF THE AGREEMENT TO WHICH IT IS
ATTACHED BUT IS INSERTED FOR CONVENIENCE OF REFERENCE ONLY.

<Table>
<Caption>
                                                                            Page
<S>                                                                           <C>
Section 1. Definitions and Accounting Matters..................................2

     1.01  Certain Defined Terms...............................................2
     1.02  Accounting Terms and Determinations................................28
     1.03  Classes and Types of Loans.........................................29
     1.04  Subsidiaries; Designation of Unrestricted Subsidiaries.............30

Section 2. Revolving Credit Commitments, Loans and Prepayments................30

     2.01  Loans..............................................................30
     2.02  Borrowings.........................................................32
     2.03  Letters of Credit..................................................32
     2.04  Changes of Revolving Credit Commitments............................38
     2.05  Commitment Fees....................................................39
     2.06  Lending Offices....................................................39
     2.07  Several Obligations; Remedies Independent..........................39
     2.08  Loan Accounts; Promissory Notes....................................39
     2.09  Optional Prepayments; Conversions or Continuations of Loans........40
     2.10  Mandatory Prepayments and Reductions of Commitments................41

Section 3. Payments of Principal and Interest.................................44

     3.01  Repayment of Loans.................................................44
     3.02  Interest...........................................................45
     3.03  Senior Leverage Ratio Fee..........................................46
     3.04  Limitation on Amounts Payable......................................46

Section 4. Payments; Pro Rata Treatment; Computations; Etc....................47

     4.01  Payments...........................................................47
     4.02  Pro Rata Treatment.................................................48
     4.03  Computations.......................................................48
     4.04  Minimum Amounts....................................................48
     4.05  Certain Notices....................................................48
     4.06  Non-Receipt of Funds by the Administrative Agent...................50
     4.07  Sharing of Payments, Etc...........................................50

Section 5. Yield Protection, Etc..............................................52

     5.01  Additional Costs...................................................52
     5.02  Limitation on Eurodollar Loans.....................................54
</Table>

                                       (i)
<Page>

<Table>
<S>                                                                           <C>
     5.03  Treatment of Affected Loans........................................54
     5.04  Compensation.......................................................55
     5.05  Additional Costs in Respect of Letters of Credit...................55
     5.06  Taxes..............................................................56

Section 6. Guarantee..........................................................57

     6.01  The Guarantee......................................................57
     6.02  Obligations Unconditional..........................................57
     6.03  Reinstatement......................................................58
     6.04  Subrogation........................................................58
     6.05  Remedies...........................................................59
     6.06  Instrument for the Payment of Money................................59
     6.07  Continuing Guarantee...............................................59
     6.08  Contribution among Certain Guarantors..............................59
     6.09  General Limitation on Guarantee Obligations........................60

Section 7. Conditions Precedent...............................................60

     7.01  Initial Extension of Credit........................................60
     7.02  Initial Revolving Credit Loans.....................................65
     7.03  Initial and Subsequent Extensions of Credit........................65

Section 8. Representations and Warranties.....................................66

     8.01  Corporate Existence................................................66
     8.02  Financial Condition................................................66
     8.03  Litigation.........................................................67
     8.04  No Breach..........................................................67
     8.05  Action.............................................................67
     8.06  Approvals..........................................................67
     8.07  Use of Credit......................................................68
     8.08  ERISA..............................................................68
     8.09  Taxes..............................................................68
     8.10  Investment Company Act.............................................68
     8.11  Public Utility Holding Company Act.................................68
     8.12  Material Agreements and Liens......................................68
     8.13  Environmental Matters..............................................69
     8.14  Capitalization.....................................................71
     8.15  Subsidiaries and Investments, Etc..................................71
     8.16  Title to Assets....................................................72
     8.17  True and Complete Disclosure.......................................72
     8.18  Legal Form.........................................................73
     8.19  Ranking............................................................73
     8.20  Commercial Activity; Absence of Immunity...........................73
     8.21  Real Property......................................................73
     8.22  Intercompany Notes.................................................74
</Table>

                                      (ii)
<Page>

<Table>
<S>                                                                          <C>
Section 9. Covenants of the Borrower..........................................74

     9.01  Financial Statements Etc...........................................74
     9.02  Litigation.........................................................77
     9.03  Existence, Etc.....................................................77
     9.04  Insurance..........................................................78
     9.05  Prohibition of Fundamental Changes.................................80
     9.06  Limitation on Liens................................................81
     9.07  Indebtedness.......................................................83
     9.08  Investments........................................................84
     9.09  Restricted Payments................................................85
     9.10  Certain Financial Covenants........................................86
     9.11  Lines of Business..................................................88
     9.12  Transactions with Affiliates.......................................88
     9.13  Use of Proceeds....................................................89
     9.14  Modifications of Certain Documents.................................89
     9.15  Governmental Approvals.............................................89
     9.16  Certain Obligations Respecting Subsidiaries........................90
     9.17  Capital Expenditures...............................................91
     9.18  Cash Management....................................................92
     9.19  Ratings of the Loans...............................................92
     9.20  Retention of Consultants...........................................92

Section 10. Events of Default.................................................93

Section 11. The Administrative Agent..........................................97

     11.01  Appointment, Powers and Immunities................................97
     11.02  Reliance by the Administrative Agent..............................98
     11.03  Defaults..........................................................98
     11.04  Rights as a Lender................................................99
     11.05  Indemnification...................................................99
     11.06  Non-Reliance by Lenders...........................................99
     11.07  Failure to Act...................................................100
     11.08  Resignation or Removal of Administrative Agent...................100
     11.09  Consents under Basic Documents...................................101
     11.10  Collateral Sub-Agents............................................101

Section 12. Miscellaneous....................................................101

     12.01  Waiver...........................................................101
     12.02  Notices..........................................................102
     12.03  Expenses and Indemnification.....................................102
     12.04  Amendments, Etc..................................................104
     12.05  Successors and Assigns...........................................105
     12.06  Survival.........................................................108
</Table>

                                      (iii)
<Page>

<Table>
     <S>                                                                     <C>
     12.07  Captions.........................................................109
     12.08  Counterparts.....................................................109
     12.09  Governing Law....................................................109
     12.10  Jurisdiction, Service of Process and Venue.......................109
     12.11  Waiver of Jury Trial.............................................110
     12.12  No Immunity......................................................110
     12.13  Treatment of Certain Information; Confidentiality................110
</Table>

SCHEDULE I        -        Certain Litigation
SCHEDULE II       -        Material Agreements and Liens
SCHEDULE III      -        Hazardous Materials
SCHEDULE IV       -        Capital Structure
SCHEDULE V        -        Existing Equity Rights
SCHEDULE VI       -        Subsidiaries and Investments
SCHEDULE VII      -        Real Property
SCHEDULE VIII     -        Insurance Deductibles
SCHEDULE IX       -        Revolving Credit Commitments
SCHEDULE X        -        Term Loan Amounts
SCHEDULE XI       -        Term Letter of Credit Liabilities
SCHEDULE XII      -        Financial Condition

EXHIBIT A         -        Form of Assignment and Acceptance
EXHIBIT B         -        Form of Confidentiality Agreement
EXHIBIT C         -        Form of Security Agreement
EXHIBIT D         -        Copy of Bonlam Intercompany Notes Agreement
EXHIBIT E         -        Copy of Fabrene Intercompany Notes Agreement
EXHIBIT F         -        Form of Guaranty Agreement
EXHIBIT G         -        Form of GOF Letter of Credit
EXHIBIT H         -        Form of Legal Opinion of Special New York Counsel to
                             the Group Members (Kirkland & Ellis)
EXHIBIT I         -        Form of Opinion of Special New York Counsel to JPMCB
                             (Milbank, Tweed, Hadley & McCloy LLP)
EXHIBIT J         -        Form of Process Agent Acceptance

                                      (iv)
<Page>

          THIRD AMENDED, RESTATED AND CONSOLIDATED CREDIT AGREEMENT dated as of
March 5, 2003, between:

          POLYMER GROUP, INC., a corporation duly organized and validly existing
     under the laws of the State of Delaware (the "BORROWER");

          each of the entities identified under the caption "GUARANTORS" on the
     signature pages hereto (individually, together with any entity that shall
     become a Guarantor hereunder pursuant to Section 9.16(b) hereof, a
     "GUARANTOR", and together with the Borrower, the "OBLIGORS");

          each of the Term Loan Lenders whose names are set forth in Schedule X
     hereto and each of the Term Letter of Credit Lenders whose names are set
     forth in Schedule XI hereto (such Term Loan Lenders and Term Letter of
     Credit Lenders being herein collectively called the "EXISTING LENDERS");

          each of the lenders that is a signatory hereto identified under the
     caption "REVOLVING CREDIT LENDERS" on the signature pages hereto; and

          JPMORGAN CHASE BANK, a New York State banking association, as
     administrative agent for the Lenders (in such capacity, together with its
     successors in such capacity, the "ADMINISTRATIVE AGENT").

          The Borrower, the other "Borrowers" named therein, the Existing
Lenders and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as
the administrative agent named therein, are parties to a Second Amended,
Restated and Consolidated Credit Agreement dated as of July 3, 1997 (as
heretofore modified and supplemented and in effect on the date of this
Agreement, the "EXISTING CREDIT AGREEMENT") pursuant to which there are
outstanding on the date hereof loans in an aggregate principal amount equal to
U.S. $478,060,000 and Cdn. $10,058,000 (collectively, the "EXISTING LOANS"), and
letters of credit in an aggregate face amount of U.S. $15,500,000 (collectively,
the "EXISTING LETTERS OF CREDIT").

          On May 11, 2002, the Borrower and certain of its subsidiaries
(collectively, the "DEBTORS") filed a voluntary petition in the United States
Bankruptcy Court for South Carolina (the "BANKRUPTCY COURT") initiating cases
(the "CHAPTER 11 CASES") under chapter 11 of title 11 of the United States Code
Sections 101-1330 (as amended, the "BANKRUPTCY CODE") and continued in the
possession of their assets and in the management of their businesses pursuant to
sections 1107 and 1108 of the Bankruptcy Code. On November 25, 2002, the Debtors
supplemented their previously filed plan of reorganization with the Bankruptcy
Court with a Joint Amended Modified Plan of Reorganization which has been
confirmed by an order of the Bankruptcy Court. Pursuant to such Joint Amended
Modified Plan of Reorganization, the Borrower and the

                                CREDIT AGREEMENT

<Page>

                                      - 2 -

Guarantors are to enter into this Agreement amending and restating in its
entirety the Existing Credit Agreement, providing for the restructuring of the
obligations of the Borrower in respect of the Existing Loans and Existing
Letters of Credit, and providing for new revolving credit loans in an aggregate
principal amount of up to U.S. $50,000,000.

          Accordingly, the parties hereto hereby agree that the Existing Credit
Agreement shall, as of the Effective Date (the occurrence of which is subject to
satisfaction of the conditions precedent specified in Section 7.01 hereof), be
amended and restated in its entirety as follows:

          Section 1. DEFINITIONS AND ACCOUNTING MATTERS.

          1.01 CERTAIN DEFINED TERMS. As used herein, the following terms shall
have the following meanings (all terms defined in this Section 1.01 or in other
provisions of this Agreement in the singular to have the same meanings when used
in the plural and vice versa):

          "ADJUSTED INTEREST COVERAGE RATIO" shall mean, as at any date, the
ratio of (a) EBITDA for the period of four fiscal quarters ending on or most
recently ended prior to such date MINUS Capital Expenditures made during such
period (except for any such Capital Expenditures to the extent financed with the
proceeds of Indebtedness, or Capital Lease Obligations, incurred pursuant to
Section 9.07(k) hereof during such fiscal year) to (b) Interest Expense for such
period.

          "ADMINISTRATIVE QUESTIONNAIRE" shall mean, with respect to each
Lender, an administrative questionnaire in the form prepared by the
Administrative Agent and submitted to the Administrative Agent (with a copy to
the Borrower) duly completed by such Lender.

          "AFFILIATE" shall mean any Person that directly or indirectly
controls, or is under common control with, or is controlled by, the Group
Members and, if such Person is an individual, any member of the immediate family
(including parents, spouse, children and siblings) of such individual and any
trust whose principal beneficiary is such individual or one or more members of
such immediate family and any Person who is controlled by any such member or
trust. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), provided that, in any
event, any Person that owns directly or indirectly securities having 10% or more
of the voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person. Notwithstanding the
foregoing, (a) no individual shall be an Affiliate solely by reason of his or
her being a director, officer or employee of the Group Members, (b) none of the
Group Members (excluding Group Members which are Unrestricted Subsidiaries)
shall be Affiliates and (c) none of the Lenders shall be Affiliates.

                                CREDIT AGREEMENT

<Page>

                                      - 3 -

          "ANCILLARY AGREEMENTS" shall mean, collectively, the License
Agreement, the Technology Agreement, the Supply Agreement and the Shared
Facilities Agreement, in each case as the same shall be modified and
supplemented and in effect from time to time.

          "APPLICABLE LENDING OFFICE" shall mean, for each Lender and for each
Type of Loan, the "Lending Office" of such Lender (or of an affiliate of such
Lender) designated in the Administrative Questionnaire for such Type of Loan or
such other office of such Lender (or of an affiliate of such Lender) as such
Lender may from time to time specify to the Administrative Agent and the
Borrower as the office by which Loans of such Type are to be made and
maintained.

          "APPLICABLE MARGIN" shall mean with respect to Eurodollar Revolving
Credit Loans, Base Rate Revolving Credit Loans, Eurodollar Term Loans and Base
Rate Term Loans, during any Accrual Period (as defined below), the respective
rates set forth below for such Loans of such Class and Type and such fees for
such Accrual Period, which rates shall be based upon the Senior Leverage Ratio
for such Accrual Period:

<Table>
<Caption>
                                 EURODOLLAR           BASE RATE
        SENIOR LEVERAGE       REVOLVING CREDIT     REVOLVING CREDIT       EURODOLLAR           BASE RATE
             RATIO                 LOANS                LOANS             TERM LOANS           TERM LOANS
     ------------------------------------------------------------------------------------------------------
       <S>                         <C>                  <C>                  <C>                  <C>
       Greater than 4.50           3.75%                2.75%                9.00%                8.00%
     ------------------------------------------------------------------------------------------------------
       Greater than 4.00
       and less than or
         equal to 4.50             3.75%                2.75%                8.00%                7.00%
     ------------------------------------------------------------------------------------------------------
       Greater than 3.50
       and less than or
         equal to 4.00             3.75%                2.75%                6.00%                5.00%
     ------------------------------------------------------------------------------------------------------
       Greater than 3.00
       and less than or
         equal to 3.50             3.75%                2.75%                5.50%                4.50%
     ------------------------------------------------------------------------------------------------------
       Less than or equal
            to 3.00                3.75%                2.75%                5.00%                4.00%
     ------------------------------------------------------------------------------------------------------
</Table>

          For purposes hereof, an "ACCRUAL PERIOD" shall mean the following
successive periods: the period commencing during any fiscal quarter on the date
(the "CHANGE DATE") that is the second Business Day following the receipt by the
Administrative Agent of the certificate referred to in the following paragraph,
to but not including the Change Date in the immediately following fiscal
quarter, PROVIDED, that the initial Accrual Period shall commence on the
Effective Date and continue until the Change Date during the fiscal quarter
ending on or nearest to March 31, 2003.

          The Senior Leverage Ratio for the initial Accrual Period shall be
deemed to be the highest level on the grid specified above. The Senior Leverage
Ratio for any Accrual Period after the initial Accrual Period shall be
determined on the basis of a certificate of a senior officer setting forth a
calculation of the Senior Leverage Ratio as at the last day of the fiscal
quarter immediately prior to the first day of such Accrual Period (together with
the financial statements for the fiscal quarter on which such calculation is
based).

                                CREDIT AGREEMENT

<Page>

                                      - 4 -

          Anything in this Agreement to the contrary notwithstanding, the
Applicable Margin shall be the highest applicable rate provided for above (i.e.,
3.75% for Eurodollar Revolving Credit Loans, 9.00% for Eurodollar Term Loans,
2.75% for Base Rate Revolving Credit Loans and 8.00% for Base Rate Term Loans)
(i) during any period when an Event of Default shall have occurred and be
continuing or (ii) if the Obligors shall default in the delivery of any
financial statements pursuant to Section 9.01(a), (b) or (c) hereof.

          "APPLICABLE PERCENTAGE" shall mean, with respect to any Lender, the
percentage of the total Revolving Credit Commitments, Term Loans and Term Letter
of Credit Liabilities hereunder represented by the aggregate amount of such
Lender's Revolving Credit Commitments, Term Loans and Term Letter of Credit
Liabilities. If the Revolving Credit Commitments shall have terminated or
expired, the Applicable Percentage shall be determined based upon the Revolving
Credit Commitments most recently in effect, giving effect to any assignments.

          "APPROVED FUND" shall mean, with respect to any Lender that is a fund
that invests in bank loans and similar extensions of credit, any other fund that
invests in bank loans and similar extensions of credit and is managed by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor.

          "BANKRUPTCY CODE" shall mean the Federal Bankruptcy Code of 1978, as
amended from time to time.

          "BANKRUPTCY COURT" shall have the meaning assigned to such term in the
preamble hereto.

          "BASE RATE" shall mean, for any day, a rate per annum equal to the
higher of (a) the Federal Funds Rate for such day PLUS 1/2 of 1% and (b) the
Prime Rate for such day. Each change in any interest rate provided for herein
based upon the Base Rate resulting from a change in the Base Rate shall take
effect at the time of such change in the Base Rate.

          "BASE RATE LOANS" shall mean Loans that bear interest at rates based
upon the Base Rate.

          "BASIC DOCUMENTS" shall mean, collectively, the Loan Documents, the
Subordinated Debt Documents and the Ancillary Agreements.

          "BONLAM" shall mean Bonlam, S.A. de C.V., a corporation duly organized
and validly existing under the laws of Mexico.

          "BONLAM INTERCOMPANY NOTES" shall mean, collectively, the promissory
note or notes, each substantially in the form of Exhibit A to the Bonlam
Intercompany Notes Agreement, from time to time executed and delivered by Bonlam
pursuant to the Bonlam Intercompany Notes Agreement to the order of PGI Polymer
to evidence advances made from time to time by PGI Polymer to Bonlam pursuant to
Section 9.08(e) hereof, in each case as the same shall, subject to Section 9.14
hereof, be modified and supplemented and in effect from time to time.

                                CREDIT AGREEMENT

<Page>

                                      - 5 -

          "BONLAM INTERCOMPANY NOTES AGREEMENT" shall mean the Amended and
Restated Intercompany Notes Agreement dated as of May 15, 1996 (a copy of which
is attached as Exhibit D hereto) and amended as of the date hereof between
Bonlam and PGI Polymer, and guaranteed by each Subsidiary of Bonlam, as the same
shall, subject to Section 9.14 hereof, be modified and supplemented and in
effect from time to time.

          "BUSINESS DAY" shall mean (a) any day on which commercial banks are
not authorized or required to close in New York City and (b) if such day relates
to a borrowing of, a payment or prepayment of principal of or interest on, a
Conversion of or into, or an Interest Period for, any Eurodollar Loan or a
notice by the Borrower with respect to any such borrowing, payment, prepayment,
Conversion or Interest Period, then also any day on which dealings in deposits
are carried out in the London interbank market.

          "CANADIAN DOLLARS" and "CDN. $" shall mean lawful money of Canada.

          "CANADIAN SECURITY DOCUMENTS" shall mean, collectively, the mortgages,
assignments, security agreements and other instruments from time to time
executed by Fabrene and its Subsidiaries to provide collateral security for the
obligations of Fabrene and its Subsidiaries under the Fabrene Intercompany Notes
Agreement and the Fabrene Intercompany Notes, in each case as the same shall,
subject to Section 9.14 hereof, be modified and supplemented and in effect from
time to time.

          "CAPITAL EXPENDITURES" shall mean, for any period, expenditures
(including, without limitation, the aggregate amount of Capital Lease
Obligations incurred during such period) made by the Borrower or any of its
Restricted Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements, but excluding
normal replacements and maintenance which are properly charged to current
operations) during such period computed in accordance with GAAP. For purposes
hereof, the investment into capital assets from the Net Available Proceeds of
any Casualty Event shall constitute a "Capital Expenditure" hereunder only to
the extent of any consideration paid by the Borrower and its Restricted
Subsidiaries in excess of such Net Available Proceeds so invested.

          "CAPITAL LEASE OBLIGATIONS" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board), and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13).

          "CASUALTY EVENT" shall mean, with respect to any Property of any
Person, any loss of or damage to, or any condemnation or other taking of, such
Property for which such Person or any of its Subsidiaries receives insurance
proceeds, or proceeds of a condemnation award or other compensation; provided,
that for purposes of Section 2.10(a) hereof, "Casualty Event" shall not include
any such loss, damage, condemnation or other taking for which proceeds or

                                CREDIT AGREEMENT

<Page>

                                      - 6 -

other compensation received does not exceed U.S. $2,500,000 (in the aggregate)
in any fiscal year of the Borrower.

          "CHAPTER 11 CASES" shall have the meaning assigned to such term in the
preamble hereto.

          "CHICOPEE" shall mean Chicopee, Inc., a corporation duly organized and
validly existing under the laws of the State of Delaware.

          "CHICOPEE WAREHOUSE SALE" shall mean the sale by Chicopee of its
warehouse located in Dayton, New Jersey.

          "CLASS" shall have the meaning assigned to such term in Section 1.03
hereof.

          "CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.

          "CONTINUE", "CONTINUATION" and "CONTINUED" shall refer to the
continuation pursuant to Section 2.09 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.

          "CONVERT", "CONVERSION" and "CONVERTED" shall refer to a conversion
pursuant to Section 2.09 hereof of one Type of Loans into another Type of Loans,
which may be accompanied by the transfer by a Lender (at its sole discretion) of
a Loan from one Applicable Lending Office to another.

          "DEBT ISSUANCE" shall mean any issuance or sale of Indebtedness, other
than (i) Indebtedness expressly permitted to be incurred pursuant to Section
9.07 hereof as in effect on the date hereof, (ii) any other Indebtedness to
which the Majority Lenders shall have consented to the extent that each of the
Lenders shall have agreed such Indebtedness shall not constitute a "Debt
Issuance" for purposes hereof and (iii) Future Refinancing Debt to the extent
the proceeds thereof are applied to the payment of the principal of (and accrued
interest and redemption premium, if any, on) the New Senior Subordinated Notes
or Junior Subordinated Convertible Notes.

          "DEBT SERVICE" shall mean, for any period, the sum, for the Borrower
and its Restricted Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) all regularly
scheduled payments or prepayments of principal of Indebtedness (including,
without limitation, the principal component of any payments in respect of
Capital Lease Obligations) made during such period PLUS (b) all Interest Expense
for such period.

          "DEFAULT" shall mean an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.

                                CREDIT AGREEMENT

<Page>

                                      - 7 -

          "DISPOSITION" shall mean any sale, assignment, transfer or other
disposition of any Property (whether now owned or hereafter acquired) by the
Borrower or any of its Restricted Subsidiaries to any Person, including, without
limitation, any sale of an equity interest in any Restricted Subsidiary, but
excluding any sale, assignment, transfer or other disposition of any Property
sold or disposed of (i) in the ordinary course of business and on ordinary
business terms (including, without limitation, sales of inventory in the
ordinary course of business), (ii) not in the ordinary course of business in an
aggregate amount not exceeding U.S. $2,500,000 in any fiscal year of the
Borrower or (iii) transfers of Property between Wholly Owned Restricted
Subsidiaries of the Borrower.

          "DIVIDEND PAYMENT" shall mean, with respect to any Person, dividends
(in cash, Property or obligations) on, or other payments or distributions on
account of, or the setting apart of money for a sinking or other analogous fund
for, or the purchase, redemption, retirement or other acquisition of, any shares
of any class of stock of such Person or of any warrants, options or other rights
to acquire the same (or to make any payments, such as "phantom stock" payments,
where the amount thereof is calculated with reference to the fair market or
equity value of such Person or any of its Subsidiaries), but excluding dividends
payable solely in shares of common stock of such Person and excluding also any
dividends or other distributions made by any Wholly Owned Restricted Subsidiary
to the Borrower or to any other Wholly Owned Restricted Subsidiary. For purposes
hereof, the amount of any Dividend Payment made by any Restricted Subsidiary
that is not a Wholly Owned Restricted Subsidiary shall be deemed to be equal to
the amount of such Dividend Payment that is made to holders of the equity
interests in such Restricted Subsidiary other than the Borrower and its Wholly
Owned Restricted Subsidiaries.

          "EBITDA" shall mean, for any period, the sum, for the Borrower and its
Restricted Subsidiaries (determined on a consolidated basis without duplication
in accordance with GAAP), of the following: (a) operating income (or loss) for
such period PLUS (b) depreciation, amortization and other non-cash charges (to
the extent deducted in determining operating income) for such period MINUS (c)
non-cash income or gains (to the extent included in determining operating
income) for such period MINUS (d) non-recurring or unusual gains (including
gains for any period ending on or before the last day of the fiscal year ending
January 3, 2004 as a result of "fresh start" accounting procedures associated
with the Reorganization Plan and the emergence of the Borrower from bankruptcy),
to the extent included in determining operating income, for such period PLUS (e)
non-cash losses (including non-recurring losses for any period ending on or
before the last day of the fiscal year ending January 3, 2004 as a result of
such "fresh start" accounting procedures), to the extent deducted in determining
operating income, for such period PLUS (f) expenses relating to employee profit
sharing arising in connection with applicable Mexican statutory requirements
PLUS (g) fees and expenses relating to the Chapter 11 Cases and the consummation
of the Reorganization Plan for any period ending on or before June 30, 2003 and
other business restructuring fees and expenses of the type described in
Financial Accounting Standards Board 146 for any period ending on or before the
last day of the fiscal year ending January 3, 2004 (to the extent deducted in
determining operating income). Notwithstanding the foregoing:

                                CREDIT AGREEMENT

<Page>

                                      - 8 -

          (x) except with respect to the entities referred to in clause (z)
     below, in determining the components set forth in clauses (a) through (e)
     above with respect to any entity that is a Restricted Subsidiary but which
     is not a Wholly Owned Restricted Subsidiary, each of such components (to
     the extent the net effect thereof shall result in a positive contribution
     to EBITDA) shall be calculated to the extent of the percentage of the
     ownership interest of the Borrower and its Wholly Owned Restricted
     Subsidiaries in such entity, provided that if the net effect of such
     components shall result in a negative contribution to EBITDA, then 100% of
     each of such components shall be taken into account in determining EBITDA,
     PROVIDED that in the case of any such Restricted Subsidiary identified on
     Schedule VI hereto as of the Effective Date, the percentage ownership
     interest of the Borrower and its Wholly Owned Restricted Subsidiaries in
     such entity shall be increased by the percentage (but not more than the
     percentage) by which such ownership interest is less than 100% on the
     Effective Date regardless of the actual percentage ownership interest of
     the Borrower and its Wholly Owned Restricted Subsidiaries at any time after
     the Effective Date;

          (y) other than for purposes of determining Excess Cash Flow, if during
     any period for which EBITDA is being determined the Borrower or any of its
     Restricted Subsidiaries shall have consummated any Disposition then, for
     all purposes of this Agreement, EBITDA shall be determined on a pro forma
     basis as if such Disposition had been made or consummated on the first day
     of such period; and

          (z) in calculating EBITDA, there shall be excluded (i) any operating
     income (loss) of any Person that is not a Restricted Subsidiary (including
     any Person that is an Unrestricted Subsidiary), except (A) to the extent of
     cash actually distributed by such Person to the Borrower and its Restricted
     Subsidiaries during the relevant period as a dividend or distribution and
     (B) the Borrower's equity in any operating loss of such Person (other than
     an Unrestricted Subsidiary) for such period and (ii) any operating income
     (but not 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 by such Restricted Subsidiary,
     directly or indirectly, to the Borrower to the extent of such restrictions.

          "EFFECTIVE DATE" shall mean the date upon which the conditions to
effectiveness set forth in Section 7.01(i) hereof shall have been satisfied or
waived.

          "ENVIRONMENTAL CLAIM" shall mean, with respect to any Person, any
written notice, claim, demand or other written communication (collectively, a
"CLAIM") by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (ii) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law. The term "Environmental Claim"
shall include, without limitation, any claim by any Governmental Authority for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and any claim by any

                                CREDIT AGREEMENT

<Page>

                                      - 9 -

third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the presence of Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment.

          "ENVIRONMENTAL LAWS" shall mean any and all present and future
Federal, state, local and foreign laws, rules or regulations (including, without
limitation, the laws, rules or regulations of Canada, Germany and Mexico), and
any orders or decrees, in each case as now or hereafter in effect, relating to
the regulation or protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or toxic or hazardous substances or wastes into the
indoor or outdoor environment, including, without limitation, ambient air, soil,
surface water, ground water, wetlands, land or subsurface strata, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants or toxic or
hazardous substances or wastes.

          "EQUITY ISSUANCE" shall mean (a) any issuance or sale by the Borrower
or any of its Restricted Subsidiaries after the Effective Date of (i) any of its
capital stock, (ii) any warrants or options exercisable in respect of its
capital stock (other than any warrants or options issued to directors, officers
or employees of the Borrower or any of its Subsidiaries pursuant to employee
benefit plans established in the ordinary course of business and any capital
stock of the Borrower issued upon the exercise of such warrants or options) or
(iii) any other security or instrument representing an equity interest (or the
right to obtain any equity interest) in the Borrower or any of its Subsidiaries
or (b) the receipt by the Borrower or any of its Restricted Subsidiaries after
the Effective Date of any capital contribution (whether or not evidenced by any
equity security issued by the recipient of such contribution); provided that
Equity Issuance shall not include (x) any such issuance or sale by any
Restricted Subsidiary of the Borrower to the Borrower or any Wholly Owned
Restricted Subsidiary of the Borrower or (y) any capital contribution by the
Borrower or any Wholly Owned Restricted Subsidiary of the Borrower to any
Restricted Subsidiary of the Borrower.

          "EQUITY RIGHTS" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including, without limitation, any stockholders' or
voting trust agreements) for the issuance, sale, registration or voting of, or
outstanding securities convertible into, any additional shares of capital stock
of any class, or partnership or other ownership interests of any type in, such
Person.

          "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.

          "ERISA AFFILIATE" shall mean any corporation or trade or business that
is a member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which the Borrower is a member and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the
Borrower is a member.

                                CREDIT AGREEMENT

<Page>

                                     - 10 -

          "EURODOLLAR BASE RATE" shall mean, with respect to any Eurodollar Loan
for any Interest Period therefor:

          (a) the rate per annum (rounded upwards, if necessary, to the nearest
     1/16 of 1%) appearing on Page 3750 of the Telerate Service (or on any
     successor or substitute page of such Service, or any successor to or
     substitute for such Service, providing rate quotations comparable to those
     currently provided on such page of such Service, as determined by the
     Administrative Agent from time to time for purposes of providing quotations
     of interest rates applicable to Dollar deposits in the London interbank
     market) at approximately 11:00 a.m., London time, two Business Days prior
     to the commencement of such Interest Period, as the rate for the offering
     of U.S. Dollar deposits with a maturity comparable to such Interest Period;
     or

          (b) if such rate does not appear on the Telerate Service, or if said
     page shall cease to be publicly available, or if the information contained
     on said page, in the reasonable judgment of the Majority Revolving Credit
     Lenders (in the case of Revolving Credit Loans) or Majority Term Loan
     Lenders (in the case of Term Loans), shall cease accurately to reflect the
     rate offered by leading banks in the London interbank market for deposits
     in U.S. Dollars as reported by any publicly available source of similar
     market data selected by such Majority Lenders, the Eurodollar Base Rate
     shall mean, with respect to the applicable Eurodollar Loan for any Interest
     Period therefor, the rate per annum (rounded upwards, if necessary, to the
     nearest 1/16 of 1%) quoted by JPMCB at approximately 11:00 a.m. London time
     (or as soon thereafter as practicable) two Business Days prior to the first
     day of such Interest Period for the offering by JPMCB to leading banks in
     the London interbank market of deposits in U.S. Dollars having a term
     comparable to such Interest Period and in an amount comparable to the
     principal amount of the Eurodollar Loan to be made by JPMCB for such
     Interest Period. If JPMCB is not participating in any Eurodollar Loan
     during any Interest Period therefor, the Eurodollar Base Rate for such Loan
     for such Interest Period shall be determined by reference to the amount of
     the Loan that JPMCB would have made or had outstanding had it been
     participating in such Loan during such Interest Period.

Anything herein to the contrary notwithstanding, the Eurodollar Base Rate for
any Interest Period shall never be lower than 2% per annum.

          "EURODOLLAR LOANS" shall mean Loans denominated in U.S. Dollars, the
interest rates on which are determined on the basis of rates referred to in the
definition of "Eurodollar Base Rate" in this Section 1.01.

          "EURODOLLAR RATE" shall mean, for any Eurodollar Loan for any Interest
Period therefor, a rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Administrative Agent to be equal to the
Eurodollar Base Rate for such Loan for such Interest Period divided by 1 MINUS
the Reserve Requirement for such Loan for such Interest Period.

                                CREDIT AGREEMENT

<Page>

                                     - 11 -

          "EVENT OF DEFAULT" shall have the meaning assigned to such term in
Section 11 hereof.

          "EXCESS CAPITAL EXPENDITURE AMOUNT" shall mean the amount equal to the
excess of (a) EBITDA for such fiscal year OVER (b) the sum of (i) Capital
Expenditures made during such fiscal year (except for any such Capital
Expenditures to the extent financed with the proceeds of Indebtedness, or
Capital Lease Obligations, incurred pursuant to Section 9.07(k) hereof during
such fiscal year) PLUS (ii) the aggregate amount of Debt Service for such fiscal
year PLUS (iii) the aggregate amount of Federal, State and foreign income and
other similar taxes payable in respect of such fiscal year.

          "EXCESS CASH FLOW" shall mean, for any fiscal year, the excess of (a)
EBITDA for such fiscal year OVER (b) the sum of (i) U.S. $20,000,000 PLUS (ii)
Capital Expenditures made during such fiscal year (except for any such Capital
Expenditures to the extent financed with the proceeds of (x) Indebtedness, or
Capital Lease Obligations, incurred pursuant to Section 9.07(k) hereof during
such fiscal year or (y) to the extent constituting usage of the Excess Capital
Expenditure Amount) PLUS (iii) the aggregate amount of Debt Service for such
fiscal year PLUS (iv) the aggregate amount of Federal, State and foreign income
and other similar taxes payable in respect of such fiscal year.

          "EXCLUDED TAXES" shall mean, with respect to the Administrative Agent,
any Lender, the Issuing Lender or any other recipient of any payment to be made
by or on account of any obligation of the Borrower hereunder, (a) taxes imposed
on or measured by its overall net income (however denominated), and franchise
taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its Applicable Lending Office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender, any withholding tax that is imposed on amounts payable to
such Foreign Lender at the time such Foreign Lender becomes a party hereto (or
designates a new lending office) or is attributable to such Foreign Lender's
failure or inability (other than as a result of a Change in Law) to comply with
Section 5.06(e) hereof, except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from the Borrower with
respect to such withholding tax pursuant to Section 5.06(a) hereof.

          "EXISTING CREDIT AGREEMENT" shall have the meaning assigned to such
term in the preamble of this Agreement.

         "EXISTING SENIOR SUBORDINATED NOTES" shall mean, collectively, (a) the
Borrower's 9% Senior Subordinated Notes due 2007 and (b) the Borrower's 8-3/4%
Senior Subordinated Notes due 2008.

          "FABRENE" shall mean Fabrene Inc., a corporation duly amalgamated and
validly existing under the laws of Ontario, Canada.

                                CREDIT AGREEMENT

<Page>

                                     - 12 -

          "FABRENE ACQUISITION INTERCOMPANY NOTE" shall mean the promissory note
referred to as the "Acquisition Intercompany Note" in the Fabrene Intercompany
Notes Agreement in the amount of Cdn. $28,203,000.00 issued by Fabrene to
Fabrene Holdings, a copy of which Note is attached as Exhibit A to the Fabrene
Intercompany Notes Agreement, as the same shall, subject to Section 9.14 hereof,
be modified and supplemented and in effect from time to time.

          "FABRENE HOLDINGS" shall mean Fabrene Group, Inc., a corporation duly
organized and validly existing under the laws of the Province of Prince Edward
Island, Canada.

          "FABRENE INTERCOMPANY NOTES" shall mean, collectively, the Fabrene
Acquisition Intercompany Note and the Fabrene Operations Intercompany Note.

          "FABRENE INTERCOMPANY NOTES AGREEMENT" shall mean the Amended and
Restated Intercompany Notes Agreement dated as of May 15, 1996 (a copy of which
is attached as Exhibit E hereto) and amended as of the date hereof between
Fabrene, Fabrene Holdings and PGI Polymer, and guaranteed by each Subsidiary of
Fabrene, as the same shall, subject to Section 9.14 hereof, be modified and
supplemented and in effect from time to time.

          "FABRENE OPERATIONS INTERCOMPANY NOTE" shall mean the promissory note
dated as of May 15, 1996, executed and delivered by Fabrene pursuant to the
Fabrene Intercompany Notes Agreement to the order of PGI Polymer to evidence
advances made from time to time by PGI Polymer to Fabrene pursuant to Section
9.08(e) hereof, as the same shall, subject to Section 9.14 hereof, be modified
and supplemented and in effect from time to time.

          "FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day and (b) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to JPMCB on such Business Day on such
transactions as determined by the Administrative Agent.

          "FOREIGN CURRENCY EQUIVALENT" shall mean, with respect to any amount
in U.S. Dollars, the amount of any other currency that could be purchased with
such amount of U.S. Dollars using the foreign exchange rate(s) specified in the
definition of the term "U.S. Dollar Equivalent", as determined by the
Administrative Agent.

          "FOREIGN LENDER" shall mean any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.

                                CREDIT AGREEMENT

<Page>

                                     - 13 -

          "FOREIGN OBLIGOR" shall mean any Obligor that is a Foreign Subsidiary
of the Borrower.

          "FOREIGN SECURITY DOCUMENTS" shall mean, collectively, the Canadian
Security Documents, the German Security Documents, the Mexican Security
Documents, and each of the mortgages, assignments, security agreements and other
instruments from time to time executed by any of the Obligors with respect to
Property located in any country other than the United States of America, Canada,
Germany or Mexico to provide collateral security for the obligations of the
Obligors hereunder, including any thereof executed and delivered pursuant to the
Existing Credit Agreement or amendments thereto (and not heretofore released),
in each case as the same shall be modified and supplemented and in effect from
time to time.

          "FOREIGN SUBSIDIARY" shall mean any Subsidiary of the Borrower
organized in any jurisdiction outside of the United States of America or any of
its States or territories.

          "FOREIGN TAXES" shall mean all present and future income, stamp,
registration and other taxes and charges now or hereafter imposed, assessed,
levied or collected by any foreign jurisdiction in connection with the
recording, registration, notarization or other formalization of any Foreign
Security Document, the Intercompany Notes or the Intercompany Notes Agreements,
or the enforcement thereof or the introduction thereof in any judicial
proceedings.

          "FUTURE REFINANCING DEBT" shall mean the Indebtedness and Guarantees
permitted under Section 9.07(h) hereof.

          "FUTURE REFINANCING DEBT DOCUMENTS" shall mean the agreements and
other instruments relating to the Indebtedness and Guarantees permitted under
Section 9.07(h) hereof, in each case as the same shall, subject to Section 9.14
hereof, be modified and supplemented and in effect from time to time.

          "GAAP" shall mean generally accepted accounting principles applied on
a basis consistent with those which, in accordance with the last sentence of
Section 1.02(a) hereof, are to be used in making the calculations for purposes
of determining compliance with this Agreement.

          "GERMAN SECURITY DOCUMENTS" shall mean, collectively, the mortgages,
assignments, security agreements and other instruments from time to time
executed by PGI Neunkirchen to provide collateral security for the obligations
of PGI Neunkirchen hereunder and originally executed and delivered by PGI
Neunkirchen pursuant to the Existing Credit Agreement or amendments thereto (and
not heretofore released), in each case as the same shall be modified and
supplemented and in effect from time to time.

          "GOF" shall mean MatlinPatterson Global Opportunities Partners LP.

          "GOF HOLDERS" shall mean GOF and each of its affiliates that hold the
equity of the Borrower on the date hereof, so long as such entities continue to
be managed or controlled by GOF or are affiliates or Subsidiaries of GOF.

                                CREDIT AGREEMENT

<Page>

                                     - 14 -

          "GOF LETTER OF CREDIT" shall mean a Letter of Credit in substantially
the form of Exhibit G hereto issued by JPMorgan Chase Bank for the account of
GOF in favor of the Administrative Agent, as beneficiary, in the original face
amount of U.S. $25,000,000, with an expiration date of not earlier than January
31, 2005, as the same shall be modified and supplemented and in effect from time
to time.

          "GOVERNMENTAL AUTHORITY" shall mean the government of the United
States of America or any other nation, or of any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government (including any supra-national bodies such as the
European Union or the European Central Bank).

          "GROUP MEMBERS" shall mean, collectively, the Borrower and its
Subsidiaries.

          "GUARANTEE" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of such
debtor's obligations or an agreement to assure a creditor against loss, and
including, without limitation, causing a bank or other financial institution to
issue a letter of credit or other similar instrument for the benefit of another
Person, but excluding endorsements for collection or deposit in the ordinary
course of business. The terms "Guarantee" and "Guaranteed" used as a verb shall
have a correlative meaning.

          "GUARANTEED OBLIGATIONS" shall mean, with respect to any Guarantor,
the prompt payment in full when due (whether at stated maturity, by acceleration
or otherwise) of the principal of and interest on the Loans and all other
amounts (including, without limitation, all Reimbursement Obligations) from time
to time owing to the Lenders and the Administrative Agent by the Borrower under
this Agreement, the Notes evidencing such Loans or under the Security Documents,
or owing to the Lenders (or any of their affiliates) or the Administrative Agent
in respect of Hedging Indebtedness, in each case strictly in accordance with the
terms thereof.

          "GUARANTY AGREEMENT" shall mean a Guaranty Agreement substantially in
the form of Exhibit F hereto executed by a Restricted Subsidiary of the Borrower
in favor of the Administrative Agent, as the same shall be modified and
supplemented and in effect from time to time.

          "HAZARDOUS MATERIAL" shall mean, collectively, (a) any petroleum or
petroleum products, flammable explosives, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation, and
transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls (PCB's), (b) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the

                                CREDIT AGREEMENT

<Page>

                                     - 15 -

definition of "hazardous substances", "hazardous wastes", "hazardous materials",
"extremely hazardous wastes", "restricted hazardous wastes", "toxic substances",
"toxic pollutants", "contaminants", "pollutants" or words of similar import
under any Environmental Law and (c) any other chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any Environmental Law.

          "HEDGING INDEBTEDNESS" shall mean the obligations of the Borrower in
respect of Hedging Transactions between the Borrower and a Lender permitted
under Section 9.08(i) hereof.

          "HEDGING TRANSACTION" shall mean, for any Person, any transaction
entered into by such Person that is designed to protect such Person against
fluctuations in interest rates, or currency or raw materials values, including,
without limitation, an interest rate swap, cap or collar agreement or similar
arrangement between such Person and one or more counterparties providing for the
transfer or mitigation of interest risks either generally or under specific
contingencies. The term "Hedging Transaction" shall include, without limitation,
any "swap agreement" as such term is defined in Section 101(53B) of the
Bankruptcy Code.

          "INDEBTEDNESS" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations of such
Person in respect of letters of credit or similar instruments issued or accepted
by banks and other financial institutions for account of such Person; (e)
Capital Lease Obligations of such Person; and (f) Indebtedness of others
Guaranteed by such Person. For purposes of this Agreement, obligations created
pursuant to any Hedging Transaction shall not be Indebtedness hereunder.

          "INDEMNIFIED TAXES" shall mean Taxes other than Excluded Taxes.

          "INTERCOMPANY NOTES" shall mean, collectively, the Bonlam Intercompany
Notes and the Fabrene Intercompany Notes.

          "INTERCOMPANY NOTES AGREEMENTS" shall mean, collectively, the Bonlam
Intercompany Notes Agreement and the Fabrene Intercompany Notes Agreement.

          "INTEREST COVERAGE RATIO" shall mean, as at any date, the ratio of (a)
EBITDA for the period of four fiscal quarters ending on or most recently ended
prior to such date to (b) Interest Expense for such period.

                                CREDIT AGREEMENT

<Page>

                                     - 16 -

          "INTEREST EXPENSE" shall mean, for any period, the sum, for the
Borrower and its Restricted Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP), of the following: (a) all interest
in respect of Indebtedness (including, without limitation, the interest
component of any payments in respect of Capital Lease Obligations, but excluding
any interest expense not payable in cash during such period) accrued or
capitalized during such period (whether or not actually paid during such
period), net of cash interest income accrued during such period, PLUS (b) the
net amounts payable (or MINUS the net amounts receivable) under interest rate
protection agreements constituting Hedging Transactions accrued during such
period (whether or not actually paid or received during such period).

          Notwithstanding the foregoing, (i) other than for purposes of
determining Excess Cash Flow, if during any period for which Interest Expense is
being determined the Borrower or any of its Restricted Subsidiaries shall have
consummated any Disposition then, for all purposes of this Agreement, Interest
Expense shall be determined on a pro forma basis as if such Disposition (and any
Indebtedness repaid as a result of such Disposition) had been made or
consummated (and such Indebtedness incurred or repaid) on the first day of such
period (such pro forma determination to take into account, inter alia, any
increases or decreases in the Applicable Margin that would have occurred had
such Disposition, and related incurrence or repayment of Indebtedness, occurred
on the first day of such period) and (ii) if, as at any date (a "CALCULATION
DATE"), fewer than four complete consecutive fiscal quarters have elapsed
subsequent to the Effective Date, Interest Expense shall be calculated (after
giving effect to the adjustments contemplated in the foregoing clause (i)) only
for the portion of such period commencing on the Effective Date and ending on
the calculation date and shall then be annualized by multiplying the amount of
such Interest Expense by a fraction, the numerator of which is 365 and the
denominator of which is the number of days during the period commencing on the
day immediately following the Effective Date through and including the
calculation date.

          "INTEREST PERIOD" shall mean, with respect to any Eurodollar Loan,
each period commencing on the date such Eurodollar Loan is made or Converted
from a Base Rate Loan or the last day of the next preceding Interest Period for
such Loan and ending on the numerically corresponding day in the first, second,
third or sixth calendar month thereafter, as the Borrower may select as provided
in Section 4.05 hereof, except that each Interest Period that commences on the
last Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing:

          (i) if any Interest Period for any Revolving Credit Loan would
     otherwise end after the Revolving Credit Termination Date, such Interest
     Period shall end on the Revolving Credit Termination Date;

          (ii) no Interest Period for any Term Loan may commence before and end
     after any Principal Payment Date applicable thereto unless, after giving
     effect thereto, the aggregate principal amount of the Term Loans having
     Interest Periods that end after such Principal Payment Date shall be equal
     to or less than the aggregate principal amount of the Term Loans scheduled
     to be outstanding after giving effect to the payments of principal required
     to be made on such Principal Payment Date;

                                CREDIT AGREEMENT

<Page>

                                     - 17 -

          (iii) each Interest Period that would otherwise end on a day which is
     not a Business Day shall end on the next succeeding Business Day (or, if
     such next succeeding Business Day falls in the next succeeding calendar
     month, on the next preceding Business Day); and

          (iv) notwithstanding clauses (i) and (ii) above, no Interest Period
     shall have a duration of less than one month and, if the Interest Period
     for any Loan would otherwise be a shorter period, such Loan shall not be
     available hereunder for such period.

          "INVESTMENT" shall mean, for any Person: (a) the acquisition (whether
for cash, Property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any such acquisition
(including, without limitation, any "short sale" or any sale of any securities
at a time when such securities are not owned by the Person entering into such
short sale); (b) the making of any deposit with, or advance, loan or other
extension of credit to, any other Person (including the purchase of Property
from another Person subject to an understanding or agreement, contingent or
otherwise, to resell such Property to such Person, but excluding any such
advance, loan or extension of credit having a term not exceeding 90 days
representing the purchase price of inventory or supplies sold by such Person in
the ordinary course of business); (c) the entering into of any Guarantee of, or
other contingent obligation with respect to, Indebtedness or other liability of
any other Person and (without duplication) any amount committed to be advanced,
lent or extended to such Person; or (d) the entering into of any Hedging
Transaction.

          "ISSUING LENDER" shall mean JPMCB, as the issuer of Letters of Credit
under Section 2.03 hereof, together with its successors and assigns in such
capacity.

          "JOINT VENTURE RESTRICTED SUBSIDIARY" shall mean any Restricted
Subsidiary of the Borrower, established as a joint venture with one or more
other joint venture parties, in which at least 80% of the aggregate outstanding
ownership interests on a fully-diluted basis in such Restricted Subsidiary is
owned by the Borrower and/or a Wholly Owned Restricted Subsidiary of the
Borrower.

          "J&J" shall mean Johnson & Johnson, a New Jersey corporation.

          "JPMCB" shall mean JPMorgan Chase Bank.

          "JUNIOR SUBORDINATED CONVERTIBLE DEBT DOCUMENTS" shall mean,
collectively, the Junior Subordinated Convertible Notes and the Junior
Subordinated Convertible Notes Indenture.

          "JUNIOR SUBORDINATED CONVERTIBLE NOTES" shall mean the 10% convertible
subordinated notes due December 2007 to be issued pursuant to the Junior
Subordinated Convertible Notes Indenture.

                                CREDIT AGREEMENT

<Page>

                                     - 18 -

          "JUNIOR SUBORDINATED CONVERTIBLE NOTES INDENTURE" shall mean the
indenture in substantially the form appended to the Reorganization Plan to be
executed and delivered in connection with the consummation of the Reorganization
Plan and to be applicable to the Junior Subordinated Convertible Notes to be
issued pursuant to the Reorganization Plan.

          "LENDERS" shall mean, collectively, the Revolving Credit Lenders, the
Term Loan Lenders and the Term Letter of Credit Lenders.

          "LETTERS OF CREDIT" shall mean, collectively, Revolving Letters of
Credit and Term Letters of Credit.

          "LETTER OF CREDIT DOCUMENTS" shall mean, with respect to any Letter of
Credit, collectively, any application therefor and any other agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk with respect to such
Letter of Credit or (b) any collateral security for any of such obligations,
each as the same shall be modified and supplemented and in effect from time to
time.

          "LETTER OF CREDIT INTEREST" shall mean, for each Letter of Credit
Lender, such Lender's participation interest (or, in the case of the Issuing
Lender, the Issuing Lender's retained interest) in the Issuing Lender's
liability under Letters of Credit and such Lender's rights and interests in
Reimbursement Obligations and fees, interest and other amounts payable in
connection with Letters of Credit and Reimbursement Obligations and any and all
collateral and guarantees therefor. References herein to "REVOLVING LETTER OF
CREDIT INTEREST" and "TERM LETTER OF CREDIT INTEREST" shall mean Letter of
Credit Interest with respect to Revolving Letters of Credit and Term Letters of
Credit, respectively.

          "LETTER OF CREDIT LENDERS" shall mean collectively the Term Letter of
Credit Lenders and the Revolving Credit Lenders.

          "LETTER OF CREDIT LIABILITY" shall mean, without duplication, at any
time and in respect of any Letter of Credit, the sum of (a) the undrawn face
amount of such Letter of Credit PLUS (b) the aggregate unpaid principal amount
of all Reimbursement Obligations of the Borrower at such time due and payable in
respect of all drawings made under such Letter of Credit. For purposes of this
Agreement, a Letter of Credit Lender (other than the Issuing Lender) shall be
deemed to hold a Letter of Credit Liability in an amount equal to its
participation interest in the related Letter of Credit under Section 2.03
hereof, and the Issuing Lender shall be deemed to hold a Letter of Credit
Liability in an amount equal to its retained interest in the related Letter of
Credit after giving effect to the acquisition by the relevant Letter of Credit
Lenders other than the Issuing Lender of their participation interests under
said Section 2.03. References herein to "REVOLVING LETTER OF CREDIT LIABILITIES"
and "TERM LETTER OF CREDIT LIABILITIES" shall mean Letter of Credit Liabilities
with respect to Revolving Letters of Credit and Term Letters of Credit,
respectively.

          "LEVERAGE RATIO" shall mean, as at any date, the ratio of Indebtedness
of the Borrower and its Restricted Subsidiaries (determined on a consolidated
basis without duplication

                                CREDIT AGREEMENT

<Page>

                                     - 19 -

in accordance with GAAP), excluding Indebtedness of Vateks Tekstil Sanayi ve
Ticaret A.S. permitted under Section 9.08(j) hereof, on such date to EBITDA for
the period of four fiscal quarters ending on or most recently ended prior to
such date.

          "LICENSE AGREEMENT" shall mean the license agreement dated as of March
15, 1995 between Chicopee and McNeil-PPC, Inc., as the same shall be modified
and supplemented and in effect from time to time.

          "LIEN" shall mean, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this Agreement and the other Loan Documents, a Person
shall be deemed to own subject to a Lien any Property that it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement (other than an
operating lease) relating to such Property.

          "LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Notes,
the Letter of Credit Documents, the Security Documents, the Intercompany Notes
and the Intercompany Notes Agreements.

          "LOANS" shall mean, collectively, the Revolving Credit Loans and the
Term Loans.

          "MAJORITY LENDERS" shall mean the Majority Revolving Credit Lenders
and Majority Restructured Lenders.

          "MAJORITY RESTRUCTURED LENDERS" shall mean Term Loan Lenders and Term
Letter of Credit Lenders having at least 51% of the sum of the aggregate
outstanding principal amount of the Term Loans and Uncovered Term Letter of
Credit Liabilities, voting as a single pool.

          "MAJORITY REVOLVING CREDIT LENDERS" shall mean Revolving Credit
Lenders having at least 51% of the aggregate amount of the Revolving Credit
Commitments or, if the Revolving Credit Commitments shall have terminated,
Revolving Credit Lenders holding at least 51% of the aggregate unpaid principal
amount of the Revolving Credit Exposure.

          "MAJORITY TERM LETTER OF CREDIT LENDERS" shall mean the Lenders having
at least 51% of the aggregate amount of all Term Letter of Credit Liabilities

          "MAJORITY TERM LOAN LENDERS" shall mean Term Loan Lenders holding at
least 51% of the aggregate outstanding principal amount of the Term Loans.

          "MARGIN STOCK" shall mean "margin stock" within the meaning of
Regulations U and X.

          "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a)
the Property, business, operations, financial condition, prospects, liabilities
or capitalization of the Group Members (excluding Group Members which are
Unrestricted Subsidiaries) taken as a

                                CREDIT AGREEMENT

<Page>

                                     - 20 -

whole, (b) the ability of any Group Member to perform its obligations under any
of the Basic Documents to which it is a party, (c) the validity or
enforceability of any of the Basic Documents, (d) the rights and remedies of the
Lenders and the Administrative Agent under any of the Basic Documents or (e) the
timely payment of the principal of or interest on the Loans or the Reimbursement
Obligations or other amounts payable in connection therewith.

          "MEXICAN FINCO" shall mean a corporation, organized after the
Effective Date under the laws of the Republic of Mexico as a direct Wholly Owned
Subsidiary of PGI Polymer, the sole assets of which will consist of Investments
in Bonlam permitted under Section 9.08(h) hereof.

          "MEXICAN SECURITY DOCUMENTS" shall mean, collectively, the mortgages,
assignments, security agreements and other instruments from time to time
executed by Bonlam and its respective Subsidiaries, to provide collateral
security for the obligations of Bonlam and its respective Subsidiaries under the
Bonlam Intercompany Notes Agreement and the Bonlam Intercompany Notes, in each
case as the same shall, subject to Section 9.14 hereof, be modified and
supplemented and in effect from time to time.

          "MORTGAGES" shall mean, collectively, the respective Deeds of Trust
and Mortgages executed and delivered by the Borrower and its Subsidiaries
pursuant to the Existing Credit Agreement, covering the properties of the
respective Mortgagors identified therein, in each case as such Deeds of Trust
and Mortgages have been heretofore modified, as such Deeds of Trust and
Mortgages shall be further modified and supplemented and in effect from time to
time (including pursuant to the confirmations referred to in Section 7.01(e)
hereof).

          "MULTIEMPLOYER PLAN" shall mean a multiemployer plan defined as such
in Section 3(37) of ERISA to which contributions have been made by the Borrower
or any ERISA Affiliate and which is covered by Title IV of ERISA.

          "NET AVAILABLE PROCEEDS" shall mean:

          (i) in the case of any Disposition, the amount of Net Cash Payments
     received in connection with such Disposition;

          (ii) in the case of any Casualty Event, the aggregate amount of
     proceeds of insurance, condemnation awards and other compensation received
     by the Group Members in respect of such Casualty Event net of (A)
     reasonable expenses incurred by the Group Members in connection with the
     collection of such insurance, condemnation awards and other compensation
     and (B) contractually required repayments of Indebtedness to the extent
     secured by a Lien on such Property (other than a Lien that is junior to the
     Lien in favor of the Administrative Agent under the Security Documents) and
     any income and transfer taxes payable by the Group Members in respect of
     such Casualty Event; and

          (iii) in the case of any Debt Issuance or Equity Issuance, the
     aggregate amount of all cash received by the Borrower and its Restricted
     Subsidiaries in respect of such Debt

                                CREDIT AGREEMENT

<Page>

                                     - 21 -

     Issuance or Equity Issuance (as the case may be) net of reasonable expenses
     incurred by the Borrower and its Restricted Subsidiaries in connection
     therewith.

          "NET CASH PAYMENTS" shall mean, with respect to any Disposition, the
aggregate amount of all cash payments, and the fair market value of any non-cash
consideration, received by the Group Members directly or indirectly in
connection with such Disposition; provided that (a) Net Cash Payments shall be
net of (i) the amount of any legal, title and recording tax expenses,
commissions and other fees and expenses paid by the Group Members in connection
with such Disposition and (ii) any Federal, state, local and foreign income or
other taxes estimated to be payable by the Group Members as a result of such
Disposition (but only to the extent that such estimated taxes are in fact paid
to the relevant Federal, state, local or foreign Governmental Authority within
six months of the date of such Disposition) and (b) Net Cash Payments shall be
net of any repayments by the Group Members of Indebtedness to the extent that
(i) such Indebtedness is secured by a Lien on the Property that is the subject
of such Disposition (other than a Lien that is junior to the Lien in favor of
the Administrative Agent under the Security Documents) and (ii) the transferee
of (or holder of a Lien on) such Property requires that such Indebtedness be
repaid as a condition to the purchase of such Property.

          "NEW SENIOR SUBORDINATED NOTES" shall mean the 10% senior subordinated
notes due December 2007 to be issued to GOF pursuant to the New Senior
Subordinated Notes Indenture, which New Senior Subordinated Notes shall (x) have
terms substantially similar to the terms appended to the Reorganization Plan as
Exhibit J to be executed and delivered in connection with the consummation of
the Reorganization Plan and to be applicable to the New Senior Subordinated
Notes to be issued pursuant to the Reorganization Plan and (y) be senior in
right of payment to the Junior Subordinated Convertible Notes.

          "NEW SENIOR SUBORDINATED NOTES INDENTURE" shall mean the indenture in
substantially the form appended to the Reorganization Plan to be executed and
delivered in connection with the consummation of the Reorganization Plan and to
be applicable to the New Senior Subordinated Notes to be issued upon any drawing
under the GOF Letter of Credit as contemplated by Section 9.07(g) hereof.

          "NOTES" shall mean, collectively, the Revolving Credit Notes and the
Term Loan Notes.

          "OPERATING DIVISIONS" shall mean the Nonwovens, Oriented Polymers and
Corporate operating divisions of the Borrower and its Restricted Subsidiaries.

          "OTHER TAXES" shall mean all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or under any other Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement or any other Loan Document.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.

                                CREDIT AGREEMENT

<Page>

                                     - 22 -

          "PERMITTED INVESTMENTS" shall mean: (a) direct obligations of the
United States of America, or of any agency thereof, or obligations guaranteed as
to principal and interest by the United States of America, or of any agency or
instrumentality thereof, in either case maturing not more than 90 days from the
date of acquisition thereof; (b) bankers' acceptances created by, certificates
of deposit issued by and time deposits made with, any bank or trust company
organized under the laws of the United States of America or any state thereof,
or Canada or Germany and having capital, surplus and undivided profits of at
least U.S. $250,000,000, maturing not more than 90 days from the date of
acquisition thereof; (c) repurchase obligations with respect to obligations of
the type (but not necessarily the maturity) described in clause (a) above issued
by any bank or trust company described in clause (b) above and maturing not more
than 90 days from the date of acquisition thereof by any Person; (d) commercial
paper rated "A-1" or better or "P-1" by Standard & Poor's Ratings Group, a
division of McGraw Hill, Inc. or Moody's Investors Services, Inc., respectively,
maturing not more than 90 days from the date of acquisition thereof; and (e)
interests in any money market mutual fund registered under the Investment
Company Act of 1940, as amended, at least 90% of the portfolio of which is
limited to obligations of the type and maturity described in the foregoing
clauses (a) through (d), so long as such fund has total assets of at least U.S.
$500,000,000 and is rated "AAAm-G" or better or "AAA" or better by Standard &
Poor's Rating Group or Moody's Investors Services, Inc., respectively.

          "PERSON" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).

          "PGI NEUNKIRCHEN" shall mean PGI Neunkirchen GmbH, a GESELLSCHAFT MIT
BESCHRANKTER HAFTUNG duly organized and validly existing under the laws of the
Germany.

          "PGI POLYMER" shall mean PGI Polymer, Inc., a Delaware corporation.

          "PLAN" shall mean an employee benefit or other plan established or
maintained by the Borrower or any ERISA Affiliate and that is covered by Title
IV of ERISA, other than a Multiemployer Plan.

          "POST-DEFAULT RATE" shall mean, in respect of any principal of any
Loan, any Reimbursement Obligation or any other amount under this Agreement, any
Note or any other Loan Document that is not paid when due (whether at stated
maturity, by acceleration, by optional or mandatory prepayment or otherwise), a
rate per annum (the "PRIME-BASED POST-DEFAULT RATE") during the period from and
including the due date to but excluding the date on which such amount is paid in
full equal to 2% PLUS the Base Rate as in effect from time to time PLUS the
Applicable Margin for Base Rate Term Loans (except that the Applicable Margin
for Revolving Credit Base Rate Loans shall be used if the amount in default is
principal of a Revolving Credit Base Rate Loan), PROVIDED that, if the amount so
in default is principal of a Eurodollar Loan and the due date thereof is a day
other than the last day of the Interest Period therefor, the "Post-Default Rate"
for such principal shall be, for the period from and including such due date to
but excluding the last day of such Interest Period, a rate per annum (the
"MARKET-BASED POST-DEFAULT RATE") equal to 2% PLUS the interest rate for such
Loan as provided

                                CREDIT AGREEMENT

<Page>

                                     - 23 -

in Section 3.02(b) hereof and, thereafter, the higher of (i) the applicable
Prime-Based Post-Default Rate and (ii) the applicable Market-Based Post-Default
Rate.

          "PRIME RATE" shall mean the rate of interest from time to time
announced by JPMCB at its principal office in New York City as its prime
commercial lending rate.

          "PRINCIPAL OFFICE" shall mean the principal office of JPMCB, located
on the date hereof at 270 Park Avenue, New York, New York 10017.

          "PRINCIPAL PAYMENT DATE" shall mean each day set forth in Section 3.01
hereof, PROVIDED, that if any such day is not a Business Day, then such
Principal Payment Date shall be the next preceding Business Day.

          "PROCESS AGENT" shall have the meaning assigned to such term in
Section 12.10(b) hereof.

          "PROCESS AGENT ACCEPTANCE" shall mean a letter from the Process Agent
to the Administrative Agent, in substantially the form of Exhibit J hereto.

          "PROPERTY" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.

          "QUARTERLY DATES" shall mean the 20th day of March, June, September
and December in each year, the first of which shall be the first such day after
the date hereof, PROVIDED, that if any such day is not a Business Day, then such
Quarterly Date shall be the next preceding Business Day.

          "REGULATIONS A, D, U AND X" shall mean, respectively, Regulations A,
D, U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified and supplemented and in effect from time
to time.

          "REGULATORY CHANGE" shall mean, with respect to any Lender, any change
after the date of this Agreement in Federal, state or foreign law or regulations
(including, without limitation, Regulation D) or the adoption or making after
such date of any interpretation, directive or request applying to a class of
banks including such Lender of or under any Federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.

          "REIMBURSEMENT OBLIGATIONS" shall mean, at any time, the obligations
of the Borrower then outstanding, or which may thereafter arise in respect of a
Letter of Credit then outstanding, to reimburse amounts paid by the Issuing
Lender in respect of any drawings under such Letter of Credit.

          "RELEASE" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor

                                CREDIT AGREEMENT

<Page>

                                     - 24 -

environment, including, without limitation, the movement of Hazardous Materials
through ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata.

          "REORGANIZATION PLAN" shall mean the Debtor's Joint Amended Modified
Plan of Reorganization filed on November 25, 2002.

          "RESERVE REQUIREMENT" shall mean, for any Interest Period for any
Eurodollar Loan, the average maximum rate at which reserves (including, without
limitation, any marginal, supplemental or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by member banks of the
Federal Reserve System in New York City with deposits exceeding one billion U.S.
Dollars against "Eurodollar liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the Reserve Requirement shall
include any other reserves required to be maintained by such member banks by
reason of any Regulatory Change with respect to (i) any category of liabilities
that includes deposits by reference to which the Eurodollar Base Rate is to be
determined as provided in the definition of "Eurodollar Base Rate" in this
Section 1.01 or (ii) any category of extensions of credit or other assets that
includes Eurodollar Loans.

          "RESTRICTED PAYMENT" shall mean, collectively, (i) any Dividend
Payment, (ii) any purchase, redemption, retirement or other acquisition for
value of, or the setting apart of any money for a sinking, defeasance or other
analogous fund for the purchase, redemption, retirement or other acquisition of,
or the voluntary payment or prepayment of the principal of or interest on, or
any other amount owing in respect of, any Subordinated Indebtedness, but
excluding (x) the refinancing of the New Senior Subordinated Notes or Junior
Subordinated Convertible Notes to the extent permitted by Section 9.07(h) hereof
and (y) regularly scheduled payments or prepayments of principal and interest in
respect of any Subordinated Indebtedness required pursuant to the Subordinated
Debt Documents or the Future Refinancing Debt Documents, as the case may be,
(iii) any Investment by the Borrower or any of its Restricted Subsidiaries in
any Person (including in any Affiliate), other than an Investment expressly
permitted by the provisions of clauses (a) through (i) of Section 9.08 hereof
and (iv) the amount of any Investment referred to in clause (ii) of Section
1.04(c) hereof outstanding on the date on which a Restricted Subsidiary is
designated as an Unrestricted Subsidiary hereunder.

          "RESTRICTED SUBSIDIARY" shall mean any Subsidiary of the Borrower
other than an Unrestricted Subsidiary.

          "REVOLVING CREDIT" refers, as applicable, to the Revolving Credit
Commitments, Revolving Credit Lenders, Revolving Credit Loans and Revolving
Credit Notes.

          "REVOLVING CREDIT COMMITMENT" shall mean, for each Revolving Credit
Lender, the obligation of such Lender to make Revolving Credit Loans and to
issue or participate in Revolving Letters of Credit pursuant to Section 2.03(c)
hereof to the Borrower in U.S. Dollars in an aggregate principal or face amount
at any one time outstanding up to but not exceeding the amount set opposite the
name of such Lender on Schedule IX hereto (as the same may be reduced from time
to time pursuant to Section 2.04 hereof) or, in the case of any Person that
becomes a Revolving Credit Lender pursuant to an assignment permitted under
Section 12.05(b)

                                CREDIT AGREEMENT

<Page>

                                     - 25 -

hereof, as specified in the respective instrument of assignment pursuant to
which such assignment is effected (as the same may be reduced from time to time
pursuant to Section 2.04 hereof). The original aggregate principal amount of the
Revolving Credit Commitments on the Effective Date is U.S. $50,000,000.

          "REVOLVING CREDIT COMMITMENT PERCENTAGE" shall mean with respect to
any Revolving Credit Lender, the ratio of (a) the amount of the Revolving Credit
Commitment of such Lender to (b) the aggregate amount of the Revolving Credit
Commitments of all Revolving Credit Lenders.

          "REVOLVING CREDIT EXPOSURE" shall mean, on any date, the sum of (a)
the aggregate principal amount of all Revolving Credit Loans outstanding on such
date PLUS (b) the aggregate amount of Revolving Letter of Credit Liabilities
outstanding on such date.

          "REVOLVING CREDIT LENDERS" shall mean (a) on the date hereof, the
Lenders having Revolving Credit Commitments in Schedule IX hereto and (b)
thereafter, the Lenders from time to time holding Revolving Credit Loans,
Revolving Letter of Credit Liabilities and Revolving Credit Commitments after
giving effect to any assignments thereof permitted by Section 12.05 hereof.

          "REVOLVING CREDIT LOANS" shall mean the loans provided for by Section
2.01(a) hereof, which may be Base Rate Loans and/or Eurodollar Loans.

          "REVOLVING CREDIT NOTES" shall mean any promissory notes executed
pursuant to Section 2.08(d) hereof evidencing Revolving Credit Loans, and all
promissory notes delivered in substitution or exchange therefor, in each case as
the same shall be modified and supplemented and in effect from time to time.

          "REVOLVING CREDIT TERMINATION DATE" shall mean December 31, 2006, or,
if such date is not a Business Day, the next preceding Business Day.

          "REVOLVING LETTER OF CREDIT" shall have the meaning assigned to such
term in Section 2.03(c) hereof.

          "REVOLVING LETTER OF CREDIT INTEREST" shall have the meaning assigned
to such term in the definition of "Letter of Credit Interest" in this Section
1.01.

          "REVOLVING LETTER OF CREDIT LIABILITY" shall have the meaning assigned
to such term in the definition of "Letter of Credit Liability" in this Section
1.01.

          "SECURITY AGREEMENT" shall mean the Third Amended, Restated and
Consolidated Security Agreement substantially in the form of Exhibit C hereto
between each Securing Party referred to therein and the Administrative Agent, as
the same shall be modified and supplemented and in effect from time to time.

                                CREDIT AGREEMENT

<Page>

                                     - 26 -

          "SECURITY DOCUMENTS" shall mean, collectively, the Foreign Security
Documents, the Security Agreement, the Mortgages, the Guaranty Agreements and
all Uniform Commercial Code financing statements (and similar registration
instruments in other jurisdictions) required by this Agreement, the Foreign
Security Documents, the Security Agreement or the Mortgages to be filed with
respect to the security interests in personal Property and fixtures created
pursuant to any of such instruments.

          "SENIOR INDEBTEDNESS" shall mean all Indebtedness of the Borrower and
its Restricted Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), excluding Indebtedness of Vateks Tekstil
Sanayi ve Ticaret A.S. permitted under Section 9.08(j) hereof, other than
Subordinated Indebtedness.

          "SENIOR LEVERAGE RATIO" shall mean, as at any date, the ratio of
Senior Indebtedness on such date to EBITDA for the period of four fiscal
quarters ending on or most recently ended prior to such date.

          "SENIOR LEVERAGE RATIO FEE" shall have the meaning assigned to such
term in Section 3.03 hereof.

          "SHARED FACILITIES AGREEMENT" shall mean the Shared Facilities
Agreement dated as of October 23, 1992 between Scott Health Care and FiberTech
Group, Inc., with respect to the Rogers, Arkansas, facility of Scott Paper
Company, as the same shall, subject to Section 9.14 hereof, be modified and
supplemented and in effect from time to time.

          "SUBORDINATED DEBT DOCUMENTS" shall mean, collectively, the New Senior
Subordinated Notes and Junior Subordinated Convertible Debt Documents.

          "SUBORDINATED INDEBTEDNESS" shall mean, collectively, the New Senior
Subordinated Notes, the Junior Subordinated Convertible Notes and any Future
Refinancing Debt.

          "SUBSIDIARY" shall mean, for any Person, any corporation, partnership
or other entity of which at least a majority of the securities or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
of such corporation, partnership or other entity (irrespective of whether or not
at the time securities or other ownership interests of any other class or
classes of such corporation, partnership or other entity shall have or might
have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.

          "SUPERMAJORITY LENDERS" shall mean the Majority Lenders determined in
each case as if the reference to "51%" in the definitions of "Majority
Restructured Lenders" and "Majority Revolving Credit Lenders" were a reference
to "66-2/3%".

                                CREDIT AGREEMENT

<Page>

                                     - 27 -

          "SUPPLY AGREEMENT" shall mean the Supply Agreement dated as of March
15, 1995 between Chicopee and J&J, as the same shall, subject to Section 9.14
hereof, be modified and supplemented and in effect from time to time.

          "TAXES" shall mean all present or future taxes, levies, imposts,
duties, deductions, withholdings, assessments, fees or other charges imposed by
any Governmental Authority, including any interest, additions to tax or
penalties applicable thereto.

          "TECHNOLOGY AGREEMENT" shall mean the Technology Agreement dated as of
March 15, 1995 between Chicopee and J&J, as the same shall be modified and
supplemented and in effect from time to time.

          "TERM" refers, as applicable, to the Term Loan Lenders, Term Loans and
Term Loan Notes.

          "TERM LETTER OF CREDIT" shall have the meaning assigned to such term
in Section 2.03(b) hereof.

          "TERM LETTER OF CREDIT COLLATERAL ACCOUNT" shall mean the "Term Letter
of Credit Collateral Account" established by the Administrative Agent under
Section 4.03 of the Security Agreement.

          "TERM LETTER OF CREDIT INTEREST" shall have the meaning assigned to
such term in the definition of "Letter of Credit Interest" in this Section 1.01.

          "TERM LETTER OF CREDIT LENDERS" shall mean (a) on the date hereof the
Term Lenders having Term Letter of Credit Liabilities in Schedule XI hereto and
(b) thereafter, the Lenders from time to time holding Term Letter of Credit
Liabilities after giving effect to any assignments thereof permitted by Section
12.05 hereof.

          "TERM LETTER OF CREDIT LIABILITY" shall have the meaning assigned to
such term in the definition of "Letter of Credit Liability" in this Section
1.01.

          "TERM LETTER OF CREDIT PARTICIPATION PERCENTAGE" shall mean, with
respect to any Term Letter of Credit Lender, the percentage set forth in
Schedule XI hereto opposite the name of such Lender or, in the case of any
Person that becomes a Term Letter of Credit Lender pursuant to an assignment
permitted under Section 12.05(b) hereof, the percentage specified in the
respective instrument of assignment pursuant to which such assignment is
effected.

          "TERM LOANS" shall mean the loans provided for by Section 2.01(b)
hereof, which may be Base Rate Loans and/or Eurodollar Loans.

          "TERM LOAN LENDERS" shall mean (a) on the date hereof, the Lenders
having Term Loans in Schedule X hereto and (b) thereafter, the Lenders from time
to time holding Term Loans after giving effect to any assignments thereof
permitted by Section 12.05 hereof.

                                CREDIT AGREEMENT

<Page>

                                     - 28 -

          "TERM LOAN NOTES" shall mean any promissory notes executed pursuant to
Section 2.08(d) hereof evidencing Term Loans, and all promissory notes delivered
in substitution or exchange therefor, in each case as the same shall be modified
and supplemented and in effect from time to time.

          "TYPE" shall have the meaning assigned to such term in Section 1.03
hereof.

          "UNCOVERED TERM LETTER OF CREDIT LIABILITIES" shall mean, at any time,
(i) the aggregate amount of Term Letter of Credit Liabilities outstanding at
such time MINUS (ii) the aggregate balance then held in the Term Letter of
Credit Collateral Account.

          "UNRESTRICTED SUBSIDIARY" shall mean any Subsidiary of the Borrower
that (a) shall have been designated as an "Unrestricted Subsidiary" in
accordance with the provisions of Section 1.04 hereof and (b) any Subsidiary of
an Unrestricted Subsidiary.

          "U.S. DOLLAR EQUIVALENT" shall mean, on any day, with respect to any
Loan denominated in Canadian Dollars, the amount of U.S. Dollars that would be
required to purchase the Canadian Dollar amount of such Loan on such day,
assuming a rate of exchange equal to the New York foreign exchange selling rate
quoted for such Canadian Dollars in the Wall Street Journal for such day (or,
for the most recent day on which the Wall Street Journal shall have been
published), PROVIDED that if for any reason the Wall Street Journal shall cease
to be published for three or more consecutive Business Days, "U.S. Dollar
Equivalent" shall mean the amount of U.S. Dollars that would be required to
purchase the Canadian Dollar amount of such Loan on such day, based upon the
spot selling rate at which the Administrative Agent offers to sell Canadian
Dollars for U.S. Dollars in the London foreign exchange market at approximately
11:00 a.m. London time for delivery two Business Days later.

          "U.S. DOLLARS" and "U.S. $" shall mean lawful money of the United
States of America.

          "WHOLLY OWNED SUBSIDIARY" shall mean, with respect to any Person, any
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors' qualifying shares) are directly or indirectly owned or controlled by
such Person or one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person. The term
"WHOLLY OWNED RESTRICTED SUBSIDIARY" shall mean a Wholly Owned Subsidiary of the
Borrower that is a Restricted Subsidiary.

          1.02 ACCOUNTING TERMS AND DETERMINATIONS.

          (a) ACCOUNTING TERMS GENERALLY. Except as otherwise expressly provided
herein, all accounting terms used herein shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to be
delivered to the Lenders hereunder shall (unless otherwise disclosed to the
Lenders in writing at the time of delivery thereof in the manner described in
subsection (b) below) be prepared, in accordance with generally accepted
accounting principles applied on a basis consistent with those used in the
preparation of the latest

                                CREDIT AGREEMENT

<Page>

                                     - 29 -

financial statements furnished to the Lenders hereunder (which, prior to the
delivery of the first financial statements under Section 9.01 hereof, shall mean
the consolidated financial statements referred to in Section 8.02(a) hereof).
All calculations made for purposes of determining compliance with this Agreement
shall (except as otherwise expressly provided herein) be made by application of
generally accepted accounting principles applied on a basis consistent with
those used in the preparation of the latest annual or quarterly financial
statements furnished to the Lenders pursuant to Section 9.01 hereof (or, prior
to the delivery of the first financial statements under Section 9.01 hereof,
used in the preparation of the consolidated financial statements referred to in
Section 8.02(a) hereof) unless

          (i) the Borrower shall have objected to determining such compliance on
     such basis at the time of delivery of such financial statements or

          (ii) the Majority Lenders shall so object in writing within 30 days
     after delivery of such financial statements,

in either of which events such calculations shall be made on a basis consistent
with those used in the preparation of the latest financial statements as to
which such objection shall not have been made (which, if objection is made in
respect of the first financial statements delivered under Section 9.01 hereof,
shall mean the consolidated financial statements referred to in Section 8.02(a)
hereof).

          (b) CHANGES IN ACCOUNTING PRINCIPLES. The Borrower shall deliver to
the Lenders at the same time as the delivery of any annual or quarterly
financial statement under Section 9.01 hereof (i) a description in reasonable
detail of any material variation between the application of accounting
principles employed in the preparation of such statement and the application of
accounting principles employed in the preparation of the next preceding annual
or quarterly financial statements as to which no objection has been made in
accordance with the last sentence of subsection (a) above and (ii) reasonable
estimates of the difference between such statements arising as a consequence
thereof.

          (c) FISCAL PERIODS. To enable the ready and consistent determination
of compliance with the covenants set forth in Section 9 hereof, the Borrower and
its Subsidiaries will not change the last day of their fiscal year from the
Saturday closest to December 31 of each year (whether or not such last day
occurs in the same calendar year or the next following calendar year), or the
last days of the first three fiscal quarters in each of their fiscal years from
the Saturday closest to March 31, June 30 and September 30 of each year,
respectively; PROVIDED that the foregoing shall not apply to Bonlam to the
extent that Bonlam is not permitted under Mexican law to conform its fiscal
dates in such manner.

          1.03 CLASSES AND TYPES OF LOANS. Loans hereunder are distinguished by
"Class" and "Type". The "Class" of a Loan refers to whether such Loan is a
Revolving Credit Loan or a Term Loan, each of which constitutes a Class. The
"Type" of a Loan refers to whether such Loan is a Base Rate Loan or a Eurodollar
Loan, each of which constitutes a Type. Loans may be identified by Class and
Type.

                                CREDIT AGREEMENT

<Page>

                                     - 30 -

          1.04 SUBSIDIARIES; DESIGNATION OF UNRESTRICTED SUBSIDIARIES. The
Borrower shall not at any time designate any of its Subsidiaries (including any
existing, newly acquired or newly formed Subsidiary, but excluding any Obligor
or Bonlam or any Subsidiary of Bonlam or Fabrene obligated in respect of the
Intercompany Notes of Bonlam or Fabrene) to be an "Unrestricted Subsidiary" for
purposes of this Agreement without the consent of the Majority Lenders or the
Administrative Agent acting with the consent of the Majority Lenders. Subject to
the immediately preceding sentence, the Borrower may at any time designate any
of its Subsidiaries (including any existing, newly acquired or newly formed
Subsidiary, but excluding any Obligor or Bonlam or any Subsidiary of Bonlam or
Fabrene obligated in respect of the Intercompany Notes of Bonlam or Fabrene) to
be an "Unrestricted Subsidiary" for purposes of this Agreement, by delivering to
the Administrative Agent a certificate of a senior financial officer of the
Borrower (and the Administrative Agent shall promptly forward a copy of such
certificate to each Lender) attaching a copy of a resolution of its Board of
Directors setting forth such designation and stating that the conditions set
forth in this Section 1.04 have been satisfied with respect to such designation,
PROVIDED that no such designation shall be effective unless (x) at the time of
such designation and after giving effect thereto, no Default or Event of Default
shall have occurred and be continuing and (y) at the time of such designation
and at all times thereafter:

          (a) neither the Borrower nor any Restricted Subsidiary is directly or
     indirectly liable for any Indebtedness of such Subsidiary;

          (b) no default with respect to any Indebtedness of such Subsidiary
     would permit (upon notice, lapse of time or otherwise) any holder of any
     other Indebtedness of the Borrower or any Restricted Subsidiary to declare
     a default on such other Indebtedness or cause the payment thereof to be
     accelerated or payable prior to its stated maturity;

          (c) neither the Borrower nor any Restricted Subsidiary has a contract,
     agreement, arrangement, understanding or obligation of any kind, whether
     written or oral, with such Subsidiary other than those that might be
     obtained at the time from Persons who are not Affiliates of the Obligors;
     and

          (d) neither the Borrower nor any Restricted Subsidiary has any
     obligation (i) to subscribe for additional shares of capital stock or other
     equity interest in such Subsidiary or (ii) to maintain or preserve such
     Subsidiary's financial condition or to cause such Subsidiary to achieve
     certain levels of operating results.

          Section 2. REVOLVING CREDIT COMMITMENTS, LOANS AND PREPAYMENTS.

          2.01 LOANS.

          (a) REVOLVING CREDIT LOANS. Each Revolving Credit Lender severally
agrees, on the terms and conditions of this Agreement, to make loans to the
Borrower in U.S. Dollars, in an aggregate principal amount at any one time
outstanding up to but not exceeding such Lender's Revolving Credit Commitment as
in effect from time to time, in each case during the period

                                CREDIT AGREEMENT

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                                     - 31 -

from and including the Effective Date to but not including the Revolving Credit
Termination Date; PROVIDED that in no event shall the aggregate principal amount
of all Revolving Credit Loans and the aggregate amount of all Revolving Letter
of Credit Liabilities, exceed the aggregate amount of the Revolving Credit
Commitments. Revolving Credit Loans shall be either Base Rate Loans or
Eurodollar Loans. During such period, and subject to the terms and conditions of
this Agreement, the Borrower may borrow, repay and reborrow the amount of the
Revolving Credit Commitments by means of Base Rate Loans and Eurodollar Loans,
and may Convert Revolving Credit Loans of one Type into Revolving Credit Loans
of another Type (as provided in Section 2.09 hereof) and may Continue Revolving
Credit Loans of one Type as Revolving Credit Loans of the same Type (as provided
in Section 2.09 hereof).

          (b) TERM LOANS. The loans of each Term Loan Lender to the Borrower
that are outstanding under the Existing Credit Agreement on the close of
business on the Business Day immediately prior to the Effective Date and
denominated in U.S. Dollars shall on the Effective Date automatically become
Term Loans hereunder to the Borrower denominated in an equivalent amount of U.S.
Dollars. The loans of each Term Loan Lender to Fabrene outstanding under the
Existing Credit Agreement on the close of business on the Business Day
immediately prior to the Effective Date and denominated in Canadian Dollars
shall on the Effective Date automatically become Term Loans hereunder to the
Borrower denominated in the U.S. Dollar Equivalent determined as of the
Effective Date of the Canadian Dollar amount of such Loans. In that connection,
each Term Loan Lender hereby authorizes the Administrative Agent on the
Effective Date to complete Columns 4 and 5 to Schedule X hereto to reflect the
actual U.S. Dollar Equivalent of such Canadian Dollar amounts, and to reflect
the resulting aggregate U.S. Dollar amount of Term Loans held by each Term Loan
Lender hereunder. After the Effective Date, and subject to the terms and
conditions of this Agreement, the Borrower may Convert Term Loans of one Type
into Term Loans of another Type (as provided in Section 2.09 hereof) or Continue
Term Loans of one Type as Term Loans of the same Type (as provided in Section
2.09 hereof).

          (c) TERM LETTERS OF CREDIT. As provided in Section 2.03(b) hereof, on
the Effective Date, all Letters of Credit outstanding on the close of business
on the Business Day immediately prior to the Effective Date under the Existing
Credit Agreement shall on the Effective Date automatically, and without any
action on the part of any Person, become Term Letters of Credit hereunder in
accordance with the provisions of said Section 2.03(b).

          (d) LIEN PRIORITY. Anything herein or in any of the Security Documents
to the contrary notwithstanding, the Liens created under the Security Documents
in favor of the Administrative Agent shall be deemed to secure first the
obligations of the Obligors in respect of the Revolving Credit Loans and
Revolving Letter of Credit Liabilities and second the obligations of the
Obligors in respect of the Term Loans and Term Letter of Credit Liabilities.
Accordingly, upon any exercise of rights or remedies by the Administrative Agent
under any of the Security Documents, the Administrative Agent shall apply any
cash proceeds received as a result thereof, after payment of all costs and
expenses associated therewith (and the payment of all expenses incurred and
advances made by the Administrative Agent in connection therewith), first to the
payment of the principal and interest on the Revolving Credit Loans (and
commitment fees in respect of the Revolving Credit Commitments), and to provide
cover for Revolving Letters of

                                CREDIT AGREEMENT

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                                     - 32 -

Credit as provided in Section 2.03(c)(vi) hereof, and, after payment in full of
such amounts and provision of such cover, to the payment of all other
obligations hereunder.

          2.02 BORROWINGS. The Borrower shall give the Administrative Agent
(which shall promptly notify the Revolving Credit Lenders) notice of each
borrowing of Revolving Credit Loans to be made to the Borrower hereunder as
provided in Section 4.05 hereof. Not later than 2:00 p.m. New York time on the
date specified for each borrowing hereunder, each Revolving Credit Lender shall
make available the amount of the Revolving Credit Loan or Revolving Credit Loans
to be made by it on such date to the Administrative Agent at the Principal
Office in immediately available funds, for account of the Borrower. The amount
so received by the Administrative Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Borrower by depositing
the same, in immediately available funds, in an account of the Borrower
designated by it.

          2.03 LETTERS OF CREDIT.

          (a) LETTERS OF CREDIT GENERALLY. As provided in paragraph (b) below,
all "Letters of Credit" outstanding on the Effective Date under the Existing
Credit Agreement shall automatically become Term Letters of Credit hereunder. In
addition, as provided in paragraph (c) below, the Revolving Credit Commitments
may, upon request of the Borrower, be utilized through the issuance of Revolving
Letters of Credit. The following provisions shall apply to all Letters of Credit
hereunder:

          (i) NOTICE OF DRAWINGS. Upon receipt from the beneficiary of any
     Letter of Credit of any demand for payment under such Letter of Credit, the
     Issuing Lender shall promptly notify the Borrower (through the
     Administrative Agent) of the amount to be paid by the Issuing Lender as a
     result of such demand and the date on which payment is to be made by the
     Issuing Lender to such beneficiary in respect of such demand. The Borrower
     hereby unconditionally agrees to pay and reimburse the Administrative Agent
     for account of the Issuing Lender for the amount of each demand for payment
     under a Letter of Credit at or prior to the date on which payment is to be
     made by the Issuing Lender to the beneficiary thereunder, without
     presentment, demand, protest or other formalities of any kind.

          (ii) REIMBURSEMENT BY BORROWER. Forthwith upon its receipt of a notice
     referred to in subclause (i) of this Section 2.03(a), the Borrower shall
     advise the Administrative Agent whether or not the Borrower intends to
     reimburse the Issuing Lender for the amount of the related demand for
     payment, it being understood that, with respect to Term Letters of Credit,
     to the extent of any balance at the time in the Term Letter of Credit
     Collateral Account, the Borrower shall be deemed to have requested that
     such balance be applied to such reimbursement (and the Administrative Agent
     shall, accordingly, apply such balance to such reimbursement). In the event
     that the Borrower fails to so advise the Administrative Agent, or if the
     Borrower fails to reimburse the Issuing Lender for a demand for payment
     under a Letter of Credit by the date of such payment, the Administrative
     Agent shall give each Term Letter of Credit Lender with respect to the Term
     Letters of Credit, and each Revolving Credit Lender with respect to the
     Revolving

                                CREDIT AGREEMENT

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                                     - 33 -

     Letters of Credit, prompt notice of the amount of the demand for payment,
     specifying such Lender's Term Letter of Credit Participation Percentage or
     Revolving Credit Commitment Percentage, as applicable, of the amount of the
     related demand for payment.

          (iii) PAYMENT BY LETTER OF CREDIT LENDERS. Each Term Letter of Credit
     Lender (other than the Issuing Lender) with respect to Term Letters of
     Credit, and each Revolving Credit Lender (other than the Issuing Lender)
     with respect to Revolving Letters of Credit, shall pay to the
     Administrative Agent for account of the Issuing Lender at the Principal
     Office in U.S. Dollars and in immediately available funds, the amount of
     such Lender's Term Letter of Credit Participation Percentage or Revolving
     Credit Commitment Percentage, as applicable, of any payment under a Term
     Letter of Credit or Revolving Letter of Credit, as applicable, upon notice
     by the Issuing Lender (through the Administrative Agent) to such Term
     Letter of Credit Lender or Revolving Credit Lender, as applicable,
     requesting such payment and specifying such amount. Each such Term Letter
     of Credit Lender's or Revolving Credit Lender's, as applicable, obligation
     to make such payments to the Administrative Agent for account of the
     Issuing Lender under this subclause (iii), and the Issuing Lender's right
     to receive the same, shall be absolute and unconditional and shall not be
     affected by any circumstance whatsoever (except as provided in the proviso
     at the end of this sentence), including, without limitation, (x) the
     failure of any other Term Letter of Credit Lender or Revolving Credit
     Lender, as applicable, to make its payment under this subclause (iii), (y)
     the financial condition of the Borrower (or any other account party) or (z)
     the existence of any Default; PROVIDED that, no Term Letter of Credit
     Lender or Revolving Credit Lender, as applicable, shall be obligated to
     make any payment to the Administrative Agent for the account of the Issuing
     Lender under any Term Letter of Credit or Revolving Letter of Credit, as
     applicable, to the extent that the Borrower shall not be required to
     indemnify any Lender or the Administrative Agent in the circumstances
     provided in clause (x) of the penultimate sentence of the last paragraph of
     this Section 2.03. Each such payment to the Issuing Lender shall be made
     without any offset, abatement, withholding or reduction whatsoever.

          (iv) PAYMENTS TO LETTER OF CREDIT LENDERS. Subject to the making of
     each payment by a Letter of Credit Lender to the Issuing Lender pursuant to
     subclause (iii) above in respect of any Letter of Credit, upon receipt by
     the Issuing Lender from or for account of the Borrower of any payment in
     respect of any Reimbursement Obligation or any such interest or other
     amount (including by way of setoff or application of proceeds of any
     collateral security) the Issuing Lender shall promptly pay to the
     Administrative Agent for account of each Term Letter of Credit Lender or
     Revolving Credit Lender, as applicable, entitled thereto, such Term Letter
     of Credit Lender's Term Letter of Credit Participation Percentage or such
     Revolving Credit Lender's Revolving Credit Commitment Percentage, as
     applicable, of such payment, each such payment by the Issuing Lender to be
     made in the same money and funds in which received by the Issuing Lender.
     In the event any payment received by the Issuing Lender and so paid to the
     applicable Letter of Credit Lenders hereunder is rescinded or must
     otherwise be returned by the Issuing Lender, each Term Letter of Credit
     Lender or Revolving Credit Lender, as applicable, shall, upon the request
     of the Issuing Lender

                                CREDIT AGREEMENT

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                                     - 34 -

     (through the Administrative Agent), repay to the Issuing Lender (through
     the Administrative Agent) the amount of such payment paid to such Lender,
     with interest, if any, at the rate required to be paid by the Issuing
     Lender upon any return of such funds.

          (v) FEES AND COMMISSIONS, ETC. The Borrower shall pay to the
     Administrative Agent for account of each Term Letter of Credit Lender
     (ratably in accordance with their respective Term Letter of Credit
     Participation Percentages) and each Revolving Credit Lender (ratably in
     accordance with their respective Revolving Credit Commitment Percentages),
     as applicable, a letter of credit fee in respect of each Term Letter of
     Credit or Revolving Letter of Credit, as applicable, at a rate per annum
     equal to the product of

               (x) in the case of Term Letters of Credit, the Applicable Margin
          for Eurodollar Term Loans and the daily average undrawn face amount of
          such Term Letter of Credit and

               (y) in the case of Revolving Letters of Credit, the Applicable
          Margin for Eurodollar Revolving Credit Loans and the daily average
          undrawn face amount of such Revolving Letter of Credit,

     in each case for the period from and including the Effective Date (A) in
     the case of a Letter of Credit that expires in accordance with its terms,
     to and including such expiration date and (B) in the case of a Letter of
     Credit that is drawn in full or is otherwise terminated other than on the
     stated expiration date of such Letter of Credit, to but excluding the date
     such Letter of Credit is drawn in full or is terminated (such fee to be
     non-refundable, to be paid in arrears on each Quarterly Date and on the
     date such Letter of Credit is so drawn in full or terminated and to be
     calculated for any day after giving effect to any payments made under such
     Letter of Credit on such day).

          In addition, the Borrower shall pay to the Administrative Agent for
     account of the Issuing Lender a fronting fee in respect of each Letter of
     Credit issued on behalf of the Borrower in an amount equal to .25% per
     annum of the daily average undrawn face amount of such Letter of Credit for
     the period from and including the date of issuance of such Letter of Credit
     (i) in the case of a Letter of Credit that expires in accordance with its
     terms, to and including such expiration date and (ii) in the case of a
     Letter of Credit that is drawn in full or is otherwise terminated other
     than on the stated expiration date of such Letter of Credit, to but
     excluding the date such Letter of Credit is drawn in full or is terminated
     (such fee to be non-refundable, to be paid in arrears on each Quarterly
     Date and on the date such Letter of Credit is so drawn in full or
     terminated and to be calculated for any day after giving effect to any
     payments made under such Letter of Credit on such day) PLUS all
     commissions, charges, costs and expenses in the amounts customarily charged
     by the Issuing Lender from time to time in like circumstances with respect
     to the issuance of each Letter of Credit and drawings and other
     transactions relating thereto.

          (vi) REPORTS BY ISSUING LENDER. Promptly following the end of each
     calendar month, the Issuing Lender shall deliver (through the
     Administrative Agent) to each Term Letter of Credit Lender or Revolving
     Credit Lender, as applicable, and to the Borrower, a

                                CREDIT AGREEMENT

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                                     - 35 -

     notice describing the aggregate stated amount of all Term Letters of Credit
     or Revolving Letters of Credit, as applicable, outstanding at the end of
     such month. Upon the request of any Letter of Credit Lender from time to
     time, the Issuing Lender shall deliver any other information reasonably
     requested by such Lender with respect to each Term Letter of Credit or
     Revolving Letter of Credit, as applicable, then outstanding.

          (vii) CONFLICT WITH OTHER AGREEMENTS. In the event of any conflict
     between any Letter of Credit Document heretofore or hereafter executed
     between the Borrower or any of its Subsidiaries and the Issuing Lender with
     respect to any Letter of Credit, and the provisions of this Agreement or
     any Security Document, the provisions of this Agreement and the Security
     Documents shall control.

          (b) TERM LETTERS OF CREDIT. On the Effective Date, all Letters of
Credit outstanding on the close of business on the Business Day immediately
prior to the Effective Date under the Existing Credit Agreement shall on the
Effective Date automatically, and without any action on the part of any Person,
become letters of credit (collectively, "TERM LETTERS OF CREDIT") hereunder for
account of the Borrower. Any Term Letter of Credit shall be extended and renewed
from time to time as requested by the Borrower, PROVIDED that in no event shall
the expiration date of any Term Letter of Credit extend beyond the earlier of
five Business Days prior to the Revolving Credit Termination Date and the date
one year following the date of such extension or renewal. The following
additional provisions shall apply to Term Letters of Credit:

          (i) NOTICES OF EXTENSIONS OR RENEWALS. The Borrower shall give the
     Administrative Agent at least five Business Days' irrevocable prior notice
     (effective upon receipt) specifying the Business Day each Term Letter of
     Credit is to be extended or renewed and specifying the date to which such
     Term Letter of Credit shall be extended or renewed. Upon receipt of any
     such notice, the Administrative Agent shall advise the Issuing Lender of
     the contents thereof.

          (ii) PARTICIPATIONS IN TERM LETTERS OF CREDIT. Each Term Letter of
     Credit Lender (other than the Issuing Lender) confirms that, under the
     Existing Credit Agreement (and continuing hereunder), it has acquired a
     Letter of Credit Interest with respect to such Term Letter of Credit in an
     amount equal to such Lender's Term Letter of Credit Participation
     Percentage of the Issuing Lender's liability under such Term Letter of
     Credit, and each Term Letter of Credit Lender (other than the Issuing
     Lender) thereby (and continuing hereunder) has absolutely, unconditionally
     and irrevocably assumed, as primary obligor and not as surety, and shall be
     unconditionally obligated to the Issuing Lender to pay and discharge when
     due, its Term Letter of Credit Participation Percentage of the Issuing
     Lender's liability under such Term Letter of Credit.

          (iii) PAYMENT OF INTEREST BY TERM LETTER OF CREDIT LENDERS. To the
     extent that any Letter of Credit Lender fails to pay any amount required to
     be paid pursuant to subclause (iii) or (iv) of Section 2.03(a) hereof on
     the due date therefor, such Lender shall pay interest to the Issuing Lender
     (through the Administrative Agent) on such amount from and including such
     due date to but excluding the date such payment is made (i) during the
     period from and including such due date to but excluding the date three

                                CREDIT AGREEMENT

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                                     - 36 -

     Business Days thereafter, at a rate per annum equal to the Federal Funds
     Rate (as in effect from time to time) and (ii) thereafter, at a rate per
     annum equal to 1% above the Post-Default Rate for Base Rate Term Loans
     hereunder.

          (iv) CONDITIONS TO EXTENSIONS OR SUPPLEMENTS. The issuance by the
     Issuing Lender of any extension, renewal, modification or supplement to any
     Term Letter of Credit hereunder shall, in addition to the conditions
     precedent set forth in Section 7 hereof, be subject to the conditions
     precedent that such Term Letter of Credit, as so extended, renewed,
     modified or supplemented, shall be in such form, contain such terms and
     support such transactions as shall either (x) be satisfactory to the
     Issuing Lender consistent with its then current practices and procedures
     with respect to Term Letters of Credit of the same type or (y) have been
     consented to by each Term Letter of Credit Lender.

          (v) COVER FOR TERM LETTER OF CREDIT LIABILITIES. Whenever in this
     Agreement the Borrower shall be required to provide cover for Term Letter
     of Credit Liabilities, the Borrower shall effect the same by paying to the
     Administrative Agent for deposit into the Term Letter of Credit Collateral
     Account immediately available funds in an amount equal to the required
     amount.

          (c) REVOLVING LETTERS OF CREDIT. Subject to the terms and conditions
of this Agreement, the Revolving Credit Commitments may be utilized, upon the
request of the Borrower, in addition to the Revolving Credit Loans provided for
by Section 2.01(a) hereof, by the issuance by the Issuing Lender of letters of
credit (collectively, "REVOLVING LETTERS OF CREDIT") for account of the Borrower
or any of its Subsidiaries (as specified by the Borrower), PROVIDED that in no
event shall (i) the aggregate amount of all Revolving Letter of Credit
Liabilities and the aggregate principal amount of all Revolving Credit Loans,
exceed the aggregate amount of the Revolving Credit Commitments, (ii) the
outstanding aggregate amount of all Revolving Letter of Credit Liabilities
exceed U.S. $10,000,000 or (iii) the expiration date of any Revolving Letter of
Credit extend beyond the earlier of the Revolving Credit Termination Date and
the date one year following the issuance of such Revolving Letter of Credit. The
following additional provisions shall apply to Revolving Letters of Credit:

          (i) NOTICE OF ISSUANCE. The Borrower shall give the Administrative
     Agent at least five Business Days' irrevocable prior notice (effective upon
     receipt) specifying the Business Day (which shall be no later than 30 days
     preceding the Revolving Commitment Termination Date) each Revolving Letter
     of Credit is to be issued and the account party or parties therefor and
     describing in reasonable detail the proposed terms of such Revolving Letter
     of Credit (including the beneficiary thereof) and the nature of the
     transactions or obligations proposed to be supported thereby (including
     whether such Revolving Letter of Credit is to be a commercial letter of
     credit or a standby letter of credit). Upon receipt of any such notice, the
     Administrative Agent shall advise the Issuing Lender of the contents
     thereof.

          (ii) PARTICIPATIONS IN REVOLVING LETTERS OF CREDIT. On each day during
     the period commencing with the issuance by the Issuing Lender of any
     Revolving Letter of Credit

                                CREDIT AGREEMENT

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                                     - 37 -

     and until such Revolving Letter of Credit shall have expired or been
     terminated, the Revolving Credit Commitment of each Revolving Credit Lender
     shall be deemed to be utilized for all purposes of this Agreement in an
     amount equal to such Lender's Revolving Credit Commitment Percentage of the
     then undrawn face amount of such Revolving Letter of Credit. Each Revolving
     Credit Lender (other than the Issuing Lender) agrees that, upon the
     issuance of any Revolving Letter of Credit hereunder, it shall
     automatically acquire a Letter of Credit Interest with respect to such
     Revolving Letter of Credit in an amount equal to such Lender's Revolving
     Credit Commitment Percentage of the Issuing Lender's liability under such
     Revolving Letter of Credit, and each Revolving Credit Lender (other than
     the Issuing Lender) thereby shall absolutely, unconditionally and
     irrevocably assume, as primary obligor and not as surety, and shall be
     unconditionally obligated to the Issuing Lender to pay and discharge when
     due, its Revolving Credit Commitment Percentage of the Issuing Lender's
     liability under such Revolving Letter of Credit.

          (iii) PAYMENT OF INTEREST BY REVOLVING CREDIT LENDERS. To the extent
     that any Revolving Credit Lender fails to pay any amount required to be
     paid pursuant to subclause (iii) or (iv) of Section 2.03(a) hereof on the
     due date therefor, such Lender shall pay interest to the Issuing Lender
     (through the Administrative Agent) on such amount from and including such
     due date to but excluding the date such payment is made (i) during the
     period from and including such due date to but excluding the date three
     Business Days thereafter, at a rate per annum equal to the Federal Funds
     Rate (as in effect from time to time) and (ii) thereafter, at a rate per
     annum equal to the Post-Default Rate for Base Rate Revolving Credit Loans
     hereunder.

          (iv) CONDITIONS PRECEDENT TO ISSUANCE. The issuance by the Issuing
     Lender of each Revolving Letter of Credit shall, in addition to the
     conditions precedent set forth in Section 7 hereof, be subject to the
     conditions precedent that (i) such Revolving Letter of Credit shall either
     (x) be in such form, contain such terms and support such transactions as
     shall be satisfactory to the Issuing Lender consistent with its then
     current practices and procedures with respect to Revolving Letters of
     Credit of the same type or (y) have been consented to by each Revolving
     Credit Lender and (ii) the Borrower shall have executed and delivered such
     applications, agreements and other instruments relating to such Revolving
     Letter of Credit as the Issuing Lender shall have reasonably requested
     consistent with its then current practices and procedures with respect to
     Revolving Letters of Credit of the same type.

          (v) MODIFICATIONS AND SUPPLEMENTS. The issuance by the Issuing Lender
     of any modification or supplement to any Revolving Letter of Credit
     hereunder shall be subject to the same conditions applicable under this
     Section 2.03(c) to the issuance of new Revolving Letters of Credit, and no
     such modification or supplement shall be issued hereunder unless either (x)
     the respective Revolving Letter of Credit affected thereby would have
     complied with such conditions had it originally been issued hereunder in
     such modified or supplemented form or (y) each Revolving Credit Lender
     shall have consented thereto.

                                CREDIT AGREEMENT

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                                     - 38 -

          (vi) COVER FOR REVOLVING LETTER OF CREDIT LIABILITIES. In the event
     that the Borrower shall be required pursuant to Section 2.10 hereof to
     provide cover for Revolving Letter of Credit Liabilities, the Borrower
     shall effect the same by paying to the Administrative Agent immediately
     available funds in an amount equal to the required amount, which funds
     shall be retained by the Administrative Agent in the Collateral Account (as
     provided in the Security Agreement as collateral security in the first
     instance for the Revolving Letter of Credit Liabilities) until such time as
     the Revolving Letters of Credit shall have been terminated and all of the
     Revolving Letter of Credit Liabilities paid in full.

The Borrower hereby indemnifies and holds harmless each Letter of Credit Lender
and the Administrative Agent from and against any and all claims and damages,
losses, liabilities, costs or expenses which such Lender or the Administrative
Agent may incur (or which may be claimed against such Lender or the
Administrative Agent by any Person whatsoever) by reason of or in connection
with the execution and delivery or transfer of or payment or refusal to pay by
the Issuing Lender under any Letter of Credit; PROVIDED that the Borrower shall
not be required to indemnify any Lender or the Administrative Agent for any
claims, damages, losses, liabilities, costs or expenses to the extent, but only
to the extent, caused by (x) the willful misconduct or gross negligence of the
Issuing Lender in determining whether a request presented under any Letter of
Credit issued on behalf of the Borrower complied with the terms of the Letter of
Credit or (y) in the case of the Issuing Lender, such Lender's failure to pay
under any Letter of Credit issued on behalf of the Borrower after the
presentation to it of a request strictly complying with the terms and conditions
of such Letter of Credit. Nothing in this Section 2.03 is intended to limit the
other obligations of the Borrower, any Lender or the Administrative Agent under
this Agreement.

          2.04 CHANGES OF REVOLVING CREDIT COMMITMENTS.

          (a) SCHEDULED REDUCTION. The aggregate amount of the Revolving Credit
Commitments shall be automatically reduced to zero on the Revolving Credit
Termination Date.

          (b) VOLUNTARY REDUCTION. The Borrower shall have the right at any time
and from time to time (x) to terminate the Revolving Credit Commitments (but
only so long as no Revolving Credit Loans or Revolving Letter of Credit
Liabilities are outstanding at such time) and (y) to reduce the aggregate unused
amount of the Revolving Credit Commitments (for which purpose use of the
Revolving Credit Commitments shall be deemed to include the aggregate amount of
Revolving Letter of Credit Liabilities). In connection with any such termination
or reduction, (i) the Borrower shall give notice of such termination or
reduction as provided in Section 4.05 hereof, and (ii) each partial reduction
shall be in an aggregate amount at least equal to U.S. $2,000,000 or in
multiples of U.S. $1,000,000 in excess thereof.

          (c) NO REINSTATEMENT. The Revolving Credit Commitments once terminated
or reduced may not be reinstated.

                                CREDIT AGREEMENT

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                                     - 39 -

          2.05 COMMITMENT FEES. The Borrower shall pay to the Administrative
Agent for account of each Revolving Credit Lender, a commitment fee on the daily
average unused amount of such Lender's Revolving Credit Commitments (for which
purpose, outstanding Revolving Letters of Credit shall be deemed to constitute a
use of the Revolving Credit Commitments) for the period from and including the
Effective Date to but not including the earlier of the date the Revolving Credit
Commitments are terminated and the Revolving Credit Termination Date, at a rate
per annum equal to 0.75%. Accrued commitment fees shall be payable in U.S.
Dollars on each Quarterly Date and on the earlier of the date the Revolving
Credit Commitments are terminated and the Revolving Credit Termination Date.

          2.06 LENDING OFFICES. The Loans of each Type made by each Lender shall
be made and maintained at such Lender's Applicable Lending Office for Loans of
such Type.

          2.07 SEVERAL OBLIGATIONS; REMEDIES INDEPENDENT. The failure of any
Revolving Credit Lender to make any Revolving Credit Loan to be made by it on
the date specified therefor shall not relieve any other Revolving Credit Lender
of its obligation to make its Revolving Credit Loan on such date, but neither
any Revolving Credit Lender nor the Administrative Agent shall be responsible
for the failure of any other Revolving Credit Lender to make a Revolving Credit
Loan to be made by such other Revolving Credit Lender, and no Revolving Credit
Lender shall have any obligation to the Administrative Agent or any other
Revolving Credit Lender for the failure by such Revolving Credit Lender to make
any Revolving Credit Loan required to be made by such Revolving Credit Lender.
The amounts payable by the Borrower at any time hereunder and under the Notes to
each Lender shall be a separate and independent debt and each Lender shall be
entitled to protect and enforce its rights arising out of this Agreement and the
Notes, and it shall not be necessary for any other Lender or the Administrative
Agent to consent to, or be joined as an additional party in, any proceedings for
such purposes.

          2.08 LOAN ACCOUNTS; PROMISSORY NOTES.

          (a) MAINTENANCE OF RECORDS BY LENDERS. Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender in respect of each Loan held by such
Lender hereunder, including the amounts of principal and interest payable and
paid to such Lender by the Borrower from time to time hereunder.

          (b) MAINTENANCE OF RECORDS BY THE ADMINISTRATIVE AGENT. The
Administrative Agent shall maintain accounts in which it shall record (i) the
amount of each Loan hereunder, the Class and Type thereof and the Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) the amount of any sum received by the Administrative Agent hereunder
from the Borrower for the account of the Lenders and each Lender's share
thereof.

          (c) EFFECT OF ENTRIES. The entries made in the accounts maintained
pursuant to paragraph (a) or (b) of this Section 2.08 shall be prima facie
evidence of the existence and amounts of the obligations recorded therein;
PROVIDED that the failure of any Lender or the Administrative Agent to maintain
such accounts or any error therein shall not in any manner

                                CREDIT AGREEMENT

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                                     - 40 -

affect the obligation of the Borrower to repay the Loans in accordance with the
terms of this Agreement.

          (d) PROMISSORY NOTES. Any Lender may request that Loans of any Class
made by it to the Borrower be evidenced by a promissory note. In such event, the
Borrower shall prepare, execute and deliver to such Lender a promissory note
payable to the order of such Lender (or, if requested by such Lender, to such
Lender and its registered assigns) and in a form approved by the Administrative
Agent. Thereafter, the Loans of the Borrower evidenced by such promissory note
and interest thereon shall at all times (including after assignment pursuant to
Section 12.05 hereof) be represented by one or more promissory notes in such
form payable to the order of the payee named therein (or, if such promissory
note is a registered note, to such payee and its registered assigns).

          2.09 OPTIONAL PREPAYMENTS; CONVERSIONS OR CONTINUATIONS OF LOANS.
Subject to Section 4.04 hereof, the Borrower shall have the right (x) to prepay
Loans, or to Convert Loans of one Type into Loans of another Type or (in the
case of all Loans) to Continue Loans of one Type as Loans of the same Type, at
any time or from time to time and (y) to deposit funds into (i) the Term Letter
of Credit Collateral Account as additional cover for Term Letter of Credit
Liabilities or (ii) the Collateral Account as additional cover for Revolving
Letter of Credit Liabilities, PROVIDED that (a) the Borrower shall give the
Administrative Agent notice of each such prepayment, deposit, Conversion or
Continuation as provided in Section 4.05 hereof (and, upon the date specified in
any such notice of prepayment or deposit, the amount to be prepaid or deposited
shall become due and payable hereunder), (b) upon any prepayment or Conversion
of Eurodollar Loans other than on the last day of an Interest Period for such
Loans, the Borrower shall pay any amounts owing under Section 5.05 hereof as a
result of such prepayment or Conversion, (c) upon any prepayment of Term Loans,
or deposit of funds into the Term Letter of Credit Collateral Account, the
Borrower shall concurrently prepay Term Loans and deposit funds into the Term
Letter of Credit Collateral Account so that the benefits of such prepayment and
deposit are shared between the Term Loan Lenders and the Term Letter of Credit
Lenders ratably in accordance with the respective outstanding principal amounts
of Term Loans and Uncovered Term Letter of Credit Liabilities held by such Term
Letter of Credit Lenders at the time of such prepayment and deposit and (d)
prepayments of Term Loans, and deposits of funds into the Term Letter of Credit
Collateral Account, shall be applied to the payments and deposits required to be
made under Section 3.01(b) hereof in inverse order of maturity and may not be
reborrowed.

          Notwithstanding the foregoing, and without limiting the rights and
remedies of the Lenders under Section 10 hereof, in the event that any Event of
Default shall have occurred and be continuing, the Administrative Agent may (i)
and at the request of the Majority Revolving Credit Lenders shall, suspend the
right of the Borrower to Convert any Revolving Credit Loan into a Eurodollar
Loan, or to Continue any Revolving Credit Loan as a Eurodollar Loan, in which
event all such Loans shall be Converted (on the last day(s) of the respective
Interest Periods therefor) or Continued, as the case may be, as Base Rate Loans
and (ii) and at the request of the Majority Term Loan Lenders shall, suspend the
right of the Borrower to Convert any Term Loan into a Eurodollar Loan, or to
Continue any Term Loan as a Eurodollar Loan, in which

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                                     - 41 -

event all such Loans shall be Converted (on the last day(s) of the respective
Interest Periods therefor) or Continued, as the case may be, as Base Rate Loans.

          2.10 MANDATORY PREPAYMENTS AND REDUCTIONS OF COMMITMENTS.

          (a) CASUALTY EVENTS. On the date 180 days following the receipt by the
Group Members of the proceeds of any insurance, condemnation award or other
compensation in respect of any Casualty Event affecting any Property of any
Group Member (excluding any Group Member which is an Unrestricted Subsidiary)
(or upon such earlier date as the respective Group Member shall have determined
not to repair or replace (with either identical or substantially similar
Property) the Property affected by such Casualty Event), the Borrower shall
prepay the Loans (and/or provide cover for Letter of Credit Liabilities as
specified in Sections 2.03(b)(v) and 2.03(c)(vi) hereof), and the Revolving
Credit Commitments shall be subject to automatic reduction, in an aggregate
amount, if any, equal to 100% of the Net Available Proceeds of such Casualty
Event not theretofore promptly applied to the repair or replacement of such
Property, such prepayment and reduction to be effected in each case in the
manner and to the extent specified in paragraph (i) below. Notwithstanding the
foregoing, in the event that a Casualty Event shall occur with respect to
Property covered by the Mortgages, the Borrower shall prepay the Loans (and/or
provide cover for Letter of Credit Liabilities as specified in said Sections
2.03(b)(v) and 2.03(c)(vi)), and the Revolving Credit Commitments shall be
subject to automatic reduction, on the dates, and in the amounts of the required
prepayments, specified in the Mortgages. Nothing in this paragraph (a) shall be
deemed to limit any obligation of the Group Members pursuant to any of the
Security Documents to remit to a collateral or similar account maintained by the
Administrative Agent pursuant to any of the Security Documents the proceeds of
insurance, condemnation award or other compensation received in respect of any
Casualty Event.

          (b) DEBT ISSUANCE. Without limiting the obligation of the Obligors to
obtain the consent of the Majority Lenders pursuant to Section 12.04 hereof to
any Debt Issuance not otherwise permitted hereunder, upon any Debt Issuance, the
Borrower shall prepay the Loans (and/or provide cover for Letter of Credit
Liabilities as specified in Sections 2.03(b)(v) and 2.03(c)(vi) hereof), and the
Revolving Credit Commitments shall be subject to automatic reduction, in an
aggregate amount equal to 100% of the Net Available Proceeds thereof, such
prepayment and reduction to be effected in each case in the manner and to the
extent specified in paragraph (i) below, PROVIDED that no prepayment need be
made pursuant to this Section 2.10(b) on the occasion of any Debt Issuance to
the extent that (i) the proceeds of such Debt Issuance are applied to the
prepayment of the Fabrene Acquisition Intercompany Note (and the Borrower
complies with the requirements of paragraph (d) below in respect of such
prepayment) and (ii) the proceeds of such Debt Issuance in excess of the amount
so applied to the Fabrene Acquisition Intercompany Note is applied to make the
prepayments required by this paragraph (b).

          (c) SALE OF ASSETS. Without limiting the obligation of the Obligors to
obtain the consent of the Majority Lenders pursuant to Section 12.04 hereof to
any Disposition not otherwise permitted hereunder, no later than five Business
Days prior to the occurrence of any such Disposition, the Borrower will deliver
to the Lenders a statement, certified by its chief

                                CREDIT AGREEMENT

<Page>

                                     - 42 -

financial officer, in form and detail satisfactory to the Administrative Agent,
of the amount of the Net Available Proceeds of such Disposition and, to the
extent such Net Available Proceeds (when taken together with the Net Available
Proceeds of all prior Dispositions as to which a prepayment has not yet been
made under this paragraph (c)) shall exceed U.S. $5,000,000, the Borrower shall
prepay the Loans (and/or provide cover for Letter of Credit Liabilities as
specified in Sections 2.03(b)(v) and 2.03(c)(vi) hereof), and the Revolving
Credit Commitments shall be subject to automatic reduction, in an aggregate
amount equal to 100% of the Net Available Proceeds of such Disposition (together
with 100% of the Net Available Proceeds of all prior Dispositions as to which a
prepayment has not yet been made under this paragraph (c)), such prepayment and
reduction to be effected in each case in the manner and to the extent specified
in paragraph (i) below.

          (d) FABRENE INTERCOMPANY NOTE. Concurrently with the receipt by
Fabrene Holdings or PGI Polymer (including, without limitation, amounts
deposited with JPMCB pursuant to the applicable provisions of the Fabrene
Intercompany Notes Agreement, but excluding amounts paid pursuant to the Fabrene
Intercompany Notes Agreement in respect of a Casualty Event or Disposition that
give rise to a prepayment pursuant to paragraphs (a) or (c) above) of any
payment or prepayment of principal in respect of the Fabrene Acquisition
Intercompany Note, the Borrower shall prepay the Loans (and/or provide cover for
Letter of Credit Liabilities as specified in Sections 2.03(b)(v) and 2.03(c)(vi)
hereof), and the Revolving Credit Commitments shall be subject to automatic
reduction, in an aggregate amount equal to the amount of such payment or
prepayment, such prepayment and reduction to be effected in each case in the
manner and to the extent specified in paragraph (i) below.

          (e) EQUITY ISSUANCE. Upon any Equity Issuance, the Borrower shall
prepay the Loans (and/or provide cover for Letter of Credit Liabilities as
specified in Sections 2.03(b)(v) and 2.03(c)(vi) hereof), and/or the Revolving
Credit Commitments shall be subject to automatic reduction, in an aggregate
amount equal to 50% of the Net Available Proceeds thereof, if any, such
prepayment and/or reduction to be effected in each case in the manner and to the
extent specified in paragraph (i) below.

          (f) EXCESS CASH FLOW. Not later than the earlier of (x) the date 30
days after the delivery to the Administrative Agent of financial statements for
any fiscal year (commencing with the fiscal year ending January 3, 2004)
pursuant to Section 9.01(c) hereof and (y) the date 120 days after the end of
such fiscal year, the Borrower shall prepay the Loans (and/or provide cover for
Letter of Credit Liabilities as specified in Sections 2.03(b)(v) and 2.03(c)(vi)
hereof), in an aggregate amount equal to the excess of (A) 100% of Excess Cash
Flow for such fiscal year OVER (B) the aggregate amount of prepayments of Term
Loans, and deposits into the Term Letter of Credit Collateral Account, made
during such fiscal year pursuant to Section 2.09 hereof, such prepayment to be
effected in each case in the manner and to the extent specified in paragraph (i)
below.

          (g) EFFECTIVE DATE EXCESS CASH PREPAYMENT. On the Effective Date, to
the extent the aggregate amount of cash, cash equivalents and marketable
securities held by the Borrower and its Restricted Subsidiaries (after giving
effect to (i) professional fees relating to the Chapter 11 Cases, (ii) the
payment to GOF provided for in Section 7.01(r) hereof, (iii) the Net

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                                     - 43 -

Cash Proceeds received in connection with the Chicopee Warehouse Sale as
provided in paragraph (h) and (iv) the prepayment provided for in Section
7.01(l) hereof) is greater than U.S. $35,000,000, the Borrower shall prepay the
Loans (and/or provide cover for Letter of Credit Liabilities as specified in
Sections 2.03(b)(v) and 2.03(c)(vi) hereof), in an aggregate amount equal to
such excess; PROVIDED that such payment and/or reduction (x) shall be in an
amount at least equal to U.S. $5,000,000 and (y) shall be effected in each case
in the manner and to the extent specified in paragraph (i) below.

          (h) CHICOPEE WAREHOUSE SALE. On the Effective Date, the Borrower shall
prepay the Loans (and/or provide cover for Letter of Credit Liabilities as
specified in Sections 2.03(b)(v) and 2.03(c)(vi) hereof), in an aggregate amount
equal to 100% of the Net Cash Proceeds received in connection with the Chicopee
Warehouse Sale, such prepayment to be effected in the manner and to the extent
specified in paragraph (i) below.

          (i) APPLICATION. Prepayments and reductions of Loans and Revolving
Credit Commitments, and provision of cover for Letter of Credit Liabilities,
described in the above paragraphs of this Section 2.10 shall be effected as
follows:

          FIRST, in the event the Borrower does not at the time of such
     prepayment deliver to the Administrative Agent a certificate of a senior
     financial officer to the effect that no Event of Default has occurred and
     is continuing (PROVIDED that if such certificate is so delivered, this
     clause FIRST shall be inapplicable), to the repayment of the Revolving
     Credit Loans (and to the provision of cover for the Revolving Letters of
     Credit as provided in Section 2.03(c)(vi) hereof), if any, and a
     corresponding permanent reduction of the Revolving Credit Commitments,

          SECOND, ratably to the Term Loans and the Term Letters of Credit, with
     the portion of such prepayments allocable to the Term Letters of Credit
     being effected through deposit of funds into the Term Letter of Credit
     Collateral Account as contemplated in Section 2.03(b)(v) hereof and,

          THIRD, to the repayment of the Revolving Credit Loans (and to the
     provision of cover for the Revolving Letters of Credit as provided in
     Section 2.03(c)(vi) hereof), if any, and (except for prepayments from
     Excess Cash Flow) a corresponding permanent reduction of the Revolving
     Credit Commitments.

Each such prepayment of the Term Loans, and deposit of funds into the Term
Letter of Credit Collateral Account, shall be applied to the payments and
deposits required to be made under Section 3.01(b) hereof in inverse order of
maturity and may not be reborrowed, PROVIDED that, (x) in the case of paragraph
(c) above, the portion, if any, of the Net Available Proceeds received from any
Disposition of a business or line of business in excess of 5.50 times the EBITDA
attributable to such business or line may, at the option of the Borrower, be
applied to such required payments and deposits in direct order of maturity
(except that no more than an aggregate of U.S. $50,000,000 from all such
Dispositions may be applied in such direct order) and (y) in the case of
paragraphs (g) and (h) above, the first U.S. $15,000,000 of prepayments

                                CREDIT AGREEMENT

<Page>

                                     - 44 -

under such paragraphs (taken together) shall be applied to such required
payments and deposits in direct order of maturity.

          (j) CHANGE OF CONTROL. In the event that any "Change of Control" or
similar event shall occur under the New Senior Subordinated Notes, Junior
Subordinated Convertible Notes Indenture or any Future Refinancing Debt
Documents and, as a result thereof, the Borrower shall be required to prepay or
to offer to repurchase any portion of the New Senior Subordinated Notes, Junior
Subordinated Convertible Notes or Future Refinancing Debt, then, prior to making
any such prepayment or offer, the Borrower shall prepay the Loans in full
(and/or provide full cover for Letter of Credit Liabilities as specified in
Sections 2.03(b)(v) and 2.03(c)(vi) hereof), and the Revolving Credit
Commitments shall be automatically reduced to zero.

          (k) EXCESS CASH. In the event that at any time the aggregate amount of
cash and cash equivalents (excluding amounts on deposit in the Term Letter of
Credit Collateral Account and amounts, up to but not exceeding EURO 6,800,000
pledged by PGI Nonwovens B.V. to support borrowings made by Vateks Tekstil
Sanayi ve Ticaret A.S. as contemplated by Section 9.06(k) hereof) held by the
Borrower and its Restricted Subsidiaries in the United States of America shall
exceed U.S. $30,000,000, or the aggregate amount of cash and cash equivalents
(subject to such exclusions) held by the Borrower and all of its Restricted
Subsidiaries throughout the world shall exceed U.S. $45,000,000 (or the
equivalent thereof in foreign currencies), then, to the extent of such excess in
either of such events, the Borrower shall immediately prepay (without reduction
of Revolving Credit Commitments) Revolving Credit Loans, if any, in an amount at
least equal to such excess, PROVIDED that (i) no prepayment shall be required
hereunder unless the amount thereof shall be at least equal to U.S. $100,000 and
(ii) the provisions of this paragraph (k) shall be inapplicable after the
Administrative Agent shall have commenced the exercise of remedies under the
Security Documents with respect to collateral security.

          (l) REVOLVING CREDIT EXPOSURE EXCEEDING COMMITMENTS. The Revolving
Credit Loans shall be prepaid, and cover shall be provided for Revolving Letters
of Credit as provided in Section 2.03(c)(vi), to the extent that the sum of the
aggregate principal amount of the Revolving Credit Loans, and the aggregate
amount of the Revolving Letter of Credit Liabilities, shall at any time exceed
the aggregate amount of the Revolving Credit Commitments after giving effect to
any reduction of Revolving Credit Commitments hereunder.

          Section 3. PAYMENTS OF PRINCIPAL AND INTEREST.

          3.01 REPAYMENT OF LOANS.

          (a) REVOLVING CREDIT LOANS. The Borrower hereby promises to pay to the
Administrative Agent in U.S. Dollars for account of each Revolving Credit Lender
the entire outstanding principal amount of the Revolving Credit Loans made by
such Lender to the Borrower, and each such Revolving Credit Loan shall mature on
the Revolving Credit Termination Date.

                                CREDIT AGREEMENT

<Page>

                                     - 45 -

          (b) TERM LOANS AND TERM LETTER OF CREDIT LIABILITIES. The Borrower
hereby promises to pay to the Administrative Agent in U.S. Dollars for
application to the payment of the Term Loans, and provide cover for Term Letter
of Credit Liabilities as specified in Sections 2.03(b)(v) hereof, the following
aggregate amounts on the following Principal Payment Dates:

<Table>
<Caption>
          Principal Payment Date      Amount of Payment
          ----------------------      -----------------
            <S>                       <C>
            December 31, 2003         U.S. $15,000,000

            June 30, 2004             U.S. $15,000,000
            December 31, 2004         U.S. $15,000,000

            June 30, 2005             U.S. $15,000,000
            December 31, 2005         U.S. $15,000,000

            June 30, 2006             U.S. $15,000,000
            December 31, 2006         Remaining Balance
</Table>

          (c) GOF LETTER OF CREDIT. The payment of the installments under
paragraph (b) above due on December 31, 2003, June 30, 2004 and December 31,
2004 (herein, the "COVERED INSTALLMENTS") are to be supported by the issuance on
the Effective Date to the Administrative Agent of the GOF Letter of Credit.
Accordingly, in the event that for any reason the Borrower does not pay any of
the Covered Installments when due, or in the event the principal of and interest
on the Term Loans and the Term Letter of Credit Liabilities shall be declared,
or shall become, due and payable pursuant to Section 10 hereof, the
Administrative Agent shall make a drawing under the GOF Letter of Credit up to
the full aggregate undrawn face amount thereof and apply the proceeds of such
drawing to the payment of principal on the Term Loans, and the deposit of funds
into the Term Letter of Credit Collateral Account, ratably in accordance with
the respective outstanding principal amounts of Term Loans and Uncovered Term
Letter of Credit Liabilities at the time; PROVIDED that in the event that an
acceleration of principal of and interest on the Loans has occurred pursuant to
Section 10 hereof, the Administrative Agent shall only be entitled to draw under
the GOF Letter of Credit up to the amount of the Covered Installments and then
only to the extent that the Covered Installments have not been previously paid.
Furthermore, in the event that (x) the aggregate unpaid amount of the Covered
Installments are at any time less than the face amount of the GOF Letter of
Credit, the Administrative Agent shall consent to the reduction of the face
amount of the GOF Letter of Credit equal to the amount of the remaining unpaid
Covered Installments within 5 Business Days of a request therefor by GOF and (y)
all Covered Installments are paid in full through regular payment (or pursuant
to one or more prepayments under Section 2.10 hereof), then the Administrative
Agent shall surrender the GOF Letter of Credit for cancellation to the issuer of
the GOF Letter of Credit within 5 Business Days of a request therefor by GOF.

          3.02 INTEREST. The Borrower hereby promises to pay to the
Administrative Agent for account of each Lender interest on the unpaid principal
amount of each Loan held by such

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                                     - 46 -

Lender for the period from and including the Effective Date to but excluding the
date such Loan shall be paid in full, at the following rates per annum:

          (a) during such periods as such Loan is a Base Rate Loan, the Base
     Rate as in effect from time to time PLUS the Applicable Margin for such
     Loan and

          (b) during such periods as such Loan is a Eurodollar Loan, for each
     Interest Period relating thereto, the Eurodollar Rate for such Loan for
     such Interest Period PLUS the Applicable Margin for such Loan.

Notwithstanding the foregoing, the Borrower hereby promises to pay to the
Administrative Agent for account of each Lender interest at the applicable
Post-Default Rate on any principal of any Loan made by such Lender to the
Borrower, on any Reimbursement Obligation of the Borrower held by such Lender
and (to the fullest extent permitted under applicable law) on any other amount
payable by the Borrower hereunder or under the Notes held by such Lender, which
shall not be paid in full when due (whether at stated maturity, by acceleration,
by mandatory prepayment or otherwise), for the period from and including the due
date thereof to but excluding the date the same is paid in full. Accrued
interest on each Loan shall be payable (i) in the case of a Base Rate Loan,
quarterly on the Quarterly Dates, (ii) in the case of a Eurodollar Loan, on the
last day of each Interest Period therefor and, if such Interest Period is longer
than three months, at three-month intervals following the first day of such
Interest Period, and (iii) in the case of any Loan, upon the payment or
prepayment thereof or the Conversion of such Loan to a Loan of another Type (but
only on the principal amount so paid, prepaid or Converted), except that
interest payable at the Post-Default Rate shall be payable from time to time on
demand. Promptly after the determination of any interest rate provided for
herein or any change therein, the Administrative Agent shall give notice thereof
to the Lenders to which such interest is payable and to the Borrower.

          3.03 SENIOR LEVERAGE RATIO FEE. The Borrower shall pay to the
Administrative Agent for account of each Term Loan Lender and Term Letter of
Credit Lender a fee (the "SENIOR LEVERAGE RATIO FEE"), at any time that the
Senior Leverage Ratio is greater than 5.00 to 1, which fee shall be equal to
1.00% per annum of the aggregate outstanding principal amount of such Lender's
Term Loans and Term Letter of Credit Liabilities, in each case payable in
arrears (i) in the case of any portion of the principal of the Term Loans, on
the dates upon which interest in respect of such portion of such principal is
payable hereunder pursuant to Section 3.02 hereof and (ii) in the case of any
Term Letters of Credit, on the dates on which Term Letter of Credit fees are
payable pursuant to Section 2.03(a)(v) hereof.

          3.04 LIMITATION ON AMOUNTS PAYABLE. Anything in this Agreement to the
contrary notwithstanding, in no event shall the sum of (a) amounts payable
pursuant to Section 3.02 hereof in respect of Term Loans or Term Letters of
Credit PLUS (b) the Senior Leverage Ratio Fee exceed 12.0% per annum.

                                CREDIT AGREEMENT
<Page>

                                     - 47 -

          Section 4. PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.

          4.01 PAYMENTS.

          (a) MANNER OF PAYMENTS. Except to the extent otherwise provided
herein, all payments of principal, interest, Reimbursement Obligations and other
amounts to be made by the Borrower under this Agreement and the Notes, and,
except to the extent otherwise provided therein, all payments to be made by the
Obligors under any other Loan Document, shall be made in U.S. Dollars, in each
case in immediately available funds, without deduction, set-off or counterclaim,
to the Principal Office, not later than 1:00 p.m. New York time on the date on
which such payment shall become due (each such payment made after such time on
such due date to be deemed to have been made on the next succeeding Business Day
and interest shall be payable in respect of any principal so extended for the
period of such extension).

          (b) AUTHORIZATION TO DEBIT ACCOUNTS. Any Lender for whose account any
such payment by the Borrower is to be made may (but shall not be obligated to)
debit the amount of any such payment that is not made by the time referred to in
paragraph (a) above to any ordinary deposit account of the Borrower with such
Lender (with prompt notice to the Borrower and the Administrative Agent).

          (c) APPLICATION OF PAYMENTS. The Borrower shall, at the time of making
each payment under this Agreement or any Note for account of any Lender, specify
to the Administrative Agent (which shall so notify the intended recipient(s)
thereof) the Loans, Reimbursement Obligations or other amounts payable by the
Borrower hereunder to which such payment is to be applied (and in the event that
the Borrower fails to so specify, or if an Event of Default has occurred and is
continuing, the Administrative Agent may distribute such payment to the Lenders
for application in such manner as it or the Majority Lenders, subject to Section
4.02 hereof, may determine to be appropriate).

          (d) PAYMENTS TO LENDERS. Each payment received by the Administrative
Agent under this Agreement or any Note for account of any Lender shall be paid
by the Administrative Agent promptly to such Lender, in immediately available
funds, for account of such Lender's Applicable Lending Office for the Loan or
other obligation in respect of which such payment is made.

          (e) NON-BUSINESS DAYS. If the due date of any payment under this
Agreement or any Note would otherwise fall on a day that is not a Business Day,
such date shall be extended to the next succeeding Business Day, and interest
shall be payable for any principal so extended for the period of such extension.

          (f) TERM LETTER OF CREDIT LIABILITIES. Each payment required to be
made by the Borrower hereunder in respect of any Term Letter of Credit Liability
shall be effected by payment by the Borrower to the Administrative Agent of
immediately available funds in an amount equal to such required payment with a
direction to the Administrative Agent to deposit such funds into the Term Letter
of Credit Collateral Account.

                                CREDIT AGREEMENT

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                                     - 48 -

          4.02 PRO RATA TREATMENT. Except to the extent otherwise provided
herein: (a) each borrowing of Revolving Credit Loans from the Revolving Credit
Lenders under Section 2.01(a) hereof shall be made from the Revolving Credit
Lenders, each payment of commitment fees under Section 2.05 hereof in respect of
the Revolving Credit Commitments shall be made for account of the Revolving
Credit Lenders, and each termination or reduction of the amount of the Revolving
Credit Commitments under Section 2.04 hereof shall be applied to the respective
Revolving Credit Commitments of the Revolving Credit Lenders, pro rata according
to the amounts of their respective Revolving Credit Commitments; (b) the making,
Conversion and Continuation of Loans of a particular Type (other than
Conversions provided for by Section 5.03 hereof) shall be made pro rata among
the relevant Lenders according to the amounts of their respective Revolving
Credit Commitments (in the case of the making of Loans) or their respective
Loans (in the case of Conversions and Continuations of Loans) and the then
current Interest Period for each Eurodollar Loan, as applicable, shall be
coterminous; (c) each payment or prepayment of principal of Loans of a
particular Class by the Borrower shall be made for account of the relevant
Lenders pro rata in accordance with the respective unpaid principal amounts of
the Loans of such Class held by them; and (d) each payment of interest on Loans
of a particular Class by the Borrower shall be made for account of the relevant
Lenders pro rata in accordance with the amounts of interest on such Loans then
due and payable to the respective Lenders.

          4.03 COMPUTATIONS. Interest on Eurodollar Loans and Reimbursement
Obligations and commitment fees and letter of credit fees shall be computed on
the basis of a year of 360 days and actual days elapsed (including the first day
but excluding the last day) occurring in the period for which payable and
interest on Base Rate Loans shall be computed on the basis of a year of 365 or
366 days, as the case may be, and actual days elapsed (including the first day
but excluding the last day) occurring in the period for which payable.
Notwithstanding the foregoing, for each day that the Base Rate is calculated by
reference to the Federal Funds Rate, interest on Base Rate Loans shall be
computed on the basis of a year of 360 days and actual days elapsed.

          4.04 MINIMUM AMOUNTS. Except for Conversions made pursuant to Section
5.03 hereof, each borrowing or Conversion of (i) Base Rate Loans shall be in an
aggregate amount at least equal to U.S. $500,000 or in multiples of U.S.
$100,000 in excess thereof, and (ii) Eurodollar Loans shall be in an aggregate
amount at least equal to U.S. $1,000,000 or in multiples of U.S. $500,000 in
excess thereof; borrowings or Conversions of or into Loans of different Types
or, in the case of Eurodollar Loans, having different Interest Periods at the
same time hereunder shall be deemed separate borrowings and Conversions for
purposes of the foregoing, one for each Type or Interest Period.

          Except for mandatory prepayments made pursuant to Section 2.10 hereof,
each partial prepayment of principal of Loans shall be in an aggregate amount at
least equal to U.S. $500,000 or in multiples of U.S. $500,000 in excess thereof
(prepayments of Loans of different Types or, in the case of Eurodollar Loans,
having different Interest Periods at the same time hereunder to be deemed
separate prepayments for purposes of the foregoing, one for each Type or
Interest Period).

          4.05 CERTAIN NOTICES. Notices by the Borrower to the Administrative
Agent of terminations or reductions of the Revolving Credit Commitments, of
borrowings, Conversions,

                                CREDIT AGREEMENT

<Page>

                                     - 49 -

Continuations and optional and mandatory prepayments of Loans and of Classes of
Loans, of Types of Loans and of the duration of Interest Periods shall be
irrevocable (except that notices of a mandatory prepayment pursuant to Section
2.10 hereof may be revoked if the respective event giving rise to such
prepayment does not occur, subject, however, to the obligation of the Borrower
to compensate the Lenders for any loss, cost or expense incurred in connection
with such revoked notice pursuant to Section 5.04 hereof) and shall be effective
only if received by the Administrative Agent not later than 12:00 noon New York
time on the number of Business Days prior to the date of the relevant
termination, reduction, borrowing, Conversion, Continuation or prepayment or the
first day of such Interest Period specified below:

<Table>
<Caption>
                                                           Number of
                                                            Business
        Notice                                             Days Prior
        ------                                             ----------
     <S>                                                     <C>
     Termination or reduction
       of Revolving Credit Commitments                          3

     Borrowings of, or
       Conversions into,
       Base Rate Loans                                       same day

     Borrowings of, Conversions
       into, Continuations
       as, or duration of Interest
       Period for, Eurodollar Loans                              3

     Optional Prepayments of Loans                               3

     Mandatory Prepayments of Loans                              1
</Table>

Each such notice of termination or reduction shall specify the amount of the
Revolving Credit Commitments to be terminated or reduced. Each such notice of
borrowing, Conversion, Continuation or optional prepayment shall specify the
Class of Loans to be borrowed, Converted, Continued or prepaid and the amount
(subject to Section 4.04 hereof) and Type of each Loan to be borrowed,
Converted, Continued or prepaid and the date of borrowing, Conversion,
Continuation or optional prepayment (which shall be a Business Day). Each such
notice of the duration of an Interest Period shall specify the Loans to which
such Interest Period is to relate. The Administrative Agent shall promptly
notify the relevant Lenders of the contents of each such notice. In the event
that the Borrower fails to select the Type of Loan, or the duration of any
Interest Period for any Eurodollar Loan, within the time period and otherwise as
provided in this Section 4.05, such Loan (if outstanding as a Eurodollar Loan)
will be automatically Converted into a Base Rate Loan on the last day of the
then current Interest Period for such Loan, or (if outstanding as a Base Rate
Loan) will remain as, or (if not then outstanding) will be made as, a Base Rate
Loan.

                                CREDIT AGREEMENT

<Page>

                                     - 50 -

          4.06 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. Unless the
Administrative Agent shall have been notified by a Lender or the Borrower (the
"PAYOR") prior to the date on which the Payor is to make payment to the
Administrative Agent of (in the case of a Lender) the proceeds of a Loan to be
made by such Lender, or a participation in a Letter of Credit drawing acquired
by such Lender hereunder or (in the case of the Borrower) a payment to the
Administrative Agent for account of one or more of the Lenders hereunder (such
payment being herein called the "REQUIRED PAYMENT"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient(s) on such date; and, if the Payor has not in fact made the
Required Payment to the Administrative Agent, the recipient(s) of such payment
shall, on demand, repay to the Administrative Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date (the "ADVANCE DATE") such amount was so made available by
the Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to the Federal Funds Rate for such day and, if
such recipient(s) shall fail promptly to make such payment, the Administrative
Agent shall be entitled to recover such amount, on demand, from the Payor,
together with interest as aforesaid, PROVIDED that if neither the recipient(s)
nor the Payor shall return the Required Payment to the Administrative Agent
within three Business Days of the Advance Date, then, retroactively to the
Advance Date, the Payor and the recipient(s) shall each be obligated to pay
interest on the Required Payment as follows:

          (i) if the Required Payment shall represent a payment to be made by
     the Borrower to the Lenders, the Borrower and the recipient(s) shall each
     be obligated retroactively to the Advance Date to pay interest in respect
     of the Required Payment at the Post-Default Rate (without duplication of
     the obligation of the Borrower under Section 3.02 hereof to pay interest on
     the Required Payment at the Post-Default Rate), it being understood that
     the return by the recipient(s) of the Required Payment to the
     Administrative Agent shall not limit such obligation of the Borrower under
     said Section 3.02 to pay interest at the Post-Default Rate in respect of
     the Required Payment and

          (ii) if the Required Payment shall represent proceeds of a Loan to be
     made by the Lenders to the Borrower, the Payor and the Borrower shall each
     be obligated retroactively to the Advance Date to pay interest in respect
     of the Required Payment pursuant to Section 3.02 hereof, it being
     understood that the return by the Borrower of the Required Payment to the
     Administrative Agent shall not limit any claim the Borrower may have
     against the Payor in respect of such Required Payment.

          4.07 SHARING OF PAYMENTS, ETC.

          (a) RIGHT OF OFFSET. The Borrower agrees that, in addition to (and
without limitation of) any right of set-off, banker's lien or counterclaim a
Lender may otherwise have, each Lender shall be entitled, at its option, to
offset balances held by it for account of the Borrower at any of its offices, in
U.S. Dollars or in any other currency, against any principal of

                                CREDIT AGREEMENT

<Page>

                                     - 51 -

or interest on any of the Loans, Reimbursement Obligations or other amounts
payable by the Borrower to such Lender hereunder, that is not paid when due
(regardless of whether such balances are then due to the Borrower), in which
case it shall promptly notify the Borrower and the Administrative Agent thereof,
PROVIDED that such Lender's failure to give such notice shall not affect the
validity thereof.

          (b) SHARING OF PAYMENTS. If any Lender shall obtain from the Borrower
payment of any principal of or interest on any Loan of any Class or Letter of
Credit Liability owing to it or payment of any other amount under this Agreement
or any other Loan Document through the exercise of any right of set-off,
banker's lien or counterclaim or similar right or otherwise (other than from the
Administrative Agent as provided herein), and, as a result of such payment, such
Lender shall have received a greater percentage of the principal of or interest
on the Loans of such Class or Letter of Credit Liabilities or such other amounts
then due hereunder or thereunder by the Borrower to such Lender than the
percentage received by any other Lender, it shall promptly purchase from such
other Lenders participations in (or, if and to the extent specified by such
Lender, direct interests in) the Loans of such Class of the Borrower or Letter
of Credit Liabilities or such other amounts, respectively, owing to such other
Lenders (or in interest due thereon, as the case may be) in such amounts, and
make such other adjustments from time to time as shall be equitable, to the end
that all the Lenders shall share the benefit of such excess payment (net of any
expenses that may be incurred by such Lender in obtaining or preserving such
excess payment) pro rata in accordance with the unpaid principal of and/or
interest on the Loans of such Class of the Borrower or Letter of Credit
Liabilities or such other amounts, respectively, owing to each of the Lenders.
To such end all the Lenders shall make appropriate adjustments among themselves
(by the resale of participations sold or otherwise, together with interest, if
any, required to be paid by the Lender returning such funds) if such payment is
rescinded or must otherwise be restored.

          (c) PARTICIPANT OFFSET RIGHTS. The Borrower agrees that any Lender so
purchasing such a participation (or direct interest) may exercise all rights of
set-off, banker's lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans or other
amounts (as the case may be) owing to such Lender in the amount of such
participation.

          (d) MANNER OF EXERCISE BY LENDERS. Nothing contained herein shall
require any Lender to exercise any such right or shall affect the right of any
Lender to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the Borrower. If, under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a set-off to which this Section 4.07 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section 4.07 to share in the benefits of any recovery on such secured
claim.

                                CREDIT AGREEMENT

<Page>

                                     - 52 -

          Section 5. YIELD PROTECTION, ETC.

          5.01 ADDITIONAL COSTS.

          (a) ADDITIONAL COSTS GENERALLY. The Borrower shall pay to the
Administrative Agent (to the fullest extent permitted by applicable law) for the
account of each Lender from time to time such amounts as such Lender may
determine to be necessary to compensate such Lender for any costs that such
Lender determines are attributable to its making or maintaining of any
Eurodollar Loans to the Borrower or its obligation to make any Eurodollar Loans
to the Borrower hereunder, or any reduction in any amount receivable by such
Lender hereunder in respect of any of such Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"ADDITIONAL COSTS"), resulting from any Regulatory Change that:

          (i) shall subject any Lender (or its Applicable Lending Office for any
     of such Loans) to any tax, duty or other charge in respect of such Loans or
     its Notes or changes the basis of taxation of any amounts payable to such
     Lender under this Agreement or its Notes in respect of any of such Loans
     (excluding changes in the rate of tax on the overall net income of such
     Lender or of such Applicable Lending Office by the jurisdiction in which
     such Lender has its principal office or such Applicable Lending Office); or

          (ii) imposes or modifies any reserve, special deposit or similar
     requirements (other than the Reserve Requirement utilized in the
     determination of the Eurodollar Rate for such Loan) relating to any
     extensions of credit or other assets of, or any deposits with or other
     liabilities of, such Lender (including, without limitation, any of such
     Loans or any deposits referred to in the definition of "Eurodollar Base
     Rate" in Section 1.01 hereof), or any commitment of such Lender (including,
     without limitation, the Revolving Credit Commitments hereunder); or

          (iii) imposes any other condition affecting this Agreement or its
     Notes (or any of such extensions of credit or liabilities) or the Revolving
     Credit Commitments.

If any Lender requests compensation from the Borrower under this Section
5.01(a), the Borrower may, by notice to such Lender (with a copy to the
Administrative Agent), suspend the obligation of such Lender thereafter to make
or Continue Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar
Loans, until the Regulatory Change giving rise to such request ceases to be in
effect (in which case the provisions of Section 5.03 hereof shall be
applicable), PROVIDED that such suspension shall not affect the right of such
Lender to receive the compensation so requested.

          (b) CAPITAL ADEQUACY. Without limiting the effect of the foregoing
provisions of this Section 5.01 (but without duplication), the Borrower (to the
extent allocable to it) shall pay to the Administrative Agent for the account of
each Lender from time to time on request such amounts as such Lender may
determine to be necessary to compensate such Lender (or, without duplication,
the bank holding company of which such Lender is a subsidiary) for any costs
that it determines are attributable to the maintenance by such Lender (or any
Applicable Lending

                                CREDIT AGREEMENT

<Page>

                                     - 53 -

Office or such bank holding company), pursuant to any law or regulation or any
interpretation, directive or request (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) of any court or
governmental or monetary authority (i) following any Regulatory Change or (ii)
implementing any risk-based capital guideline or other requirement (whether or
not having the force of law and whether or not the failure to comply therewith
would be unlawful) heretofore or hereafter issued by any government or
governmental or supervisory authority implementing at the national level the
Basel Accord (including, without limitation, the Final Risk-Based Capital
Guidelines of the Board of Governors of the Federal Reserve System (12 C.F.R.
Part 208, Appendix A; 12 C.F.R. Part 225, Appendix A) and the Final Risk-Based
Capital Guidelines of the Office of the Comptroller of the Currency (12 C.F.R.
Part 3, Appendix A)), of capital in respect of its Revolving Credit Commitment
(if any) or its Loans (such compensation to include, without limitation, an
amount equal to any reduction of the rate of return on assets or equity of such
Lender (or any Applicable Lending Office or such bank holding company) to a
level below that which such Lender (or any Applicable Lending Office or such
bank holding company) could have achieved but for such law, regulation,
interpretation, directive or request).

          For purposes of this Section 5.01(b) and Section 5.05 hereof, "BASEL
ACCORD" shall mean the proposals for risk-based capital framework described by
the Basel Committee on Banking Regulations and Supervisory Practices in its
paper entitled "International Convergence of Capital Measurement and Capital
Standards" dated July 1988, as amended, modified and supplemented and in effect
from time to time or any replacement thereof.

          (c) NOTIFICATION BY LENDERS. Each Lender shall notify the Borrower of
any event occurring after the date of this Agreement entitling such Lender to
compensation under paragraph (a) or (b) of this Section 5.01 as promptly as
practicable, but in any event within 45 days, after such Lender obtains actual
knowledge thereof; PROVIDED that (i) if any Lender fails to give such notice
within 45 days after it obtains actual knowledge of such an event, such Lender
shall, with respect to compensation payable pursuant to this Section 5.01 in
respect of any costs resulting from such event, only be entitled to payment
under this Section 5.01 for costs incurred from and after the date 45 days prior
to the date that such Lender does give such notice and (ii) each Lender will
designate a different Applicable Lending Office for the Loans of such Lender
affected by such event if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the sole opinion of such
Lender, be disadvantageous to such Lender, except that such Lender shall have no
obligation to designate an Applicable Lending Office located in the United
States of America. Each Lender will furnish to the Borrower a certificate
setting forth the basis and amount of each request by such Lender for
compensation under paragraph (a) or (b) of this Section 5.01. Determinations and
allocations by any Lender for purposes of this Section 5.01 of the effect of any
Regulatory Change pursuant to paragraph (a) of this Section 5.01, or of the
effect of capital maintained pursuant to paragraph (b) of this Section 5.01, on
its costs or rate of return of maintaining Loans or its obligation to make
Loans, or on amounts receivable by it in respect of Loans, and of the amounts
required to compensate such Lender under this Section 5.01, shall be conclusive,
PROVIDED that such determinations and allocations are made on a reasonable
basis.

                                CREDIT AGREEMENT

<Page>

                                     - 54 -

          5.02 LIMITATION ON EURODOLLAR LOANS. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any Eurodollar Base
Rate for any Eurodollar Loans for any Interest Period:

          (a) the Administrative Agent determines, which determination shall be
     conclusive, that quotations of interest rates for the relevant deposits
     referred to in paragraph (b) of the definition of "Eurodollar Base Rate" in
     Section 1.01 hereof are not being provided in the relevant amounts or for
     the relevant maturities for purposes of determining rates of interest for
     Eurodollar Loans as provided herein; or

          (b) if the related Loans are Revolving Credit Loans, the Majority
     Revolving Credit Lenders determine or, if the related Loans are Term Loans,
     the Majority Term Loan Lenders determine (in each case, which determination
     shall be conclusive), and notify the Administrative Agent that the relevant
     rates of interest referred to in the definition of "Eurodollar Base Rate"
     in Section 1.01 hereof upon the basis of which the rate of interest for
     Eurodollar Loans for such Interest Period is to be determined are not
     likely to adequately cover the cost to such Lenders of making or
     maintaining Eurodollar Loans for such Interest Period;

then the Administrative Agent shall give the Borrower and each Lender prompt
notice thereof and, so long as such condition remains in effect, the Lenders
shall be under no obligation to make additional Eurodollar Loans, to Continue
Eurodollar Loans or to Convert Base Rate Loans into Eurodollar Loans, and the
Borrower shall, on the last day(s) of the then current Interest Period(s) for
the outstanding Eurodollar Loans, either prepay such Loans or Convert such Loans
into Base Rate Loans in accordance with Section 2.09 hereof.

          5.03 TREATMENT OF AFFECTED LOANS. If the obligation of any Lender to
make Eurodollar Loans or to Continue, or to Convert Base Rate Loans into,
Eurodollar Loans shall be suspended pursuant to Section 5.01 hereof, such
Lender's Eurodollar Loans shall be automatically Converted into Base Rate Loans
on the last day(s) of the then current Interest Period(s) for Eurodollar Loans
and, unless and until such Lender gives notice as provided below that the
circumstances specified in Section 5.01 hereof that gave rise to such Conversion
no longer exist:

          (a) to the extent that such Lender's Eurodollar Loans have been so
     Converted, all payments and prepayments of principal that would otherwise
     be applied to such Lender's Eurodollar Loans shall be applied instead to
     its Base Rate Loans; and

          (b) all Loans that would otherwise be made or Continued by such Lender
     as Eurodollar Loans shall be made or Continued instead as Base Rate Loans,
     and all Base Rate Loans of such Lender that would otherwise be Converted
     into Eurodollar Loans shall remain as Base Rate Loans.

If such Lender gives notice to the Borrower with a copy to the Administrative
Agent that the circumstances specified in Section 5.01 hereof that gave rise to
the Conversion of such Lender's Eurodollar Loans pursuant to this Section 5.03
no longer exist (which such Lender agrees to do

                                CREDIT AGREEMENT

<Page>

                                     - 55 -

promptly upon such circumstances ceasing to exist) at a time when Eurodollar
Loans made by other Lenders are outstanding, such Lender's Base Rate Loans shall
be automatically Converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Eurodollar Loans, to the extent necessary so
that, after giving effect thereto, all Loans held by the Lenders holding
Eurodollar Loans and by such Lender are held pro rata (as to principal amounts,
Types and Interest Periods) in accordance with their respective Revolving Credit
Commitments.

          5.04 COMPENSATION. The Borrower shall pay to the Administrative Agent
for account of each Lender, upon the request of such Lender through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense that such Lender determines is attributable to:

          (a) any payment, mandatory or optional prepayment or Conversion of a
     Eurodollar Loan, as applicable, made by such Lender to the Borrower for any
     reason (including, without limitation, the acceleration of the Loans
     pursuant to Section 10 hereof) on a date other than the last day of the
     Interest Period for such Loan; or

          (b) any failure by the Borrower for any reason (including, without
     limitation, the failure of any of the conditions precedent specified in
     Section 7 hereof to be satisfied) to borrow a Eurodollar Loan, as
     applicable, from such Lender on the date for such borrowing specified in
     the relevant notice of borrowing given pursuant to Section 2.02 hereof.

Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
that otherwise would have accrued on the principal amount so paid, prepaid or
Converted or not borrowed for the period from the date of such payment,
prepayment, Conversion or failure to borrow to the last day of the then current
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan that would have commenced on the date specified
for such borrowing) at the applicable rate of interest for such Loan provided
for herein OVER (ii) the amount of interest that otherwise would have accrued on
such principal amount at a rate per annum equal to the interest component of the
amount such Lender would have bid in the London interbank market for U.S. Dollar
deposits of leading banks.

          5.05 ADDITIONAL COSTS IN RESPECT OF LETTERS OF CREDIT. Without
limiting the obligations of the Borrower under Section 5.01 hereof (but without
duplication), if as a result of any Regulatory Change or any risk-based capital
guideline or other requirement heretofore or hereafter issued by any government
or governmental or supervisory authority implementing at the national level the
Basel Accord there shall be imposed, modified or deemed applicable any tax,
reserve, special deposit, capital adequacy or similar requirement against or
with respect to or measured by reference to Letters of Credit hereunder and the
result shall be to increase the cost to any Lender or Lenders of maintaining any
Letter of Credit (or its obligation to purchase participations in any Letter of
Credit), or reduce any amount receivable by any Lender hereunder in respect of
any Letter of Credit (which increases in cost, or reductions in amount
receivable, shall be the result of such Lender's or Lenders' reasonable
allocation of the aggregate of such increases or reductions resulting from such
event), then, upon demand by such Lender or

                                CREDIT AGREEMENT

<Page>

                                     - 56 -

Lenders (through the Administrative Agent), the Borrower shall pay immediately
to the Administrative Agent for account of such Lender or Lenders, from time to
time as specified by such Lender or Lenders (through the Administrative Agent),
such additional amounts as shall be sufficient to compensate such Lender or
Lenders (through the Administrative Agent) for such increased costs or
reductions in amount. A statement as to such increased costs or reductions in
amount incurred by any such Lender or Lenders, submitted by such Lender or
Lenders to the Borrower shall be conclusive in the absence of manifest error as
to the amount thereof.

          5.06 TAXES.

          (a) PAYMENTS FREE OF TAXES. Any and all payments by or on account of
any obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without reduction or withholding for any
Indemnified Taxes or Other Taxes, PROVIDED that if the Borrower shall be
required by applicable law to deduct any Indemnified Taxes (including any Other
Taxes) from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 5.06) the
Administrative Agent, Lender or Issuing Lender (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall timely
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.

          (b) PAYMENT OF OTHER TAXES BY THE BORROWER. Without limiting the
provisions of paragraph (a) above, the Borrower shall timely pay any Other Taxes
to the relevant Governmental Authority in accordance with applicable law.

          (c) INDEMNIFICATION BY THE BORROWER. The Borrower shall indemnify the
Administrative Agent, each Lender and the Issuing Lender, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section 5.06) paid by the
Administrative Agent, such Lender or the Issuing Lender, as the case may be, and
any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or the Issuing Lender (with a copy to the Administrative
Agent), or by the Administrative Agent on its own behalf or on behalf of a
Lender or the Issuing Lender, shall be conclusive absent manifest error.

          (d) EVIDENCE OF PAYMENTS. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.

          (e) FOREIGN LENDERS. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located,

                                CREDIT AGREEMENT

<Page>

                                     - 57 -

or any treaty to which such jurisdiction is a party, with respect to payments
hereunder or under any other Loan Document shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law or reasonably requested by the Borrower or the Administrative Agent, such
properly completed and executed documentation prescribed by applicable law as
will permit such payments to be made without withholding or at a reduced rate.

          (f) TREATMENT OF CERTAIN REFUNDS. If the Administrative Agent, a
Lender or the Issuing Lender determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 5.06, it shall pay an amount equal
to such refund to the Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 5.06 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent, such Lender or the Issuing
Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), PROVIDED that the Borrower,
upon the request of the Administrative Agent, such Lender or the Issuing Lender,
agrees to repay the amount paid over to the Borrower (PLUS any penalties,
interest or other charges imposed by the relevant Governmental Authority) to the
Administrative Agent, such Lender or the Issuing Lender in the event the
Administrative Agent, such Lender or the Issuing Lender is required to repay
such refund to such Governmental Authority. This paragraph shall not be
construed to require the Administrative Agent, any Lender or the Issuing Lender
to make available its tax returns (or any other information relating to its
taxes which it deems confidential) to the Borrower or any other Person.

          Section 6. GUARANTEE.

          6.01 THE GUARANTEE. Each Guarantor hereby jointly and severally
guarantees to each Lender (and its affiliates, as the case may be), the
Administrative Agent and their respective successors and assigns the Guaranteed
Obligations. Each Guarantor hereby further agrees that if the Borrower shall
fail to pay in full when due (whether at stated maturity, by acceleration or
otherwise) any of the Guaranteed Obligations in respect of which such Guarantor
is obligated, such Guarantor will promptly pay the same, without any demand or
notice whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Guaranteed Obligations, the same will be promptly paid in
full when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.

          6.02 OBLIGATIONS UNCONDITIONAL. The obligations of the Guarantors
under Section 6.01 hereof are absolute and unconditional, joint and several,
irrespective of the value, genuineness, validity, regularity or enforceability
of the obligations of the Borrower under this Agreement, the Notes or any other
agreement or instrument referred to herein or therein, or any substitution,
release or exchange of any other guarantee of or security for any of the
Guaranteed Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 6.02 that the obligations of the

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Guarantors hereunder shall be absolute and unconditional, joint and several,
under any and all circumstances. Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not alter or impair the liability of the Guarantors hereunder which shall
remain absolute and unconditional as described above:

          (i) at any time or from time to time, without notice to the
     Guarantors, the time for any performance of or compliance with any of the
     Guaranteed Obligations shall be extended, or such performance or compliance
     shall be waived;

          (ii) any of the acts mentioned in any of the provisions of this
     Agreement or the Notes or any other agreement or instrument referred to
     herein or therein shall be done or omitted;

          (iii) the maturity of any of the Guaranteed Obligations shall be
     accelerated, or any of the Guaranteed Obligations shall be modified,
     supplemented or amended in any respect, or any right under this Agreement
     or the Notes or any other agreement or instrument referred to herein or
     therein shall be waived or any other guarantee of any of the Guaranteed
     Obligations or any security therefor shall be released or exchanged in
     whole or in part or otherwise dealt with; or

          (iv) any lien or security interest granted to, or in favor of, the
     Administrative Agent or any Lender or Lenders as security for any of the
     Guaranteed Obligations shall fail to be perfected.

The Guarantors hereby expressly waive diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Administrative
Agent or any Lender exhaust any right, power or remedy or proceed against the
Borrower under this Agreement or the Notes or any other agreement or instrument
referred to herein or therein, or against any other Person under any other
guarantee of, or security for, any of the Guaranteed Obligations.

          6.03 REINSTATEMENT. The obligations of the Guarantors under this
Section 6 shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Borrower in respect of the Guaranteed
Obligations is rescinded or must be otherwise restored by any holder of any of
the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise and the Guarantors jointly and severally agree
that they will indemnify the Administrative Agent and each Lender on demand for
all reasonable costs and expenses (including, without limitation, fees of
counsel) incurred by the Administrative Agent or such Lender in connection with
such rescission or restoration, including any such costs and expenses incurred
in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law.

          6.04 SUBROGATION. Each Guarantor hereby waives all rights of
subrogation or contribution, whether arising by contract or operation of law
(including, without limitation, any such right arising under the Bankruptcy
Code) or otherwise by reason of any payment by it pursuant to the provisions of
this Section 6 and further agrees with the Borrower for the benefit

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of each of its creditors (including, without limitation, each Lender and the
Administrative Agent) that any such payment by such Guarantor shall constitute a
contribution of capital by such Guarantor to the Borrower (or an investment in
the equity capital of the Borrower by such Guarantor).

          6.05 REMEDIES. The Guarantors jointly and severally agree that, as
between the Guarantors and the Lenders, the obligations of the Borrower under
this Agreement and the Notes may be declared to be forthwith due and payable as
provided in Section 10 hereof (and shall be deemed to have become automatically
due and payable in the circumstances provided in said Section 10) for purposes
of Section 6.01 hereof notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such obligations from becoming automatically due
and payable) as against the Borrower and that, in the event of such declaration
(or such obligations being deemed to have become automatically due and payable),
such obligations (whether or not due and payable by the Borrower) shall
forthwith become due and payable by the Guarantors for purposes of said Section
6.01.

          6.06 INSTRUMENT FOR THE PAYMENT OF MONEY. Each Guarantor hereby
acknowledges that the guarantee in this Section 6 constitutes an instrument for
the payment of money, and consents and agrees that any Lender or the
Administrative Agent, at its sole option, in the event of a dispute by such
Guarantor in the payment of any moneys due hereunder, shall have the right to
bring motion-action under New York CPLR Section 3213.

          6.07 CONTINUING GUARANTEE. The guarantee in this Section 6 is a
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising until such time as all Guaranteed Obligations (including, without
limitation, all Letter of Credit Liabilities) shall have been paid in full and
the Revolving Credit Commitments terminated.

          6.08 CONTRIBUTION AMONG CERTAIN GUARANTORS. The Guarantors hereby
agree, as between themselves, that if any Guarantor shall become an Excess
Funding Obligor (as defined below) by reason of the payment by such Guarantor of
any Guaranteed Obligations, each other Guarantor shall, on demand of such Excess
Funding Guarantor (but subject to the next sentence), pay to such Excess Funding
Guarantor an amount equal to such Guarantor's Pro Rata Share (as defined below
and determined, for this purpose, without reference to the Properties, debts and
liabilities of such Excess Funding Obligor) of the Excess Payment (as defined
below) in respect of such Guaranteed Obligations. The payment obligation of a
Guarantor to any Excess Funding Guarantor under this Section 6.08 shall be
subordinate and subject in right of payment to the prior payment in full of the
obligations of such Guarantor under the other provisions of this Section 6 and
such Excess Funding Guarantor shall not exercise any right or remedy with
respect to such excess until payment and satisfaction in full of all of such
obligations.

          For purposes of this Section 6.08, (i) "EXCESS FUNDING GUARANTOR"
shall mean, in respect of any Guaranteed Obligations, a Guarantor that has paid
an amount in excess of its Pro Rata Share of such Guaranteed Obligations, (ii)
"EXCESS PAYMENT" shall mean, in respect of any Guaranteed Obligations, the
amount paid by an Excess Funding Guarantor in excess of its Pro Rata Share of
such Guaranteed Obligations and (iii) "PRO RATA SHARE" shall mean, for any
Guarantor, the ratio (expressed as a percentage) of (x) the amount by which the
aggregate present

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fair saleable value of all Properties of such Guarantor (excluding any shares of
stock of any other Guarantor) exceeds the amount of all the debts and
liabilities of such Guarantor (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder and any obligations of any other Guarantor that have been Guaranteed
by such Guarantor) to (y) the amount by which the aggregate fair saleable value
of all Properties of all of the Guarantors exceeds the amount of all the debts
and liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities, but excluding the obligations of the Guarantors hereunder) of all
of the Guarantors, all as of the Effective Date. If any entity becomes a
Guarantor pursuant to Section 9.16(b) hereof (and thus a Guarantor hereunder)
subsequent to the Effective Date, then for purposes of this Section 6.08 such
subsequent Guarantor shall be deemed to have been a Guarantor as of the
Effective Date and the aggregate present fair saleable value of the Properties,
and the amount of the debts and liabilities, of such Guarantor as of the
Effective Date shall be deemed to be equal to such value and amount on the date
such Guarantor becomes a Guarantor hereunder.

          6.09 GENERAL LIMITATION ON GUARANTEE OBLIGATIONS. In any action or
proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law (including the law of any
foreign jurisdiction) affecting the rights of creditors generally, if the
obligations of any Guarantor under Section 6.01 hereof would otherwise, taking
into account the provisions of Section 6.08 hereof, be held or determined to be
void, invalid or unenforceable, or subordinated to the claims of any other
creditors, on account of the amount of its liability under said Section 6.01,
then, notwithstanding any other provision hereof to the contrary, the amount of
such liability shall, without any further action by such Guarantor, any Lender,
the Administrative Agent or any other Person, be automatically limited and
reduced to the highest amount that is valid and enforceable and not subordinated
to the claims of other creditors as determined in such action or proceeding.

          Section 7. CONDITIONS PRECEDENT.

          7.01 INITIAL EXTENSION OF CREDIT. The effectiveness of this Agreement
(and the amendment and restatement of the Existing Credit Agreement to be
effected hereby), and the obligation of any Revolving Credit Lender to make any
Revolving Credit Loan or issue a Revolving Letter of Credit hereunder, is
subject to (i) the condition that such effectiveness shall have occurred on or
before March 14, 2003, and (ii) the receipt by the Administrative Agent of the
following documents, each of which shall be satisfactory to the Administrative
Agent (and, to the extent specified below, to the Lenders specified below) in
form and substance:

          (a) CREDIT AGREEMENT. This Third Amended, Restated and Consolidated
     Credit Agreement and related documentation as contemplated hereby, each
     duly executed and delivered by the Obligors, the Revolving Credit Lenders
     and the Administrative Agent (it being understood that, pursuant to the
     Supplemental Order Confirming the Joint Second Amended Modified Plan of
     Reorganization issued by the Bankruptcy Court on January 16, 2003, each of
     the Term Loan Lenders and Term Letter of Credit Lenders shall be deemed to
     have agreed to the provisions of this Agreement as if such Lenders were
     signatories hereto).

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          (b) CORPORATE DOCUMENTS. Certified copies of the charter and by-laws
     (or equivalent documents) of each Group Member and of all corporate
     authority for each Group Member (including, without limitation, board of
     director resolutions and evidence of the incumbency of officers) with
     respect to the execution, delivery and performance of such Basic Documents
     to which such Group Member is or is intended to be a party and each other
     document to be delivered by such Group Member from time to time in
     connection herewith and the extensions of credit hereunder (and the
     Administrative Agent and each Lender may conclusively rely on such
     certificate until it receives notice in writing from such Group Member).

          (c) OFFICER'S CERTIFICATE. A certificate of a senior financial officer
     of the Borrower, dated the Effective Date, to the effect set forth in
     paragraphs (a) and (b) of the first sentence of Section 7.03 hereof.

          (d) OPINIONS OF COUNSEL TO THE GROUP MEMBERS. Opinions, dated the
     Effective Date, of (i) Kirkland & Ellis, special New York counsel to the
     Group Members, in substantially the form of Exhibit H hereto and (ii)
     special Canadian, German and Mexican counsel covering such matters with
     respect to the Canadian, German and Mexican Security Documents,
     respectively, and the other Basic Documents being executed and delivered by
     the respective Group Members in such countries, and in each case covering
     such other matters as the Administrative Agent or any Lender may reasonably
     request (and each Obligor hereby instructs such counsel to deliver each
     such opinion to the Lenders and to the Administrative Agent).

          (e) OPINIONS OF LOCAL COUNSEL. Opinions, dated the Effective Date, of
     special local counsel in the respective states in which the properties
     covered by the Mortgages are located covering such matters with respect to
     such Mortgages and covering such other matters as the Administrative Agent
     or any Lender may reasonably request.

          (f) OPINION OF SPECIAL NEW YORK COUNSEL TO JPMCB. An opinion, dated
     the Effective Date, of Milbank, Tweed, Hadley & McCloy, special New York
     counsel to JPMCB, substantially in the form of Exhibit I hereto (and JPMCB
     hereby instructs such counsel to deliver such opinion to the Lenders and
     the Administrative Agent).

          (g) NOTES. To the extent requested by any Lender pursuant to Section
     2.08(d) hereof, Notes, duly completed and executed, with respect to the
     Loans held or to be made by such Lender hereunder.

          (h) SECURITY AGREEMENT; COLLATERAL ACCOUNT. The Security Agreement,
     duly executed and delivered by each Securing Party referred to therein and
     the Administrative Agent. In addition, (i) each such Securing Party shall
     have taken such other action (including, without limitation, delivering to
     the Administrative Agent instruments and other documents in connection with
     foreign patents and trademarks and certificates representing all shares of
     stock pledged by the Obligors hereunder, together with undated stock powers
     or other instruments of assignment, in each case to the extent not
     heretofore

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     delivered to the Administrative Agent) as the Administrative Agent shall
     have requested in order to perfect the security interests created pursuant
     to the Security Agreement and (ii) the Collateral Account contemplated by
     Section 4.01 of the Security Agreement, the Term Letter of Credit
     Collateral Account contemplated by Section 4.03 of the Security Agreement
     and the Intercompany Notes Account contemplated by Section 4.02 of the
     Security Agreement shall each have been established and there shall have
     been executed and delivered to the Administrative Agent such lock-box or
     similar agreements (and there shall have been taken such other action,
     including establishment of accounts in the name of the Administrative
     Agent, in connection therewith) with respect to Accounts (as such term is
     defined in the Security Agreement) as contemplated by Section 4.04 of the
     Security Agreement and Section 4.01(f) hereof.

          (i) MORTGAGES AND TITLE INSURANCE. The following documents each of
     which shall be executed (and, where appropriate, acknowledged) by Persons
     satisfactory to the Administrative Agent:

               (i) with respect to each Mortgage, an instrument of Modification
          and Confirmation pursuant to which such Mortgage shall have been
          amended in form and substance satisfactory to the Administrative Agent
          to spread the Lien thereof to secure the obligations under this
          Agreement, and to reflect that the Revolving Credit Loans and
          Revolving Letter of Credit Liabilities are entitled to priority as
          contemplated in Section 2.01(d) hereof, in each case duly executed,
          acknowledged and delivered by the respective parties thereto, in
          recordable form (in such number of copies as the Administrative Agent
          shall have requested);

               (ii) mortgagee down-date continuation reports for, and
          modification/date-down endorsements to, existing title policies issued
          pursuant to the Existing Credit Agreement (or any predecessor Credit
          Agreement), subject only to such exceptions as shall be satisfactory
          to the Administrative Agent;

               (iii) for filing in the appropriate county land offices, Uniform
          Commercial Code financing statements covering fixtures, in each case
          appropriately completed and duly executed; and

               (iv) such other documents as may be reasonably requested by the
          title companies to record the instruments of Modification and
          Confirmation and to issue the modification/date-down endorsements.

     In addition, the respective Mortgagors shall have paid to the title
     companies all expenses of such title companies in connection with the
     issuance of the down-date continuation reports and modification date-down
     endorsements and the recording of the instruments of Modification and
     Confirmation and in addition shall have paid to such title companies an
     amount equal to the recording and stamp taxes payable in connection with
     recording the respective instruments of Modification and Confirmation in
     the appropriate county land offices.

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                                     - 63 -

          (j) CONFIRMATION OF FOREIGN SECURITY DOCUMENTS. With respect to each
     Foreign Security Document and Lien on any Property located in Germany,
     Canada, Mexico or any other country other than the United States of
     America, confirmations in form and substance satisfactory to the
     Administrative Agent of the Liens created thereunder, together with such
     amendments thereto as shall be necessary to reflect the amendment and
     restatement of the Existing Credit Agreement contemplated hereby, including
     to provide that the Revolving Credit Loans and Revolving Letter of Credit
     Liabilities are entitled to priority as contemplated in Section 2.01(d)
     hereof, in each case duly executed, acknowledged and delivered by the
     respective parties thereto, in recordable form (in such number of copies as
     the Administrative Agent shall have requested);

          (k) INSURANCE. Certificates of insurance evidencing the existence of
     all insurance required to be maintained by the Obligors and their
     Subsidiaries pursuant to Section 9.04 hereof and the designation of the
     Administrative Agent as the loss payee thereunder to the extent required by
     said Section 9.04 in respect of all insurance covering tangible Property,
     such certificates to be in such form and contain such information as is
     specified in said Section 9.04. In addition, the Obligors shall have
     delivered (i) a certificate of the chief financial officer of the Borrower
     setting forth the insurance obtained by it in accordance with the
     requirements of Section 9.04 hereof and stating that such insurance is in
     full force and effect and that all premiums then due and payable thereon
     have been paid and (ii) a written report, dated reasonably near the
     Effective Date, of Aon Risk Services, or any other firm of independent
     insurance brokers of nationally recognized standing, as to such insurance
     and stating that, in their opinion, such insurance adequately protects the
     interests of the Administrative Agent and the Lenders, is in compliance
     with the provisions of said Section 9.04, and is comparable in all respects
     with insurance carried by responsible owners and operators of Properties
     similar to those covered by the Mortgages.

          (l) PREPAYMENT OF EXISTING LOANS AND LETTERS OF CREDIT. Evidence that
     (i) the Borrower shall have received U.S. $50,000,000 in Net Cash Proceeds
     from the issuance of Junior Subordinated Convertible Notes in like
     principal amount, which Junior Subordinated Convertible Notes shall contain
     terms and conditions, and be issued pursuant to agreements, consistent with
     the Reorganization Plan and otherwise satisfactory to the Administrative
     Agent and (ii) such Net Cash Proceeds, together with the Net Cash Proceeds
     received in connection with the Chicopee Warehouse Sale, shall have been
     applied to the prepayment of the Term Loans, and the provision of cover for
     Term Letter of Credit Liabilities as specified in Section 2.03(b)(v)
     hereof, outstanding under the Existing Credit Agreement, allocated to the
     prepayment of such Term Loans and the provision of such cover ratably in
     accordance with the respective outstanding amounts of such Term Loans and
     Term Letter of Credit Liabilities.

          (m) CONSUMMATION OF REORGANIZATION PLAN. Evidence that (i) the
     Bankruptcy Court shall have entered orders (the "PLAN ORDERS") confirming
     the Reorganization Plan and authorizing the Debtors to enter into the Loan
     Documents, such orders and Reorganization Plan to each be in form and
     substance satisfactory to the Administrative Agent and the Majority
     Restructured Lenders, it being understood that in any event the

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     Reorganization Plan shall provide for the conversion of all of the Existing
     Senior Subordinated Notes into equity capital of the Borrower in the
     respective amounts, and having the respective terms, provided in the
     Reorganization Plan, (ii) each of the Plan Orders shall be in full force
     and effect and none of the Plan Orders shall be subject to any appeal or
     stay, (iii) the Borrower and each of its Subsidiaries party to the Chapter
     11 Cases shall have emerged (or be simultaneously emerging) from the
     Chapter 11 Cases and shall have consummated (or shall be simultaneously
     consummating) the Reorganization Plan in accordance with the terms thereof
     and (iv) any Indebtedness incurred by the Borrower or any of its
     Subsidiaries during the Chapter 11 Cases (including any
     debtor-in-possession financing) shall have been paid in full and all
     collateral security therefor released, in each case in a manner
     satisfactory to the Administrative Agent, it being understood that in no
     event shall any such indebtedness have been paid with the proceeds of any
     Revolving Credit Loan hereunder.

          (n) MANAGEMENT RETENTION ARRANGEMENTS. Evidence that arrangements
     satisfactory to the Majority Restructured Lenders for the retention of key
     senior management personnel have been made, including execution and
     delivery of satisfactory employment agreements.

          (o) NO OUTSTANDING REVOLVING CREDIT LOANS. Evidence that, on the
     Effective Date after giving effect to the consummation of the
     Reorganization Plan, there are no outstanding Revolving Credit Loans
     (including any borrowing to pay any debtor-in-possession financing incurred
     in any case under Chapter 11 of the Bankruptcy Code).

          (p) PROCESS AGENT ACCEPTANCES. A Process Agent Acceptance from each
     Foreign Obligor, duly executed and delivered by the Process Agent in
     substantially the form of Exhibit J attached hereto, and process agent
     acceptances (in respect of Bonlam and Fabrene), duly executed and delivered
     by process agents in substantially the form attached as Exhibits to the
     Intercompany Notes Agreements (to the extent not previously delivered
     pursuant to the Existing Credit Agreement for periods through the date
     twelve months after the Revolving Credit Termination Date).

          (q) PAYMENT OF FEES. Evidence of the payment to the Administrative
     Agent of (i) an upfront fee in an amount equal to 2% of the aggregate
     amount of the Revolving Credit Commitments (which fee shall be shared
     ratably by the Revolving Credit Lenders), net of any previous payments of
     such upfront fee paid prior to the Effective Date, (ii) all interest,
     letter of credit fees and commissions accrued and unpaid under the Existing
     Credit Agreement to but not including the Effective Date and (iii) all
     fees, disbursements and other expenses required to be paid (including of
     counsel and financial advisors for the Lenders) for which invoices have
     been presented on or before the Effective Date.

          (r) GOF PAYMENTS. Evidence that the aggregate payments to GOF in
     connection with the Reorganization Plan and the transactions contemplated
     thereby are less than or equal to U.S. $4,500,000 (constituting a standby
     purchaser fee of $2,000,000, an arrangement and plan facilitation fee of
     $2,000,000 and a posting fee of $500,000) and that no other fees to, or
     reimbursement of, expenses of GOF are payable.

                                CREDIT AGREEMENT

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                                     - 65 -

          (s) CHICOPEE WAREHOUSE SALE AND EFFECTIVE DATE EXCESS CASH PREPAYMENT.
     Evidence of the payment to the Administrative Agent of amounts due and
     payable pursuant to Sections 2.10(g) and (h) hereof to the extent that
     proceeds of such prepayments are received on or before the Effective Date.

          (t) OTHER DOCUMENTS. Such other documents as the Administrative Agent
     or special New York counsel to JPMCB may reasonably request.

The effectiveness of this Agreement (and the amendment and restatement of the
Existing Credit Agreement contemplated hereby), and the obligation of any Lender
to make its initial extension of credit hereunder (whether by making a Loan, or
issuing a Letter of Credit), is also subject to (i) each order issued in any of
the Chapter 11 Cases (other than the Plan Orders, as to which paragraph (m)
above shall be applicable), to the extent deemed materially adverse to the
Lenders by the Administrative Agent, being satisfactory in form and substance to
the Administrative Agent and (ii) the payment by the Borrower of such fees as
the Borrower shall have agreed to pay or deliver to any Lender or the
Administrative Agent in connection herewith, including, without limitation, the
reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy LLP, special New
York counsel to JPMCB, in connection with the negotiation, preparation,
execution and delivery of this Agreement and the Notes and the other Loan
Documents and the extensions of credit hereunder (to the extent that statements
for such fees and expenses have been delivered to the Borrower).

          7.02 INITIAL REVOLVING EXTENSIONS OF CREDIT. The obligation of the
Revolving Credit Lenders to make the initial Revolving Credit Loans hereunder,
or to issue the initial Revolving Letter of Credit hereunder, is subject to the
condition precedent that all marketable securities not constituting cash and
cash equivalents of the Borrower and its Restricted Subsidiaries shall have been
liquidated prior to the making of any such Revolving Credit Loans and Revolving
Credit Letters of Credit.

          7.03 INITIAL AND SUBSEQUENT EXTENSIONS OF CREDIT. The obligation of
the Lenders to make any Revolving Credit Loan or issue any Revolving Letter of
Credit, or to extend, renew, modify or supplement any Letter of Credit, is
subject to the further conditions precedent that, both immediately prior to the
making of such Revolving Credit Loan, the issuance of such Revolving Letter of
Credit or the making of such extension, renewal, modification or supplement, and
also after giving effect thereto and to the intended use thereof:

          (a) no Default shall have occurred and be continuing; and

          (b) the representations and warranties made by the Obligors in Section
     8 hereof, and by each of the Group Members in each of the other Loan
     Documents to which it is a party, shall be true and complete on and as of
     the date of the making of such Loan, the issuance of such Letter of Credit,
     or the making of such extension, renewal, modification or supplement with
     the same force and effect as if made on and as of such date (or, if any
     such representation or warranty is expressly stated to have been made as of
     a specific date, as of such specific date).

                                CREDIT AGREEMENT

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                                     - 66 -

          Each notice of borrowing, or request for the issuance of a Revolving
Letter of Credit or any such extension, renewal, modification or supplement by
the Borrower hereunder, shall constitute a certification by the Borrower to the
effect set forth in the preceding sentence (both as of the date of such notice
or request and, unless the Borrower otherwise notifies the Administrative Agent
prior to the date of such borrowing, issuance, extension, renewal, modification
or supplement, as of the date of such borrowing, issuance, extension, renewal,
modification or supplement).

          Section 8. REPRESENTATIONS AND WARRANTIES. Each Obligor hereby
represents and warrants to the Lenders that:

          8.01 CORPORATE EXISTENCE. Each Group Member: (a) is a corporation,
partnership, limited liability company, or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization; (b) has all requisite corporate or other power, and has all
material governmental licenses, authorizations, consents and approvals necessary
to own its assets and carry on its business as now being or as proposed to be
conducted; and (c) is qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify could have a Material
Adverse Effect.

          8.02 FINANCIAL CONDITION. The Borrower has heretofore furnished to
each of the Lenders the following financial statements:

          (a) the audited consolidated balance sheets of the Borrower and its
     consolidated Subsidiaries and the related audited consolidated statements
     of operations, shareholders' equity (deficit) and cash flows of the
     Borrower and its consolidated Subsidiaries for the fiscal year ended
     December 29, 2001, reported on by Ernst & Young LLP;

          (b) the unaudited consolidated balance sheets of the Borrower and its
     consolidated Subsidiaries and the related unaudited consolidated statements
     of operations, shareholders' equity (deficit) and cash flows of the
     Borrower and its consolidated Subsidiaries for the nine-month period ended
     September 28, 2002; and

          (c) projected pro forma consolidated balance sheets of the Borrower
     and its consolidated Subsidiaries, and related consolidated statements of
     shareholders' equity (deficit) as at December 28, 2002, which balance
     sheets and statements reflect the consummation of the Reorganization Plan
     as if the same had been consummated on said date.

All such financial statements fairly present the respective actual or projected
pro forma financial condition, as applicable, of the Borrower and its
consolidated Subsidiaries as at the respective dates, and the respective actual
results of operations for the respective periods ended on said respective dates,
all in accordance with generally accepted accounting principles and practices
applied on a consistent basis; PROVIDED that, as to projections, the Borrower
and its consolidated

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                                     - 67 -

Subsidiaries represent only that such projections have been prepared in good
faith based on estimates and assumptions believed by the Borrower and its
consolidated Subsidiaries to be reasonable as of the date such projections were
prepared. None of the Borrower or any of its Subsidiaries has on the date hereof
any material contingent liabilities, material liabilities for taxes, material
unusual forward or long-term commitments or material unrealized or anticipated
losses from any unfavorable commitments, except as referred to or reflected or
provided for in said respective balance sheets as at said respective dates.
Except as set forth on Schedule XII hereto, since September 28, 2002, there has
been no material adverse change in the financial condition, operation, business
or prospects of the Borrower and its consolidated Subsidiaries taken as a whole
from that set forth in the respective financial statements as at such date.

          8.03 LITIGATION. Except as set forth in Schedule I hereto, there are
no legal or arbitral proceedings, or any proceedings by or before any
governmental or regulatory authority or agency, now pending or (to the knowledge
of any Obligor) threatened against any Group Member which, if adversely
determined could reasonably be expected to have a Material Adverse Effect.

          8.04 NO BREACH. None of the execution and delivery of this Agreement
and the Notes and the other Basic Documents, the consummation of the
transactions herein and therein contemplated or compliance with the terms and
provisions hereof and thereof will conflict with or result in a breach of, or
require any consent under, the organizational documents of any Group Member, or
any applicable law or regulation (including, without limitation, regulations of
the central bank of Canada, Germany or Mexico), or any order, writ, injunction
or decree of any court or Governmental Authority, or any agreement or instrument
to which any Group Member is a party or by which any of them or any of their
Property is bound or to which any of them is subject, or constitute a default
under any such agreement or instrument, or (except for the Liens created
pursuant to the Security Documents) result in the creation or imposition of any
Lien upon any Property of any Group Member pursuant to the terms of any such
agreement or instrument.

          8.05 ACTION. Each Obligor has all necessary corporate or other power,
authority and legal right to execute, deliver and perform its obligations under
each of the Basic Documents to which it is a party; the execution, delivery and
performance by each Obligor of each of the Basic Documents to which it is a
party have been duly authorized by all necessary corporate or other action on
its part (including, without limitation, any required shareholder approvals);
and this Agreement has been duly and validly executed and delivered by each
Obligor and constitutes, and each of the Notes and the other Basic Documents to
which any Obligor is a party when executed and delivered by such Obligor (in the
case of the Notes, for value), will constitute, its legal, valid and binding
obligation, enforceable against such Obligor in accordance with its terms,
except as such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or similar laws of general applicability affecting
the enforcement of creditors' rights and (b) the application of general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

          8.06 APPROVALS. No authorizations, approvals (other than the approval
of the Bankruptcy Court which has been previously obtained) or consents of
(including any exchange control approval), and no filings or registrations with,
any governmental or regulatory authority

                                CREDIT AGREEMENT

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                                     - 68 -

or agency, or any securities exchange (including, without limitation, the
central bank of Canada, Germany or Mexico), are necessary for the execution,
delivery or performance by any Obligor of the Basic Documents to which it is a
party or for the legality, validity or enforceability hereof or thereof, except
for filings and recordings in respect of the Liens created pursuant to the
Security Documents.

          8.07 USE OF CREDIT. None of the Group Members is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
Margin Stock, and no part of the proceeds of any extension of credit hereunder
will be used to buy or carry any Margin Stock in violation of the applicable
provisions of Regulations U and X.

          8.08 ERISA. Each Plan, and, to the knowledge of each Obligor, each
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law, and no event
or condition has occurred and is continuing as to which any Obligor would be
under an obligation to furnish a report to the Lenders under Section 9.01(f)
hereof.

          8.09 TAXES. The Group Members (other than their respective Foreign
Subsidiaries) are members of an affiliated group of corporations filing
consolidated returns for Federal income tax purposes, of which the Borrower is
the "common parent" (within the meaning of Section 1504 of the Code) of such
group. There is no tax sharing, tax allocation or similar agreement currently in
effect providing for the manner in which tax payments owing by the members of
such affiliated group (whether in respect of Federal, state or foreign income or
other taxes) are allocated among the members of the group. The Group Members
have filed (either directly, or indirectly through the Borrower) all United
States Federal, and all foreign, income tax returns and all other material tax
returns that are required to be filed by them and have paid (either directly, or
indirectly through the Borrower) all taxes due pursuant to such returns or
pursuant to any assessment received by any Group Member. The charges, accruals
and reserves on the books of the Group Members in respect of taxes and other
governmental charges are, in the opinion of the Obligors, adequate.

          8.10 INVESTMENT COMPANY ACT. None of the Group Members is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.

          8.11 PUBLIC UTILITY HOLDING COMPANY ACT. None of the Group Members is
a "holding company", or an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.

          8.12 MATERIAL AGREEMENTS AND LIENS.

          (a) INDEBTEDNESS. Part A of Schedule II hereto is a complete and
correct list, as of the date of this Agreement (and after giving effect to the
transactions contemplated to occur on

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                                     - 69 -

the Effective Date), of each credit agreement, loan agreement, indenture,
purchase agreement, lease, guarantee, letter of credit or other arrangement
(excluding this Agreement) providing for or otherwise relating to any
Indebtedness or any extension of credit (or commitment for any extension of
credit) to, or guarantee by, any Group Member, the aggregate principal or face
amount of which equals or exceeds (or may equal or exceed) U.S. $100,000, and
the aggregate principal or face amount outstanding or that may become
outstanding under each such arrangement is correctly described in Part A of said
Schedule II.

          (b) LIENS. Part B of Schedule II hereto is a complete and correct
list, as of the date of this Agreement (and after giving effect to the
transactions contemplated to occur on the Effective Date), of each Lien securing
Indebtedness of any Person (excluding the Security Documents) the aggregate
principal or face amount of which equals or exceeds (or may equal or exceed)
U.S. $100,000 and covering any Property of any Group Member, and the aggregate
Indebtedness secured (or which may be secured) by each such Lien and the
Property covered by each such Lien is correctly described in Part B of said
Schedule II.

          8.13 ENVIRONMENTAL MATTERS. Each Group Member has obtained all
environmental, health and safety permits, licenses and other authorizations
required under all Environmental Laws to carry on its business as now being or
as proposed to be conducted, except to the extent failure to have any such
permit, license or authorization would not have a Material Adverse Effect. Each
of such permits, licenses and authorizations is in full force and effect and
each Group Member is in compliance with the terms and conditions thereof, and is
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply
therewith would not have a Material Adverse Effect.

          In addition, except as set forth in Schedule III hereto:

          (a) NO PENDING ENVIRONMENTAL MATTERS. No notice, notification, demand,
     request for information, citation, summons or order has been issued, no
     complaint has been filed, no penalty has been assessed and no investigation
     or review is pending or threatened by any governmental or other entity with
     respect to any alleged failure by any Group Member to have any
     environmental, health or safety permit, license or other authorization
     required under any Environmental Law in connection with the conduct of the
     business of any Group Member or with respect to any generation, treatment,
     storage, recycling, transportation, discharge or disposal, or any Release
     of any Hazardous Materials generated by any Group Member which alleged
     failure, generation, treatment, storage, recycling, transportation,
     discharge or disposal or Release would have a Material Adverse Effect.

          (b) NO TREATMENT FACILITIES OR RELEASES. Except to the extent the same
     could not reasonably be expected to have a Material Adverse Effect:

                                CREDIT AGREEMENT

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                                     - 70 -

               (i) no Group Member owns, operates or leases a treatment, storage
          or disposal facility requiring a permit under the Resource
          Conservation and Recovery Act of 1976, as amended, or under any
          comparable state or local statute;

               (ii) no polychlorinated biphenyls (PCB's) is or has been present
          at any site or facility now or previously owned, operated or leased by
          any Group Member;

               (iii) no asbestos or asbestos-containing materials is or has been
          present at any site or facility now or previously owned, operated or
          leased by any Group Member;

               (iv) there are no underground storage tanks or surface
          impoundments for Hazardous Materials, active or abandoned, at any site
          or facility now or previously owned, operated or leased by any Group
          Member;

               (v) no Hazardous Materials have been Released at, on or under any
          site or facility now or previously owned, operated or leased by any
          Group Member in a reportable quantity established by statute,
          ordinance, rule, regulation or order; and

               (vi) no Hazardous Materials have been otherwise Released at, on
          or under any site or facility now or previously owned, operated or
          leased by any Group Member.

          (c) NO HAZARDOUS MATERIAL TRANSPORTED TO NPL SITES. No Group Member
     has transported or arranged for the transportation of any Hazardous
     Material to any location that is listed on the National Priorities List
     ("NPL") under the Comprehensive Environmental Response, Compensation and
     Liability Act of 1980, as amended ("CERCLA"), listed for possible inclusion
     on the NPL by the Environmental Protection Agency in the Comprehensive
     Environmental Response and Liability Information System, as provided for by
     40 C.F.R. Section 300.5 ("CERCLIS"), or on any similar state, local or
     foreign list or that is the subject of Federal, state, local or foreign
     enforcement actions or other investigations that may lead to Environmental
     Claims against any Group Member, in each case to the extent such
     Environmental Claims could reasonably be expected to have a Material
     Adverse Effect.

          (d) NO NOTIFICATIONS OR LISTINGS. No oral or written notification of a
     Release of a Hazardous Material has been filed by or on behalf of any Group
     Member and no site or facility now or previously owned, operated or leased
     by any Group Member is listed or proposed for listing on the NPL, CERCLIS
     or any similar state or foreign list of sites requiring investigation or
     clean-up.

          (e) NO LIENS OR RESTRICTIONS. No Liens have arisen under or pursuant
     to any Environmental Laws on any site or facility owned, operated or leased
     by any Group Member, and none of the Group Members has received any
     notification (or otherwise has

                                CREDIT AGREEMENT

<Page>

                                     - 71 -

     any knowledge) of any government action that has been taken or is in
     process that could subject any such site or facility to such Liens, and no
     Group Member would be required to place any notice or restriction relating
     to the presence of Hazardous Materials at any site or facility owned by it
     in any deed to the real property on which such site or facility is located.

          (f) FULL DISCLOSURE. There have been no so-called "Phase I" or "Phase
     II" environmental investigations or other analyses conducted by or that are
     in the possession of any Group Member in relation to any site or facility
     now or previously owned, operated or leased by any Group Member which have
     not been made available to the Lenders.

          8.14 CAPITALIZATION.

          (a) OUTSTANDING EQUITY. The authorized capital stock of the Borrower
and each of the Subsidiaries will consist as of the Effective Date, after giving
effect to the transactions contemplated to occur on or before the Effective
Date, of the aggregate number of shares of common and preferred stock, having
the respective par values and series, in each case as listed in Schedule IV
hereto. On the Effective Date, after giving effect to the transactions
contemplated to occur on or before the Effective Date, the number of shares of
common stock and each series of preferred stock of the Borrower and each of its
Subsidiaries will be duly and validly issued and outstanding as listed in said
Schedule IV and, in the case of each of such Subsidiaries, will be owned
beneficially and of record by the Persons as listed in said Schedule IV.

          (b) OUTSTANDING EQUITY RIGHTS. As of the Effective Date, after giving
effect to the transactions contemplated to occur on or before the Effective
Date, except as set forth in Schedule V hereto, (i) there will be no outstanding
Equity Rights with respect to any Group Member and (ii) there will be no
outstanding obligations of any Group Member to repurchase, redeem, or otherwise
acquire any shares of capital stock of the Borrower or any other Group Member
nor will there be any outstanding obligations of any Group Member to make
payments to any Person, such as "phantom stock" payments, where the amount
thereof is calculated with reference to the fair market value or equity value of
any Group Member.

          8.15 SUBSIDIARIES AND INVESTMENTS, ETC.

          (a) SUBSIDIARIES. Set forth in Part A of Schedule VI hereto is a
complete and correct list of all of the Subsidiaries of the Borrower as of the
Effective Date after giving effect to the transactions contemplated to occur on
or before the Effective Date, together with, for each such Subsidiary, (i) the
jurisdiction of organization of such Subsidiary, (ii) each Person holding
ownership interests in such Subsidiary, (iii) the nature of the ownership
interests held by each such Person and the percentage of ownership of such
Subsidiary represented by such ownership interests and (iv) an indication of
whether such Subsidiary is a Restricted Subsidiary. Except as disclosed in Part
A of Schedule VI hereto, (x) the Borrower and its Subsidiaries owns, or will own
on the Effective Date, free and clear of Liens (other than Liens created
pursuant to the Security Documents), and has the unencumbered right to vote, all
outstanding ownership interests in each Person shown to be held by it in Part A
of Schedule VI hereto, (y) all of the

                                CREDIT AGREEMENT

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                                     - 72 -

issued and outstanding capital stock of each such Person organized as a
corporation is validly issued, fully paid and nonassessable and (z) (except as
disclosed in Schedule V hereto) there are no outstanding Equity Rights with
respect to such Person. As of the Effective Date, except as set forth on
Schedule VI hereto, all the Subsidiaries of the Borrower are Restricted
Subsidiaries.

          (b) INVESTMENTS. Set forth in Part B of Schedule VI hereto is a
complete and correct list of all Investments (other than Investments disclosed
in Part A of said Schedule VI hereto and other than Investments referred to in
clause (b) through (i), inclusive, of Section 9.08 hereof) held by any Group
Member in any Person on the date hereof, or that will be held on the Effective
Date after giving effect to the transactions contemplated to occur on or before
the Effective Date, and, for each such Investment, (x) the identity of the
Person or Persons holding such Investment and (y) the nature of such Investment.
Except as disclosed in Part B of Schedule VI hereto, each Group Member owns, or
will own, free and clear of all Liens (other than Liens created pursuant to the
Security Documents), all such Investments.

          (c) ABSENCE OF CERTAIN RESTRICTIONS. Except as provided for in the
Intercompany Notes Agreements, no Group Member is, on the date hereof, subject
to any indenture, agreement, instrument or other arrangement of the type
described in Section 9.16(e) hereof.

          8.16 TITLE TO ASSETS. Each Group Member on the Effective Date will own
and have good and marketable title (subject only to Liens permitted by Section
9.06 hereof) to the material Properties shown to be owned in the most recent
financial statements referred to in Section 8.02(c) hereof (other than
Properties disposed of in the ordinary course of business or otherwise permitted
to be disposed of pursuant to Section 9.05 hereof). Each Group Member on the
Effective Date will own (or have available for use under lease, license or other
arrangements entered into with any other Person) good and marketable title to,
and enjoy on the date hereof, and will enjoy on the Effective Date, peaceful and
undisturbed possession of, all Properties (subject only to Liens permitted by
Section 9.06 hereof) that are necessary for the operation and conduct of their
businesses.

          8.17 TRUE AND COMPLETE DISCLOSURE. The information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf of the
Obligors to the Administrative Agent or any Lender in connection with the
negotiation, preparation or delivery of this Agreement and the other Basic
Documents or included herein or therein or delivered pursuant hereto or thereto,
when taken as a whole (together with the Reorganization Plan) do not contain any
untrue statement of material fact or omit to state any material fact necessary
to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading, PROVIDED that, as to projections, the
Obligors represent only that such projections have been prepared in good faith
based on estimates and assumptions believed by the Obligors to be reasonable as
of the date such projections were prepared. All written information furnished
after the date hereof by the Obligors to the Administrative Agent and the
Lenders in connection with this Agreement and the other Basic Documents and the
transactions contemplated hereby and thereby will be true, complete and accurate
in every material respect, or (in the case of projections) based on reasonable
estimates, on the date as of which such information is stated or certified.
There is no fact known to the Obligors that could have a Material Adverse Effect
that has not been disclosed herein, in the other Basic Documents or in a report,
financial statement,

                                CREDIT AGREEMENT

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                                     - 73 -

exhibit, schedule, disclosure letter or other writing furnished to the Lenders
for use in connection with the transactions contemplated hereby or thereby.

          8.18 LEGAL FORM. The Foreign Security Documents, and the Intercompany
Notes and the Intercompany Notes Agreements, are in proper legal form under the
law of any applicable foreign jurisdiction for the enforcement thereof against
any Foreign Obligor, and if any such documents or instruments were stated to be
governed by such law, they would constitute legal, valid and binding obligations
of the respective Group Members party thereto under such law, enforceable in
accordance with their respective terms. All formalities required in any such
foreign jurisdiction for the validity and enforceability of any Foreign Security
Document, and any of the Intercompany Notes or the Intercompany Notes
Agreements, in each applicable foreign jurisdiction have been accomplished, and
no Foreign Taxes are required to be paid for the validity and enforceability
thereof.

          8.19 RANKING. The Foreign Security Documents, and the Intercompany
Notes and the Intercompany Notes Agreements, and the obligations evidenced
thereby are and will at all times be direct and unconditional general
obligations of the Obligors, and rank and will at all times rank in right of
payment and otherwise at least PARI PASSU with any unsecured Indebtedness of the
respective Group Members party thereto, whether now existing or hereafter
outstanding. There exists no Lien (including any Lien arising out of any
attachment, judgment or execution), nor any segregation or other preferential
arrangement of any kind, on, in or with respect to any of the Property or
revenues of the Group Members, except as expressly permitted by Section 9.06
hereof.

          8.20 COMMERCIAL ACTIVITY; ABSENCE OF IMMUNITY. The Group Members party
to the Foreign Security Documents, and the Intercompany Notes and the
Intercompany Notes Agreements, are subject to civil and commercial law with
respect to their obligations under such instruments. The execution, delivery and
performance by such Group Members of such instruments constitute private and
commercial acts rather than public or governmental acts. None of such Group
Members nor any of their Properties or revenues is entitled to any right of
immunity in any jurisdiction from suit, court jurisdiction, judgment, attachment
(whether before or after judgment), set-off or execution of a judgment or from
any other legal process or remedy relating to the obligations of such Group
Members under such instruments.

          8.21 REAL PROPERTY. Set forth on Schedule VII attached hereto is a
list of all of the real property interests of the Group Members on the Effective
Date, after giving effect to the transactions contemplated to occur on or before
the Effective Date, indicating in each case whether the respective Property is
owned or leased, the identity of the owner or lessee and the location of the
respective Property. All such leases necessary for the conduct of the business
of the Group Members are valid and subsisting and are in full force and effect,
except for such failures to be valid, subsisting and in full force and effect as
would not, individually or in the aggregate, have a Material Adverse Effect.
Each of the Group Members enjoys peaceful and undisturbed possession under all
such leases, and each of the Group Members has complied with all material
obligations under all leases to which it is a party, except where the failure to
so comply could not reasonably be expected to have a Material Adverse Effect.

                                CREDIT AGREEMENT

<Page>

                                     - 74 -

          8.22 INTERCOMPANY NOTES. On the date hereof, the only "Intercompany
Notes" under and as defined in the Existing Credit Agreement that have been
executed and delivered by either Bonlam or Fabrene are the Fabrene Acquisition
Intercompany Note, the Fabrene Operations Intercompany Note and the Bonlam
Intercompany Notes.

          Section 9. COVENANTS OF THE BORROWER. Each Obligor hereby covenants
and agrees with the Lenders and the Administrative Agent that, so long as any
Revolving Credit Commitment, Loan or Letter of Credit Liability is outstanding
and until payment in full of all amounts payable by the Borrower hereunder:

          9.01 FINANCIAL STATEMENTS ETC. The Obligors shall deliver to the
Administrative Agent (and the Administrative Agent will promptly forward copies
of the same to each Lender):

          (a) as soon as available and in any event within (x) 45 days after the
     end of each monthly accounting period for the fiscal year of the Borrower
     ending January 3, 2004 and (y) 30 days after the end of each monthly
     accounting period of each fiscal year of the Borrower commencing with the
     fiscal year ending January 1, 2005 (unless such monthly accounting period
     ends on the end of a fiscal quarter or fiscal year, in which case the
     provisions of paragraph (b) and (c) below shall apply), consolidated
     statements of income, retained earnings and cash flows of the Borrower and
     its Subsidiaries (and, separately stated, of the Borrower and its
     Restricted Subsidiaries and, with respect to statements of income,
     Operating Divisions) for such period and for the period from the beginning
     of the respective fiscal year to the end of such period, and the related
     consolidated balance sheets of the Borrower and its Subsidiaries as at the
     end of such period (and, separately stated, of the Borrower and its
     Restricted Subsidiaries and, with respect to statements of income,
     Operating Divisions), setting forth in each case in comparative form the
     corresponding consolidated figures for the corresponding period in the
     preceding fiscal year, accompanied by a certificate of a senior financial
     officer of the Borrower, which certificate shall state that said
     consolidated financial statements fairly present the consolidated financial
     condition and results of operations of the Borrower and its Subsidiaries
     (or of the Borrower and its Restricted Subsidiaries and Operating
     Divisions, as the case may be), in each case in accordance with generally
     accepted accounting principles, consistently applied, as at the end of, and
     for, such period (subject to the absence of footnote disclosures and to
     normal year-end audit adjustments);

          (b) as soon as available and in any event within (x) 60 days after the
     end of each quarterly fiscal period for the fiscal year of the Borrower
     ending January 3, 2004 and (y) 45 days after the end of each quarterly
     fiscal period of each fiscal year of the Borrower commencing with the
     fiscal year ending January 1, 2005 (unless such quarterly fiscal period
     ends on the end of a fiscal year, in which case the provisions of paragraph
     (c) below shall apply), consolidated statements of income, retained
     earnings and cash flows of the Borrower and its Subsidiaries (and,
     separately stated, of the Borrower and its Restricted Subsidiaries and,
     with respect to statements of income, Operating Divisions) for such period
     and for the period from the beginning of the respective fiscal year to the
     end of such period, and the related consolidated balance sheets of the
     Borrower and its

                                CREDIT AGREEMENT

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                                     - 75 -

     Subsidiaries as at the end of such period (and, separately stated, of the
     Borrower and its Restricted Subsidiaries and, with respect to statements of
     income, Operating Divisions), setting forth in each case in comparative
     form the corresponding consolidated figures for the corresponding period in
     the preceding fiscal year, accompanied by a certificate of a senior
     financial officer of the Borrower, which certificate shall state that said
     consolidated financial statements fairly present the consolidated financial
     condition and results of operations of the Borrower and its Subsidiaries
     (or of the Borrower and its Restricted Subsidiaries and Operating
     Divisions, as the case may be), in each case in accordance with generally
     accepted accounting principles, consistently applied, as at the end of, and
     for, such period (subject to the absence of footnote disclosures and to
     normal year-end audit adjustments);

          (c) as soon as available and in any event within (x) 120 days after
     the end of the fiscal year of the Borrower ending January 3, 2004 and (y)
     90 days after the end of each fiscal year of the Borrower commencing with
     the fiscal year ending January 1, 2005, consolidated statements of income,
     retained earnings and cash flows of the Borrower and its Subsidiaries (and,
     separately stated, of the Borrower and its Restricted Subsidiaries and
     Operating Divisions) for such fiscal year and the related consolidated
     balance sheets of the Borrower and its Subsidiaries (and, separately
     stated, of the Borrower and its Restricted Subsidiaries and Operating
     Divisions) as at the end of such fiscal year, setting forth in each case in
     comparative form the corresponding consolidated figures for the preceding
     fiscal year, and accompanied by an opinion thereon of independent certified
     public accountants of recognized national standing, which opinion shall
     state that said consolidated financial statements fairly present the
     consolidated financial condition and results of operations of the Borrower
     and its Subsidiaries (or of the Borrower and its Restricted Subsidiaries
     and Operating Divisions, as the case may be) as at the end of, and for,
     such fiscal year in accordance with generally accepted accounting
     principles, and a certificate of such accountants stating that, in making
     the examination necessary for their opinion, they obtained no knowledge,
     except as specifically stated, of any Default;

          (d) promptly upon their becoming available, copies of all registration
     statements and regular periodic reports, if any, which any of the Group
     Members shall have filed with the Securities and Exchange Commission (or
     any governmental agency substituted therefor) or any national securities
     exchange;

          (e) promptly upon the mailing thereof to the holders of any
     publicly-traded debt or equity securities of any of the Group Members,
     copies of all financial statements, certificates, reports, proxy statements
     and other notices or information so mailed;

          (f) as soon as possible, and in any event within ten days after any
     Obligor knows or has reason to believe that any of the events or conditions
     specified below with respect to any Plan or Multiemployer Plan has occurred
     or exists, a statement signed by a senior financial officer of such Obligor
     setting forth details respecting such event or condition and the action, if
     any, that the Obligors and their ERISA Affiliates propose to take with
     respect thereto (and a copy of any report or notice required to be filed
     with or given to PBGC by the Borrower or an ERISA Affiliate with respect to
     such event or condition):

                                CREDIT AGREEMENT

<Page>

                                     - 76 -

               (i) any reportable event, as defined in Section 4043(c) of ERISA
          and the regulations issued thereunder, with respect to a Plan, as to
          which the PBGC has not by regulation waived the requirement of Section
          4043(a) of ERISA that it be notified within 30 days of the occurrence
          of such event (PROVIDED that a failure to meet the minimum funding
          standard of Section 412 of the Code or Section 302 of ERISA,
          including, without limitation, the failure to make on or before its
          due date a required installment under Section 412(m) of the Code or
          Section 302(e) of ERISA, shall be a reportable event regardless of the
          issuance of any waivers in accordance with Section 412(d) of the
          Code); and any request for a waiver under Section 412(d) of the Code
          for any Plan;

               (ii) the distribution under Section 4041 of ERISA of a notice of
          intent to terminate any Plan or any action taken by the Borrower or an
          ERISA Affiliate to terminate any Plan;

               (iii) the institution by the PBGC of proceedings under Section
          4042 of ERISA for the termination of, or the appointment of a trustee
          to administer, any Plan, or the receipt by the Borrower or any ERISA
          Affiliate of a notice from a Multiemployer Plan that such action has
          been taken by the PBGC with respect to such Multiemployer Plan;

               (iv) the complete or partial withdrawal from a Multiemployer Plan
          by the Borrower or any ERISA Affiliate that results in liability under
          Section 4201 or 4204 of ERISA (including the obligation to satisfy
          secondary liability as a result of a purchaser default) or the receipt
          by the Borrower or any ERISA Affiliate of notice from a Multiemployer
          Plan that it is in reorganization or insolvency pursuant to Section
          4241 or 4245 of ERISA or that it intends to terminate or has
          terminated under Section 4041A of ERISA;

               (v) the institution of a proceeding by a fiduciary of any
          Multiemployer Plan against the Borrower or any ERISA Affiliate to
          enforce Section 515 of ERISA, which proceeding is not dismissed within
          30 days; and

               (vi) the adoption of an amendment to any Plan that, pursuant to
          Section 401(a)(29) of the Code or Section 307 of ERISA, would require
          security to be provided to the Plan in accordance with the provisions
          of said Sections;

          (g) as soon as available and in any event within 30 days after the
     beginning of each fiscal year of the Borrower, (i) a projection (setting
     forth an itemization of the principal assumptions relating thereto) for
     such fiscal year of the Borrower of the anticipated income statement, cash
     flow statement and changes in financial position of the Borrower, and the
     related balance sheets and (ii) promptly after any material change in such
     projections (either positive or negative) becomes known, notice of such
     change;

                                CREDIT AGREEMENT

<Page>

                                     - 77 -

          (h) promptly after any Obligor has reason to believe that any Default
     has occurred, a notice of such Default describing the same in reasonable
     detail and, together with such notice or as soon thereafter as possible, a
     description of the action that such Obligor has taken or propose to take
     with respect thereto; and

          (i) from time to time such other information regarding the financial
     condition, operations, business or prospects of any Group Member
     (including, without limitation, any Plan or Multiemployer Plan and any
     reports or other information required to be filed under ERISA) as any
     Lender or the Administrative Agent may reasonably request.

The Borrower will furnish to the Administrative Agent (and the Administrative
Agent will promptly forward copies of the same to each Lender), at the time it
furnishes each set of financial statements pursuant to clause (b) or (c) above,
a certificate of a senior financial officer of the Borrower (i) to the effect
that no Default has occurred and is continuing (or, if any Default has occurred
and is continuing, describing the same in reasonable detail and describing the
action that the Borrower has taken or proposes to take with respect thereto) and
(ii) setting forth in reasonable detail the computations necessary to determine
whether the Obligors are in compliance with Sections 9.07 through 9.10 hereof,
inclusive, as of the end of the respective quarterly fiscal period or fiscal
year.

          The Borrower shall conduct, not less frequently than quarterly
(commencing with the first full fiscal quarter following the Effective Date),
telephone conference calls or in-person meetings with the Lenders providing
updates on the status of the Borrower's Property, business, operations,
financial condition, prospects, liabilities and capitalization, PROVIDED that
not more than 135 days shall occur between any of such calls or meetings.

          9.02 LITIGATION. The Obligors will promptly give to each Lender notice
of all legal or arbitral proceedings, and of all proceedings by or before any
governmental or regulatory authority or agency, and any material development in
respect of such legal or other proceedings, affecting any Group Member, except
proceedings which, if adversely determined, would not have a Material Adverse
Effect. Without limiting the generality of the foregoing, the Obligors will give
to each Lender notice of the assertion of any Environmental Claim by any Person
against, or with respect to the activities of, any Group Member and notice of
any alleged violation of or non-compliance with any Environmental Laws or any
permits, licenses or authorizations, other than any Environmental Claim or
alleged violation which, if adversely determined, would not have a Material
Adverse Effect.

          9.03 EXISTENCE, ETC. Each Obligor will, and will cause each of its
Subsidiaries to:

          (a) preserve and maintain its legal existence and all of its material
     rights, privileges, licenses and franchises (PROVIDED that nothing in this
     Section 9.03 shall prohibit any transaction expressly permitted under
     Section 9.05 hereof);

          (b) comply with the requirements of all applicable laws (including,
     without limitation, all Environmental Laws), rules, regulations and orders
     of governmental or

                                CREDIT AGREEMENT

<Page>

                                     - 78 -

     regulatory authorities if failure to comply with such requirements could
     reasonably be expected to have a Material Adverse Effect;

          (c) pay and discharge all taxes, assessments and governmental charges
     or levies in excess of U.S. $250,000 imposed on it or on its income or
     profits or on any of its Property prior to the date on which penalties
     attach thereto, except for any such tax, assessment, charge or levy the
     payment of which is being contested in good faith and by proper proceedings
     and against which adequate reserves are being maintained in accordance with
     GAAP;

          (d) comply with the provisions of any Ancillary Agreement if failure
     to comply therewith could reasonably be expected to have a Material Adverse
     Effect;

          (e) maintain all of its Properties used or useful in its business in
     good working order and condition, ordinary wear and tear excepted, except
     to the extent the failure to maintain the same would have a Material
     Adverse Effect;

          (f) keep adequate records and books of account, in which complete
     entries will be made in accordance with generally accepted accounting
     principles consistently applied; and

          (g) permit representatives of any Lender or the Administrative Agent
     during normal business hours, to examine, copy and make extracts from its
     books and records, to visit any of its Properties, and to discuss its
     business and affairs with its officers, all to the extent reasonably
     requested by such Lender or the Administrative Agent (as the case may be).

          9.04 INSURANCE. Each Obligor will, and will cause each of its
Subsidiaries to, keep insured by financially sound and reputable insurers all
Property of a character usually insured by corporations engaged in the same or
similar business similarly situated against loss or damage of the kinds and in
the amounts customarily insured against by such corporations and carry such
other insurance as is usually carried by such corporations, PROVIDED that in any
event each Obligor will maintain (with respect to itself and its Restricted
Subsidiaries):

          (1) CASUALTY INSURANCE -- insurance against loss or damage covering
     all of the tangible real and personal Property and improvements of the
     Obligors and each of their Restricted Subsidiaries by reason of any Peril
     (as defined below) in such amounts (subject to the respective deductibles
     for insurance indicated in Schedule VIII hereto) as shall be reasonable and
     customary and sufficient to avoid the insured named therein from becoming a
     co-insurer of any loss under such policy but in any event in an amount (i)
     in the case of fixed assets and equipment (including, without limitation,
     vehicles), at least equal to 100% of the actual replacement cost of such
     assets (including, without limitation, foundation, footings and excavation
     costs), subject to deductibles as aforesaid and (ii) in the case of
     inventory, not less than the fair market value thereof, subject to
     deductibles as aforesaid.

                                CREDIT AGREEMENT

<Page>

                                     - 79 -

          (2) AUTOMOBILE LIABILITY INSURANCE FOR BODILY INJURY AND PROPERTY
     DAMAGE -- insurance against liability for bodily injury and property damage
     in respect of all vehicles (whether owned, hired or rented by any Obligor
     or any of its Restricted Subsidiaries) at any time located at, or used in
     connection with, its Properties or operations in such amounts as are then
     customary for vehicles used in connection with similar Properties and
     businesses, but in any event to the extent required by applicable law.

          (3) COMPREHENSIVE GENERAL LIABILITY INSURANCE -- insurance against
     claims for bodily injury, death or Property damage occurring on, in or
     about the Properties (and adjoining streets, sidewalks and waterways) of
     any Obligor and its Restricted Subsidiaries, in such amounts as are then
     customary for Property similar in use in the jurisdictions where such
     Properties are located.

          (4) WORKERS' COMPENSATION INSURANCE -- workers' compensation insurance
     (including, without limitation, employers' liability insurance) to the
     extent required by applicable law.

          (5) PRODUCT LIABILITY INSURANCE -- insurance against claims for bodily
     injury, death or Property damage resulting from the use of products sold by
     any Obligor or any of its Restricted Subsidiaries in such amounts as are
     then customarily maintained by responsible persons engaged in businesses
     similar to that of such Obligor and its Restricted Subsidiaries.

          (6) BUSINESS INTERRUPTION INSURANCE -- insurance against loss of
     operating income (up to an aggregate amount equal to U.S. $80,000,000 and
     subject to a deductible, or self-insured amount, not in excess of U.S.
     $500,000, other than with respect to wind or earthquake, which may have a
     higher deductible, or self-insured amount) by reason of any Peril.

          (7) OTHER INSURANCE -- such other insurance, including, without
     limitation, War-Risk Insurance when and to the extent obtainable from the
     United States Government, in each case as generally carried by owners of
     similar Properties in the jurisdictions where such Properties are located,
     in such amounts and against such risks as are then customary for Property
     similar in use.

Such insurance shall be written by financially responsible companies selected by
the Obligors and having an A. M. Best rating of "A" or better and being in a
financial size category of XIV or larger, or by other companies acceptable to
the Majority Lenders, and (other than workers' compensation) shall name the
Administrative Agent as additional insured, or loss payee, as its interests may
appear. Each policy referred to in this Section 9.04 shall provide that it will
not be canceled or reduced, or allowed to lapse without renewal, except after
not less than 30 days' notice to the Administrative Agent and shall also provide
that the interests of the Administrative Agent and the Lenders shall not be
invalidated by any act or negligence of the Obligors or any Person having an
interest in any Property covered by the Mortgages nor by occupancy or use of any
such Property for purposes more hazardous than permitted by such policy nor by
any

                                CREDIT AGREEMENT

<Page>

                                     - 80 -

foreclosure or other proceedings relating to such Property. The Obligors will
advise the Administrative Agent promptly of any policy cancellation, reduction
or amendment.

          On or before the Effective Date, the Obligors will deliver to the
Administrative Agent certificates of insurance satisfactory to the
Administrative Agent evidencing the existence of all insurance required to be
maintained by the Obligors hereunder setting forth the respective coverages,
limits of liability, carrier, policy number and period of coverage and showing
that such insurance will remain in effect through the end of the policy term
subject only to the payment of premiums as they become due. Thereafter, upon
renewal of the policies, the Obligors will deliver to the Administrative Agent
certificates of insurance evidencing that all insurance required to be
maintained by the Obligors hereunder will continue in effect through the next
twelve months, subject only to the payment of premiums as they become due. The
Obligors will not obtain or carry separate insurance concurrent in form or
contributing in the event of loss with that required by this Section 9.04 unless
the Administrative Agent is the named insured thereunder, with loss payable as
provided herein. The Obligors will immediately notify the Administrative Agent
whenever any such separate insurance is obtained and shall deliver to the
Administrative Agent the certificates evidencing the same.

          Without limiting the obligations of the Obligors under the foregoing
provisions of this Section 9.04, in the event the Obligors shall fail to
maintain in full force and effect insurance as required by the foregoing
provisions of this Section 9.04, then the Administrative Agent may, but shall
have no obligation so to do, procure insurance covering the interests of the
Lenders and the Administrative Agent in such amounts and against such risks as
the Majority Lenders shall deem appropriate, and the Obligors shall reimburse
the Administrative Agent in respect of any premiums paid by the Administrative
Agent in respect thereof.

          For purposes hereof, the term "PERIL" shall mean, collectively, fire,
lightning, flood, windstorm, hail, earthquake, explosion, riot and civil
commotion, vandalism and malicious mischief, damage from aircraft, vehicles and
smoke and all other perils covered by the "all-risk" endorsement then in use in
the jurisdictions where the Properties of the Borrower and their Restricted
Subsidiaries are located.

          9.05 PROHIBITION OF FUNDAMENTAL CHANGES.

          (a) MERGERS, ETC. No Obligor will, nor will any Obligor permit any of
its Restricted Subsidiaries to, enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution).

          (b) DISPOSITIONS. No Obligor will, nor will it permit any of its
Restricted Subsidiaries to, convey, sell, lease, transfer or otherwise dispose
of, in one transaction or a series of transactions, any part of its business or
Property, whether now owned or hereafter acquired, including, without
limitation, receivables and leasehold interests, but excluding (i) any inventory
or other Property sold or disposed of in the ordinary course of business and on
ordinary business terms, (ii) the use or lease of certain facilities of Chicopee
located in Quebec, Canada and Little Rock, Arkansas, (iii) direct or indirect
sales by Bonlam of non-Mexican accounts receivable to Banco de National de
Comercio Exterior, S.N.C. pursuant to the Export Sales Program (as

                                CREDIT AGREEMENT

<Page>

                                     - 81 -

described in Section 9.07(i) hereof) and (iv) other sales of Property (including
sales of obsolete or worn-out Property, tools or equipment no longer used or
useful), so long as the aggregate amount thereof sold by the Obligors and their
Restricted Subsidiaries during the term of this Agreement shall not exceed U.S.
$15,000,000.

          (c) ACQUISITIONS. No Obligor will, nor will it permit any of its
Restricted Subsidiaries to, acquire any business or Property from, or capital
stock of, or be a party to any acquisition of, any Person except for purchases
of inventory and other Property to be sold or used in the ordinary course of
business and Investments permitted under Section 9.08 hereof.

          (d) CERTAIN EXCEPTIONS. Notwithstanding the foregoing provisions of
this Section 9.05,

          (i) any of the Borrower's Restricted Subsidiaries may merge into the
     Borrower or any of its Restricted Subsidiaries, so long as in any such
     merger to which the Borrower is a party, the Borrower shall be the
     continuing or surviving entity and in any such merger to which a Wholly
     Owned Subsidiary of the Borrower is a party, a Wholly Owned Subsidiary of
     the Borrower shall be the continuing or surviving entity; and

          (ii) any of the Borrower's Restricted Subsidiaries may transfer any of
     its Property to any other Restricted Subsidiary of the Borrower, so long as
     any such transfer by a Wholly Owned Subsidiary of the Borrower shall be to
     a Wholly Owned Subsidiary of the Borrower.

          9.06 LIMITATION ON LIENS. No Obligor will, nor will it permit any of
its Restricted Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of its Property, whether now owned or hereafter acquired, except:

          (a) Liens created pursuant to the Security Documents;

          (b) Liens in existence on the Effective Date (after giving effect to
     the transactions contemplated to occur on the Effective Date) and listed in
     Part B of Schedule II hereto;

          (c) Liens on Non-Mexican accounts receivable sold by Bonlam directly
     (or indirectly through other institutions) to Banco de National de Comercio
     Exterior, S.N.C. pursuant to its export sales program as described in
     Section 9.07(i) hereof;

          (d) Liens imposed by any Governmental Authority for taxes, assessments
     or charges not yet due or which are being contested in good faith and by
     appropriate proceedings if adequate reserves with respect thereto are
     maintained on the books of such Obligor or the affected Restricted
     Subsidiary, as the case may be, in accordance with GAAP;

          (e) carriers', warehousemen's, mechanics', materialmen's, repairmen's
     or other like Liens arising in the ordinary course of business which are
     not overdue for a period of more than 30 days or which are being contested
     in good faith and by appropriate

                                CREDIT AGREEMENT

<Page>

                                     - 82 -

     proceedings if adequate reserves with respect thereto are maintained on the
     books of such Obligor or the affected Restricted Subsidiary, as the case
     may be, in accordance with GAAP, and Liens securing judgments but only to
     the extent for an amount and for a period not resulting in an Event of
     Default under Section 10(h) hereof;

          (f) pledges or deposits under worker's compensation, unemployment
     insurance and other social security legislation;

          (g) deposits to secure the performance of bids, trade contracts (other
     than for borrowed money), leases, statutory obligations, surety and appeal
     bonds, performance bonds and other obligations of a like nature incurred in
     the ordinary course of business;

          (h) easements, rights-of-way, restrictions and other similar
     encumbrances incurred in the ordinary course of business and encumbrances
     consisting of zoning restrictions, easements, licenses, restrictions on the
     use of Property or minor imperfections in title thereto which, in the
     aggregate, are not material in amount, and which do not in any case
     materially detract from the value of the Property subject thereto or
     interfere with the ordinary conduct of the business of the Obligors or any
     of their Restricted Subsidiaries;

          (i) Liens upon real and/or tangible personal Property acquired after
     the date hereof (by purchase, construction or otherwise) by any Obligor or
     any of its Subsidiaries, each of which Liens either (A) existed on such
     Property before the time of its acquisition and was not created in
     anticipation thereof, or (B) was created within 90 days of such acquisition
     solely for the purpose of securing Indebtedness representing, or incurred
     to finance, refinance or refund, the cost (including the cost of
     construction) of such Property; PROVIDED that no such Lien shall extend to
     or cover any Property of any Obligor or any such Subsidiary other than the
     Property so acquired and improvements thereon;

          (j) additional Liens (including, without limitation, any extensions,
     renewals or replacements thereof permitted under the following clause (k)),
     so long as the aggregate principal amount of Indebtedness secured thereby
     shall not exceed U.S. $10,000,000 at any one time outstanding;

          (k) pledges by PGI Nonwovens B.V. of cash to support borrowings by
     Vateks Tekstil Sanayi ve Ticaret A.S. in respect of the Guarantee referred
     to in Section 9.08(j) hereof; and

          (l) any extension, renewal or replacement of the foregoing, PROVIDED
     that (A) the Liens permitted hereunder shall not be spread to cover any
     additional Indebtedness or Property (other than a substitution of like
     Property) and (B) the aggregate amount of the obligations secured by such
     extension, renewal or replacement does not exceed the amount then being
     secured by the Lien being extended, renewed or replaced.

                                CREDIT AGREEMENT

<Page>

                                     - 83 -

          9.07 INDEBTEDNESS. No Obligor will, nor will it permit any of its
Restricted Subsidiaries to, create, incur or suffer to exist any Indebtedness
except:

          (a) Indebtedness to the Lenders hereunder;

          (b) Indebtedness outstanding on the Effective Date (after giving
     effect to the transactions contemplated to occur on the Effective Date) and
     listed in Part A of Schedule II hereto, excluding, however, any
     Indebtedness in respect of the Intercompany Notes (which shall be governed
     by clause (d) below);

          (c) Indebtedness of any Restricted Subsidiary to the Borrower or any
     other Restricted Subsidiary, except for any such Indebtedness of Bonlam or
     Fabrene as to which clauses (d) and (e) below shall apply;

          (d) Indebtedness (x) of Bonlam and its Subsidiaries under the Bonlam
     Intercompany Notes Agreement in an aggregate amount of up to U.S.
     $10,000,000 and (y) of Fabrene and its Subsidiaries under the Fabrene
     Intercompany Notes Agreement and the Fabrene Intercompany Notes thereunder
     (PROVIDED that, in respect of the Fabrene Acquisition Intercompany Note the
     principal amount thereof shall not exceed the Foreign Currency Equivalent
     in Canadian Dollars of U.S. $17,970,000);

          (e) Indebtedness of Bonlam to the Mexican Finco;

          (f) Indebtedness of the Borrower in respect of the Junior Subordinated
     Convertible Notes (and of any other Group Member, other than a Group Member
     that does not Guarantee the obligations of the Borrower hereunder, in
     respect of a Guarantee of the Junior Subordinated Convertible Notes, so
     long as any such Guarantee is subordinated to the Guarantee hereunder)
     issued on the Effective Date in an aggregate principal amount up to but not
     exceeding U.S. $50,000,000;

          (g) Indebtedness of the Borrower in respect of the New Senior
     Subordinated Notes (and of any other Group Member, other than a Group
     Member that does not Guarantee the obligations of the Borrower hereunder,
     in respect of a Guarantee of the New Senior Subordinated Notes, so long as
     any such Guarantee is subordinated to the Guarantee hereunder) issued to
     GOF upon any drawing under the GOF Letter of Credit and to evidence the
     reimbursement obligations of the Borrower to GOF in respect of such
     drawing, in an aggregate principal amount up to but not exceeding U.S.
     $25,000,000;

          (h) unsecured subordinated Indebtedness incurred by the Borrower (and
     by any other Group Member, other than a Group Member that does not
     Guarantee the obligations of the Borrower hereunder, in respect of a
     Guarantee of such unsecured subordinated Indebtedness), so long as (i) the
     proceeds of such Indebtedness are either applied to the prepayment of the
     principal of (and accrued interest and redemption premium, if any, on) the
     New Senior Subordinated Notes or Junior Subordinated Convertible Notes, or
     the prepayment of Indebtedness hereunder pursuant to Section 2.10(b)
     hereof, (ii) such Indebtedness is incurred pursuant to instruments and

                                CREDIT AGREEMENT

<Page>

                                     - 84 -

     agreements which contain terms (including, without limitation, interest,
     amortization, covenants and events of default and terms of subordination)
     which are in each case in form and substance reasonably satisfactory to the
     Majority Lenders and (iii) after giving effect to such incurrence, no
     Default or Event of Default shall have occurred and be continuing, and the
     Borrower shall be in compliance with the provisions of Sections 9.10(a) and
     9.10(b) hereof (determined on a pro forma basis as if such additional
     Indebtedness had been incurred on the first day of the period of four
     fiscal quarters most recently ended prior to the date of such incurrence
     for which financial statements of the Borrower are available);

          (i) Indebtedness of Bonlam arising in respect of the sale of
     non-Mexican accounts receivable by Bonlam directly (or indirectly through
     other institutions) to Banco de National de Comercio Exterior, S.N.C.
     pursuant to its export sales program, so long as the aggregate outstanding
     principal amount thereof shall not exceed U.S. $2,000,000 at any one time;

          (j) Indebtedness of Vateks Tekstil Sanayi ve Ticaret A.S. (and
     Guarantees thereof by PGI Nonwovens B.V.) in an aggregate amount up to but
     not exceeding EURO 6,800,000 at any one time outstanding; and

          (k) additional Indebtedness of the Borrower (including Indebtedness
     secured by Liens permitted under Section 9.06(i) hereof and, to the extent
     relating to Liens described in Section 9.06(i), under 9.06(j) hereof) so
     long as the aggregate principal amount thereof does not exceed U.S.
     $5,000,000 at any one time outstanding.( )

          9.08 INVESTMENTS. No Obligor will, nor will it permit any of its
Restricted Subsidiaries to, make or permit to remain outstanding any Investments
except:

          (a) Investments outstanding on the Effective Date (after giving effect
     to the transactions contemplated to occur on the Effective Date) and
     identified in Schedule VI hereto;

          (b) operating deposit accounts with banks located in any country where
     operations are conducted by the Borrower and their Subsidiaries;

          (c) Permitted Investments;

          (d) Investments after the Effective Date by any Group Member in any
     Wholly Owned Restricted Subsidiary (other than in Bonlam, Fabrene or their
     respective Subsidiaries, as to which clauses (e), (f), (g) and (h) below
     shall apply) and Investments in any Joint Venture Restricted Subsidiary,
     PROVIDED that (i) the aggregate amount of such Investments in Joint Venture
     Restricted Subsidiaries shall not exceed U.S. $10,000,000, (ii) no such
     Investment shall be made in any Joint Venture Restricted Subsidiary if such
     Joint Venture Restricted Subsidiary shall at any time have been a Wholly
     Owned Restricted Subsidiary and (iii) if any Joint Venture Restricted
     Subsidiary shall at any time

                                CREDIT AGREEMENT

<Page>

                                     - 85 -

     become a Wholly Owned Restricted Subsidiary, the Investments in such Joint
     Venture Restricted Subsidiary shall no longer be subject to such U.S.
     $10,000,000 limit;

          (e) Investments (x) in the case of Fabrene Holdings and PGI Polymer,
     evidenced by the Fabrene Intercompany Notes and constituting Indebtedness
     of Fabrene to Fabrene Holdings and PGI Polymer permitted under Section
     9.07(d) hereof and (y) in the case of PGI Polymer, evidenced by the Bonlam
     Intercompany Notes and constituting Indebtedness of Bonlam to PGI Polymer
     permitted under Section 9.07(d) hereof, so long as in the case of each of
     the foregoing clauses (x) and (y) such Intercompany Notes shall have been
     delivered in pledge to the Administrative Agent pursuant to the Security
     Agreement;

          (f) Investments (in each case as additional equity capital) by the
     Borrower in PGI Polymer and by PGI Polymer in Fabrene, from the proceeds of
     a Debt Issuance permitted to be applied to the prepayment of the Fabrene
     Acquisition Intercompany Note pursuant to Section 2.10(b) hereof, so long
     as each such Investment occurs immediately following receipt by the
     Borrower of the proceeds of such Debt Issuance and such proceeds are in
     fact applied to the prepayment of the Fabrene Acquisition Intercompany Note
     (and to the prepayment of Loans hereunder) as contemplated by Section
     2.10(d) hereof;

          (g) Investments by Bonlam in one or more Restricted Subsidiaries of
     Bonlam;

          (h) Investments by the Mexican Finco in Bonlam consisting of an
     unsecured receivable, so long as the Mexican Finco shall be a Restricted
     Subsidiary;

          (i) Hedging Transactions entered into in the ordinary course of
     business and not for speculative purposes; and

          (j) the Guarantee of Indebtedness of Vateks Tekstil Sanayi ve Ticaret
     A.S. by PGI Nonwovens B.V. referred to in Section 9.07(j) hereof.

The aggregate amount of an Investment at any one time outstanding for purposes
of clause (d) above, shall be deemed to be equal to (A) the aggregate amount of
cash, together with the aggregate fair market value of Property, loaned,
advanced, contributed, transferred or otherwise invested that gives rise to such
Investment MINUS (B) the aggregate amount of dividends, distributions or other
payments received in cash in respect of such Investment; the amount of an
Investment shall not in any event be reduced by reason of any write-off of such
Investment.

          9.09 RESTRICTED PAYMENTS. No Obligor will, nor will it permit any of
its Restricted Subsidiaries to, make any Restricted Payments at any time during
any fiscal year. Notwithstanding the foregoing, the Borrower may make (x) cash
payments to officers and employees in respect of shares of stock (or options
therefor) granted to such officers and employees upon the termination of
employment of such officer or employee (so long as the aggregate amount thereof
paid in any single fiscal year shall not exceed U.S. $750,000) and (y) payments
of dividends in respect of its Class C common stock in an aggregate amount up to
but not exceeding U.S. $1,000,000 during any single fiscal year.

                                CREDIT AGREEMENT

<Page>

                                     - 86 -

          Without limiting the generality of the foregoing, the Borrower will
not, nor will it permit any of its Subsidiaries to, pay any monies to any
trustee or paying agent in respect of any Subordinated Indebtedness to be
applied to the payment of interest on such Subordinated Indebtedness in advance
of the date upon which such interest is due and payable in respect of such
Subordinated Indebtedness.

          9.10 CERTAIN FINANCIAL COVENANTS.

          (a) LEVERAGE RATIO. The Borrower will not permit the Leverage Ratio to
exceed the following respective ratios at any time during the following
respective periods:

<Table>
<Caption>
             Period Commencing                                      Ratio
             -----------------                                      -----
     <S>                                                           <C>
     Last day of 1st fiscal quarter in 2003                        6.90 to 1
     Last day of 2nd fiscal quarter in 2003                        6.70 to 1
     Last day of 3rd fiscal quarter in 2003                        6.80 to 1
     Last day of 4th fiscal quarter in 2003                        6.80 to 1

     Last day of 1st fiscal quarter in 2004                        6.10 to 1
     Last day of 2nd fiscal quarter in 2004                        5.90 to 1
     Last day of 3rd fiscal quarter in 2004                        5.70 to 1
     Last day of 4th fiscal quarter in 2004                        5.50 to 1

     Last day of 1st fiscal quarter in 2005                        5.10 to 1
     Last day of 2nd fiscal quarter in 2005                        4.90 to 1
     Last day of 3rd fiscal quarter in 2005                        4.60 to 1
     Last day of 4th fiscal quarter in 2005                        4.40 to 1

     Last day of 1st fiscal quarter in 2006                        4.00 to 1
     Last day of 2nd fiscal quarter in 2006                        3.90 to 1
     Last day of 3rd fiscal quarter in 2006                        3.60 to 1
     Last day of 4th fiscal quarter in 2006
       and at all times thereafter                                 3.50 to 1
</Table>

          (b) SENIOR LEVERAGE RATIO. The Borrower will not permit the Senior
Leverage Ratio to exceed the following respective ratios at any time during the
following respective periods:

<Table>
<Caption>
             Period Commencing                                      Ratio
             -----------------                                      -----
     <S>                                                           <C>
     Last day of 1st fiscal quarter in 2003                        6.20 to 1
     Last day of 2nd fiscal quarter in 2003                        6.10 to 1
     Last day of 3rd fiscal quarter in 2003                        6.10 to 1
     Last day of 4th fiscal quarter in 2003                        6.20 to 1
</Table>

                                CREDIT AGREEMENT

<Page>

                                     - 87 -

<Table>
     <S>                                                           <C>
     Last day of 1st fiscal quarter in 2004                        5.50 to 1
     Last day of 2nd fiscal quarter in 2004                        5.20 to 1
     Last day of 3rd fiscal quarter in 2004                        4.90 to 1
     Last day of 4th fiscal quarter in 2004                        4.70 to 1

     Last day of 1st fiscal quarter in 2005                        4.30 to 1
     Last day of 2nd fiscal quarter in 2005                        4.20 to 1
     Last day of 3rd fiscal quarter in 2005                        3.90 to 1
     Last day of 4th fiscal quarter in 2005                        3.70 to 1

     Last day of 1st fiscal quarter in 2006                        3.40 to 1
     Last day of 2nd fiscal quarter in 2006                        3.20 to 1
     Last day of 3rd fiscal quarter in 2006                        3.00 to 1
     Last day of 4th fiscal quarter in 2006
       and at all times thereafter                                 2.90 to 1
</Table>


          (c) INTEREST COVERAGE RATIO. The Borrower will not permit the Interest
Coverage Ratio to be less than the following respective ratios at the end of any
fiscal quarter which falls within the following respective periods:

<Table>
<Caption>
             Period Commencing                                      Ratio
             -----------------                                      -----
     <S>                                                           <C>
     Last day of 1st fiscal quarter in 2003                        1.60 to 1
     Last day of 2nd fiscal quarter in 2003                        1.40 to 1
     Last day of 3rd fiscal quarter in 2003                        1.60 to 1
     Last day of 4th fiscal quarter in 2003                        1.50 to 1

     Last day of 1st fiscal quarter in 2004                        1.60 to 1
     Last day of 2nd fiscal quarter in 2004                        1.60 to 1
     Last day of 3rd fiscal quarter in 2004                        1.70 to 1
     Last day of 4th fiscal quarter in 2004                        1.70 to 1

     Last day of 1st fiscal quarter in 2005                        1.80 to 1
     Last day of 2nd fiscal quarter in 2005                        2.00 to 1
     Last day of 3rd fiscal quarter in 2005                        2.10 to 1
     Last day of 4th fiscal quarter in 2005                        2.30 to 1

     Last day of 1st fiscal quarter in 2006                        2.50 to 1
     Last day of 2nd fiscal quarter in 2006                        2.70 to 1
     Last day of 3rd fiscal quarter in 2006                        2.80 to 1
     Last day of 4th fiscal quarter in 2006
       and at all times thereafter                                 3.00 to 1
</Table>

                                CREDIT AGREEMENT

<Page>

                                     - 88 -

          (d) ADJUSTED INTEREST COVERAGE RATIO. The Borrower will not permit the
Adjusted Interest Coverage Ratio to be less than the following respective ratios
at the end of any fiscal quarter which falls within the following respective
periods:

<Table>
<Caption>
             Period Commencing                                      Ratio
             -----------------                                      -----
     <S>                                                           <C>
     Last day of 1st fiscal quarter in 2003                        0.70 to 1
     Last day of 2nd fiscal quarter in 2003                        0.70 to 1
     Last day of 3rd fiscal quarter in 2003                        0.80 to 1
     Last day of 4th fiscal quarter in 2003                        0.70 to 1

     Last day of 1st fiscal quarter in 2004                        0.90 to 1
     Last day of 2nd fiscal quarter in 2004                        0.90 to 1
     Last day of 3rd fiscal quarter in 2004                        0.90 to 1
     Last day of 4th fiscal quarter in 2004                        1.00 to 1

     Last day of 1st fiscal quarter in 2005                        1.10 to 1
     Last day of 2nd fiscal quarter in 2005                        1.20 to 1
     Last day of 3rd fiscal quarter in 2005                        1.30 to 1
     Last day of 4th fiscal quarter in 2005                        1.50 to 1

     Last day of 1st fiscal quarter in 2006                        1.70 to 1
     Last day of 2nd fiscal quarter in 2006                        1.80 to 1
     Last day of 3rd fiscal quarter in 2006                        1.90 to 1
     Last day of 4th fiscal quarter in 2006
       and at all times thereafter                                 2.10 to 1
</Table>

          9.11 LINES OF BUSINESS. No Obligor will, nor will it permit any of its
Subsidiaries to, engage to any substantial extent in any line or lines of
business activity other than the business of manufacturing and marketing of
woven and nonwoven materials, polymers and polyolefins, and related businesses
and activities.

          9.12 TRANSACTIONS WITH AFFILIATES. Except as expressly permitted by
this Agreement, no Obligor will, nor will it permit any of its Restricted
Subsidiaries to, directly or indirectly: (a) transfer, sell, lease, assign or
otherwise dispose of any Property to an Affiliate; (b) merge into or consolidate
with or purchase or acquire Property from an Affiliate; or (c) enter into any
other transaction directly or indirectly with or for the benefit of an Affiliate
(including, without limitation, guarantees and assumptions of obligations of an
Affiliate); PROVIDED that:

          (x) any Affiliate who is an individual may serve as a director,
     officer or employee of any Obligor or any of its Restricted Subsidiaries
     and receive reasonable compensation for his or her services in such
     capacity,

          (y) an Obligor and its Restricted Subsidiaries may enter into
     transactions (other than extensions of credit by such Obligor or any of its
     Restricted Subsidiaries to an Affiliate) providing for the leasing of
     Property, the rendering or receipt of services or the

                                CREDIT AGREEMENT

<Page>

                                     - 89 -

     purchase or sale of inventory and other Property in the ordinary course of
     business if the monetary or business consideration arising therefrom would
     be substantially as advantageous to such Obligor or its Restricted
     Subsidiaries as the monetary or business consideration which it would
     obtain in a comparable transaction with a Person not an Affiliate, and

          (z) GOF may be paid, and retain, the fees described in Section 7.01(r)
     hereof, and may receive, and retain, the New Senior Subordinated Notes as
     provided herein.

          9.13 USE OF PROCEEDS. The Borrower will use the proceeds of the
Revolving Credit Loans and Revolving Letters of Credit hereunder to finance the
working capital needs of the Borrower and its Subsidiaries in the ordinary
course of business, and not to (i) make any scheduled amortization payment of
Term Loans or any reimbursement of a drawing under any Term Letter of Credit or
(ii) pay any debtor-in-possession financing incurred in any of the Chapter 11
Cases; PROVIDED that neither the Administrative Agent nor any Lender shall have
any responsibility as to the use of any of the proceeds of any Loans hereunder.

          9.14 MODIFICATIONS OF CERTAIN DOCUMENTS. The Obligors will not, and
will not permit their Subsidiaries to, consent to any modification, supplement
or waiver of any of the provisions of any of the Basic Documents (excluding the
License Agreement and the Technology Agreement, and excluding increases or
decreases in the balance of any of the Intercompany Notes), the charter
documents of any of the Obligors or their Restricted Subsidiaries or the Future
Refinancing Debt Documents, without in each case the prior consent of the
Administrative Agent (with the approval of the Majority Lenders), PROVIDED that
no such consent shall be necessary

          (i) to modify the charter documents of any Obligor (other than Bonlam
     or Fabrene) in a manner that, in the judgment of the Administrative Agent,
     shall not be materially adverse to the interests of the Lenders hereunder,
     or

          (ii) for any modification, supplement or waiver under the Supply
     Agreement unless the same would alter Section 26 of the Supply Agreement
     (or otherwise modify the Supply Agreement so as to adversely affect the
     ability of the Administrative Agent or the Lenders to exercise, or result
     in a breach of the Supply Agreement if the Administrative Agent or the
     Lenders were to exercise, any of their rights or remedies under any of the
     Security Documents).

          9.15 GOVERNMENTAL APPROVALS. The Borrower will cause each Group Member
that is a Foreign Subsidiary party to any Loan Document to obtain from time to
time at its own expense all such governmental licenses, authorizations,
consents, permits and approvals as may be required for such Group Member to
comply with its obligations under the Loan Documents and each other instrument
or agreement referred to therein.

                                CREDIT AGREEMENT

<Page>

                                     - 90 -

          9.16 CERTAIN OBLIGATIONS RESPECTING SUBSIDIARIES.

          (a) OWNERSHIP OF SUBSIDIARIES. The Borrower will take such action from
time to time as shall be necessary to ensure that each Restricted Subsidiary of
the Borrower is a Wholly Owned Subsidiary.

          (b) ADDITIONAL GUARANTORS. In the event that the Borrower or any of
its Restricted Subsidiaries shall form or acquire after the Effective Date any
new Restricted Subsidiary that is (x) the Mexican Finco, (y) organized under the
laws of a State of the United States of America or (z) that the Administrative
Agent reasonably determines (in consultation with the Borrower) may Guarantee
the obligations hereunder without adverse tax consequences under Section 956 of
the Code, the Borrower shall cause such new Restricted Subsidiary to execute and
deliver to the Administrative Agent a Guaranty Agreement, substantially in the
form attached as Exhibit F hereto, and to thereby become a "Guarantor" hereunder
and a "Securing Party" under the Security Agreement and to deliver such proof of
corporate action, incumbency of officers, opinions of counsel and other
documents as is consistent with those delivered by each Obligor pursuant to
Section 7.01 hereof upon the Effective Date or as the Administrative Agent shall
have reasonably requested, PROVIDED that, if such new Restricted Subsidiary is
the Mexican Finco, the Borrower shall cause the Mexican Finco to execute and
deliver such other documents as the Administrative Agent shall deem appropriate
in order to create and perfect a Lien on all of the Property of the Mexican
Finco under the laws of the Republic of Mexico.

          (c) BONLAM SUBSIDIARIES. The Borrower will take such action from time
to time as shall be necessary to ensure that all Subsidiaries of Bonlam shall
Guarantee the obligations of Bonlam under the Bonlam Intercompany Notes
Agreement and Bonlam Intercompany Notes. In that connection, in the event that
Bonlam shall form or acquire any such new Subsidiary, the Borrower will cause
such new Subsidiary to Guarantee the obligations of Bonlam under the Bonlam
Intercompany Notes Agreement pursuant to a written instrument in form and
substance satisfactory to the Administrative Agent and to deliver such proof of
corporate action, incumbency of officers, opinions of counsel and other
documents as is consistent with those delivered by Bonlam pursuant to Section
7.01 hereof upon the Effective Date or as the Administrative Agent shall have
reasonably requested.

          (d) FABRENE SUBSIDIARIES. The Borrower will take such action from time
to time as shall be necessary to ensure that all Subsidiaries of Fabrene shall
Guarantee the obligations of Fabrene under the Fabrene Intercompany Notes
Agreement and Fabrene Intercompany Notes. In that connection, in the event that
Fabrene shall form or acquire any such new Subsidiary, the Borrower will cause
such new Subsidiary to Guarantee the obligations of Fabrene under the Fabrene
Intercompany Notes Agreement pursuant to a written instrument in form and
substance satisfactory to the Administrative Agent and to deliver such proof of
corporate action, incumbency of officers, opinions of counsel and other
documents as is consistent with those delivered by Fabrene pursuant to Section
7.01 hereof upon the Effective Date or as the Administrative Agent shall have
reasonably requested.

          (e) CERTAIN RESTRICTIONS. The Borrower will not permit any of its
Restricted Subsidiaries to enter into, after the date of this Agreement, any
indenture, agreement, instrument

                                CREDIT AGREEMENT

<Page>

                                     - 91 -

or other arrangement that, directly or indirectly, prohibits or restrains, or
has the effect of prohibiting or restraining, or imposes materially adverse
conditions upon, the incurrence or payment of Indebtedness, the granting of
Liens, the declaration or payment of dividends, the making of loans, advances or
Investments or the sale, assignment, transfer or other disposition of Property,
other than any such prohibition or restraint arising pursuant to an indenture,
agreement, instrument or other arrangement providing for Liens permitted by
Section 9.06(i) or (j) hereof, so long as such prohibition or restraint shall
only cover the Property that is subject to such Lien and no other Property.

          (f) FURTHER ASSURANCES. The Borrower will, and will cause each of its
Subsidiaries to, take such action from time to time as shall reasonably be
requested by the Administrative Agent to effectuate the purposes and objectives
of this Agreement.

          Without limiting the generality of the foregoing, the Borrower will,
and will cause each other Obligor to, take such action from time to time
(including filing appropriate Uniform Commercial Code financing statements and
executing and delivering such assignments, security agreements and other
instruments) as shall be reasonably requested by the Administrative Agent to
create, in favor of the Administrative Agent for the benefit of the Lenders (and
any affiliate thereof that is a party to any Hedging Agreement entered into with
the Borrower), perfected security interests and Liens in substantially all of
the property of such Obligor as collateral security for its obligations
hereunder (subject, in any event, to the requirements of paragraph (b) above);
PROVIDED that any such security interest or Lien shall be subject to the
relevant requirements of the Security Documents.

          If any Obligor shall acquire any real property interest after the
Effective Date having a fair market value of U.S. $250,000 or more (or shall
make improvements upon any existing real property interest resulting in the fair
market value of such interest together with such improvements being equal to
U.S. $500,000 or more in the case of office space leases or U.S. $250,000 or
more in the case of all other types of property), then (subject, in the case of
any such interest that is a leasehold interest, to the delivery by the relevant
landlord(s) of any required landlord consent) it will or, as applicable, will
cause the respective Subsidiary holding such real property interest, to execute
and deliver in favor of the Administrative Agent a mortgage, deed of trust or
deed to secure debt (as appropriate for the jurisdiction in which such
respective real property is situated) pursuant to which such Obligor will create
a Lien upon such real property interest (and improvements) in favor of the
Administrative Agent for the benefit of the Lenders (and any affiliate thereof
that is a party to any Hedging Agreement entered into with the Borrower) as
collateral security for the obligations of such Obligor under this Agreement or,
as applicable, under the respective Guaranty Agreement to which such Obligor is
a party, and will deliver (or, or in case of landlords consents, will use its
best efforts to cause the relevant landlord(s) to deliver) such opinions of
counsel, landlords consents, and title insurance policies as the Administrative
Agent shall reasonably request in connection therewith.

          9.17 CAPITAL EXPENDITURES. The Borrower shall not permit the aggregate
amount of Capital Expenditures made by the Borrower and its Restricted
Subsidiaries to exceed U.S. $40,000,000 in any fiscal year, PROVIDED that if the
aggregate amount of Capital Expenditures for any Qualifying Fiscal Year shall be
less than U.S. $40,000,000, then 50% of the

                                CREDIT AGREEMENT

<Page>

                                     - 92 -

shortfall shall be added to the amount of Capital Expenditures permitted for the
immediately succeeding (but not any other) Qualifying Fiscal Year and, for
purposes hereof, the amount of Capital Expenditures made during any Qualifying
Fiscal Year shall be deemed to have been made first from the permitted amount
for such Qualifying Fiscal Year and last from the amount of any carryover from
any previous Qualifying Fiscal Year. For purposes hereof, a "Qualifying Fiscal
Year" shall mean the fiscal year ending on or nearest to January 3, 2004, and
each fiscal year thereafter.

          Notwithstanding the foregoing (a) if, to the extent the aggregate
amount of Capital Expenditures made during any fiscal year shall exceed the
aggregate amount permitted to be made during such fiscal year pursuant to the
preceding paragraph, the Borrower shall nevertheless not be deemed to have
breached this Section 9.17 if such excess is not greater than the Excess Capital
Expenditure Amount for the immediately preceding fiscal year and (b) Capital
Expenditures made by the Borrower and its Restricted Subsidiaries shall not
exceed U.S. $60,000,000 in any fiscal year.

          Within 60 days from the end of each fiscal year, the Borrower shall
furnish to the Administrative Agent a certificate of a senior financial officer
of the Borrower setting forth in reasonable detail the aggregate amount of
Capital Expenditures made by the Borrower and its Restricted Subsidiaries during
such respective fiscal year.

          9.18 CASH MANAGEMENT. The Borrower will at all times cause to be in
effect arrangements (in form, and pursuant to documentation, satisfactory to the
Administrative Agent) with respect to the Borrower and each of its Subsidiaries
(other than Foreign Subsidiaries) under which (a) all cash receipts arising in
the ordinary course of business of the Borrower and such Subsidiaries are
directed to a lock box account, in the name or under the control of the
Administrative Agent, and from such lock box account into a concentration
account maintained at JPMCB and in the name or under the control of the
Administrative Agent and (b) the aggregate amount of cash and cash equivalents
held by the Borrower and such Subsidiaries at any time in excess of U.S.
$2,500,000 shall be maintained in bank or securities accounts in the name or
under the control of the Administrative Agent, PROVIDED that the foregoing shall
not be applicable to amounts maintained in disbursement accounts to the extent
such amounts do not exceed the aggregate amount of checks outstanding against
such accounts and amounts necessary to meet minimum balance requirements. For
purposes hereof, it is understood that all Permitted Investments shall
constitute cash equivalents.

          9.19 RATINGS OF THE LOANS Within 10 days from the Effective Date, the
Borrower shall have commenced the process of obtaining from a nationally
recognized rating agency a rating on the Loans and, as soon as practicable, but
in any event not later than 90 days after the Effective Date, the Borrower shall
have caused the Loans to be rated by such rating agency.

          9.20 RETENTION OF CONSULTANTS. The Obligors acknowledge that the
Lenders shall continue to have the right at any time to retain (either directly
or through counsel) an independent accounting or consulting firm to conduct
ongoing reviews of the business and operations of PGI and its Subsidiaries and
that the fees and expenses of any such firm shall be reimbursed by the Obligors
pursuant to Section 12.03 hereof. The Obligors agree, and agree to

                                CREDIT AGREEMENT

<Page>

                                     - 93 -

cause their Subsidiaries, to cooperate with any such firm and agree also that
such firm will constitute representatives of the Lenders and the Administrative
Agent for purposes of Section 9.03(g) hereof and, accordingly, shall be
permitted during normal business hours, to examine, copy and make extracts from
the books and records of the Obligors and their Subsidiaries, to visit any of
the Properties of the Obligors and their Subsidiaries, and to discuss its
business and affairs with its officers, all subject to the confidentiality
provisions of Section 12.13(b) hereof and to the extent reasonably requested by
such firm retained by the Lenders.

          Section 10. EVENTS OF DEFAULT. If one or more of the following events
(herein called "EVENTS OF DEFAULT") shall occur and be continuing:

          (a) The Borrower shall default in the payment when due (whether at
     stated maturity or upon mandatory or optional prepayment) of any principal
     of or interest on any Loan or any Reimbursement Obligation, any fee or any
     other amount payable by it hereunder or under any other Basic Document, or
     shall fail to deposit any amount into the Term Letter of Credit Collateral
     Account when such deposit is due hereunder; or

          (b) The Obligors or any of their Restricted Subsidiaries shall default
     in the payment when due of any principal of or interest on any of its other
     Indebtedness aggregating U.S. $5,000,000 (or its equivalent in any other
     currency) or more (excluding, however, Indebtedness under the Intercompany
     Notes), or in the payment when due of any amount under any Hedging
     Transaction; or any event specified in any note, agreement, indenture or
     other document evidencing or relating to any such Indebtedness or any event
     specified in any Hedging Transaction shall occur if the effect of such
     event is to cause, or (with the giving of any notice or the lapse of time
     or both) to permit the holder or holders of such Indebtedness (or a trustee
     or agent on behalf of such holder or holders) to cause, such Indebtedness
     to become due, or to be prepaid in full (whether by redemption, purchase,
     offer to purchase or otherwise), prior to its stated maturity or, in the
     case of any Hedging Transaction, to permit the payments owing under such
     Hedging Transaction to be liquidated; or

          (c) Any representation, warranty or certification made or deemed made
     herein or in any other Basic Document (or in any modification or supplement
     hereto or thereto) by any Group Member, or any certificate furnished to any
     Lender or the Administrative Agent pursuant to the provisions hereof or
     thereof, shall prove to have been false or misleading as of the time made,
     deemed made or furnished in any material respect; or

          (d) Any Obligor shall default in the performance of any of its
     obligations under any of Sections 9.01(h), 9.05, 9.06, 9.07, 9.08, 9.09,
     9.10, 9.14, 9.16, 9.17 or 9.18 hereof; any Obligor which is a Securing
     Party under the Security Agreement shall default in the performance of any
     of its obligations under Sections 4.04, 5.02 or 5.04(d) of the Security
     Agreement; or any Obligor shall default in the performance of any of its
     other obligations in this Agreement or any other Basic Document and such
     default shall continue unremedied for a period of thirty days after the
     earlier of (x) the date notice thereof shall be given to such Obligor by
     the Administrative Agent or any Lender (through the

                                CREDIT AGREEMENT

<Page>

                                     - 94 -

     Administrative Agent) or (y) such default shall first become known to any
     officer of the Borrower; or

          (e) Any Group Member shall admit in writing its inability to, or be
     generally unable to, pay its debts as such debts become due; or

          (f) Any Group Member shall (i) apply for or consent to the appointment
     of, or the taking of possession by, a receiver, custodian, trustee,
     examiner or liquidator of itself or of all or a substantial part of its
     Property, (ii) make a general assignment for the benefit of its creditors,
     (iii) commence a voluntary case under the Bankruptcy Code, (iv) file a
     petition seeking to take advantage of any other law relating to bankruptcy,
     insolvency, reorganization, liquidation, dissolution, arrangement or
     winding-up, or composition or readjustment of debts, (v) fail to controvert
     in a timely and appropriate manner, or acquiesce in writing to, any
     petition filed against it in an involuntary case under the Bankruptcy Code,
     (vi) take any corporate action for the purpose of effecting any of the
     foregoing or (vii) do the equivalent of any of the foregoing under the laws
     of any non-U.S. jurisdiction (including, in the case of Canada, the
     Bankruptcy and Insolvency Act (Canada), the Companies Creditors Arrangement
     Act (Canada) or the Winding Up Act (Canada)); or

          (g) A proceeding or case shall be commenced, without the application
     or consent of the affected Group Member, in any court of competent
     jurisdiction, seeking (i) its reorganization, liquidation, dissolution,
     arrangement or winding-up, or the composition or readjustment of its debts,
     (ii) the appointment of a receiver, custodian, trustee, examiner,
     liquidator or the like of such Group Member or of all or any substantial
     part of its Property, (iii) similar relief in respect of such Group Member
     under any law relating to bankruptcy, insolvency, reorganization,
     winding-up, or composition or adjustment of debts, and such proceeding or
     case shall continue undismissed, or an order, judgment or decree approving
     or ordering any of the foregoing shall be entered and continue unstayed and
     in effect, for a period of 60 or more days; or an order for relief against
     any Group Member shall be entered in an involuntary case under the
     Bankruptcy Code or (iv) the equivalent of any of the foregoing under the
     laws of any non-U.S. jurisdiction (including, in the case of Canada, the
     Bankruptcy and Insolvency Act (Canada), the Companies Creditors Arrangement
     Act (Canada) or the Winding Up Act (Canada)); or

          (h) A final judgment or judgments for the payment of money in excess
     of U.S. $2,000,000 in the aggregate (exclusive of judgment amounts fully
     covered by insurance where the insurer has admitted liability in respect of
     such judgment) or in excess of U.S. $10,000,000 in the aggregate
     (regardless of insurance coverage) shall be rendered by one or more courts,
     administrative tribunals or other bodies having jurisdiction against any
     Group Member and the same shall not be discharged (or provision shall not
     be made for such discharge), or a stay of execution thereof shall not be
     procured, within 30 days from the date of entry thereof and such Group
     Member shall not, within said period of 30 days, or such longer period
     during which execution of the same shall have been stayed, appeal therefrom
     and cause the execution thereof to be stayed during such appeal; or

                                CREDIT AGREEMENT

<Page>

                                     - 95 -

          (i) An event or condition specified in Section 9.01(f) hereof shall
     occur or exist with respect to any Plan or Multiemployer Plan and, as a
     result of such event or condition, together with all other such events or
     conditions, the Borrower or any ERISA Affiliate shall incur or in the
     opinion of the Majority Lenders shall be reasonably likely to incur a
     liability to a Plan, a Multiemployer Plan or the PBGC (or any combination
     of the foregoing) which would constitute, in the determination of the
     Majority Lenders, a Material Adverse Effect; or

          (j) A reasonable basis shall exist for the assertion against any Group
     Member (or there shall have been asserted against any Group Member) claims
     or liabilities, whether accrued, absolute or contingent, based on or
     arising from the generation, storage, transport, handling or disposal of
     Hazardous Materials by any Group Member or any of their Affiliates, or any
     predecessor in interest of any Group Member or any of their Affiliates, or
     relating to any site or facility owned, operated or leased by any Group
     Member or any of its Affiliates, which claims or liabilities (insofar as
     they are payable by the Group Member but after deducting any portion
     thereof which is reasonably expected to be paid by other creditworthy
     Persons jointly and severally liable therefor), in the judgment of the
     Majority Lenders are reasonably likely to be determined adversely to the
     affected Group Members, and the amount thereof is, singly or in the
     aggregate, reasonably likely to have a Material Adverse Effect; or

          (k) Any Governmental Authority shall take any action to condemn,
     seize, nationalize or appropriate any substantial portion of the Property
     of any Group Member (either with or without payment of compensation) or
     shall take any action that, in the opinion of the Majority Lenders, is
     reasonably likely to result in a Material Adverse Effect; or the Group
     Members shall be prevented from exercising normal control over all or a
     substantial part of their Property (and the same shall continue for 30 or
     more days); or

          (l) Any one or more of the following events shall occur and be
     continuing:

               (i) Any Person (other than the GOF Holders) shall own,
          collectively, on a fully-diluted basis (in other words, giving effect
          to the exercise of any warrants, options and conversion and other
          rights), more than 35% of the aggregate shares of voting capital stock
          of the Borrower (representing at least 35% of the votes that may be
          cast in an election of directors of the Borrower); or

               (ii) during any period of 12 consecutive calendar months, a
          majority of the Board of Directors of the Borrower shall no longer be
          composed of individuals (w) who were appointed by one or more of the
          GOF Holders, (x) who were members of said Board on the first day of
          such period, (y) whose election or nomination to said Board was
          approved by individuals referred to in clause (x) above constituting
          at the time of such election or nomination at least a majority of said
          Board or (z) whose election or nomination to said Board was approved
          by

                                CREDIT AGREEMENT

<Page>

                                     - 96 -

          individuals referred to in clauses (w), (x) and (y) above constituting
          at the time of such election or nomination at least a majority of said
          Board; or

          (m) Except for expiration pursuant to its terms, any of the Security
     Documents shall be terminated or shall cease to be in full force and
     effect, for whatever reason; or

          (n) Any of the Ancillary Agreements (except for the Shared Facilities
     Agreement) shall for any reason be terminated or cease to be in full force
     and effect; or J&J or any of its Subsidiaries shall send a notice to
     Chicopee pursuant to Section 13(d) of the Supply Agreement and the breach
     or other default described in such notice shall not have been cured within
     30 days thereof,

THEREUPON:

          (1) in the case of an Event of Default other than one referred to in
     clause (f) or (g) of this Section 10 with respect to any Obligor, the
     Administrative Agent shall upon request of the Majority Lenders, by notice
     to the Borrower, terminate the Revolving Credit Commitments and/or declare
     the principal amount then outstanding of, and the accrued interest on, the
     Loans, the Reimbursement Obligations and all other amounts payable by the
     Borrower hereunder and under the Notes (including, without limitation, any
     amounts payable under Section 5.04 hereof) to be forthwith due and payable,
     whereupon such amounts shall be immediately due and payable without
     presentment, demand, protest or other formalities of any kind, all of which
     are hereby expressly waived by the Borrower; and

          (2) in the case of the occurrence of an Event of Default referred to
     in clause (f) or (g) of this Section 10 with respect to any Obligor, the
     Revolving Credit Commitments shall automatically be terminated and the
     principal amount then outstanding of, and the accrued interest on, the
     Loans, the Reimbursement Obligations and all other amounts payable by the
     Borrower hereunder and under the Notes (including, without limitation, any
     amounts payable under Section 5.04 hereof) shall automatically become
     immediately due and payable without presentment, demand, protest or other
     formalities of any kind, all of which are hereby expressly waived by the
     Borrower.

          In addition, upon the occurrence and during the continuance of any
Event of Default,

          (i) without limiting the right of the Administrative Agent to exercise
     such rights and remedies under the Basic Documents as permitted hereunder
     and thereunder, upon the occurrence of any Event of Default, the Majority
     Revolving Credit Lenders shall be permitted, (x) by notice to the Borrower,
     to terminate the Revolving Credit Commitments and/or declare the principal
     amount then outstanding of, and the accrued interest on, the Revolving
     Credit Loans and all other amounts payable by the Borrower hereunder and
     under the Notes to the Revolving Credit Lenders (including, without
     limitation, any amounts payable under Section 5.04 hereof) to be forthwith
     due and payable, whereupon such amounts shall be immediately due and
     payable without presentment, demand,

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                                     - 97 -

     protest or other formalities of any kind, all of which are hereby expressly
     waived by the Borrower and, if requested by the Administrative Agent or the
     Majority Revolving Credit Lenders through the Administrative Agent (and, in
     the case of any Event of Default referred to in clause (f) or (g) of this
     Section 10 with respect to any Obligor, forthwith, without any demand or
     the taking of any other action by the Administrative Agent or such Lenders)
     provide cover for the Revolving Letter of Credit Liabilities by paying to
     the Administrative Agent immediately available funds in an amount equal to
     the Revolving Letter of Credit Liabilities, which funds shall be held by
     the Administrative Agent in the Collateral Account, as collateral security
     in the first instance for the Revolving Letter of Credit Liabilities, and
     be subject to withdrawal only as therein provided and (y) to direct the
     Administrative Agent to exercise all available rights and remedies under
     the Security Documents without the consent of any other Lenders; and

          (ii) if the Administrative Agent has declared the principal amount
     then outstanding of, and accrued interest on, the Loans and all other
     amounts payable by the Borrower hereunder and under the Notes to be due and
     payable, the Borrower agrees that it shall, if requested by the
     Administrative Agent or the Majority Term Letter of Credit Lenders through
     the Administrative Agent (and, in the case of any Event of Default referred
     to in clause (f) or (g) of this Section 10 with respect to any Obligor,
     forthwith, without any demand or the taking of any other action by the
     Administrative Agent or such Lenders) provide cover for the Term Letter of
     Credit Liabilities by paying to the Administrative Agent immediately
     available funds in an amount equal to the Uncovered Term Letter of Credit
     Liabilities, which funds shall be held by the Administrative Agent in the
     Term Letter of Credit Collateral Account, as collateral security in the
     first instance for the Term Letter of Credit Liabilities, and be subject to
     withdrawal only as therein provided.

          Section 11.  THE ADMINISTRATIVE AGENT.

          11.01 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the Security Documents with such powers as are specifically
delegated to the Administrative Agent by the terms of this Agreement and of the
other Basic Documents, together with such other powers as are reasonably
incidental thereto. The Administrative Agent (which term as used in this
sentence and in Section 11.05 hereof and the first sentence of Section 11.06
hereof shall include references to its affiliates and its own and its
affiliates' officers, directors, employees and agents):

          (a) shall have no duties or responsibilities except those expressly
     set forth in this Agreement and in the other Basic Documents, and shall not
     by reason of this Agreement or any other Basic Document be a trustee for
     any Lender;

          (b) shall not be responsible to the Lenders for any recitals,
     statements, representations or warranties contained in this Agreement or in
     any other Basic Document, or in any certificate or other document referred
     to or provided for in, or received by any of them under, this Agreement or
     any other Basic Document, or for the

                                CREDIT AGREEMENT

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                                     - 98 -

     value, validity, effectiveness, genuineness, enforceability or sufficiency
     of this Agreement, any Note or any other Basic Document or any other
     document referred to or provided for herein or therein or for any failure
     by any Obligor or any other Person to perform any of its obligations
     hereunder or thereunder;

          (c) shall not be required to initiate or conduct any litigation or
     collection proceedings hereunder or under any other Basic Document (except
     for the exercise of remedies under the Security Documents, as expressly
     provided therein); and

          (d) shall not be responsible for any action taken or omitted to be
     taken by it hereunder or under any other Basic Document or under any other
     document or instrument referred to or provided for herein or therein or in
     connection herewith or therewith, except for its own gross negligence or
     willful misconduct.

The Administrative Agent may employ agents and attorneys-in-fact and shall not
be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. The Administrative Agent may
deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until a notice of the assignment or transfer thereof shall
have been filed with the Administrative Agent, together with the consent of the
Borrower to such assignment or transfer (to the extent provided in Section
12.05(b) hereof).

          11.02 RELIANCE BY THE ADMINISTRATIVE AGENT. The Administrative Agent
shall be entitled to rely upon any certification, notice or other communication
(including, without limitation, any thereof by telephone, telecopy, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Administrative Agent. As to any matters not expressly provided
for by this Agreement or any other Basic Document, the Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder or thereunder in accordance with instructions given by the Majority
Lenders or, if provided herein, in accordance with the instructions given by the
Majority Revolving Credit Lenders, the Majority Term Loan Lenders, the Majority
Term Letter of Credit Lenders or all of the Lenders as is required in such
circumstance and such instructions of such Lenders and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders.

          11.03 DEFAULTS. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default unless the Administrative
Agent has received notice from a Lender or the Borrower specifying such Default
and stating that such notice is a "Notice of Default". In the event that the
Administrative Agent receives such a notice of the occurrence of a Default, the
Administrative Agent shall give prompt notice thereof to the Lenders. The
Administrative Agent shall (subject to Section 11.07 hereof) take such action
with respect to such Default as shall be directed by the Majority Lenders or, if
provided herein, the Majority Revolving Credit Lenders, the Majority Term Loan
Lenders or the Majority Term Letter of Credit Lenders, PROVIDED that, unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem
advisable

                                CREDIT AGREEMENT

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                                     - 99 -

in the best interest of the Lenders except to the extent that this Agreement
expressly requires that such action be taken, or not be taken, only with the
consent or upon the authorization of the Majority Lenders, the Majority
Revolving Credit Lenders, the Majority Term Loan Lenders or the Majority Term
Letter of Credit Lenders or all of the Lenders.

          11.04 RIGHTS AS A LENDER. With respect to its Revolving Credit
Commitments and the Loans made by it, JPMCB (and any successor acting as
Administrative Agent) in its capacity as a Lender hereunder shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not acting as the Administrative Agent and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the
Administrative Agent in its individual capacity. JPMCB (and any successor acting
as Administrative Agent) and its affiliates may (without having to account
therefor to any Lender) accept deposits from, lend money to, make investments in
and generally engage in any kind of banking, trust or other business with the
Group Members (and any of their Affiliates) as if it were not acting as the
Administrative Agent, and JPMCB (or any successor) and its affiliates may accept
fees and other consideration from the Obligors for services in connection with
this Agreement or otherwise without having to account for the same to the
Lenders.

          11.05 INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 12.03 hereof,
but without limiting the obligations of the Borrower under said Section 12.03,
and including in any event any payments under any indemnity that the
Administrative Agent is required to issue to any bank referred to in Section
4.04 of the Security Agreement to which remittances in respect of Accounts, as
defined therein, are to be made), ratably in accordance with their respective
Applicable Percentages, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever that may be imposed on, incurred by or
asserted against the Administrative Agent (including by any Lender), arising out
of or by reason of any investigation in or in any way relating to or arising out
of this Agreement or any other Basic Document or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including, without limitation, the costs and
expenses that the Borrower is obligated to pay under Section 12.03 hereof, and
including also any payments under any indemnity that the Administrative Agent is
required to issue to any bank referred to in Section 4.04 of the Security
Agreement to which remittances in respect of Accounts, as defined therein, are
to be made, but excluding, unless a Default has occurred and is continuing,
normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, PROVIDED that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the party to be indemnified.

          11.06 NON-RELIANCE BY LENDERS. Each Lender agrees that it has,
independently and without reliance on the Administrative Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Group Members and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Administrative Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement.
The Administrative

                                CREDIT AGREEMENT

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                                     - 100 -

Agent shall not be required to keep itself informed as to the performance or
observance by any Group Member of this Agreement or any of the other Basic
Documents or any other document referred to or provided for herein or therein or
to inspect the Properties or books of the Group Members. Except for notices,
reports and other documents and information expressly required to be furnished
to the Lenders by the Administrative Agent hereunder or under any of the Basic
Documents, the Administrative Agent shall have no duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition or business of the Group Members (or any of their
Affiliates) that may come into the possession of the Administrative Agent or any
of its affiliates.

          11.07 FAILURE TO ACT. Except for action expressly required of the
Administrative Agent hereunder and under the other Basic Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 11.05 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.

          11.08 RESIGNATION OR REMOVAL OF ADMINISTRATIVE AGENT. Subject to the
appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Lenders and the Borrower, and the Administrative Agent may be removed at
any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall, after consultation with the
Borrower, have the right to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Administrative Agent, then the retiring Agent
may, on behalf of the Lenders after consultation with the Borrower, appoint a
successor Administrative Agent, that shall be a bank which has an office in New
York, New York with a combined capital and surplus of at least U.S.
$500,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder and under the Security Documents by a successor Administrative Agent,
such successor Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder and under the other Basic Documents
and the Borrower will, and will cause each of its Subsidiaries to, take such
action and execute and deliver such instruments, as shall be requested by the
successor Administrative Agent to confirm in favor of such successor
Administrative Agent the Liens created pursuant to the Security Documents in
favor of such retiring Administrative Agent. After any retiring Administrative
Agent's resignation or removal hereunder or under any of the Basic Documents,
the provisions of this Section 11 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Administrative Agent.

          In connection with any such appointment of a successor Administrative
Agent, the Borrower agrees to pay to such successor such fees at such levels as
shall be consistent with fees generally charged by banks to perform the type of
services required by the Administrative Agent.

                                CREDIT AGREEMENT

<Page>

                                     - 101 -

          11.09 CONSENTS UNDER BASIC DOCUMENTS. Except as otherwise provided in
Section 12.04 hereof with respect to this Agreement, the Administrative Agent
may, with the prior consent of the Majority Lenders (but not otherwise), consent
to any modification, supplement or waiver under any of the Basic Documents,
PROVIDED that, without the prior consent of each Lender, the Administrative
Agent shall not (except as provided herein or in the Security Documents) do any
of the following:

          (i) release all or substantially all of the collateral or otherwise
     terminate all or substantially all of the Liens under the Basic Documents
     providing for collateral security, except that the Administrative Agent
     may, with the prior consent of the Supermajority Lenders (but not
     otherwise), release less than all or substantially all of the collateral or
     otherwise terminate less than all or substantially all of the Liens under
     the Basic Documents providing for collateral security,

          (ii) alter with respect to all or substantially all of the collateral
     the relative priorities of the obligations entitled to the benefits of the
     Liens created under the Security Documents, except that the Administrative
     Agent may, with the prior consent of the Majority Lenders (but not
     otherwise), consent to: (i) any modification, supplement or waiver under
     any of the Basic Documents that would result in additional obligations
     hereunder being secured by all or substantially all of such collateral
     security or (ii) a Lien securing such additional obligations that is junior
     to the Lien in favor of the other obligations secured by such Basic
     Document, or

          (iii) release all, or substantially all of the Guarantors from their
     obligations under Section 6 hereof, or under any Guaranty Agreement, except
     that the Administrative Agent may, with the prior consent of the
     Supermajority Lenders (but not otherwise), release fewer than all or
     substantially all of the Guarantors.

No such consent shall be required, and the Administrative Agent is hereby
authorized, to release any Lien covering Property (and to release any such
Guarantor from such guarantee obligations) which is the subject of either a
disposition of Property permitted hereunder or a disposition to which the
Majority Lenders have consented.

          11.10 COLLATERAL SUB-AGENTS. Each Lender by its execution and delivery
of this Agreement agrees, as contemplated by Section 4.05 of the Security
Agreement, that, in the event it shall hold any Permitted Investments referred
to therein, such Permitted Investments shall be held in the name and under the
control of such Lender, and such Lender shall hold such Permitted Investments as
a collateral sub-agent for the Administrative Agent thereunder. The Borrower by
its execution and delivery of this Agreement hereby consents to the foregoing.

          Section 12. MISCELLANEOUS.

          12.01 WAIVER. No failure on the part of the Administrative Agent or
any Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power

                                CREDIT AGREEMENT

<Page>

                                    - 102 -

or privilege under this Agreement or any Note shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
this Agreement or any Note preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies provided herein
are cumulative and not exclusive of any remedies provided by law.

          12.02 NOTICES. Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:

          (a) if to the Borrower or any Guarantor, to it at 4838 Jenkins Avenue,
     North Charleston, South Carolina 29405, Attention of James G. Boyd, CFO
     (Telecopy No. (847) 308-0104; Telephone No.(843) 566-7293), with a courtesy
     copy to GOF at 520 Madison Avenue, New York, New York 10022, Attention of
     Bob Weiss, General Counsel (Telecopy No. (212) 651-9525; Telephone No.
     (212) 651-4014);

          (b) if to the Administrative Agent, to JPMorgan Chase Bank, 1 Chase
     Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of Loan and
     Agency Services Group (Telecopy No. (212) 552-5658; Telephone No.
     552-7906), in each case with a copy to JPMorgan Chase Bank, 270 Park
     Avenue, 4th Floor, New York, New York 10017, Attention of Peter Dedousis
     (Telecopy No. (212) 270-7939; Telephone No. (212) 270-4062);

          (c) if to JPMCB as Issuing Lender, to it at 1111 Fannin, 10th Floor,
     Houston, Texas 77002, Attention of James DeLeon (Telecopy No. (713)
     427-6307; Telephone No. (713) 750-2366; and

          (d) if to a Lender, to it at its address (or telecopy number) set
     forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto (or, in the case
of any such change by a Lender, by notice to the Borrower and the Administrative
Agent). All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.

          12.03 EXPENSES AND INDEMNIFICATION. The Obligors jointly and severally
agree to pay or reimburse each of the Lenders and the Administrative Agent for
paying: (a) all reasonable out-of-pocket costs and expenses of the
Administrative Agent (including, without limitation, the reasonable fees and
expenses of Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to
JPMCB and of special Canadian, German or Mexican counsel to JPMCB), in
connection with (i) the negotiation, preparation, execution and delivery of this
Agreement and the other Basic Documents and the extension of credit hereunder
(but subject in any event to such separate arrangements as have been entered
into between JPMCB and the Borrower regarding the aggregate amount thereof), and
(ii) any modification, supplement or waiver of any of the terms of this
Agreement or any of the other Basic Documents; (b) all reasonable costs and

                                CREDIT AGREEMENT

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                                    - 103 -

expenses of the Lenders and the Administrative Agent (including, without
limitation, reasonable counsels' fees) in connection with (i) any Default and
any enforcement or collection proceedings resulting therefrom or in connection
with the negotiation of any restructuring or "work-out" (whether or not
consummated) of the obligations of the Borrower hereunder and (ii) the
enforcement of this Section 12.03; (c) all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or revenue
authority in respect of this Agreement or any of the other Basic Documents or
any other document referred to herein or therein and all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest contemplated by
any Basic Document or any other document referred to therein (including, without
limitation, all such costs, expenses, taxes, assessments and other charges
relating to the Canadian Security Documents, German Security Documents or
Mexican Security Documents, as applicable); and (d) all costs, expenses and
other charges in respect of title insurance procured with respect to the Liens
created pursuant to the Mortgages.

          The Obligors hereby jointly and severally agree to indemnify the
Administrative Agent and each Lender and their respective affiliates, directors,
officers, employees, attorneys and agents from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages or expenses incurred
by any of them (including, without limitation, any and all losses, liabilities,
claims, damages or expenses incurred by the Administrative Agent to any Lender,
whether or not the Administrative Agent or any Lender is a party thereto)
arising out of or by reason of any investigation or litigation or other
proceedings (including any threatened investigation or litigation or other
proceedings) relating to the extensions of credit hereunder or any actual or
proposed use by the Group Members of the proceeds of any of the extensions of
credit hereunder, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation or
litigation or other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified). Without limiting the
generality of the foregoing, the Obligors will (x) indemnify the Administrative
Agent for any payments that the Administrative Agent is required to make under
any indemnity issued to any bank referred to in Section 4.04 of the Security
Agreement to which remittances in respect to Accounts, as defined therein, are
to be made and (y) indemnify the Administrative Agent and each Lender from, and
hold the Administrative Agent and each Lender harmless against, any losses,
liabilities, claims, damages or expenses described in the preceding sentence
(but excluding, as provided in the preceding sentence, any loss, liability,
claim, damage or expense incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified) arising under any Environmental Law
as a result of the past, present or future operations of the Group Members (or
any predecessor in interest to the Group Members), or the past, present or
future condition of any site or facility owned, operated or leased by the Group
Members (or any such predecessor in interest), or any Release or threatened
Release of any Hazardous Materials from any such site or facility, including any
such Release or threatened Release which shall occur during any period when the
Administrative Agent or any Lender shall be in possession of any such site or
facility following the exercise by the Administrative Agent or any Lender of any
of its rights and remedies hereunder or under any of the Security Documents.

                                CREDIT AGREEMENT

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                                    - 104 -

          12.04 AMENDMENTS, ETC. Except as otherwise expressly provided in this
Agreement, any provision of this Agreement, including any amendment providing
for extension of new credit hereunder to be secured equally and ratably by the
collateral hereunder, may be modified or supplemented only by an instrument in
writing signed by each Obligor, the Administrative Agent and the Majority
Lenders, or by each Obligor and the Administrative Agent acting with the consent
of the Majority Lenders, and any provision of this Agreement may be waived by
the Majority Lenders or by the Administrative Agent acting with the consent of
the Majority Lenders; PROVIDED that:

          (a) no modification, supplement or waiver shall, unless by an
     instrument signed by each Lender affected thereby: (i) increase, or extend
     the term of any of the Revolving Credit Commitments, or extend the time or
     waive any requirement for the reduction or termination of any of the
     Revolving Credit Commitments, (ii) extend any date fixed for the payment of
     principal of or interest on any Loan, the Reimbursement Obligations or any
     fee hereunder, (iii) reduce the amount of any such payment of principal,
     (iv) reduce the rate at which interest is payable thereon or any fee is
     payable hereunder, or (v) modify, supplement or waive Section 4.02 hereof;

          (b) no modification, supplement or waiver shall, unless by an
     instrument signed by the "Majority Lenders" of each Class of Loans
     hereunder or by the Administrative Agent acting with the consent of the
     "Majority Lenders" of each Class of Loans hereunder: (i) alter the manner
     of application to the Loans hereunder of any prepayment or (ii) modify the
     definition of the term "Majority Lenders", "Majority Revolving Credit
     Lenders", "Majority Term Loan Lenders" or "Majority Term Letter of Credit
     Lenders";

          (c) no modification, supplement or waiver shall, unless by an
     instrument signed by all of the Lenders or by the Administrative Agent
     acting with the consent of all of the Lenders: (i) alter the terms of this
     Section 12.04 (other than by amendment to the terms referred to in
     paragraph (b) above), (ii) modify the definition of the term "Supermajority
     Lenders" or modify in any manner any requirement hereunder that
     determinations or waivers of any rights, or modifications of any provision,
     be made only with the consent of each Lender or (iii) alter the terms of
     Section 11.09 hereof;

          (d) any modification or supplement of Section 11 hereof, or any of the
     rights or duties of the Administrative Agent hereunder, shall require the
     consent of the Administrative Agent;

          (e) any modification of any of the provisions herein relating to the
     Revolving Letter of Credit Liabilities (other than any such modification
     affecting both the Revolving Credit Loans and the Revolving Letters of
     Credit) shall require the consent of the Majority Revolving Credit Lenders;
     and

          (f) any modification of any of the provisions herein relating to the
     Term Letter of Credit Liabilities (other than any such modification
     affecting both the Term Loans and the Term Letters of Credit) shall require
     the consent of the Majority Term Letter of Credit Lenders; and

                                CREDIT AGREEMENT

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                                    - 105 -

          (g) any modification or waiver of the provisions of Section 9.05
     hereof to enable any Disposition not otherwise permitted by said Section
     9.05 as originally in effect shall require the consent of the Revolving
     Credit Lenders having at least 80% of the aggregate amount of the Revolving
     Credit Commitments or, if the Revolving Credit Commitments shall have been
     terminated, Revolving Credit Lenders having at least 80% of the aggregate
     unpaid principal amount of the Revolving Credit Loans.

          Anything in this Agreement to the contrary notwithstanding, no waiver
or modification of any provision of this Agreement that either (x) has the
effect (either immediately or at some later time) of enabling the Borrower to
satisfy a condition precedent to the making of a Revolving Credit Loan or the
issuance of a Revolving Letter of Credit or (y) adversely affects the collateral
or Guarantee hereunder, shall be effective against the Revolving Credit Lenders
for the purposes of the Revolving Credit Commitments unless the Majority
Revolving Credit Lenders shall have concurred with such waiver or modification.

          12.05 SUCCESSORS AND ASSIGNS.

          (a) ASSIGNMENTS GENERALLY. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that (i) the Borrower may not
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of each Lender (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void) and (ii)
no Lender may assign or otherwise transfer its rights or obligations hereunder
except in accordance with this Section 12.05. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
and, to the extent expressly contemplated hereby, the affiliates, directors,
officers, employees, attorneys and agents of each of the Administrative Agent,
the Issuing Lenders and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

          (b) ASSIGNMENTS BY LENDERS.

          (i) ASSIGNMENTS GENERALLY. Subject to the conditions set forth in
clause (ii) below, any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Revolving Credit Commitment, and the Loans and Letter of Credit
Interests, at the time held by it) with the prior written consent (such consent
not to be unreasonably withheld or delayed) of:

          (A) the Borrower, PROVIDED that no consent of the Borrower shall be
     required for an assignment to a Lender, an Affiliate of a Lender, an
     Approved Fund or, if an Event of Default under Section 10(a), 10(f) or
     10(g) hereof shall have occurred and is continuing, any other assignee;

          (B) the Administrative Agent, PROVIDED that no consent of the
     Administrative Agent shall be required for an assignment of any Revolving
     Credit Commitment to an

                                CREDIT AGREEMENT

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                                    - 106 -

     assignee that is a Lender with a Revolving Credit Commitment immediately
     prior to giving effect to such assignment; and

          (C) the Issuing Lender, to the extent such assignment is of a Term
     Letter of Credit Interest or a Revolving Commitment to an assignee that is
     not a Term Letter of Credit Lender or Revolving Credit Lender, as
     applicable, immediately prior to giving effect to such assignment.

          (ii) CERTAIN CONDITIONS TO ASSIGNMENTS. Assignments shall be subject
to the following additional conditions:

          (A) except in the case of an assignment to a Lender or an Affiliate of
     a Lender, or an assignment of the entire remaining amount of the assigning
     Lender's Revolving Credit Commitment (together with all Revolving Credit
     Loans and Revolving Letter of Credit Interest), Term Loans or Term Letter
     of Credit Interest, the amount of the Revolving Credit Commitment, Term
     Loans or Term Letter of Credit Interest of the assigning Lender subject to
     each such assignment (determined as of the date the Assignment and
     Acceptance with respect to such assignment is delivered to the
     Administrative Agent) shall not be less than U.S. $1,000,000 unless each of
     the Borrower and the Administrative Agent otherwise consent, PROVIDED that
     no such consent of the Borrower shall be required if an Event of Default
     under Section 10(a), 10(f) or 10(g) hereof has occurred and is continuing;

          (B) each partial assignment of any Revolving Credit Commitment, Term
     Loans or Term Letter of Credit Interest shall be made as an assignment of a
     proportionate part of all the assigning Lender's rights and obligations
     under this Agreement in respect of such Commitment (together with a
     proportionate part of the outstanding Revolving Credit Loans and Revolving
     Letter of Credit Interest), Term Loans and Term Letter of Credit Interest;

          (C) the parties to each assignment shall execute and deliver to the
     Administrative Agent an Assignment and Acceptance in substantially the form
     of Exhibit A hereto, together with a processing and recordation fee of U.S.
     $3,500; and

          (D) the assignee, if it shall not already be a Lender, shall deliver
     to the Administrative Agent an Administrative Questionnaire.

          (iii) EFFECTIVENESS OF ASSIGNMENTS. Subject to acceptance and
recording thereof pursuant to paragraph (c) below, from and after the effective
date specified in each Assignment and Acceptance the assignee thereunder shall
be a party hereto and, to the extent of the interest assigned by such Assignment
and Acceptance, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the rights referred to in Section 12.06 hereof). Any
assignment or transfer by a

                                CREDIT AGREEMENT

<Page>

                                     - 107 -

Lender of rights or obligations under this Agreement that does not comply with
this Section 12.05 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (e) below.

          (c) MAINTENANCE OF REGISTER BY THE ADMINISTRATIVE AGENT. The
Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices in New York City a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Revolving Credit Commitment of, and principal
amount of the Loans and Letter of Credit Interests held by, each Lender pursuant
to the terms hereof from time to time (the "REGISTER"). The entries in the
Register shall be conclusive, and the Borrower, the Administrative Agent, the
Issuing Lender and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Lender and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

          (d) ACCEPTANCE OF ASSIGNMENTS BY ADMINISTRATIVE AGENT. Upon its
receipt of a duly completed Assignment and Acceptance executed by an assigning
Lender and an assignee, the assignee's completed Administrative Questionnaire
(unless the assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in paragraph (b) above and any written consent to
such assignment required by said paragraph (b), the Administrative Agent shall
accept such Assignment and Acceptance and record the information contained
therein in the Register. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph (d).

          (e) PARTICIPATIONS. Any Lender may, without the consent of the
Borrower, the Administrative Agent or the Issuing Lender, sell participations to
one or more banks or other entities (a "PARTICIPANT") in all or a portion of
such Lender's rights and obligations under this Agreement and the other Loan
Documents (including all or a portion of its Revolving Credit Commitments and
the Loans and Letter of Credit Interests held by it); PROVIDED that (i) such
Lender's obligations under this Agreement and the other Loan Documents shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrower,
the Administrative Agent, the Issuing Lender and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Loan
Documents. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and the other Loan Documents and to approve any
amendment, modification or waiver of any provision of this Agreement or any
other Loan Document; PROVIDED that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
12.04 hereof that affects such Participant. Subject to paragraph (f) below, the
Borrower agrees that each Participant shall be entitled to the benefits of
Section 5 hereof to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) above. To the extent permitted
by law, each Participant also shall be entitled to the benefits of Section 4.07

                                CREDIT AGREEMENT

<Page>

                                      -108-

hereof as though it were a Lender, provided such Participant agrees to be
subject to Section 4.07(b) hereof as though it were a Lender hereunder.

          (f) LIMITATIONS ON RIGHTS OF PARTICIPANTS. A Participant shall not be
entitled to receive any greater payment under Section 5 hereof than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower's prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 5.06 hereof unless the Borrower is notified
of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with Section 5.06(e) hereof as though it
were a Lender.

          (g) CERTAIN PLEDGES. Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any such pledge or assignment to a
Federal Reserve Bank, and this Section 12.05 shall not apply to any such pledge
or assignment of a security interest; PROVIDED that no such pledge or assignment
of a security interest shall release a Lender from any of its obligations
hereunder or substitute any such assignee for such Lender as a party hereto.

          (h) DISCLOSURE OF CERTAIN INFORMATION. A Lender may furnish any
information concerning any Group Member in the possession of such Lender from
time to time to assignees and participants (including prospective assignees and
participants), subject, however, to the provisions of Section 12.13(b) hereof.

          (i) ASSIGNMENTS TO GROUP MEMBERS. Anything in this Section 12.05 to
the contrary notwithstanding, no Lender may assign or participate any interest
in any Loan or Reimbursement Obligation held by it hereunder to any Group Member
or any of their Affiliates or Subsidiaries without the prior written consent of
each Lender.

          12.06 SURVIVAL. The obligations of the Borrower under Sections 5.01,
5.04, 5.05, 5.06 and 12.03 hereof, the obligations of the Guarantors under
Section 6.03 hereof, and the obligations of the Lenders under Section 11.05
hereof shall survive the repayment of the Loans and Reimbursement Obligations
and the termination of the Revolving Credit Commitments and, in the case of any
Lender that may assign any interest in its Revolving Credit Commitments, Loans
or Letter of Credit Interests hereunder, shall survive the making of such
assignment, notwithstanding that such assigning Lender may cease to be a
"Lender" hereunder. In addition, each representation and warranty made, or
deemed to be made by a notice of any extension of credit (whether by means of a
Loan or a Letter of Credit), herein or pursuant hereto shall survive the making
of such representation and warranty, and no Lender shall be deemed to have
waived, by reason of making any extension of credit hereunder (whether by means
of a Loan or a Letter of Credit), any Default which may arise by reason of such
representation or warranty proving to have been false or misleading,
notwithstanding that such Lender or Agent may have had notice or knowledge or
reason to believe that such representation or warranty was false or misleading
at the time such extension of credit was made.

                                CREDIT AGREEMENT

<Page>

                                      -109-

          12.07 CAPTIONS. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.

          12.08 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.

          12.09 GOVERNING LAW. This Agreement and the Notes shall be governed
by, and construed in accordance with, the law of the State of New York.

          12.10 JURISDICTION, SERVICE OF PROCESS AND VENUE.

          (a) JURISDICTION. Each party hereto hereby agrees that any suit,
action or proceeding with respect to this Agreement, any Note or any judgment
entered by any court in respect thereof may be brought in the United States
District Court for the Southern District of New York, in the Supreme Court of
the State of New York sitting in New York County (including its Appellate
Division), or in any other appellate court in the State of New York, as the
party commencing such suit, action or proceeding may elect in its sole
discretion; and each party hereto hereby irrevocably submits to the
non-exclusive jurisdiction of such court for the purpose of any such suit,
action, proceeding or judgment. Each party hereto further submits, for the
purpose of any such suit, action, proceeding or judgment brought or rendered
against it, to the appropriate courts of the jurisdiction of its domicile.

          (b) APPOINTMENT OF PROCESS AGENT. Each of the Foreign Obligors hereby
agrees that service of all writs, process and summonses in any such suit, action
or proceeding brought hereunder may be made upon CT Corporation System,
presently located at 111 8th Avenue, 13th Floor, New York, New York 10011,
U.S.A. (the "PROCESS AGENT"), and each of the Foreign Obligors hereby confirms
and agrees that the Process Agent has been duly and irrevocably appointed as its
agent and true and lawful attorney-in-fact in its name, place and stead to
accept such service of any and all such writs, process and summonses, and agrees
that the failure of the Process Agent to give any notice of any such service of
process to the Borrower or such Foreign Obligor shall not impair or affect the
validity of such service or of any judgment based thereon. Each of the Foreign
Obligors hereby further irrevocably consents to the service of process in any
suit, action or proceeding in said courts by the mailing thereof by the
Administrative Agent or any Lender by registered or certified mail, postage
prepaid, at its address set forth beneath its signature hereto.

          (c) NO LIMITATIONS UPON JURISDICTION. Nothing herein shall in any way
be deemed to limit the ability of the Administrative Agent or any Lender to
serve any such writs, process or summonses in any other manner permitted by
applicable law or to obtain jurisdiction over the Borrower in such other
jurisdictions, and in such manner, as may be permitted by applicable law.

          (d) WAIVER OF VENUE. Each Obligor hereby irrevocably waives any
objection that it may now or hereafter have to the laying of the venue of any
suit, action or proceeding arising

                                CREDIT AGREEMENT

<Page>

                                      -110-

out of or relating to this Agreement or the Notes brought in the Supreme Court
of the State of New York, County of New York, in the United States District
Court for the Southern District of New York and hereby further irrevocably
waives any claim that any such suit, action or proceeding brought in such court
has been brought in an inconvenient forum.

          12.11 WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

          12.12 NO IMMUNITY. To the extent that any Foreign Obligor may be or
become entitled, in any jurisdiction in which judicial proceedings may at any
time be commenced with respect to this Agreement or the Notes, to claim for
itself or its Properties or revenues any immunity from suit, court jurisdiction,
attachment prior to judgment, attachment in aid of execution of a judgment,
execution of a judgment or from any other legal process or remedy relating to
its obligations under this Agreement, the Notes or any of the other Basic
Documents, and to the extent that in any such jurisdiction there may be
attributed such an immunity (whether or not claimed), such Foreign Obligor
hereby irrevocably agrees not to claim and hereby irrevocably waives such
immunity to the fullest extent permitted by the laws of such jurisdiction.

          12.13 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY.

          (a) SHARING OF INFORMATION WITH AFFILIATES. The Obligors acknowledge
that from time to time financial advisory, investment banking and other services
may be offered or provided to the Group Members (in connection with this
Agreement or otherwise) by any Lender or by one or more subsidiaries or
affiliates of such Lender and the Obligors hereby authorize each Lender to share
any information delivered to such Lender by the Obligors and their Subsidiaries
pursuant to this Agreement, or in connection with the decision of such Lender to
enter into this Agreement, to any such subsidiary or affiliate, it being
understood that any such subsidiary or affiliate receiving such information
shall be bound by the provisions of paragraph (b) below as if it were a Lender
hereunder.

          (b) CONFIDENTIALITY. Each Lender and the Administrative Agent agrees
(on behalf of itself and each of its affiliates, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of this nature and (with respect to those Lenders which are banks) in accordance
with safe and sound banking practices, any non-public information supplied to it
by the Obligors pursuant to this Agreement which is identified by such Person as
being confidential at the time the same is delivered to the Lenders or the
Administrative Agent, PROVIDED that (A) nothing herein shall limit the
disclosure of any such information (i) to the extent required by statute, rule,
regulation or judicial process, (ii) to counsel for any of the Lenders or the
Administrative Agent, (iii) to bank examiners, auditors, accountants, the
National Association of Insurance Commissioners or any regulatory authority,
(iv) to the Administrative Agent or any other Lender, (v) in connection with any
litigation to which any one or more of the

                                CREDIT AGREEMENT

<Page>

                                      -111-

Lenders or the Administrative Agent is a party, (vi) to a subsidiary or
affiliate of such Lender as provided in paragraph (a) above or (vii) to any
Lender, assignee or participant (or prospective assignee or participant) or to
direct or indirect contractual counterparties to swap agreements or such
contractual counterparties' professional advisers so long as such assignee or
participant (or prospective assignee or participant) or contractual counterparty
or professional adviser to such contractual counterparty first executes and
delivers to the respective Lender a Confidentiality Agreement substantially in
the form of Exhibit B hereto and (B) in no event shall any Lender or the
Administrative Agent be obligated or required to return any materials furnished
by the Obligors. The obligations of each Lender under this Section 12.13 shall
supersede and replace the obligations of such Lender under any confidentiality
letter in respect of this financing signed and delivered by such Lender to any
Group Member.

                                CREDIT AGREEMENT

<Page>

                                      -112-

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

                                  THE BORROWER

                                       POLYMER GROUP, INC.


                                       By: /s/ James G. Boyd
                                           ------------------------------------
                                           Name:  James G. Boyd
                                           Title: Ex. VP, Treasurer and CFO


                                   GUARANTORS

BONLAM (S.C.), INC.                         CHICOPEE HOLDINGS B.V.


By: /s/ James G. Boyd                       By: /s/ James G. Boyd
    ----------------------------------          --------------------------
    Name:  James G. Boyd                        Name:  James G. Boyd
    Title: Ex. VP, Treasurer and CFO            Title: Ex. VP, Treasurer and CFO

CHICOPEE, INC.                              DOMINION TEXTILE MAURITIUS


By: /s/ James G. Boyd                       By: /s/ James G. Boyd
    ----------------------------------          --------------------------
    Name:  James G. Boyd                        Name:  James G. Boyd
    Title: Ex. VP, Treasurer and CFO            Title: Ex. VP, Treasurer and CFO

DOMINION TEXTILE (USA) INC.                 DT ACQUISITION INC.


By: /s/ James G. Boyd                       By: /s/ James G. Boyd
    ----------------------------------          --------------------------
    Name:  James G. Boyd                        Name:  James G. Boyd
    Title: Ex. VP, Treasurer and CFO            Title: Ex. VP, Treasurer and CFO

                                CREDIT AGREEMENT

<Page>

                                      -113-

FABPRO ORIENTED POLYMERS, INC.              FABRENE CORP.


By: /s/ James G. Boyd                       By: /s/ James G. Boyd
    ----------------------------------          --------------------------
    Name:  James G. Boyd                        Name:  James G. Boyd
    Title: Ex. VP, Treasurer and CFO            Title: Ex. VP, Treasurer and CFO

FABRENE GROUP, INC.                         FABRENE GROUP, L.L.C.


By: /s/ James G. Boyd                       By: /s/ James G. Boyd
    ----------------------------------          --------------------------
    Name:  James G. Boyd                        Name:  James G. Boyd
    Title: Ex. VP, Treasurer and CFO            Title: Ex. VP, Treasurer and CFO

FIBERGOL CORPORATION                        FIBERTECH GROUP, INC.


By: /s/ James G. Boyd                       By: /s/ James G. Boyd
    ----------------------------------          --------------------------
    Name:  James G. Boyd                        Name:  James G. Boyd
    Title: Ex. VP, Treasurer and CFO            Title: Ex. VP, Treasurer and CFO

FNA ACQUISITION INC.                        FNA POLYMER CORP.


By: /s/ James G. Boyd                       By: /s/ James G. Boyd
    ----------------------------------          --------------------------
    Name:  James G. Boyd                        Name:  James G. Boyd
    Title: Ex. VP, Treasurer and CFO            Title: Ex. VP, Treasurer and CFO

LORETEX CORPORATION                         PGI ASSET MANAGEMENT COMPANY


By: /s/ James G. Boyd                       By: /s/ James G. Boyd
    ----------------------------------          --------------------------
    Name:  James G. Boyd                        Name:  James G. Boyd
    Title: Ex. VP, Treasurer and CFO            Title: Ex. VP, Treasurer and CFO

                                CREDIT AGREEMENT

<Page>

                                      -114-

PGI EUROPE, INC.                            PGI POLYMER, INC.


By: /s/ James G. Boyd                       By: /s/ James G. Boyd
    ----------------------------------          --------------------------
    Name:  James G. Boyd                        Name:  James G. Boyd
    Title: Ex. VP, Treasurer and CFO            Title: Ex. VP, Treasurer and CFO

PGI NEUNKIRCHEN GMBH                        PGI SERVICING COMPANY


By: /s/ James G. Boyd                       By: /s/ James G. Boyd
    ----------------------------------          --------------------------
    Name:  James G. Boyd                        Name:  James G. Boyd
    Title: Ex. VP, Treasurer and CFO            Title: Ex. VP, Treasurer and CFO


By: /s/  Jerry Zucker
    ----------------------------------
    Name:  Jerry Zucker
    Title:

POLY-BOND INC.                              PNA CORP.


By: /s/ James G. Boyd                       By: /s/ James G. Boyd
    ----------------------------------          --------------------------
    Name:  James G. Boyd                        Name:  James G. Boyd
    Title: Ex. VP, Treasurer and CFO            Title: Ex. VP, Treasurer and CFO

POLYIONIX SEPARATION                        PRISTINE BRANDS CORPORATION
  TECHNOLOGIES, INC.


By: /s/ James G. Boyd                       By: /s/ James G. Boyd
    ----------------------------------          --------------------------
    Name:  James G. Boyd                        Name:  James G. Boyd
    Title: Ex. VP, Treasurer and CFO            Title: Ex. VP, Treasurer and CFO

TECHNETICS GROUP, INC.


By: /s/ James G. Boyd
    ----------------------------------
    Name:  James G. Boyd
    Title: Ex. VP, Treasurer and CFO

                                CREDIT AGREEMENT

<Page>

                                     -115-

                            REVOLVING CREDIT LENDERS

                                        JPMORGAN CHASE BANK, as a Revolving
                                          Credit Lender and Administrative Agent


                                        By: /s/ Peter Dedousis
                                            ------------------------------------
                                            Name:  Peter Dedousis
                                            Title: Managing Director


                                        THE FOOTHILL GROUP, INCORPORATED


                                        By: /s/ Dennis R. Ascher
                                            ------------------------------------
                                            Name:  Dennis R. Ascher
                                            Title: S.V.P.


                                        GENERAL ELECTRIC CAPITAL CORPORATION


                                        By: /s/ Karen Wold
                                            ------------------------------------
                                            Name:  Karen Wold
                                            Title: Duly Authorized Signatory

                                CREDIT AGREEMENT

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>8
<FILENAME>a2111067zex-10_2.txt
<DESCRIPTION>EXHIBIT 10.2
<TEXT>
<Page>

                                                                    EXHIBIT 10.2


                                                                [Execution Copy]

                                 AMENDMENT NO. 1

          AMENDMENT NO. 1 dated as of March 29, 2003, between POLYMER GROUP,
INC. (the "BORROWER"), each of the entities identified on the signature pages
hereto under the caption "GUARANTORS" (individually, a "GUARANTOR", and together
with the Borrower, the "OBLIGORS") and JPMORGAN CHASE BANK, as administrative
agent for the Lenders (in such capacity, together with its successors in such
capacity, the "ADMINISTRATIVE AGENT").

          The Borrowers, the Guarantors, certain lenders (the "LENDERS") and the
Administrative Agent are party to a Third Amended, Restated and Consolidated
Credit Agreement dated as of March 5, 2003 (the "CREDIT AGREEMENT") providing
for the restructuring of the obligations of the Borrower in respect of the
Existing Loans (as defined in the Credit Agreement) and Existing Letters of
Credit (as therein defined), and providing for new revolving credit loans and
other extensions of credit in an aggregate principal or face amount of up to
U.S. $50,000,000. The Obligors wish to amend the Credit Agreement in certain
respects and, in that connection, the Administrative Agent has been granted
authority by the Majority Lenders (as defined in the Credit Agreement) to
execute and deliver this Amendment No. 1. Accordingly, the Obligors and the
Administrative Agent on behalf of the Majority Lenders hereby agree as follows:

          Section 1. DEFINITIONS. Capitalized terms used but not otherwise
defined herein have the meanings given to them in the Credit Agreement.

          Section 2. AMENDMENTS. Subject to the satisfaction of the conditions
precedent specified in Section 4 below, but effective as of the date hereof, the
Credit Agreement shall be amended as follows:

          2.01. GENERAL. References in the Credit Agreement (including
references to the Credit Agreement as amended hereby) to "this Agreement" or
words of similar import (including indirect references to the Credit Agreement)
shall be deemed to be references to the Credit Agreement as hereby amended.

          2.02. DEFINITIONS. Section 1.01 of the Credit Agreement shall be
amended by amending the following definitions (to the extent already included in
said Section 1.01) and adding the following definitions in the appropriate
alphabetical location (to the extent not already included in said Section 1.01):

          "DEBT ISSUANCE" shall mean any issuance or sale of Indebtedness, other
     than (i) Indebtedness expressly permitted to be incurred pursuant to
     Section 9.07 hereof as in effect on the date hereof, (ii) any other
     Indebtedness to which the Majority Lenders shall have consented to the
     extent that each of the Lenders shall have agreed such Indebtedness shall
     not constitute a "Debt Issuance" for purposes hereof and (iii) Future
     Refinancing

                                 AMENDMENT NO. 1

<Page>

                                      - 2 -

     Debt to the extent the proceeds thereof are applied to the payment of the
     principal of (and accrued interest and redemption premium, if any, on) the
     New Senior Subordinated Notes or Junior Subordinated Convertible Notes. It
     is understood and agreed that any issuance of New Senior Subordinated Notes
     (other than any such issuance arising upon a drawing under the GOF Letter
     of Credit as provided in Section 9.07(g)(i) hereof) shall constitute a
     "Debt Issuance" under and for all purposes of this Agreement.

          "QUALIFIED ISSUANCE PROCEEDS" shall mean Net Available Proceeds
     received after the date hereof from either (i) an issuance of New Senior
     Subordinated Notes (other than any such issuance arising upon a drawing
     under the GOF Letter of Credit as provided in Section 9.07(g)(i) hereof) or
     (ii) an Equity Issuance, or from any combination thereof.

          "QUALIFIED PREPAYMENT PROCEEDS" shall mean, proceeds representing
     either (i) proceeds of a drawing under the GOF Letter of Credit pursuant to
     the second paragraph of Section 3.01(c) hereof or (ii) proceeds
     constituting the first U.S. $10,000,000 of Qualified Issuance Proceeds
     received by the Borrower after the date hereof and applied to the
     prepayment of Loans, and deposit of funds into the Term Letter of Credit
     Collateral Account, as required by Section 2.10(b) or 2.10(e) hereof, as
     applicable.

          2.03. INTEREST EXPENSE DEFINITION. Section 1.01 of the Credit
Agreement shall be amended by amending in its entirety the last paragraph of the
definition of "Interest Expense" as follows:

          "Notwithstanding the foregoing, (i) other than for purposes of
     determining Excess Cash Flow, if during any period for which Interest
     Expense is being determined the Borrower or any of its Restricted
     Subsidiaries shall have consummated any Disposition then, for all purposes
     of this Agreement, Interest Expense shall be determined on a pro forma
     basis as if such Disposition (and any Indebtedness repaid as a result of
     such Disposition) had been made or consummated (and such Indebtedness
     incurred or repaid) on the first day of such period (such pro forma
     determination to take into account, inter alia, any increases or decreases
     in the Applicable Margin that would have occurred had such Disposition, and
     related incurrence or repayment of Indebtedness, occurred on the first day
     of such period), (ii) if, as at any date (a "CALCULATION DATE"), fewer than
     four complete consecutive fiscal quarters have elapsed subsequent to the
     Effective Date, Interest Expense shall be calculated (after giving effect
     to the adjustments contemplated in the foregoing clause (i)) only for the
     portion of such period commencing on the Effective Date and ending on the
     calculation date and shall then be annualized by multiplying the amount of
     such Interest Expense by a fraction, the numerator of which is 365 and the
     denominator of which is the number of days during the period commencing on
     the day immediately following the Effective Date through and including the
     calculation date, (iii) if, at any time any prepayment shall be made in
     respect of the Term Loans from any Qualified Prepayment Proceeds, Interest
     Expense shall be determined for the relevant period on a pro forma basis as
     if such prepayment (and any New Senior Subordinated Notes that are issued
     as a result of any drawing under the GOF Letter of Credit) had occurred (or
     been issued) at the beginning of such period and (iv) if all or any

                                 AMENDMENT NO. 1

<Page>

                                      - 3 -

     portion of the Junior Subordinated Convertible Notes shall be converted
     into equity of the Borrower as provided in the Junior Subordinated
     Convertible Notes Indenture, Interest Expense shall be determined for the
     relevant period on a pro forma basis as if such conversion had occurred at
     the beginning of such period."

          2.04. OPTIONAL PREPAYMENTS. Section 2.09(d) of the Credit Agreement is
hereby amended to read in its entirety as follows:

          "(d) prepayments of Term Loans, and deposits of funds into the Term
     Letter of Credit Collateral Account, shall be applied to the payments and
     deposits required to be made under Section 3.01(b) hereof in inverse order
     of maturity and may not be reborrowed; PROVIDED that, if specified by the
     Borrower at the time notice of such prepayment is delivered to the
     Administrative Agent, up to an aggregate of U.S. $25,000,000 of the Covered
     Installments (as defined in Section 3.01(c) hereof) may be prepaid in
     direct order of maturity."

          2.05. MANDATORY PREPAYMENTS - EQUITY ISSUANCE. Section 2.10(e) of the
Credit Agreement is hereby amended to read in its entirety as follows:

          "(e) EQUITY ISSUANCE. Upon any Equity Issuance, the Borrower shall
     prepay the Loans (and/or provide cover for Letter of Credit Liabilities as
     specified in Sections 2.03(b)(v) and 2.03(c)(vi) hereof), and/or the
     Revolving Credit Commitments shall be subject to automatic reduction, in an
     aggregate amount equal to 50% of the Net Available Proceeds thereof, if
     any, such prepayment and/or reduction to be effected in each case in the
     manner and to the extent specified in paragraph (i) below, PROVIDED that,
     notwithstanding the foregoing, in the case of any Net Available Proceeds of
     an Equity Issuance received by the Borrower during the fiscal year ending
     January 3, 2004, the Borrower shall be required to prepay the Loans (and/or
     provide cover for Letter of Credit Liabilities) in an amount equal to 100%
     of the first U.S. $10,000,000 of such Net Available Proceeds."

          2.06. MANDATORY PREPAYMENTS - ALLOCATION. Section 2.10(i) of the
Credit Agreement is hereby amended by adding a new paragraph at the end thereof
to read as follows:

          "In addition, notwithstanding anything herein to the contrary, the
     portion of the proceeds of the first U.S. $10,000,000 of Qualified Issuance
     Proceeds received by the Borrower during the fiscal year ending January 4,
     2004 shall be applied to the prepayment of the installments of the Term
     Loans, and cover for the Term Letter of Credit Liabilities, in direct order
     of maturity."

          2.07. GOF LETTER OF CREDIT. Section 3.01(c) of the Credit Agreement is
hereby amended by adding a new paragraph at the end thereof to read as follows:

          "In addition to the foregoing, in the event that at the time the
     Borrower delivers notice of a prepayment under Section 2.09(d) hereof it
     specifies that such prepayment is to be applied to the Covered Installments
     in direct order of maturity, the Borrower may also request that the
     Administrative Agent obtain the required funds for such prepayment

                                 AMENDMENT NO. 1

<Page>

                                      - 4 -

     by drawing under the GOF Letter of Credit in an amount equal to such
     requested prepayment. In such event, the Administrative Agent shall make
     such drawing within five Business Days of such request, and shall apply the
     proceeds thereof to such prepayment. To the extent that at any time on or
     before May 15, 2004 the Borrower shall fail to be in compliance with
     Section 9.10(b), 9.10(c) or 9.10(d) hereof and, after two Business Days'
     notice from the Administrative Agent to the Borrower of the Administrative
     Agent's intent to make a drawing on the GOF Letter of Credit, there is no
     outstanding request from the Borrower to make a drawing pursuant to the
     preceding two sentences, the Borrower hereby irrevocably authorizes and
     directs the Administrative Agent to draw the full undrawn face amount of
     the GOF Letter of Credit to be applied to the Covered Installments in
     direct order of maturity as provided above (and, for these purposes, agrees
     that upon such failure to comply, Terms Loans and cover for Term Letters of
     Credit, in an aggregate amount equal to the full undrawn face amount of the
     GOF Letter of Credit, shall be due and payable without presentment, demand,
     protest or other formalities of any kind, all of which are hereby expressly
     waived by the Borrower)."

          2.08. INDEBTEDNESS COVENANT. Section 9.07(g) of the Credit Agreement
is hereby amended to read in its entirety as follows:

          "(g) Indebtedness of the Borrower in respect of the New Senior
     Subordinated Notes (and of any other Group Member, other than a Group
     Member that does not Guarantee the obligations of the Borrower hereunder,
     in respect of a Guarantee of the New Senior Subordinated Notes, so long as
     any such Guarantee is subordinated to the Guarantee hereunder) issued to
     GOF either (i) upon any drawing under the GOF Letter of Credit and to
     evidence the reimbursement obligations of the Borrower to GOF in respect of
     such drawing, in an aggregate principal amount up to but not exceeding U.S.
     $25,000,000 or (ii) otherwise after the date hereof in an aggregate
     additional amount up to but not exceeding U.S. $35,000,000, together with
     in each case interest accrued thereon for any period added to the principal
     thereof;"

          2.09. CERTAIN FINANCIAL COVENANTS. New Section 9.10(e) is hereby
inserted into the Credit Agreement to read as follows:

          "(e) CERTAIN CURE RIGHTS. Notwithstanding the provisions of Section 10
     hereof, but without limiting the obligations of the Borrower under Section
     9.10(c) or 9.10(d) hereof, a breach by the Borrower as at the last day of
     any fiscal quarter of its obligations under said Section 9.10(c) or 9.10(d)
     shall not constitute an Event of Default hereunder (except for purposes of
     Section 7 hereof) until the date (for purposes of this paragraph (e), the
     "CUT-OFF DATE") which is the earlier of the date five days after (i) the
     date the financial statements for the Borrower and its Subsidiaries with
     respect to such fiscal quarter are delivered pursuant to Section 9.01(b)
     hereof or (ii) the latest date on which such financial statements are
     required to be delivered pursuant to said Section 9.01(b), PROVIDED that,
     (x) if following the last day of such fiscal quarter and prior to the
     Cut-Off Date, either (A) the Borrower shall have prepaid the Term Loans,
     and made deposits into the Term Letter of Credit Collateral Account, from
     available cash, or (B) GOF shall have converted Junior Subordinated
     Convertible Notes into equity, in the

                                 AMENDMENT NO. 1

<Page>

                                      - 5 -

     aggregate for clauses (A) and (B) in an amount sufficient to bring the
     Borrower into compliance with said Section 9.10(c) or 9.10(d) assuming that
     the Interest Coverage Ratio and the Adjusted Interest Coverage Ratio (as
     the case may be), as of the last day of such fiscal quarter were calculated
     on a pro forma basis as provided in the definition of "Interest Expense"
     giving effect to such prepayment and conversion, then such breach or
     breaches shall be deemed to have been cured and (y) breaches of Sections
     9.10(c) and 9.10(d) hereof may not be deemed to be cured pursuant to this
     Section 9.10(e) more than three times during the term of this Agreement."

          2.10. EVENT OF DEFAULT. Section 10 of the Credit Agreement is hereby
amended by deleting the comma at the end of paragraph (n) thereof and inserting
"; or" in lieu thereof, and inserting a new paragraph (o) after said paragraph
(n) to read as follows:

          "(o) The amendments to the New Senior Subordinated Notes Indenture,
     and the amendments to (or exchange of) the Junior Subordinated Convertible
     Notes, contemplated by Section 4(b) of Amendment No. 1 hereto shall not
     have been effected in a manner in form and substance satisfactory to the
     Administrative Agent on or before May 31, 2003,"

          Section 3. REPRESENTATIONS AND WARRANTIES. Each Obligor hereby
represents and warrants to the Administrative Agent and the Lenders that (a)
after giving effect to the amendments set forth in Section 2 of this Amendment
No. 1, no Default has occurred and is continuing and (b) the representations and
warranties set forth in Section 8 of the Credit Agreement as amended hereby are
true and complete on the date hereof as if made on and as of the date hereof
(or, if any such representation or warranty is expressly stated to have been
made as of a specific date, as of such specific date) and as if each reference
in said Section 8 to "this Agreement" included reference to the Credit Agreement
as amended hereby.

          Section 4. CONDITIONS TO EFFECTIVENESS. As provided in Section 2, the
amendments to the Credit Agreement set forth in Section 2 are subject to, and
will become effective as of the date hereof upon satisfaction of the following
conditions precedent (including, with respect to each document required below to
be delivered, that the Administrative Agent shall have received each such
document, which shall be satisfactory in form and substance to the
Administrative Agent):

          (a) EXECUTION. This Amendment No. 1 shall have been duly executed by
     each Obligor and the Administrative Agent (having obtained the consent of
     the Majority Lenders) as provided on the signature pages hereof.

          (b) SUBORDINATED DEBT DOCUMENTS. The Borrower shall have received a
     commitment from GOF to (i) amend the New Senior Subordinated Notes
     Indenture to provide that interest on the New Senior Subordinated Notes
     accrued from the Effective Date through January 31, 2005, if any such Notes
     are issued, be added to the principal of such Notes and not be payable in
     cash, (ii) either (x) amend the Junior Convertible Subordinated Notes
     Indenture to provide that interest on the Junior Subordinated Convertible
     Notes held by GOF accrued from the Effective Date through January 5, 2004
     shall be added to the principal of such Notes and not be payable in cash,
     or (y) exchange

                                 AMENDMENT NO. 1

<Page>

                                      - 6 -

     any Junior Subordinated Convertible Notes held by GOF for a new series of
     junior subordinated convertible notes with identical terms as the
     outstanding Junior Subordinated Convertible Notes, other than to provide
     that interest accrued from the Effective Date through January 5, 2004
     (including interest on the Junior Subordinated Convertible Notes for
     periods prior to such exchange) on such new junior subordinated convertible
     notes be added to the principal of such new notes and not be payable in
     cash and (iii) do such further acts and things as may be required to effect
     the purposes of this Amendment No. 1.

          The Administrative Agent hereby consents to the foregoing for purposes
     of Section 9.14 of the Credit Agreement. In addition, to the extent the
     outstanding Junior Subordinated Convertible Notes are exchanged as provided
     above, the Obligors and the Administrative Agent agree to further amend the
     Credit Agreement as shall be appropriate to provide that such new notes,
     and any related indenture, shall be substituted in the Credit Agreement for
     the term "Junior Subordinated Convertible Notes" and "Junior Subordinated
     Convertible Notes Indenture".

          (c) CONVERSION OF JUNIOR SUBORDINATED CONVERTIBLE NOTES. The Borrower
     shall have received a commitment from GOF pursuant to which GOF shall
     agree, if requested at any time on or before May 15, 2004 by the Borrower,
     to convert outstanding Junior Subordinated Convertible Notes (or any new
     junior subordinated convertible notes issued as contemplated in paragraph
     (b) above) held by GOF in an aggregate amount up to the lesser of U.S.
     $38,000,000 or the amount necessary to cure or avoid any breach of the
     requirements of Section 9.10(a) of the Credit Agreement existing, or
     expected to exist, at the time of such request, into equity of the Borrower
     (as provided in the Junior Subordinated Convertible Notes Indenture, or any
     new junior subordinated convertible notes indenture contemplated in
     paragraph (b) above).

          (d) ADDITIONAL EQUITY OR NEW SENIOR SUBORDINATED NOTES. The
     Administrative Agent shall have received an executed copy of a letter
     issued by GOF to the Borrower pursuant to which, in the event that the
     Borrower shall fail to be in compliance with the requirements of Section
     9.10(c) of the Credit Agreement as at the last day of the third fiscal
     quarter in 2003, and subject to the other conditions therein referred to,
     GOF agrees to make either an equity investment in the Borrower, or to
     purchase additional New Senior Subordinated Notes as contemplated in
     Section 9.07(g)(ii), in an aggregate amount of up to U.S. $10,000,000.

          (e) AMENDMENT FEE. The Administrative Agent shall have received, for
     the account of each Lender that, not later than 5:00 p.m. New York City
     time on April 10, 2003, has authorized the Administrative Agent to execute
     and deliver this Amendment No. 1, an amendment fee in an amount equal to
     0.10% of the sum of such Lender's Revolving Credit Exposure, Term Loans and
     Uncovered Term Letter of Credit Liability on the date of such
     effectiveness.

                                 AMENDMENT NO. 1

<Page>

                                      - 7 -

          (f) OTHER DOCUMENTS. The Administrative Agent shall have received such
     other documents as the Administrative Agent or Milbank, Tweed, Hadley &
     McCloy LLP, special New York counsel to JPMCB, may reasonably request.

          Section 5. MISCELLANEOUS. Except as herein provided, the Credit
Agreement shall remain unchanged and in full force and effect. For the avoidance
of doubt, this Amendment No. 1 shall not constitute or be deemed, or interpreted
as, a novation. This Amendment No. 1 may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
amendatory instrument and any of the parties hereto may execute this Amendment
No. 1 by signing any such counterpart. This Amendment No. 1 shall be governed
by, and construed in accordance with, the law of the State of New York.

                                 AMENDMENT NO. 1

<Page>

                                      - 8 -

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed and delivered as of the day and year first above
written.

                                  THE BORROWER

                                         POLYMER GROUP, INC.


                                         By: /s/ James G. Boyd
                                            ------------------------------------
                                            Name:  James G. Boyd
                                            Title: Ex. VP, Treasurer and CFO


                                   GUARANTORS

BONLAM (S.C.), INC.                      CHICOPEE HOLDINGS B.V.


By: /s/ James G. Boyd                        By: /s/ James G. Boyd
   --------------------------------             --------------------------------
   Name:  James G. Boyd                         Name:  James G. Boyd
   Title: Ex. VP, Treasurer and CFO             Title: Ex. VP, Treasurer and CFO


CHICOPEE, INC.                           DOMINION TEXTILE MAURITIUS


By: /s/ James G. Boyd                        By: /s/ James G. Boyd
   --------------------------------             --------------------------------
   Name:  James G. Boyd                         Name:  James G. Boyd
   Title: Ex. VP, Treasurer and CFO             Title: Ex. VP, Treasurer and CFO


DOMINION TEXTILE (USA) INC.              DT ACQUISITION INC.


By: /s/ James G. Boyd                        By: /s/ James G. Boyd
   --------------------------------             --------------------------------
   Name:  James G. Boyd                         Name:  James G. Boyd
   Title: Ex. VP, Treasurer and CFO             Title: Ex. VP, Treasurer and CFO

                                 AMENDMENT NO. 1

<Page>

                                      - 9 -

FABPRO ORIENTED POLYMERS, INC.           FABRENE CORP.


By: /s/ James G. Boyd                        By: /s/ James G. Boyd
   --------------------------------             --------------------------------
   Name:  James G. Boyd                         Name:  James G. Boyd
   Title: Ex. VP, Treasurer and CFO             Title: Ex. VP, Treasurer and CFO

FABRENE GROUP, INC.                      FABRENE GROUP, L.L.C.


By: /s/ James G. Boyd                        By: /s/ James G. Boyd
   --------------------------------             --------------------------------
   Name:  James G. Boyd                         Name:  James G. Boyd
   Title: Ex. VP, Treasurer and CFO             Title: Ex. VP, Treasurer and CFO

FIBERGOL CORPORATION                     FIBERTECH GROUP, INC.


By: /s/ James G. Boyd                        By: /s/ James G. Boyd
   --------------------------------             --------------------------------
   Name:  James G. Boyd                         Name:  James G. Boyd
   Title: Ex. VP, Treasurer and CFO             Title: Ex. VP, Treasurer and CFO

FNA ACQUISITION INC.                     FNA POLYMER CORP.


By: /s/ James G. Boyd                        By: /s/ James G. Boyd
   --------------------------------             --------------------------------
   Name:  James G. Boyd                         Name:  James G. Boyd
   Title: Ex. VP, Treasurer and CFO             Title: Ex. VP, Treasurer and CFO

LORETEX CORPORATION                      PGI ASSET MANAGEMENT COMPANY


By: /s/ James G. Boyd                        By: /s/ James G. Boyd
   --------------------------------             --------------------------------
   Name:  James G. Boyd                         Name:  James G. Boyd
   Title: Ex. VP, Treasurer and CFO             Title: Ex. VP, Treasurer and CFO

                                 AMENDMENT NO. 1

<Page>

                                     - 10 -

PGI EUROPE, INC.                         PGI POLYMER, INC.


By: /s/ James G. Boyd                        By: /s/ James G. Boyd
   --------------------------------             --------------------------------
   Name:  James G. Boyd                         Name:  James G. Boyd
   Title: Ex. VP, Treasurer and CFO             Title: Ex. VP, Treasurer and CFO

PGI NEUNKIRCHEN GMBH                     PGI SERVICING COMPANY


By: /s/ James G. Boyd                        By: /s/ James G. Boyd
   --------------------------------             --------------------------------
   Name:  James G. Boyd                         Name:  James G. Boyd
   Title: Ex. VP, Treasurer and CFO             Title: Ex. VP, Treasurer and CFO


By: /s/ Charlotte Crosby
   ---------------------------------
   Name:
   Title:

POLY-BOND INC.                           PNA CORP.


By: /s/ James G. Boyd                        By: /s/ James G. Boyd
   --------------------------------             --------------------------------
   Name:  James G. Boyd                         Name:  James G. Boyd
   Title: Ex. VP, Treasurer and CFO             Title: Ex. VP, Treasurer and CFO

POLYIONIX SEPARATION                     PRISTINE BRANDS CORPORATION
 TECHNOLOGIES, INC.


By: /s/ James G. Boyd                        By: /s/ James G. Boyd
   --------------------------------             --------------------------------
   Name:  James G. Boyd                         Name:  James G. Boyd
   Title: Ex. VP, Treasurer and CFO             Title: Ex. VP, Treasurer and CFO

TECHNETICS GROUP, INC.


By: /s/ James G. Boyd
   --------------------------------
   Name:  James G. Boyd
   Title: Ex. VP, Treasurer and CFO

                                 AMENDMENT NO. 1

<Page>

                                     - 11 -

                              ADMINISTRATIVE AGENT

                                         JPMORGAN CHASE BANK, as Administrative
                                            Agent


                                         By: /s/ Peter A. Dedousis
                                            ------------------------------------
                                            Name:  Peter A. Dedousis
                                            Title: Managing Director

                                AMENDMENT NO. 1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>9
<FILENAME>a2111067zex-10_3.txt
<DESCRIPTION>EXHIBIT 10.3
<TEXT>
<Page>

                                                                    EXHIBIT 10.3

                                                                  EXECUTION COPY

                             SHAREHOLDERS AGREEMENT

         This Shareholders Agreement (this "AGREEMENT") dated as of March 5,
2003 (the "EFFECTIVE DATE") is entered into by and among Polymer Group, Inc., a
Delaware corporation (the "COMPANY"), MatlinPatterson Global Opportunities
Partners L.P., a Delaware limited partnership ("GOF"), Northeast Investors
Trust, a Massachusetts business trust ("NIT"), One Group Income Bond Fund, a
Massachusetts mutual fund ("ONE GROUP INCOME"), One Group High Yield Bond Fund,
a Massachusetts mutual fund ("ONE GROUP HIGH YIELD"), Southern Ute Growth Fund,
an Indian Tribal Fund ("SOUTHERN UTE GROWTH"), Southern Ute Permanent Fund, an
Indian Tribal Fund (together with One Group Income, One Group High Yield and
Southern Ute Growth, "PACHOLDER"), Atlantic Global Funding Ltd., a Cayman
Islands company ("ATLANTIC"), CHYPS 1997-1 Ltd., a Cayman Islands company
("CHYPS 1997"), CHYPS 1999-1 Ltd., a Cayman Islands company (collectively with
Atlantic and CHYPS 1997, "DELAWARE INVESTMENTS") (NIT, Pacholder and Delaware
Investments are collectively referred to herein as the "NON-GOF HOLDERS"), James
G. Boyd, in his individual capacity ("BOYD") and Jerry Zucker, in his individual
capacity ("ZUCKER").

In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto hereby agree as follows:

                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

         1.1      DEFINITIONS AND INTERPRETATION.

                  (a)      INTERPRETATION. When a reference is made in this
Agreement to Sections, Exhibits, Appendices or Schedules, such reference shall
be to a Section of or Exhibit, Appendix or Schedule to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to March 5, 2003. Words used herein, regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine, or
neuter, as the context requires.

                  (b)      Definitions. When used in this Agreement, the
following terms shall have the meanings set forth below (all terms used in this
Agreement that are not defined in this Article I shall have the meanings set
forth elsewhere in this Agreement).

         1.2      "AFFILIATE" of any Person shall mean any Person, directly or
indirectly, through one or more intermediaries, controlling, controlled by, or
under common control with such Person. The term "control," as used in the
immediately preceding sentence, shall mean with respect to a corporation or
limited liability company, the right to exercise, directly or indirectly,

<Page>

more than fifty percent (50%) of the outstanding voting interests in the
controlled corporation or limited liability company, and, with respect to any
individual, partnership, trust, other entity or association, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of the controlled entity or the actions of the
individual, as the case may be.

         1.3      "BOYD" shall have the meaning set forth in the first
introductory paragraph hereto.

         1.4      "Business DAY" shall mean any day that is not a Saturday,
Sunday or other day on which banking institutions in New York, New York are
authorized or required by law or executive order to close.

         1.5      "BYLAWS" shall mean the Bylaws of the Company dated as of
March 5, 2003, as the same may be amended from time to time..

         1.6      "CERTIFICATE OF INCORPORATION" shall mean the Amended and
Restated Certificate of Incorporation of the Company, filed with the Secretary
of State of the State of Delaware on March 5, 2003, as the same may be amended
and restated from time to time.

         1.7      "CHANGE OF CONTROL" shall mean the acquisition by any Person
or group (as defined in Section 13(d)(3) of the Exchange Act), other than any
GOF Party, of beneficial ownership (as defined in Section 13(d) of the Exchange
Act) of all or more than 50% of the assets of the Company and its Subsidiaries,
taken as a whole, or 50% or more of the voting equity of the Company pursuant to
a merger, consolidation, other business combination, reorganization,
restructuring, sale of equity (whether through a new issuance by the Company or
a transfer by a Shareholder), sale of assets, tender offer, exchange offer or
similar transaction or series of transactions.

         1.8      "CLASS A COMMON STOCK" shall mean the Class A Common Stock,
par value $.01 per share, of the Company.

         1.9      "CLASS B COMMON STOCK" shall mean the Class B Common Stock,
par value $.01 per share, of the Company.

         1.10     "CLASS C COMMON Stock" shall mean the Class C Common Stock,
par value $.01 per share, of the Company.

         1.11     "CLASS D COMMON STOCK" shall mean the Class D Common Stock,
par value $.01 per share, of the Company.

         1.12     "CLASS E COMMON STOCK" shall mean the Class E Common Stock,
par value $.01 per share, of the Company.

         1.13     "COMMON STOCK" shall collectively mean the Class A Common
Stock, Class B Common Stock, Class C Common Stock, Class D Common Stock, and
Class E Common Stock.

         1.14     "COMPANY" shall have the meaning set forth in the first
introductory paragraph hereto.

                                       2

<Page>

         1.15     "COMPANY TAG-ALONG NOTICE" shall have the meaning set forth in
Section 3.2.

         1.16     "CONVERTIBLE NOTES" shall mean the 10% convertible
subordinated notes due December 2007, to be issued by the Company on the
Effective Date in an aggregate principal amount of $50,000,000.

         1.17     "CSFB" shall mean Credit Suisse First Boston.

         1.18     "DIA" shall have the meaning set forth in the first
introductory paragraph hereto.

         1.19     "EFFECTIVE DATE" shall have the meaning set forth in the first
introductory paragraph hereto.

         1.20     "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934
and the rules and regulations promulgated thereunder, as each may be amended
from time to time.

         1.21     "EXEMPT SECURITIES" shall mean: (a) shares of Common Stock
issuable upon conversion of the Convertible Notes; (b) shares of Class B Common
Stock issuable pursuant to the anti-dilution provisions of the Class B Common
Stock upon conversion of the Convertible Notes as set forth in Article IV,
Section 2(a)(x) of the Certificate of Incorporation; (c) equity securities of
the Company issued in connection with (i) any acquisition of another Person
(other than an individual) by the Company or any Subsidiary of the Company by
merger, stock purchase, purchase of all or substantially all of the assets, or
other reorganization, or (ii) the purchase of all or substantially all of the
assets of another Person, in each case that is approved by a majority of the
Board of Directors; (d) up to an aggregate of 4,000,000 shares of Common Stock
(or related options) issued to employees, officers, directors, consultants,
other persons performing services for the Company (including distributors and
sales representatives) and their respective Affiliates, in each case, pursuant
to any stock option plan, or similar equity-based compensatory arrangement
approved by a majority of the Board of Directors; (e) shares of Common Stock
issued in connection with any stock split, stock dividend, recapitalization or
similar transaction by the Company; (f) shares of Common Stock issued pursuant
to a firm commitment underwritten public offering of the Company's Common Stock;
(g) non-convertible debt securities or debt instruments; (h) shares of capital
stock issued pursuant to a rights offering made to all holders of Initial Common
Stock in accordance with applicable Federal securities laws; (i) shares of
Common Stock and other securities issuable pursuant to the Plan; (j) shares of
Common Stock issuable upon exercise of the Series A Warrants and the Series B
Warrants; and (k) shares of capital stock issued pursuant to an anti-takeover
plan, takeover defense plan or "poison pill" in the form of a shareholder rights
plan or similar plan adopted by the Company.

         1.22     "EXPEDITED ISSUANCE" shall have the meaning set forth in
Section 2.3(a).

         1.23     "EXPEDITED PURCHASER" shall have the meaning set forth in
Section 2.3(a).

         1.24     "GOF BOARD MEMBER" shall have the meaning set forth in Section
4.1.

         1.25     "GOF PARTY" shall mean GOF or any Affiliate of GOF.

         1.26     "GOF PARTY TAG-ALONG NOTICE" shall have the meaning set forth
in Section 3.2.

                                       3

<Page>

         1.27     "INITIAL COMMON STOCK" shall mean the issued and outstanding
shares of Common Stock that were issued (a) pursuant to the Plan, (b) upon
conversion of the Convertible Notes or exercise of the Warrants, (c) upon
antidilution adjustments to the Class B Common Stock or Convertible Notes, or
(d) upon stock splits, stock dividends or otherwise, in each case, in respect of
any of the securities set forth in clauses (a), (b) and (c) above.

         1.28     "INITIAL SHAREHOLDERS" shall mean all of the beneficial owners
of Initial Common Stock.

         1.29     "LAW" shall mean any Federal, state, local or foreign statute,
law, regulation, rule, ordinance or code.

         1.30     "NEW POLYMER AFFILIATED TRANSACTION" shall mean entering into
any transaction involving any PGI Affiliate; provided, however, that, in the
case of GOF, CSFB or a PGI Affiliate of GOF or CSFB, that such transaction
exceeds $10,000,000; provided, further, that transactions between the Company,
its Subsidiaries or its Affiliates and Huntsman Company, LLC, its Subsidiaries
or its Affiliates substantially consistent with past practice shall not be a New
Polymer Affiliated Transaction for the purposes of the foregoing.

         1.31     "NON-GOF BOARD MEMBER" shall have the meaning set forth in
Section 4.1.

         1.32     "NON-GOF HOLDER" shall have the meaning set forth in the first
introductory paragraph hereto.

         1.33     "NOTEHOLDER COUNSEL" shall mean counsel, to the holders of
Convertible Notes and/or Initial Common Stock issued upon conversion thereof in
connection with any registration pursuant to Section 5.5, which Noteholder
Counsel shall be chosen by GOF; provided that if GOF and its Affiliates shall
not hold at least fifty percent of the Initial Common Stock issuable upon
conversion of the Convertible Notes (calculated assuming the conversion of all
outstanding Convertible Notes), Noteholder Counsel shall be chosen by the
Non-GOF Holders holding at least fifty percent of the Initial Common Stock
issuable upon conversion of the Convertible Notes held by all Non-GOF Holders
(calculated assuming the conversion of all outstanding Convertible Notes);
provided, further, that such counsel shall be reasonably satisfactory to the
Company.

         1.34     "NOTICE OF ACCEPTANCE" shall mean a written notice, in a form
proscribed by the Company (which form may, at the Company's reasonable
discretion, include purchaser representations and warranties and other terms and
provisions customary for transactions of such type, including without
limitation, representations and warranties as to such Initial Shareholder's
title to the Common Stock and authority to purchase the Preemptive Securities)
delivered by an Initial Shareholder or his nominee to the Company.

         1.35     "OVERSUBSCRIPTION SHARES" shall mean the number of Preemptive
Securities (determined on an as exercised or as converted basis) initially
offered in accordance with Section 2.2 and 2.3 that Initial Shareholders fail to
elect to exercise their right to purchase pursuant thereto (excluding elections
by Initial Shareholders to purchase Oversubscription Shares).

         1.36     "PARTICIPATING SHAREHOLDER" shall have the meaning set forth
in Section 3.2(b).

                                       4

<Page>

         1.37     "PERSON" shall mean an individual, partnership, limited
partnership, limited liability partnership, limited liability company,
corporation, trust, estate, association, custodian, trustee, executor,
administrator, nominee or any other entity.

         1.38     "PGI AFFILIATE" shall mean (a) GOF, (b) Boyd, (c) Zucker, (d)
CSFB, (e) any Insider (as defined in 11 U.S.C. sec 101) of GOF, Boyd, Zucker or
CSFB, (f) the Intertech Group, Inc., (g) the GTC Fund III Limited Partnership
and (h) any other entity directly or indirectly controlling or controlled by or
under direct or indirect common control with GOF, Boyd, Zucker or CSFB, where
control means the power to direct the management or policies of such entity,
directly or indirectly; provided that nothing in this definition shall be an
admission that any such entity is an "affiliate" of the Company for any purpose
other than for the purpose of defining PGI Affiliate in this Agreement.

         1.39     "PLAN" shall mean the Debtors' Joint Second Amended Modified
Plan of Reorganization, dated January 16, 2003.

         1.40     "POST-ISSUANCE OFFER NOTICE" shall have the meaning set forth
in Section 2.3(a).

         1.41     "PREEMPTIVE SECURITIES" shall have the meaning set forth in
Section 2.1.

         1.42     "PRE-ISSUANCE OFFER NOTICE" shall have the meaning set forth
in Section 2.2(a).

         1.43     "SECURITIES ACT" shall mean the Securities Act of 1933, as the
same may be amended from time to time.

         1.44     "SERIES A WARRANTS" shall mean the Series A Warrants to
purchase shares of Class D Common Stock, par value $.01 per share, which
warrants shall be issued by the Company as of the Effective Date.

         1.45     "SERIES B WARRANTS" shall mean the Series B Warrants to
purchase shares of Class E Common Stock, par value $.01 per share, which
warrants shall be issued by the Company as of the Effective Date.

         1.46     "SHAREHOLDERS" shall mean all of the beneficial owners of
issued and outstanding Common Stock.

         1.47     "SHAREHOLDER TAG-ALONG ACCEPTANCE NOTICE" shall mean a written
notice, in a form proscribed by the GOF Party proposing to sell Subject Shares
(which form may, at such GOF Party's reasonable discretion, include seller
representations and warranties and other terms and provisions customary for
transactions of such type, including without limitation, representations and
warranties as to such Initial Shareholder's title to the Common Stock and
authority to sell the same) delivered by an Initial Shareholder or his nominee
to the Company.

         1.48     "SUBJECT SHARES" shall have the meaning set forth in Section
3.1.

         1.49     "SUBSIDIARY" shall mean, with respect to any Person, any
corporation, partnership, limited partnership, limited liability partnership,
limited liability company or other legal entity in which such Person (either
directly or indirectly through or together with other Subsidiaries) owns

                                       5

<Page>

more than 50% of the voting securities of such corporation, partnership, limited
liability company or other legal entity.

         1.50     "TAG-ALONG SHARES" shall have the meaning set forth in Section
3.2(b).

         1.51     "THIRD PARTY" shall have the meaning set forth in Section 3.1.

         1.52     "WARRANTS" shall mean the Series A Warrants and Series B
Warrants.

         1.53     "ZB BOARD MEMBER" shall have the meaning set forth in Section
4.1.

                                   ARTICLE II
                                PREEMPTIVE RIGHTS

         2.1      PREEMPTIVE RIGHTS. Except for issuances of Exempt Securities,
the Company will not issue any shares of capital stock of the Company and will
not issue or grant any options, warrants, conversion rights or other rights to
purchase or acquire any shares of capital stock of the Company (collectively,
"PREEMPTIVE SECURITIES") without compliance with Section 2.2; PROVIDED, HOWEVER,
that the Company may issue Preemptive Securities solely to Initial Shareholders
without compliance with Section 2.2 if the Company complies with Section 2.3.

         2.2      OFFER PRIOR TO ISSUANCE.


                  (a)      Prior to any issuance of any Preemptive Securities,
the Company (directly or through its agent) shall deliver to each Initial
Shareholder that is the record holder of Initial Common Stock and each broker,
dealer, trust company, commercial bank and other nominee that is the record
holder of Initial Common Stock, in each case, as of a record date set by the
Company for such purpose, a written notice of any proposed or intended issuance
of Preemptive Securities (the "PRE-ISSUANCE OFFER NOTICE"), which Pre-Issuance
Offer Notice shall (a) identify and describe the Preemptive Securities proposed
or intended to be issued, (b) disclose the number, price and other terms upon
which they are to be issued, (c) indicate the procedure for each Initial
Shareholder to offer to purchase such Initial Shareholder's initial pro rata
portion (determined in accordance with this Section 2.2(a)) of such Preemptive
Securities and such Initial Shareholder's pro rata portion of Oversubscription
Shares, and (d) include a deadline for Initial Shareholders or their respective
nominees, as the case may be, to deliver a Notice of Acceptance and payment of
the purchase price for such Initial Shareholder's initial pro rata portion of
Preemptive Securities and any Oversubscription Shares sought to be purchased
thereby to the Company (or its agent), which deadline shall in no event be later
than thirty (30) calendar days or earlier than ten (10) Business Days after the
date of the Pre-Issuance Offer Notice; PROVIDED that such deadline may be later
than thirty (30) calendar days after the date of the Pre-Issuance Offer Notice
if (i) GOF consents thereto in writing, or (ii) outside legal counsel to the
Company (which counsel shall be reasonably satisfactory to GOF) provides a
written opinion addressed to the Company to the effect that a later deadline is
required for the Company to comply with a Law applicable to the Company. An
Initial Shareholder shall not be entitled to purchase Oversubscription Shares
unless such Initial Shareholder has purchased its full amount of its initial pro
rata portion of Preemptive Securities. For purposes of this Section 2.2, an
Initial Shareholder's initial pro rata portion of Preemptive Securities shall be
determined by multiplying (x) the number of Preemptive Securities (determined on
an as exercised or as converted basis)

                                       6

<Page>

proposed to be issued by (y) a fraction, the numerator of which is the aggregate
number of issued and outstanding shares of Initial Common Stock then
beneficially owned by such Initial Shareholder, and the denominator of which is
the aggregate number of issued and outstanding shares of Initial Common Stock
then beneficially owned by all Initial Shareholders. For the purposes of this
Section 2.2, an Initial Shareholder's pro rata portion of Oversubscription
Shares shall equal the product of (a) the Oversubscription Shares in such
offering multiplied by (b) a fraction, the numerator of which is the aggregate
number of issued and outstanding shares of Initial Common Stock then
beneficially owned by such Initial Shareholder, and the denominator of which is
the aggregate number of issued and outstanding shares of Initial Common Stock
then beneficially owned by all Initial Shareholders who elected to (i) purchase
their full initial pro rata portion of Preemptive Securities and (ii) purchase
Oversubscription Shares.

                  (b)      To purchase its pro rata portion of any Preemptive
Securities to be issued by the Company and any Oversubscription Shares, an
Initial Shareholder or his broker, dealer, trust company, commercial bank or
other nominee must deliver a Notice of Acceptance, along with a certified check
(or other form of payment approved by the Company) for the purchase price for
such Preemptive Securities (including any Oversubscription Shares), to the
Company (or its agent) in accordance with the instructions set forth on the
Notice of Acceptance prior to the deadline set forth in the Pre-Issuance Offer
Notice. The Company shall issue to each Initial Shareholder that has timely
returned a properly completed Notice of Election, along with a certified check
(or other means of payment approved by the Company) for the purchase price, the
applicable number of Preemptive Securities and Oversubscription Shares in
accordance with the terms set forth in the Pre-Issuance Offer Notice.

                  (c)      In the event that the Company complies with the
procedures set forth in this Section 2.2 and not all of the Preemptive
Securities are accepted for purchase (after taking into account all
Oversubscription Shares sought to be purchased by Initial Shareholders), the
Company shall have 180 days from the date of the deadline set forth in the
applicable Pre-Issuance Offer Notice to issue or sell all or any part of the
Preemptive Securities as to which a Notice of Acceptance has not timely been
given by the Initial Shareholders to any other purchaser or purchasers
(including Initial Shareholders or their Affiliates) upon the terms and
conditions (including the per share price) which are not more favorable to the
purchaser than those set forth in the Pre-Issuance Offer Notice. Any Preemptive
Securities not acquired by the Initial Shareholders or any other purchaser or
purchasers prior to the date that is 180 days after the deadline set forth in
the applicable Pre-Issuance Offer Notice may not be issued until they are again
offered to the Initial Shareholders under the procedures specified in this
Section 2.2 or Section 2.3.

         2.3      OFFER AFTER ISSUANCE.


                  (a)      Subject to this Section 2.3(a), the Company may issue
to one or more Initial Shareholders (or an Affiliate thereof) (each an
"EXPEDITED PURCHASER"), without compliance with the procedures set forth in
Section 2.2, such Initial Shareholders' initial pro rata portion (as determined
in accordance with the last sentence of this Section 2.3(a)) of the total amount
of Preemptive Securities proposed to be issued by the Company (an "EXPEDITED
ISSUANCE"). In such event, the Company (directly or through its agent) shall, as
soon as reasonably practicable after an Expedited Issuance, deliver to each
Initial Shareholder that is the

                                       7

<Page>

record holder of Initial Common Stock and each broker, dealer, trust company,
commercial bank and other nominee that is the record holder of Initial Common
Stock, in each case, as of a record date set by the Company for such purpose, a
written notice of the issuance of Preemptive Securities (the "POST-ISSUANCE
OFFER NOTICE"), which Post-Issuance Offer Notice shall (a) identify and describe
the Preemptive Securities that were issued, and disclose the date of such
Expedited Issuance, (b) disclose the number, price and other terms upon which
they were issued, (c) indicate the procedure for each Initial Shareholder to
purchase such Initial Shareholder's initial pro rata portion (determined in
accordance with this Section 2.3(a)) of such Preemptive Securities and such
Initial Shareholder's pro rata portion of Oversubscription Shares on the same
terms as in such Expedited Issuance, and (d) include a deadline of not less than
thirty (30) calendar days for such Initial Shareholders or their respective
nominees, as the case may be, to deliver a Notice of Acceptance and payment of
the purchase price for such Initial Shareholder's initial pro rata portion of
Preemptive Securities and any Oversubscription Shares sought to be purchased to
the Company (or its agent). An Initial Shareholder shall not be entitled to
purchase Oversubscription Shares unless such Initial Shareholder has purchased
its full amount of its initial pro rata portion of Preemptive Securities. For
purposes of this Section 2.3(a), an Initial Shareholder's initial pro rata
portion of Preemptive Securities shall equal (x) the sum of the number of
Preemptive Securities proposed to be issued (or issued) by the Company in the
Expedited Issuance, determined on an as exercised or as converted basis, plus
the additional number of Preemptive Securities proposed to be issued by the
Company, determined on an as exercised or as converted basis, multiplied by (y)
a fraction, the numerator of which is the aggregate number of issued and
outstanding shares of Initial Common Stock beneficially owned by such Initial
Shareholder immediately prior to the Expedited Issuance, and the denominator of
which is the aggregate number of issued and outstanding shares of Initial Common
Stock beneficially owned by all Initial Shareholders immediately prior to the
Expedited Issuance. For the purposes of this Section 2.3, an Initial
Shareholder's pro rata portion of Oversubscription Shares shall equal the
product of (a) the Oversubscription Shares in such offering multiplied by (b) a
fraction, the numerator of which is the aggregate number of issued and
outstanding shares of Initial Common Stock beneficially owned by such Initial
Shareholder immediately prior to the Expedited Issuance, and the denominator of
which is the aggregate number of issued and outstanding shares of Initial Common
Stock beneficially owned immediately prior to the Expedited Issuance by all
Initial Shareholders who elected to (i) purchase their full initial pro rata
portion of Preemptive Securities and (ii) purchase Oversubscription Shares.

                  (b)      To purchase its pro rata portion of Preemptive
Securities and any Oversubscription Shares, an Initial Shareholder (other than
the Expedited Purchasers) or such Initial Shareholder's broker, dealer, trust
company, commercial bank or other nominee must deliver a Notice of Acceptance,
along with a certified check (or other form of payment approved by the Company)
for the purchase price for such Preemptive Securities (including any
Oversubscription Shares), to the Company (or its agent) in accordance with the
instructions set forth on the Notice of Acceptance prior to the deadline set
forth in the Post-Issuance Offer Notice. The Company shall issue to each Initial
Shareholder that has timely returned a properly completed Notice of Election,
along with a certified check (or other means of payment approved by the Company)
for the purchase price, the applicable number of Preemptive Securities and any
Oversubscription Shares in accordance with the terms set forth in the
Post-Issuance Offer Notice.

                                       8

<Page>

         2.4      NON-MATERIAL VARIATION OF PROCEDURES. The Company, with the
approval of its Board of Directors, including at least one Non-GOF Board Member,
and the written consent of GOF, may alter the procedures set forth in Sections
2.2 and 2.3 to the extent required to comply with any applicable Law or as is
otherwise advisable; PROVIDED, HOWEVER, that no alteration to the procedures set
forth in Sections 2.2 or 2.3 may be made in the manner set forth in this Section
2.4 if such alteration would result in a material adverse effect on the
preemptive rights provided in this Article II.

         2.5      WAIVER. The Company may issue Preemptive Securities without
compliance with the terms and provisions of Sections 2.2 and 2.3 with the prior
consent of both (a) the Board of Directors of the Company, including at least
one Non-GOF Board Member, and (b) GOF.

         2.6      TERMINATION. The terms and provisions of this Article II shall
terminate upon the earlier of (a) a Change of Control or (b) the consent of both
(i) the Board of Directors of the Company, including at least one Non-GOF Board
Member, and (ii) GOF.

                                   ARTICLE III
                                TAG-ALONG RIGHTS

         3.1      TAG-ALONG RIGHTS. The GOF Parties will not sell any shares of
Common Stock to any Person that is not a GOF Party (a "THIRD PARTY") without
compliance with the terms of this Article III; PROVIDED, HOWEVER, that the terms
and provisions of this Article III shall not be applicable to any sale by a GOF
Party if (a) prior to and after giving effect to such sale the GOF Parties shall
beneficially own at least an aggregate of 54.9% of the Common Stock of the
Company, assuming the exercise, conversion and exchange of all securities
immediately exercisable, convertible or exchangeable for Common Stock on the
date of determination, or (b) the GOF Party's sale to a Third Party is in
connection with a tender offer by such Third Party open to all holders of
Initial Common Stock and in accordance with the requirements of applicable
Federal securities laws. All shares of Common Stock proposed to be sold by a GOF
Party and not excluded from the terms and provisions of this Article III
pursuant to the proviso of the immediately preceding sentence are referred to
herein as "SUBJECT SHARES".

         3.2      PROCEDURES.

                  (a)      Prior to the sale of any Subject Shares to a Third
Party, the GOF Party shall deliver to the Company a written notice of the
proposed or intended sale of Subject Shares (the "GOF PARTY TAG-ALONG NOTICE"),
which GOF Party Tag-Along Notice shall (a) identify the Subject Shares proposed
or intended to be sold, and (b) disclose the number, price and other terms upon
which they are to be sold. Within three (3) Business Days of the receipt of the
GOF Party Tag-Along Notice, the Company shall set a record date for the
determination of Initial Shareholders entitled to exercise tag-along rights with
respect to the Subject Shares identified in the GOF Party Tag-Along Notice
(which record date shall not be more than 15 calendar days after the receipt of
the GOF Party Tag-Along Notice ) and, within two Business Days of such record
date, the Company (directly or through its agent) shall take all steps necessary
and/or advisable (including preparing necessary and/or advisable documentation
and making all necessary and/or advisable filings with the U.S. Securities and
Exchange Commission and any other governmental authority) to deliver to each
Initial Shareholder that is the record holder of

                                       9

<Page>

Common Stock and each broker, dealer, trust company, commercial bank and other
nominee that is the record holder of Common Stock, in each case, as of the
record date set by the Company, a written notice of the proposed or intended
sale of Subject Shares (the "COMPANY TAG-ALONG NOTICE"). The Company Tag-Along
Notice shall be satisfactory in all respects to GOF and shall (a) identify the
Subject Shares proposed or intended to be sold, (b) disclose the number, price
and other terms upon which they are to be sold, (c) inform each Initial
Shareholder of his right to sell such Initial Shareholder's pro rata portion
(determined in accordance with the last sentence of this Section 3.2) of shares
of Common Stock along with the GOF Party to the Third Party, (d) include all
other information, disclosures, statements and documents as may be required by
Law (which information, disclosures, statements and documents shall be
reasonably satisfactory to GOF), and (e) include a deadline for Initial
Shareholders or their respective nominees, as the case may be, to deliver a
Shareholder Tag-Along Acceptance Notice, along with the shares of Common Stock
to be sold, to GOF (or its agent) in accordance with the terms of the
Shareholder Tag-Along Acceptance Notice, which deadline shall in no event be
later than thirty (30) calendar days or earlier than ten (10) Business Days
after the date of the Company Tag-Along Notice; PROVIDED that such deadline may
be later than thirty (30) calendar days after the date of the Company Tag-Along
Notice if (i) GOF consents thereto in writing, or (ii) outside legal counsel to
the Company (which counsel shall be reasonably satisfactory to GOF) provides a
written opinion addressed to the Company to the effect that a later deadline is
required for the Company to comply with a Law applicable to the Company. The
Company shall enclose a sufficient number of Shareholder Tag-Along Acceptance
Notices with each Company Tag-Along Notice. For purposes of this Section 3.2, an
Initial Shareholder's pro rata portion shall be determined by multiplying (x)
the number of Subject Shares proposed to be sold to a Third Party by (y) a
fraction, the numerator of which is the aggregate number of issued and
outstanding shares of Initial Common Stock then beneficially owned by such
Initial Shareholder, and the denominator of which is the aggregate number of
shares of Initial Common Stock then issued and outstanding.

                  (b)      To sell his pro rata portion of shares of Common
Stock along with the GOF Party to the Third Party each Initial Shareholder or
his broker, dealer, trust company, commercial bank or other nominee must (a)
deliver a Shareholder Tag-Along Acceptance Notice, along with the shares of
Common Stock to be sold, to GOF (or its agent) in accordance with the
instructions set forth on the Shareholder Tag-Along Acceptance Notice; and (b)
comply with any other applicable terms of the proposed sale (including executing
definitive documentation and any related documents), in each case, prior to the
deadline set forth in the Company Tag-Along Notice (an Initial Shareholder
satisfying such requirements shall be referred to herein as a "PARTICIPATING
SHAREHOLDER"). Upon compliance with the foregoing procedures, the GOF Party may
sell the Subject Shares (less the number of Tag-Along Shares (as defined below))
for a period of up to 180 days after the deadline set forth in the Company
Tag-Along Notice, upon terms and conditions (including the per share price)
which are not more favorable to the GOF Party, in the aggregate, than those set
forth in the GOF Tag-Along Notice; PROVIDED that such sale provides for the
purchase of each Participating Shareholders pro rata portion of Common Stock
(the "TAG-ALONG SHARES") on terms and conditions no less favorable than those
set forth in the GOF Tag-Along Notice. Any Subject Shares not sold by the GOF
Party prior to the date that is 180 days after the deadline set forth in the
Company Party Tag-Along Notice may not be sold without compliance with this
Section 3.2.

                                       10

<Page>

                  (c)      Promptly (but in no event later than three (3)
Business Days) after the consummation of the sale of Subject Shares by a GOF
Party to a Third Party, the GOF Party shall (i) notify the Company of such sale,
and (ii) cause to be remitted to the Company the total sales proceeds
attributable to the sale of Tag-Along Shares. Thereafter the Company (directly
or through its agent) shall promptly distribute such sales proceeds to the
applicable Initial Shareholders.

         3.1      NON-MATERIAL VARIATION OF PROCEDURES. The Company, with the
approval of its Board of Directors, including at LEAST one Non-GOF Board Member,
and the written consent of GOF, may alter the procedures set forth in Section
3.2 to the extent required to comply with any applicable Law or as is otherwise
advisable; PROVIDED, HOWEVER, that no alteration to the procedures set forth in
Section 3.2 may be made in the manner set forth in this Section 3.3 if such
alteration would result in a material adverse effect on the tag-along rights
provided in this Article III.

         3.2      WAIVER. A GOF Party may sell Subject Shares without compliance
with the terms and provisions of SECTIONS 3.2 with the prior consent of both (a)
the Board of Directors of the Company, including at least one Non-GOF Board
Member, and (b) GOF.

         3.3      TERMINATION. The terms and provisions of this Article III
shall terminate upon the earlier of (a) a Change of Control or (b) the consent
of both (i) the Board of Directors of the Company, including at least one
Non-GOF Board Member, and (ii) GOF.


                                   ARTICLE IV
                               BOARD OF DIRECTORS

         4.1      NUMBER, TERM, AND QUALIFICATIONS.

                  (a)      INITIAL BOARD OF DIRECTORS. Pursuant to the Plan and
this Agreement, on the Effective Date, the Company's Board of Directors shall be
(a) fixed at nine (9) members, each with one year terms, subject to the removal
provisions of the Company's Bylaws, and (b) composed of five (5) directors
designated by GOF (together with any direct or indirect successors thereto
designated by GOF, the "GOF BOARD MEMBERS"), two (2) directors designated by the
pre-Effective Date Board of Directors of the Company, who shall be Zucker and
Boyd (together with any direct or indirect successors thereto, the "ZB BOARD
MEMBERS"), and two (2) directors designated by the Non-GOF Holders (together
with any direct or indirect successors thereto, the "NON-GOF BOARD MEMBERS").

                  (b)      SUBSEQUENT ELECTIONS.

                  At the annual meeting of stockholders for the calendar years
2003, 2004 and 2005, GOF, each Non-GOF Holder, Zucker (as long as he is a
director) and Boyd (as long as he is a director) each shall vote or cause to be
voted all shares of Common Stock and other voting equity owned by him or it, or
over which he or it has voting control, and otherwise use its respective best
efforts, so as to nominate and elect to the Board of Directors the GOF Board
Members, Non-GOF Board Members and ZB Board Members sitting on the Board of
Directors

                                       11

<Page>

on the date immediately preceding such meeting; provided that if there
shall be any vacancy on the Board of Directors on the date immediately preceding
such meeting as the result of the removal, resignation, death, disability or
otherwise of a GOF Board Member, Non-GOF Board Member or ZB Board Member, GOF,
each Non-GOF Holder, Zucker and Boyd each shall vote or cause to be voted all
shares of Common Stock and other voting equity owned by him or it, or over which
he or it has voting control, and otherwise use its respective best efforts, so
as to nominate and elect a successor designated by GOF, if the director was a
GOF Board Member, designated by the remaining Non-GOF Board Member, if the
director was a Non-GOF Board Member and designated by the remaining ZB Board
Member, if the director was a ZB Board Member; provided that (i) GOF shall not
be required to vote, or cause to be voted, the shares of Common Stock or other
voting equity owned by it or over which it has voting control, or use its best
efforts, to nominate or elect any proposed director if such proposed director
was previously removed from the Board of Directors in accordance with the terms
of this Agreement, and (ii) upon the removal of any ZB Board Member pursuant to
Sections 4.2(c) or (d), the remaining ZB Board Member shall not have the right
to designate a successor to the removed ZB Board Member.

         4.2      VACANCIES.

                  (a)      At any time prior to the third (3rd) anniversary of
the Effective Date, upon the vacancy of any director due to resignation, removal
or otherwise, GOF, each Non-GOF Holder, Zucker and Boyd each shall vote or cause
to be voted all shares of Common Stock and other voting equity owned by him or
it, or over which he or it has voting control, and otherwise use its respective
best efforts, so as to nominate and elect a successor designated by GOF, if the
director was a GOF Board Member, designated by the remaining Non-GOF Board
Member, if the director was a Non-GOF Board Member and designated by the
remaining ZB Board Member, if the director was a ZB Board Member; provided that
(i) GOF shall not be required to vote, or cause to be voted, the shares of
Common Stock or other voting equity owned by it or over which it has voting
control, or use its best efforts, to nominate or elect any proposed director if
such proposed director was previously removed from the Board of Directors in
accordance with the terms of this Agreement, and (ii) upon the removal of any ZB
Board Member pursuant to Sections 4.2(c) or (d), the remaining ZB Board Member
shall not have the right to designate a successor to the removed ZB Board
Member.

                  (b)      At any time on or after the third (3rd) anniversary
of the Effective Date, GOF, each Non-GOF Holder, Zucker and Boyd shall each vote
or cause to be voted all shares of Common Stock and other voting equity owned by
him or it, or over which he or it has voting control, so as to nominate, include
on the Company's slate of directors and elect each GOF Board Member, ZB Board
Member and Non-GOF Board Member that served on the Board of Directors
immediately prior to such election and/or each other Shareholder nominee;
provided that in the case of each such specific nomination (i) such GOF Board
Member, ZB Board Member, Non-GOF Board Member or other Shareholder nominee has
been properly nominated by a Shareholder, and (ii) the nomination thereof has
the support of the affirmative vote of at least 12.5% of the issued and
outstanding shares of Common Stock; provided, further that each share of Common
Stock may be counted in support of only one nominee; provided further that in no
event shall the size of the Company's Board of Directors be increased by
operation of this Section 4.2(b).

                                       12

<Page>

                  (c)      GOF shall not vote, or cause to be voted, the shares
of Common Stock or other voting equity owned by it, or over which it has voting
control, to remove Zucker or any ZB Board Member that is a direct or indirect
successor thereto from the Board of Directors without cause unless (i) Zucker's
employment with the Company or its Subsidiaries is terminated for cause, or (ii)
(A) Zucker's employment with the Company or its Subsidiaries is terminated
without cause or Zucker resigns and (B) the Company tenders or otherwise pays to
Zucker the amounts that he is entitled to receive under his letter agreement
dated May 22, 1998, as amended on May 11, 2002 (as the same may be amended from
time to time, the "Zucker Change of Control Agreement") or any other applicable
agreement; provided, however, that during the pendency of any dispute relating
to (I) Zucker's termination of employment, (II) whether such termination of
employment is for cause, or (III) whether Zucker is entitled to payment under
the Zucker Change of Control Agreement or any other applicable agreement, GOF
shall be permitted to vote, and cause to be voted, the shares of Common Stock or
other voting equity owned by it, and over which it has voting control, to remove
Zucker (or any ZB Board Member that is a direct or indirect successor thereto)
from the Board of Directors. Nothing in this Section 4.2(c) shall limit GOF's
right to vote, or cause to be voted, the shares of Common Stock or other voting
equity owned by it, or over which it has voting control, to remove for cause
Zucker or any ZB Board Member that is a direct or indirect successor thereto
from the Board of Directors.

                  (d)      GOF shall not vote, or cause to be voted, the shares
of Common Stock or other voting equity owned by it, or over which it has voting
control, to remove Boyd or any ZB Board Member that is a direct or indirect
successor thereto from the Board of Directors without cause unless (i) Boyd's
employment with the Company or its Subsidiaries is terminated for cause, or (ii)
(A) Boyd's employment with the Company or its Subsidiaries is terminated without
cause or Boyd resigns and (B) the Company tenders or otherwise pays Boyd the
amounts that he is entitled to receive under his letter agreement dated May 22,
1998, as amended on May 11, 2002 (as the same may be amended from time to time,
the "Boyd Change of Control Agreement") or any other applicable agreement;
provided, however, that during the pendency of any dispute relating to (I)
Boyd's termination of employment, (II) whether such termination of employment is
for cause, or (III) whether Boyd is entitled to payment under the Boyd Change of
Control Agreement or any other applicable agreement, GOF shall be permitted to
vote, and cause to be voted, the shares of Common Stock or other voting equity
owned by it, and over which it has voting control, to remove Boyd (or any ZB
Board Member that is a direct or indirect successor thereto) from the Board of
Directors. Nothing in this Section 4.2(d) shall limit GOF's right to vote, or
cause to be voted, the shares of Common Stock or other voting equity owned by
it, or over which it has voting control, to remove for cause Boyd or any ZB
Board Member that is a direct or indirect successor thereto from the Board of
Directors.

                  (e)      If a ZB Board Member is removed as a director for
cause or otherwise in accordance with Section 4.2(c) or (d), the Company
promptly shall call a special meeting of shareholders for the purpose of
reducing the number of directors on the Company's Board of Directors to
eliminate the vacancy created by such removal and GOF shall, at such special
meeting, vote, and cause to be voted, the shares of Common Stock or other voting
equity owned by it, or over which it has voting control, in favor of reducing
the number of directors on the Company's Board of Directors to eliminate such
vacancy; provided, however, that (i) during the pendency of any dispute
described in the proviso of Section 4.2(c)(ii), GOF shall not vote, or cause to
be voted, the shares of Common Stock or other voting equity owned by it, or over
which

                                       13

<Page>

it has voting control in favor of either the elimination of the vacancy created
by the removal of Zucker or any ZB Board Member that is a direct or indirect
successor thereto or the election of any director to fill such vacancy, and (ii)
during the pendency of any dispute described in the proviso of Section
4.2(d)(ii), GOF shall not vote, or cause to be voted, the shares of Common Stock
or other voting equity owned by it, or over which it has voting control in favor
of either the elimination of the vacancy created by the removal of Boyd or any
ZB Board Member that is a direct or indirect successor thereto or the election
of any director to fill such vacancy.

                  (f)      GOF shall not vote, or cause to be voted, the shares
of Common Stock or other voting equity owned by it, or over which it has voting
control, to remove without cause any Non-GOF Board Member.

         4.3      COMMITTEES. At least one Non-GOF Board Member shall be a
member of each of the audit committee, compensation committee and executive
committee for so long as a Non-GOF Board Member has a right to a seat on the
Board of Directors pursuant to Sections 4.1, 4.2(a) or 4.2(b); PROVIDED that at
least one Non-GOF Board Member is a member of the Company's Board of Directors
during such period and that the member to serve on such committees satisfies all
applicable Federal, state, securities exchange, quotation system, and self
regulatory organization (including, without limitation, the Securities and
Exchange Commission, New York Stock Exchange, Nasdaq and the OTC Bulletin Board,
as the case may be) rules and regulations regarding, concerning and relating to
qualifications and requirements necessary for service on such committees.

         4.4      TERMINATION. The terms and provisions of this Article IV shall
terminate upon a Change of Control.

                                    ARTICLE V
                              AFFIRMATIVE COVENANTS

         5.1      REPORTING OBLIGATIONS.

                  (a)      OBLIGATION TO REGISTER. If a class of the Company's
equity securities is not otherwise registered pursuant to Section 12(d) or
Sections 12(g)(1)(A) or (B) of the Exchange Act, the Company shall (a) use its
best efforts to register the Class A Common Stock, on a voluntary basis, with
the Commission pursuant to Section 12(g) of the Exchange Act and to have such
registration declared effective as soon as possible after the date hereof, and
(b) file all periodic and other reports and filings required to be filed by
issuers with a class of equity securities registered under Sections 12(d) or (g)
of the Exchange Act.

                  (b)      TERMINATION OF OBLIGATION TO REGISTER. The Company
shall not seek to terminate the voluntary registration OF its Class A Common
Stock required by Section 5.1(a) above, and shall continue to file all periodic
and other reports and filings required to be filed by issuers with a class of
equity securities registered under Section 12(g) of the Exchange Act, until the
termination of the covenants in this Article V in accordance with Section 5.6.

         5.2      INCORPORATION. The Company shall maintain its corporate
existence in Delaware; PROVIDED, HOWEVER, that the Company may reincorporate
elsewhere if such reincorporation is

                                       14

<Page>

necessary to effectuate a bona fide business combination or other transaction;
PROVIDED, FURTHER, that any such business combination or other transaction with
a PGI Affiliate shall require the approval of one (1) Non-GOF Board Member.

         5.3      LISTING. On the Effective Date, or as soon as practicable
thereafter, the Company shall use its reasonable best efforts to become a listed
company on the New York Stock Exchange or to become included for quotation on
The Nasdaq Stock Market; provided that the Company shall initially list its
shares of Class A Common Stock and Class B Common Stock for trading on the
Nasdaq bulletin board or over-the-counter market.

         5.4      RELATED PARTY TRANSACTIONS.

                  (a)      Without the written approval of at least one Non-GOF
Board Member, the Company may not enter into any New Polymer Affiliated
Transaction; provided that, solely for the avoidance of doubt, nothing in this
Section 5.4 will require the termination of any of the existing terms or
provisions of, or existing obligations under, any of the following relationships
between the Company and any PGI Affiliate: (a) the existing lease and shared
services agreement relating to the Company's headquarters, among the Company,
The InterTech Group, Inc. and ZS Associates, as in effect on the date hereof;
(b) the shared insurance purchasing arrangement between the Company and The
InterTech Group, Inc., as in effect on the date hereof; and (c) the shared
employee benefits management agreement between the Company and The InterTech
Group, Inc, as in effect on the date hereof. Notwithstanding anything to the
contrary herein, (x) any amendment, modification, extension or change to, or
waiver under, any of the relationships between the Company and any PGI Affiliate
set forth in the final proviso to the immediately preceding sentence shall
require the written approval of at least one Non-GOF Board Member, and (y)
nothing in this Agreement shall restrict or prevent the Company from terminating
any of the relationships, agreements or arrangements set forth in the final
proviso to the immediately preceding sentence.

                  (b)      Notwithstanding the provisions of Section 5.4(a), in
no case shall the Company enter into any agreement to pay, nor shall it pay, any
management fee or transaction fee to any PGI Affiliate, excluding fees of up to
an aggregate of $4,500,000 payable to GOF pursuant to the Plan.

         5.5      REGISTRATION RIGHTS. In the event that the Company, GOF or any
Non-GOF Holder shall determine, based upon the reasonable advice of counsel,
that (a) the Convertible Notes may not be offered for resale or resold, or (b)
the Initial Common Stock issuable upon conversion of the Convertible Notes may
not be issued, offered for resale and/or resold, in each of the cases set forth
in the foregoing clauses (a) and (b), without the registration of such offer,
resale and/or issuance under the Securities Act and the rules and regulations
promulgated thereunder, or an exemption therefrom, GOF or such Non-GOF Holder
shall have the right to cause the Company to use its reasonable best efforts to
register the offer, resale and/or issuance of all Convertible Notes and/or
Initial Common Stock issuable upon the conversation thereof, as the case may be,
under the Securities Act pursuant to a registration statement on Form S-1 or
Form S-3, if available to the Company (or successors to such forms adopted by
the Securities and Exchange Commission or any successor thereto). In the event a
registration is requested pursuant to this Section 5.5, GOF and the Non-GOF
Holders shall reasonably cooperate with the

                                       15

<Page>

Company in the preparation of the registration statement, and the Company shall,
among other things, pay all expenses of the registration (including, without
limitation, the costs and expenses of Noteholder Counsel), provide Noteholder
Counsel with a reasonable opportunity to review and comment upon the
registration statement, communications with the staff of the Securities Exchange
Commission and related documents, and effect such registration as soon as shall
be reasonably practicable.

         5.6      TERMINATION OF COVENANTS. The covenants of the Company
contained in this Article V shall terminate, and be of no further force or
effect, upon the consummation of a going private transaction or Change of
Control.

                                   ARTICLE VI
                                     GENERAL

         6.1      TRANSFER.

                  (a)      TRANSFERS BY GOF PARTIES. Upon any transfer of shares
of Class A Common Stock by a GOF Party that complies with Article III other than
transfers to other GOF Parties (including, without limitation, (a) transfers of
shares of Class A Common Stock that are not deemed Subject Shares pursuant to
Section 3.01; and (b) transfers of shares of Class A Common Stock that are not
subject to Section 3.2 as a result of a waiver obtained pursuant to Section
3.4), such transferred shares and the transferee that acquires them shall not be
subject to the terms of Article III. The rights of GOF under Article IV of this
Agreement may be assigned, in whole or in part, by GOF to any Person to which
GOF transfers Class A Common Stock; provided that the transferee provides
written notice of such assignment to the Company and the other signatories
hereto and agrees in writing to be bound by the terms of Article IV applicable
to GOF.

                  (b)      TRANSFERS BY THE NON-GOF HOLDERS, ZUCKER AND BOYD.
The Non-GOF Holders, Zucker and Boyd shall be prohibited from transferring any
or all of their respective rights or obligations under Article IV to any Person;
provided, however, that nothing in this Section 6.1(b) shall limit the rights
granted to each beneficial owner of Initial Common Stock pursuant to Article II
and Article III and nothing in this Agreement shall prevent any such holders
from transferring their shares of Common Stock.

         6.2      LEGENDS. Each certificate evidencing shares of Initial Common
Stock and each certificate issued in exchange for or upon the transfer of any
shares of Initial Common Stock shall be stamped or otherwise imprinted with a
legend in substantially the following form (in addition to any other legends
required by applicable law or other agreements to which the such shares are
subject):

         "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SHAREHOLDERS' AGREEMENT DATED AS OF MARCH 5, 2003, AMONG POLYMER GROUP, INC.
(THE "COMPANY") AND CERTAIN OF THE COMPANY'S SHAREHOLDERS. THE TERMS OF SUCH
SHAREHOLDERS' AGREEMENT INCLUDES, AMONG OTHER THINGS, A VOTING AGREEMENT AMONG
CERTAIN OF THE COMPANY'S SHAREHOLDERS AND CONTRACTUAL PREEMPTIVE RIGHTS, IN
FAVOR OF THE HOLDER HEREOF AND THE OTHER HOLDERS OF INITIAL COMMON

                                       16

<Page>

STOCK (AS SUCH TERM IS DEFINED THEREIN), ON CERTAIN ISSUANCES BY THE COMPANY. A
COPY OF SUCH SHAREHOLDERS' AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST."

         The legend set forth above shall be removed from the certificates
evidencing any shares which cease to be governed by this Agreement.

         6.3      SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

         6.4      ENFORCEMENT.

                  (a)      THIRD PARTY BENEFICIARIES. All holders of Initial
Common Stock shall be third party beneficiaries of Article II, Article III and
Sections 5.1, 5.3, 5.4, 6.4, 6.8 and 6.9 of this Agreement, and shall have the
right to enforce the terms of such provisions as if they were parties hereto.
Notwithstanding the foregoing or anything to the contrary in this Agreement, no
holder of Initial Common Stock shall be deemed a third party beneficiary of, or
have the right to enforce, any Article, Section, term or provision of this
Agreement not explicitly identified in the immediately preceding sentence. All
initial holders of Convertible Notes as of the Effective Date shall be third
party beneficiaries of Section 5.5 of this Agreement and shall have the right to
enforce the terms of such provision as if they were parties hereto provided that
such holder still beneficially owns such Convertible Notes. Notwithstanding the
foregoing or anything to the contrary in this Agreement, no holder of
Convertible Notes shall be deemed a third party beneficiary of, or have the
right to enforce, any Article, Section, term or provision of this Agreement not
explicitly identified in the immediately preceding sentence.

                  (b)      SPECIFIC PERFORMANCE. In addition to any and all
other remedies that may be available at law in the event of any breach of this
Agreement, each party shall be entitled to specific performance of the
agreements and obligations of the Company and the other parties hereunder and to
such other injunctive or other equitable relief as may be granted by a court of
competent jurisdiction.

         6.5      GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York (without
reference to the conflicts of law provisions thereof).

         6.6      NOTICES. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be deemed
delivered (a) three (3) business days after being sent by registered or
certified mail, return receipt requested, postage prepaid, (b) one business day
after being sent via a reputable nationwide overnight courier service
guaranteeing next business day delivery (provided that such notice, request,
consent or other communication was deposited with such courier prior to its
deadline for next day delivery), or (c) the same day of such notice being sent
by facsimile (where a fax confirmation is retained and presented to the intended
recipient of such notice, request, consent or other communication when requested
thereby) or by personal delivery, in each case to the intended recipient as set
forth below:

                                       17

<Page>

                  If to the Company, to:

                           Polymer Group, Inc.
                           4838 Jenkins Avenue
                           North Charleston, South Carolina 29405
                           Facsimile: (843) 747-4092
                           Attention: General Counsel

                  with a copy to:


                           Kirkland & Ellis
                           200 East Randolph Drive
                           Chicago, Illinois  60601
                           Facsimile: (312) 861-2200
                           Attention: H. Kurt von Moltke

                  If to GOF, to:

                           MatlinPatterson Global Opportunities Partners L.P.
                           c/o: MatlinPatterson Global Advisers LLC
                           520 Madison Avenue
                           New York, New York 10022
                           Facsimile: (212) 651-4010
                           Attention: Ramon Betolaza

                  with a copy to:

                           Orrick, Herrington & Sutcliffe LLP
                           666 Fifth Avenue
                           New York, NY 10103
                           Facsimile: (212) 506-5151
                           Attention: Duncan N. Darrow, Esq.

                  If to a Non-GOF Holder, at the address set forth below such
Non-GOF Holder's signature hereto.

                  If to Zucker, to:

                           Jerry Zucker
                           C/o Polymer Group, Inc.
                           4838 Jenkins Avenue
                           North Charleston, South Carolina 29405
                           Facsimile: (843) 747-4092

                  If to Boyd, to:

                                       18

<Page>

                           James G. Boyd
                           C/o Polymer Group, Inc.
                           4838 Jenkins Avenue
                           North Charleston, South Carolina 29405
                           Facsimile: (843) 747-4092

Any party may give any notice, request, consent or other communication under
this Agreement using any other means (including, without limitation, personal
delivery, messenger service, telecopy, first class mail or electronic mail), but
no such notice, request, consent or other communication using such other means
shall be deemed to have been duly given unless and until it is actually received
by the party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.

         6.7      COMPLETE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter.

         6.8      AMENDMENTS. Except as may otherwise be set forth in Sections
2.4 and 3.3, all amendments to this Agreement shall be in writing and must be
approved by (a) the Board of Directors of the Company, including at least one
Non-GOF Board Member, and (b) GOF; provided, however, that any amendment to
Article IV must be approved by the director affected by such amendment.

         6.9      ADDITIONAL SHAREHOLDER. Notwithstanding anything to the
contrary contained herein, in connection with the issuance by the Company of
additional shares of Common Stock (including shares of Common Stock issuable
upon the conversion, exercise or exchange of securities issued by the Company),
the Company, with the approval of the Board of Directors, including at least one
Non-GOF Board Member, and the written consent of GOF, may grant to any purchaser
of such shares of Common Stock (or such shares of Common Stock issuable upon the
conversion, exercise or exchange of securities) rights equivalent to those
granted to the Initial Shareholders pursuant to Article II and Article III. Upon
execution and delivery by such purchaser of an additional counterpart signature
page to this Agreement, such Common Stock shall be deemed "Initial Common Stock"
hereunder, and such purchaser shall be deemed an "Initial Shareholder"
hereunder.

         6.10     COUNTERPARTS; Facsimile Signatures. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, and all of which together shall constitute one and the same document.
This Agreement may be executed by facsimile signatures.

         6.11     NON-GOF BOARD MEMBER VOTE. Notwithstanding anything to the
contrary herein, any waiver, termination, amendment or other action that,
pursuant to any Section of this Agreement, requires the consent or approval of a
Non-GOF Board Member shall require such consent or approval only IF both (a) at
least one Non-GOF Board Member has the right to a seat on the Board of Directors
pursuant to Sections 4.1, 4.2(a) or 4.2(b) of this Agreement, and (b) at the
time such approval is sought one of the following is true (i) at least one
Non-GOF Board

                                       19

<Page>

Member is a member of the board of directors, (ii) if a Non-GOF Board Member is
not a member of the board of directors, a Non-GOF Board Member shall have been a
member of the board of directors within sixty days of such time, or (iii) if a
Non-GOF Board Member is not, and, within sixty days of such time, has not been,
a member of the board of directors, a nomination or designation of a proposed
Non-GOF Board Member shall have been made in good faith pursuant to the terms of
the Shareholders Agreement and not withdrawn, and such nominee or designee shall
not have refused or declined appointment to the board of directors.

         6.12     FRACTIONAL SHARES. Notwithstanding anything to the contrary
herein, the provisions of Article II and Article III shall not be deemed to
grant any shareholder the right to purchase or sell any fractional share, and
(a) with respect to Article II, the Company shall have the right to determine,
in its reasonable discretion, the treatment of fractional share amounts, and (b)
with respect to Article III, the applicable GOF Party shall have the right to
determine, in its reasonable discretion, the treatment of fractional share
amounts.

                                   * * * * * *


                                       20

<Page>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.

                             POLYMER GROUP, INC.


                             By:  /s/James G. Boyd
                             Name:  James G. Boyd
                             Title:  Ex. VP, Treasurer & CFO


                             MATLINPATTERSON GLOBAL
                             OPPORTUNITIES PARTNERS L.P.

                             By:  MatlinPatterson Global Advisers LLC, its
                                  Investment Advisor

                             By:  /s/David J. Matlin
                             Name:  David J. Matlin
                             Title: CEO





                [Counterpart Execution Page to Shareholders Agreement]

<Page>

                             NORTHEAST INVESTORS TRUST


                             By:
                             Name:
                             Title:

                             50 Congress Street, Room 1000
                             Boston, MA 02109

                             ONE GROUP INCOME BOND FUND

                             By:  Banc One High Yield Partners, LLC, its
                                  investment advisor


                             By: /s/James P. Shanahan, Jr.
                             Name: James P. Shanahan, Jr.
                             Title: Manager

                             8044 Montgomery Road, Suite 480
                             Cincinnati, OH 45236

                             ONE GROUP HIGH YIELD BOND FUND

                             By:  Banc One High Yield Partners, LLC, its
                                  investment advisor


                             By: /s/James P. Shanahan, Jr.
                             Name: James P. Shanahan, Jr.
                             Title: Manager

                             8044 Montgomery Road, Suite 480
                             Cincinnati, OH 45236





                [Counterpart Execution Page to Shareholders Agreement]

<Page>

                             SOUTHERN UTE GROWTH FUND

                             By:  Banc One High Yield Partners, LLC, its
                                  investment advisor


                             By: /s/James P. Shanahan, Jr.
                             Name: James P. Shanahan, Jr.
                             Title: Manager

                             8044 Montgomery Road, Suite 480
                             Cincinnati, OH 45236

                             SOUTHERN UTE PERMANENT FUND

                             By:  Banc One High Yield Partners, LLC, its
                                  investment advisor


                             By: /s/James P. Shanahan, Jr.
                             Name: James P. Shanahan, Jr.
                             Title: Manager

                             8044 Montgomery Road, Suite 480
                             Cincinnati, OH 45236

                             ATLANTIC GLOBAL FUNDING LTD.

                             By:  Delaware Investment Advisors, its  collateral
                                  manager


                             By:  /s/Carl E. Mabry
                             Name: Carl E. Mabry
                             Title: Vice-President

                             One Commerce Square, 40th Floor
                             Philadelphia, PA 19103





                [Counterpart Execution Page to Shareholders Agreement]

<Page>

                             CHYPS 1997-1 LTD.

                             By:  Delaware Investment Advisors, its collateral
                                  manager


                             By:  /s/Carl E. Mabry
                             Name: Carl E. Mabry
                             Title: Vice-President

                             One Commerce Square, 40th Floor
                             Philadelphia, PA 19103

                             CHYPS 1999-1 LTD.

                             By:  Delaware Investment Advisors, its collateral
                                  manager


                             By:  /s/Carl E. Mabry
                             Name: Carl E. Mabry
                             Title: Vice-President

                             One Commerce Square, 40th Floor
                             Philadelphia, PA 19103





                [Counterpart Execution Page to Shareholders Agreement]

<Page>

                             /s/ James G. Boyd
                             ----------------------------------
                             James G. Boyd, in his individual capacity


                             /s/Jerry Zucker
                             ----------------------------------
                             Jerry Zucker, in his individual capacity






                [Counterpart Execution Page to Shareholders Agreement]

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>10
<FILENAME>a2111067zex-10_4.txt
<DESCRIPTION>EXHIBIT 10.4
<TEXT>
<Page>

                                                                    EXHIBIT 10.4

                          [MATLINPATTERSON LETTERHEAD]

April 11, 2003

Polymer Group, Inc.
P.O. Box 5069
North Charleston, SC 29405

Ladies and Gentlemen:

          MatlinPatterson Global Opportunities Partners L.P. (the "Fund")
currently beneficially owns and controls $38.0 million aggregate principal
amount of the 10% Convertible Subordinated Notes due 2007 (the "Junior Notes")
issued by Polymer Group, Inc. (the "Company") pursuant to the indenture dated as
of March 5, 2003 (the "Indenture"), between the Company and Wilmington Trust
Company, as trustee. The Junior Notes are convertible into shares of the
Company's Class A common stock at the option of the holder at any time and
currently bear cash interest at the rate of 10% per annum (12% in the case of a
default under the Junior Notes). The Fund has also caused to be issued an
irrevocable letter of credit dated as of March 5, 2003 (the "Letter of Credit"),
in favor of JPMorgan Chase Bank, as administrative agent for the lenders under
the Company's Third Amended, Restated and Consolidated Credit Agreement dated as
of March 5, 2003 (the "Credit Agreement"). The Fund and the Company are party to
the Senior Subordinated Note Purchase Agreement dated as of March 5, 2003 (the
"Senior Note Agreement"), which provided for the issuance to the Fund of a
Senior Subordinated Note dated as of March 5, 2003 (the "Senior Note"), to
evidence future drawings under the Letter of Credit. The Senior Note bears
interest on a cash basis at the rate of 10% per annum (12% in the case of a
default under the Senior Note) on any outstanding amounts.

          The Company has obtained the consent of the lenders under the Credit
Agreement to enter into Amendment No. 1 thereto substantially in the form of
Exhibit A attached hereto ("Amendment No. 1 "), and the Company and the lenders
have entered into Amendment No. 1. Solely for the purpose of assisting the
Company in maintaining compliance with the financial covenants during the period
beginning on March 6, 2003 and ending on January 4, 2004 (the "Period"), the
Fund hereby agrees with the Company to take the following steps as follows:

1.   The Fund will amend the Senior Note and such of the Junior
     Notes it holds or controls so that interest that accrues on
     such Senior Note from March 6, 2003 until January 31, 2005
     and interest that accrues on such Junior Notes from March 6,
     2003 until January 5, 2004, will not be required to be paid
     by the Company in cash, but rather will, at the sole option
     of the Company, be payable by having the Company issue an
     additional principal amount of Senior Note and Junior Notes,
     respectively ("PIK Notes"), which PIK Notes shall also
     provide that interest is payable in additional principal
     amount of Senior Note and Junior Notes, respectively, in
     full and complete satisfaction of any and all accrued and
     unpaid interest on such Senior Note and Junior Notes. The
     Fund will also consent to the necessary changes to the
     Senior Note Agreement and the Indenture to allow for the
     issuance of PIK Notes.

<Page>

2.   In the event that on or before May 15, 2004, the Company is
     unable to meet the financial covenants contained in Section
     9.10 (b) of the Credit Agreement (the "Senior Leverage
     Covenant"), Section 9.10 (c) of the Credit Agreement (the
     "Interest Covenant"), or Section 9.10 (d) of the Credit
     Agreement (the "Adjusted Interest Covenant"), the Fund will
     allow the Company to instruct the Agent to (and if the
     Company fails to so instruct the Agent, the Agent may) draw
     under the Letter of Credit and use the proceeds from such
     drawing to make a corresponding dollar-for-dollar reduction
     of an amount outstanding under the Credit Agreement, up to
     the full amount of the remaining balance of the Letter of
     Credit, to be in compliance with such Covenant.

3.   In the event that the Company is unable to meet the
     financial covenant contained in Section 9.10 (a) of the
     Credit Agreement (the "Leverage Covenant"), including in the
     circumstance resulting from a drawing under the Letter of
     Credit to comply with the Senior Leverage Covenant and
     corresponding increase in the amount outstanding under the
     Senior Note, at the request of the Company at any time on or
     before May 15, 2004, the Fund will convert such of its
     Junior Notes into shares of Class A common stock to reduce
     total outstanding indebtedness of the Company such that the
     Company will, following such conversion, be in compliance
     with the Leverage Covenant.

4.   In the event that the Company has undertaken the actions set
     forth in paragraphs 1, 2 and 3 above and, after taking such
     actions the Company is unable to meet the Interest Covenant
     solely for the 12-month period ending on the last day of the
     Company's third fiscal quarter of 2003, the Fund will
     purchase additional securities from the Company in an
     aggregate principal amount of up to $10 million (the "New
     Securities"), such that following any such purchase, the
     Company will be in compliance with the Interest Covenant.
     The New Securities will be in the form of senior
     subordinated debt or equity securities, as may be agreed
     between the Fund and the Company. In the event the New
     Securities are senior subordinated debt securities, any
     interest payments required to be made during the Period
     shall only be made by issuing additional principal amount of
     New Securities, and no cash payment shall be made in respect
     of interest payments on the New Securities during the
     Period.

All of the obligations of the Fund contained in this agreement are subject to
the continuing condition that Amendment No. 1 shall be in full force and effect.
This agreement is for the sole benefit of the Company, is only enforceable by
the Company, and may not be relied upon by any third party. No party shall
become a third party beneficiary as a result of this agreement.

                                        2
<Page>

          If you are in agreement with the above terms, please indicate your
acceptance by signing and returning a copy to us, following which this shall
become a binding agreement.


                                        MatlinPatterson Global Opportunities
                                        Partners L.P.

                                        By: MatlinPatterson Global Advisors
                                            LLC, its investment advisor

                                        By:
                                           -----------------------------------
                                           Name:
                                           Title:


Confirmed and agreed:
Polymer Group, Inc.


By:
    ----------------------
    Name:
    Title:

                                        3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>11
<FILENAME>a2111067zex-99_1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
<Page>

                                                                    EXHIBIT 99.1

                           CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of Polymer Group, Inc. (the
"Company") on Form 10-Q for the period ended March 29, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I,
James L. Schaeffer, Chief Executive Officer of the Company, certify, pursuant
to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002, that to my knowledge:

     (1) The Report fully complies with the requirements of section 13(a) or
         15(d) of the Securities Exchange Act Of 1934, as amended; and

     (2) The information contained in the Report fairly presents, in all
         material respects, the financial condition and results of operations
         of the Company.


                                                         /s/ JAMES L. SCHAEFFER
                                                         ----------------------
                                                         James L. Schaeffer
                                                         CHIEF EXECUTIVE OFFICER

May 19, 2003

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>12
<FILENAME>a2111067zex-99_2.txt
<DESCRIPTION>EXHIBIT 99.2
<TEXT>
<Page>

                                                                    EXHIBIT 99.2

                           CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of Polymer Group, Inc. (the
"Company") on Form 10-Q for the period ended March 29, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I,
James L. Schaeffer, Acting Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002, that to my knowledge:

     (1) The Report fully complies with the requirements of section 13(a) or
         15(d) of the Securities Exchange Act Of 1934, as amended; and

     (2) The information contained in the Report fairly presents, in all
         material respects, the financial condition and results of operations
         of the Company.

                                                 /s/ JAMES L. SCHAEFFER
                                                 -------------------------------
                                                 James L. Schaeffer
                                                 ACTING CHIEF FINANCIAL OFFICER*

May 19, 2003

*James G. Boyd, the Company's Chief Financial Officer, was involved in an
automobile accident on May 8, 2003 and has been hospitalized since such date.

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