-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QldrF1pMVLBvBp42y8qaBux7A+Jk/jwPZLLc9MZYe5bYzASRddPv3mCfNjXDlpK4 eIsCvMP6124lrNbNHbhkKg== 0000950152-01-505901.txt : 20020410 0000950152-01-505901.hdr.sgml : 20020410 ACCESSION NUMBER: 0000950152-01-505901 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FERRO CORP CENTRAL INDEX KEY: 0000035214 STANDARD INDUSTRIAL CLASSIFICATION: PAINTS, VARNISHES, LACQUERS, ENAMELS & ALLIED PRODUCTS [2851] IRS NUMBER: 340217820 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00584 FILM NUMBER: 1791095 BUSINESS ADDRESS: STREET 1: 1000 LAKESIDE AVE CITY: CLEVELAND STATE: OH ZIP: 44114-1183 BUSINESS PHONE: 2166418580 MAIL ADDRESS: STREET 1: 1000 LAKESIDE AVE CITY: CLEVELAND STATE: OH ZIP: 44144-1183 10-Q 1 l91036ae10-q.txt FERRO CORPORATION--FORM 10-Q QTR. ENDING 9-30-2001 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ------------ FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED SEPTEMBER 30, 2001 [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO _____________ COMMISSION FILE NUMBER 1-584 FERRO CORPORATION (Exact name of registrant as specified in its charter) AN OHIO CORPORATION, IRS NO. 34-0217820 1000 LAKESIDE AVENUE CLEVELAND, OH 44114 (Address of principal executive offices) REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE: 216/641-8580 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] At October 31, 2001 there were 34,272,865 shares of Ferro common stock, par value $1.00, outstanding. ================================================================================ CONDENSED CONSOLIDATED STATEMENTS OF INCOME FERRO CORPORATION AND SUBSIDIARIES
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------- ------------ (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) 2001 2000 2001 2000 ---- ---- ---- ---- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Sales from Ongoing Operations........................ $ 365,310 $ 359,173 $ 1,091,193 $ 1,070,267 Sales from Businesses Sold........................... -- 513 -- 15,858 -------------- -------------- --------------- --------------- Total Net Sales...................................... $ 365,310 $ 359,686 $ 1,091,193 $ 1,086,125 Cost of Sales........................................ 279,668 263,164 822,773 788,122 Selling, Administrative and General Expenses......... 73,334 62,039 206,502 190,004 Other Charges (Credits): Interest Expense.................................. 8,737 6,551 24,016 17,885 Net Foreign Currency (Gain) Loss.................. (17,128) (1,292) (17,477) (2,124) Other Expense - Net............................... 1,190 643 2,998 1,034 -------------- -------------- --------------- --------------- Income Before Taxes............................ 19,509 28,581 52,381 91,204 Income Tax Expense................................... 7,257 10,391 19,151 34,462 -------------- -------------- --------------- --------------- Net Income........................................... 12,252 18,190 33,230 56,742 Dividend on Preferred Stock, Net of Tax.............. 763 846 2,333 2,626 -------------- -------------- --------------- --------------- Net Income Available to Common Shareholders.......... $ 11,489 $ 17,344 $ 30,897 $ 54,116 ============== ============== =============== =============== Per Common Share Data: Basic Earnings.................................... $ 0.34 $ 0.50 $ 0.90 $ 1.56 Diluted Earnings.................................. 0.33 0.48 0.88 1.49 Shares Outstanding: Average Outstanding............................... 34,249,361 34,495,234 34,216,688 34,681,555 Average Diluted................................... 37,071,799 37,593,916 37,081,281 37,848,300 Actual End of Period.............................. 34,259,867 34,328,186 34,259,867 34,328,186
See Accompanying Notes to Condensed Consolidated Financial Statements 1 CONDENSED CONSOLIDATED BALANCE SHEET FERRO CORPORATION AND SUBSIDIARIES SEPTEMBER 30, 2001 AND DECEMBER 31, 2000
(DOLLARS IN THOUSANDS) -------------------------- (UNAUDITED) (AUDITED) 2001 2000 ---- ---- ASSETS (DOLLARS IN THOUSANDS) Current Assets: Cash and Cash Equivalents........................................................... $ 33,989 $ 777 Net Receivables..................................................................... 235,737 189,014 Inventories......................................................................... 268,833 189,639 Other Current Assets................................................................ 101,679 63,798 --------------- --------------- Total Current Assets............................................................. 640,238 443,228 Net Property, Plant & Equipment........................................................ 583,548 425,728 Unamortized Intangible Assets.......................................................... 438,351 196,279 Other Assets........................................................................... 87,794 61,770 --------------- --------------- $ 1,749,931 $ 1,127,005 =============== =============== LIABILITIES Current Liabilities: Notes and Loans Payable............................................................. $ 334,105 $ 65,865 Accounts Payable, Trade............................................................. 191,420 155,244 Other Current Liabilities........................................................... 236,764 143,986 --------------- --------------- Total Current Liabilities........................................................ 762,289 365,095 Long - Term Debt....................................................................... 557,440 350,781 Other Liabilities...................................................................... 112,864 101,971 Shareholders' Equity................................................................... 317,338 309,158 --------------- --------------- $ 1,749.931 $ 1,127,005 =============== ===============
See Accompanying Notes to Condensed Consolidated Financial Statements 2 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FERRO CORPORATION AND SUBSIDIARIES
NINE MONTHS ENDED ----------------- SEPTEMBER 30 (UNAUDITED) (UNAUDITED) (DOLLARS IN THOUSANDS) 2001 2000 ---- ---- Net Cash Provided by Operating Activities. ............................................ $ 116,084 $ 73,915 Cash Flow from Investing Activities: Capital Expenditures for Plant and Equipment ....................................... (34,959) (37,398) Acquisitions and Divestitures, net of cash acquired ................................ (509,245) (114,483) Other Investing Activities.......................................................... 3,180 574 ----------- ------------- Net Cash Used for Investing Activities. ............................................... (541,024) (151,308) Cash Flow from Financing Activities: Net Borrowings (Payments) Under Short-term Facilities .............................. (46,055) 17,412 Net Borrowings Under Short-term Capital Markets Facility .......................... 300,000 -- Asset Securitization ............................................................... 30,274 79,100 Proceeds from Long-term Debt ....................................................... 455,000 44,831 Principal Payments on Long-term Debt ............................................... (250,229) -- Purchase of Treasury Stock ......................................................... (4,050) (26,161) Cash Dividend Paid ................................................................. (17,655) (17,748) Other Financing Activities ......................................................... (8,887) 2,055 ------------ ------------- Net Cash Provided by Financing Activities ............................................. 458,398 99,489 Effect of Exchange Rate Changes on Cash ............................................... (246) (1,031) ----------- ------------- Increase in Cash and Cash Equivalents ................................................. 33,212 21,065 Cash and Cash Equivalents at Beginning of Period ...................................... 777 7,114 ----------- ------------- Cash and Cash Equivalents at End of Period ............................................ $ 33,989 $ 28,179 =========== ============= Cash Paid During the Period for: Interest, net of amounts capitalized ............................................... $ 17,418 $ 13,710 Income Taxes ....................................................................... $ 8,779 $ 21,475 ----------- -------------
See Accompanying Notes to Condensed Consolidated Financial Statements 3 FERRO CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2000. The information furnished herein reflects all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for fair presentation of the results of operations for the interim periods. The results of the nine months ended September 30, 2001 are not necessarily indicative of the results expected in subsequent quarters or for the full year. 2. COMPREHENSIVE INCOME Comprehensive income represents net income adjusted for foreign currency translation adjustments and pension liability adjustments. Comprehensive income was $20.3 million and $6.6 million for the three months ended September 30, 2001 and 2000, respectively. Comprehensive income was $29.4 million and $42.2 million for the nine months ended September 30, 2001 and 2000, respectively. Accumulated other comprehensive income (loss) at September 30, 2001 and December 31, 2000 was ($89.5) million and ($85.7) million, respectively. 3. INVENTORIES Inventories consisted of the following: (dollars in millions) September 30, December 31, 2001 2000 ---- ---- Raw materials $ 88.8 $ 56.1 Work in Process 23.2 28.4 Finished Good 166.9 116.0 ----------- ---------- 278.9 200.5 LIFO Reserve ( 10.1) (10.9) ----------- ---------- Net Inventory $ 268.8 $ 189.6 =========== ========== 4. LONG-TERM DEBT Long-term debt as of September 30, 2001 and December 31, 2000 was as follows: 2001 2000 ---- ---- Debentures, 7.125%, due 2028 $ 54,443 $ 54,427 Debentures, 7.625%, due 2013 24,831 24,824 Debentures, 8.0%, due 2025 49,451 49,434 Debentures, 7.375%, due 2015 24,949 24,947 Revolving credit agreements 400,000 195,510 Other 4,872 3,349 -------- -------- 558,546 352,491 Less current portion 1,106 1,710 -------- -------- Total $557,440 $350,781 ======== ======== In connection with the acquisition of certain businesses of dmc(2) (see note 8), the Company entered into new unsecured senior credit facilities to fund the acquisition, pay off certain borrowings under its former revolving credit facility and provide for its ongoing working capital and other financing requirements. The new credit facilities include (1) a $373 million five-year revolving credit facility, (2) a $300 million capital markets 180-day term loan facility and (3) a $187 million 364-day revolving credit facility. At the Company's option, the borrowings under the revolving credit facilities bear 4 FERRO CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 4. LONG-TERM DEBT (CONTINUED) interest at a rate equal to (1) the London Interbank Offered Rate adjusted for eurocurrency reserve requirements ("LIBOR"), or (2) the greater of the prime rate established by National City Bank, Cleveland, Ohio and the Federal Funds effective rate plus 0.5% (collectively referred to under the credit facilities as the "Prime Rate"); plus, in each case, applicable margins based upon a combination of the Company's index debt rating and the ratio of the Company's total debt to EBITDA. The capital markets term facility bears interest, at the Company's option, at a rate equal to (1) LIBOR plus 2% or (2) the Prime Rate. At its option and so long as no default or event of default has occurred or is continuing, the Company may extend the capital markets term facility for an additional 180 days and the 364-day revolving facility for an additional one year, which facility will then be converted into a term loan. The capital markets term facility margins will be subject to a 1% increase for the first month following the earlier of a downgrade in its index debt rating or the term loan remaining outstanding past its maturity date, plus additional increases of 0.50% for each additional month thereafter. The Company may prepay borrowings under the credit facilities from time to time without premium or penalty, subject to certain restrictions on competitive bid loans and customary breakage costs. The Company will be required to make mandatory prepayments under the credit facilities with 100% of the proceeds from certain asset sales and certain sales of debt or equity securities. These mandatory prepayments will result in reductions in the lenders' borrowing commitments in accordance with the terms of the credit facilities. The Company is also required to make mandatory prepayment upon a change in control or in the event its principal borrowings under the credit facilities exceed the commitment amounts. The credit facilities contain customary restrictions on the Company's ability to engage in certain activities, including restrictions on its ability to dispose of certain assets, consummate certain acquisitions, consolidate or merge, engage in certain sales and leaseback transactions, pay dividends in certain situations, repurchase or redeem its capital stock under certain circumstances, incur certain indebtedness, create liens, enter into agreements with certain negative pledge clauses, enter into transactions with affiliates or change its business. Several of the covenants contain additional restrictions based upon the ratio of the Company's total debt to EBITDA or in the event its debt ceases to be rated investment grade by both Moody's Investor Service, Inc. and Standard & Poor's Rating Group. The credit facilities also contain financial covenants relating to maximum leverage based on total debt to EBITDA and minimum fixed charge coverage ratios over certain periods of time. The Company's obligations under the credit facilities are not secured and are unconditionally guaranteed, jointly and severally, by Ferro Electronic Materials, Inc. and Ferro Pfanstiehl Laboratories, Inc., both of which are domestic wholly owned subsidiaries. Although its credit facilities are unsecured, if its debt ceases to be rated as investment grade, the Company and its material subsidiaries must grant security interests in its principal manufacturing properties, pledge 100% of the stock of its domestic material subsidiaries and pledge 65% of the stock of foreign material subsidiaries, in each case, in favor of its lenders under such facilities. In that event, liens on the Company's principal domestic manufacturing properties and the stock of its domestic subsidiaries will be shared with the holders of its senior notes and trust notes and trust certificates issued under its asset defeasance program. 5 FERRO CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 5. EARNINGS PER SHARE COMPUTATION
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------ ------------ 2001 2000 2001 2000 ---- ---- ---- ---- Average Basic Shares Outstanding............ 34,249,361 34,495,234 34,216,688 34,681,555 Adjustments for Assumed Conversion of Convertible Preferred Stock and Common Stock Options.................... 2,822,438 3,098,682 2,864,593 3,116,745 -------------- --------------- -------------- --------------- Average Diluted Shares...................... 37,071,799 37,593,916 37,081,281 37,848,300
Basic earnings per share is computed as net income available to common shareholders divided by average basic shares outstanding. Diluted earnings per share is computed as net income adjusted for the tax effect associated with assumed conversion of preferred stock to common stock divided by average diluted shares outstanding. 6. CONTINGENT LIABILITIES As discussed in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2000 and incorporated herein by reference, the Company is involved in a number of sites involving the Comprehensive Environmental Response, Compensation and Liability Act and similar laws. Costs associated with the remediation of environmental pollution are accrued when it becomes probable that a liability has been incurred and the costs can be reasonably estimated. The Company determines such costs based on the Company's stated or estimated contribution to each site and the estimated total clean-up costs of each site. The costs are not discounted due to the uncertainty with respect to the timing of related payments. The Company actively monitors the actual and anticipated spending at each site in which it is involved, and adjusts related accruals when circumstances indicate a change from previously stated or estimated amounts. On May 4, 1999, and December 16, 1999, the United States Environmental Protection Agency (U.S. EPA) issued Notices of Violation (NOVs) alleging that the Company violated various requirements of the Clean Air Act and related state laws in modifying and operating the Pyro-Chek process. The U.S. EPA has also submitted requests seeking information from the Company related to the alleged violations. The Company completed the sale of assets relating to the Pyro-Chek process and ceased production of Pyro-Chek in June 2000. The Company has been meeting with the U.S. EPA, the State of Indiana and local authorities and is engaged in negotiations intended to resolve the issues raised in the NOVs. The Company believes that it will resolve this matter in a manner that will not have a material adverse effect on the Company's financial position or results of operations. In 2000, a wrongful death lawsuit was filed against Keil Chemical, a division of the Company, and is now pending in Federal court in Indiana. Three negligence suits were filed against Keil Chemical, also in Federal court in Indiana. These complaints generally allege that the Company was negligent and/or reckless in failing to control emissions, misrepresenting emissions levels to regulatory agencies, failing to warn nearby residents of the hazards posed by its emissions, and in emitting carcinogenic chemicals without a permit. The Company believes it has valid defenses to the allegations made in these suits, is vigorously defending its position, and believes it will resolve these matters in a manner that will not have a material adverse effect on the Company's financial position or results of operations. 6 FERRO CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 7. REPORTING FOR SEGMENTS The Company's reportable segments are Coatings and Performance Chemicals. Coatings products include ceramics and color, industrial coatings and electronic materials. Performance Chemicals consists of polymer additives, performance and fine chemicals, plastic compounds and plastic colorants. The Company measures segment profit for internal reporting purposes as net operating profit before interest and taxes. Excluded from net operating profit are certain unallocated corporate expenses. A complete reconciliation of segment income to consolidated income before tax is presented below. Sales to external customers are presented in the following chart. Inter-segment sales are not material. FERRO CORPORATION AND SUBSIDIARIES SEGMENT DATA (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------ ------------ (DOLLARS IN THOUSANDS) 2001 2000 2001 2000 - ---------------------- ---- ---- ---- ---- SEGMENT SALES Coatings............................................ $ 220,930 $ 218,927 $ 642,601 $ 664,164 Performance Chemicals............................... 144,380 140,759 448,592 421,961 ------------ ---------- ----------- ---------- Total (1)............................................... $ 365,310 $ 359,686 $ 1,091,193 $1,086,125 ============ ========== =========== ========== SEGMENT INCOME Coatings............................................ $ 13,202 $ 25,833 $ 52,857 $ 76,576 Performance Chemicals............................... 7,298 12,492 30,541 42,832 ------------ ---------- ----------- ---------- Total ............................................... 20,580 38,325 83,398 119,408 Unallocated expenses (2)................................ 8,272 3,842 21,480 11,409 Interest expense........................................ 8,737 6,551 24,016 17,885 Foreign currency (gain)................................. (17,128) (1,292) (17,477) (2,124) Other (income) expense.................................. 1,190 643 2,998 1,034 ------------ ---------- ----------- ---------- Income before taxes................................. $ 19,509 $ 28,581 $ 52,381 $ 91,204 ============ ========== =========== ========== GEOGRAPHIC SALES United States....................................... $ 196,383 $ 220,400 $ 614,036 $ 643,788 International....................................... 168,927 139,286 477,140 442,337 ------------ ---------- ----------- ---------- Total (1)............................................... $ 365,310 $ 359,686 $ 1,091,193 $1,086,125 ============ ========== =========== ==========
- --------------- (1) Sales for the three and nine months ended September 30, 2000 include sales from businesses sold of $513 and $15,858, respectively. (2) Unallocated expenses consist primarily of corporate costs, charges associated with employment cost reduction programs and certain integration costs related to the acquisition of certain businesses of dmc(2). 7 FERRO CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 8. ACQUISITIONS AND DIVESTITURES On September 7, 2001, the Company acquired from OM Group, Inc. ("OMG") certain businesses previously owned by dmc(2) Degussa Metals Catalysts Cerdec AG ("dmc(2)") pursuant to an agreement to purchase certain assets of dmc(2), including shares of certain of its subsidiaries. The businesses acquired include the electronic materials, performance pigments, glass systems and Cerdec ceramics businesses of dmc(2). The Company paid to OMG in cash a purchase price for these businesses of approximately $525 million. A summary of the preliminary allocation of the purchase price follows: (dollars in millions): Cash consideration paid to OMG $ 525.0 Estimated fair value of net assets acquired 279.5 ------- Excess of purchase price over estimated fair value of net assets acquired $ 245.5 ======= The preliminary purchase price allocation is subject to revisions, when additional information becomes available to the Company, including the fair values of certain acquired assets and their remaining useful lives; valuation of actuarially-determined liabilities; measurement of certain assumed liabilities; and plans to integrate the operations of the acquired dmc(2) operations. These costs, once determinable, will be accrued as part of the purchase price allocation and will result in adjustments to the excess of purchase price over net assets acquired. Additionally, the purchase price is subject to certain post-closing adjustments with respect to working capital changes and levels of acquired cash and debt. Any such adjustments will result in changes to the preliminary allocation shown above. The Company financed this transaction with proceeds from new credit facilities, which are described in Note 4 herein. The following unaudited proforma financial information for the nine months ended September 30, 2001 and 2000 assumes the acquisition of certain businesses of dmc(2) occurred as of January 1, 2000, after giving effect to certain adjustments, including interest expense on acquisition debt, depreciation based on the adjustments to fair market value of the acquired property, plant and equipment, and related income tax effects. The proforma results have been prepared for comparative purposes only, reflect no potential synergies from the acquisition and are not necessarily indicative of the results of operations that may occur in the future or that would have occurred had the dmc(2) acquisition been effected on the date indicated. Nine months ended September 30 2001 2000 ---------- --------- (dollars in millions except per share amounts) Revenues - Proforma $1407.4 $1476.5 Net Income - Proforma 19.1 58.4 Earnings per share -- proforma - Basic. 0.49 1.61 - Diluted 0.49 1.53 8 FERRO CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 9. REALIGNMENT AND COST REDUCTION PROGRAMS The following table summarizes the activities relating to the Company's realignment and cost reduction programs: Accrued costs as of December 31, 2000 $ 4,100 Charges through September 30, 2001 8,926 Cash payments made through September 30, 2001 (6,172) --------- Accrued costs as of September 30, 2001 $ 6,854 ========= In the second quarter of 2001, the Company implemented an employment cost reduction program as an element of an overall cost reduction program in response to a slowdown in general economic conditions. The program included the elimination of approximately 200 manufacturing and general overhead positions and the closure of two small manufacturing operations whose production was transferred to more efficient locations. The Company continued the program during the third quarter of 2001, and recorded further charges relating to the closure of another small manufacturing facility whose production is being integrated elsewhere, and the related termination of employees. Pursuant to the programs, the Company incurred pre-tax charges of $8.9 million through September of 2001, which included $7.8 million for severance, $0.8 million for asset impairment and $0.3 million of other costs. Severance costs were included in both cost of sales and selling, administrative and general expenses for $2.9 million and $4.9 million, respectively. Through September 30, 2001, the amount of severance costs paid under all realignment and cost reduction programs was $6.2 million and 247 employees had actually been terminated. 10. ACCOUNTING PRONOUNCEMENTS In June 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 141, "Business Combinations." Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. The Company adopted certain provisions of Statement 141 effective July 1, 2001, with respect to disclosures and acquisitions consummated following that date. The adoption did not have a material effect on the Company's financial position or results of operations. In June 2001, the Financial Accounting Standards Board (FASB) also issued Statement No. 142 "Goodwill and Other Intangible Assets." Statement 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized but, instead, tested for impairment at least annually in accordance with the provisions of Statement 142. The Company has adopted certain provisions of Statement 142 with respect to acquisitions consummated after June 30, 2001. The adoption did not have a material impact on the Company's financial position or results of operations. As January 1, 2002, the Company expects to have unamortized goodwill of approximately $435 million, which will be subject to the transition provisions of Statements 141 and 142. Amortization expense related to goodwill was approximately $5.6 million and $6.2 million for the year ended December 31, 2000, and the nine months ended September 30, 2001, respectively. The Company is currently studying the effects of adopting the remaining provisions of Statements 141 and 142 (which are effective January 1, 2002), including whether any transitional adjustments will be required. 9 FERRO CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 10. ACCOUNTING PRONOUNCEMENTS (CONTINUED) In June 2001, the FASB issued Statement No. 143 "Accounting for Asset Retirement Obligations." Statement 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period and the capitalized cost is depreciated over the remaining useful life of the related asset. Upon settlement of the liability, the entity either settles the obligation for the amount recorded or incurs a gain or loss. Statement 143 is effective for fiscal years beginning after June 15, 2002. Management is evaluating the effect of this statement on the Company's results of operations and financial position. In August 2001, the FASB issued Statement No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets," effective prospectively for fiscal years beginning after December 15, 2001. Statement 144 supersedes Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and the accounting and reporting provisions of APB No. 30 "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions ("Opinion 30") for the disposal of a segment of business (as previously defined under Opinion 30). The FASB issued Statement No. 144 to establish a single accounting model for long-lived assets to be disposed of by sale. Statement 144 broadens the presentation of discontinued operations in the income statement to include a component of an entity (rather than a segment of a business). A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of an entity. Statement 144 also requires that discontinued operations be measured at the lower of the carrying amount or fair value less cost to sell. The Company does not expect Statement No. 144 to have a material impact on its financial position or results of operations. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 Third quarter 2001 net sales of $365.3 million were 1.6% higher than the $359.7 million of sales for the comparable 2000 period. Sales increased 0.9% in the Coatings segment and increased 2.6% in the Performance Chemicals segment. Overall volume increased 2.8% for the quarter, including the effect of acquisitions. Core volumes were down in North America due to continued weak economic conditions in the industrial sector, particularly in durable goods markets such as plastics, PVC, appliances and automotive. Volume growth in Europe and Asia was aided by the recent dmc(2) acquisition, but was more than offset by the decline in North America. Gross margins were 23.4% of sales compared with 26.8% for the comparable 2000 period. This decline was due primarily to lower volumes and capacity utilization, particularly in the United States, and the Company's inventory reduction program which yielded a reduction in inventory of approximately $25.9 million during the quarter. In addition, certain integration and related inventory costs related to the acquisition reduced gross margins in the 2001 period. Selling, administrative and general expenses were $73.3 million in the third quarter of 2001 compared with $62.0 million in the third quarter of 2000. The increase was due to the addition of dmc(2) operating expenses and certain integration costs related to the acquisition of certain businesses of dmc(2). Interest expense rose during the quarter due to additional debt resulting from the dmc(2) acquisition, offset by declines in variable interest rates and a debt reduction of more than $50 million made during the quarter, before considering the debt financing impact of the acquisition of certain of the business of dmc(2). 10 During the second quarter of 2001, forward contracts were initiated for purposes of mitigating the effects of currency movements on the cash flow requirements of the acquisition of certain businesses of dmc(2). Subsequent strengthening of the Euro resulted in the realization of approximately $16.9 million in foreign currency gains from the closing of those contracts during the third quarter of 2001. Earnings in the third quarter of 2001 were $0.33 per diluted common share including the reductions for the aforementioned integration costs and the benefit of the currency gains, compared with $0.48 for the prior year period. dmc(2), for the one month of ownership, was slightly dilutive to earnings in the third quarter, as expected. QUARTERLY SEGMENT RESULTS Sales for the Coatings segment were $220.9 million compared with $218.9 million in the third quarter of 2000. The increase reflects the growth from acquisitions, offset to a large degree by the weakness in the United States markets and electronics markets worldwide. Coatings earnings were $13.2 million during the quarter compared with $25.8 million during the third quarter of 2000. The decline in earnings was driven by lower capacity utilization primarily in the United States and weakness of electronic material markets worldwide. Performance Chemicals sales increased 2.6% to $144.4 million compared with $140.8 million during the third quarter of 2000. Sales growth stemmed primarily from acquisitions completed in 2000, offset by light demand in the United States construction markets, especially for some of the PVC and plastic additive products. Performance Chemicals segment income for the quarter was $7.3 million compared with $12.5 million for the third quarter of 2000, reflecting weakness in the United States durable goods and construction markets. GEOGRAPHIC SALES Sales in the United States were $196.4 million for the three months ended September 30, 2001, compared with $220.4 million for the three months ended September 30, 2000. Sales declined in the region as a result of weakness in the United States durable goods, construction and electronic materials markets. International sales were $168.9 million for the three months ended September 30, 2001, compared with $139.3 million for the three months ended September 30, 2000. The sales growth was driven by sales added from acquisitions and continued volume growth in Europe and Asia. COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 Sales for the nine months ended September 30, 2001, were $1,091.2 million compared with $1,086.1 million for the nine months ended September 30, 2000. Sales from ongoing operations for the first nine months of 2000, excluding sales from businesses sold, were $1,070.3 million. Sales for the 2001 period were aided by acquisition growth, but were adversely impacted by wide spread weakness in the United States durable goods, construction and electronic materials markets. Gross margins as a percent of sales were 24.6% compared with 27.4% for the 2000 period. Lower gross margins were a result of sales declines in the United States, an inventory reduction program that reduced capacity utilization, higher energy costs, charges related to employment cost reduction programs, and integration and inventory costs related to the acquisition of certain businesses of dmc(2). Selling, administrative and general expenses were $206.5 million compared with $190.0 million for the first nine months of 2000. Selling, administrative and general costs associated with acquisitions made during the past year, severance costs related to employment cost reduction programs and integration costs resulted in higher expenses during the 2001 period. Interest expense for the nine month period of 2001 increased as compared to the corresponding 2000 period due to additional debt resulting from the dmc(2) acquisition, partially offset by declines in variable interest rates and debt reduction made during the first nine months of 2001, before considering the impact of the acquisition of certain businesses of dmc(2). 11 During the second quarter of 2001, forward contracts were initiated for purposes of mitigating the effects of currency movements on the cash flow requirements of the acquisition of certain businesses of dmc(2). Subsequent strengthening of the euro resulted in the realization of approximately $16.9 million in foreign currency gains from the closing of those contracts during the third quarter of 2001. Diluted earnings per share were $0.88 for the nine month period ending September 30, 2001, down from $1.49 for the first nine months of 2000. NINE-MONTH SEGMENT RESULTS For the first nine months of 2001, sales in the Coatings segment were $642.6 million, compared with sales of $664.2 million for the 2000 period. Growth from acquisitions was offset by lower volume in North America and weakness early in the year of the euro versus the U.S. dollar. Foreign currency translation reduced segment sales by $17.3 million in the first nine months of 2001 versus the corresponding 2000 period. Segment income was $52.9 million compared with $76.6 million reported in the first nine months of 2000. Lower segment earnings were a result of lower volumes in the United States, weakening of the Euro and reduced capacity utilization in connection with the Company's inventory reduction programs. Performance Chemicals sales were $448.6 million, up 6.3% from sales of $422.0 million for the first nine months of 2000. Acquisitions completed in 2000 were the primary driver of the higher sales for the 2001 period. Segment income was $30.5 million compared with $42.8 million for the first nine months of 2000. The decline in earnings reflects lower capacity utilization and volumes in the United States durable goods and construction markets. GEOGRAPHIC SALES Sales in the United States were $614.0 million for the nine months ended September 30, 2001, compared with $643.8 million for the nine months ended September 30, 2000. Sales in the region were driven by the general slowing of the United States economy. International sales were $477.1 million for the nine months ended September 30, 2001, compared with $442.3 million for the nine months ended September 30, 2000. International sales growth was aided by acquisitions and volume growth in Europe and Asia, but was partially offset by the negative impact of currency translation of $20.7 million. OUTLOOK In light of the ongoing macroeconomic conditions, the Company does not anticipate that the markets for its products will recover to previous levels in the near future. The Company's businesses have implemented, and are continuing to implement, aggressive cost containment measures and are managing to reduce working capital to mitigate, in part, the impact of economic conditions on the results of operations. In the near term, the primary focus of the Company will be to capitalize on the synergies from integrating the acquired dmc(2) businesses with their Ferro counterparts. The Company believes that significant cost savings can be achieved through eliminating duplicate facilities, reducing overhead and capitalizing on raw material sourcing synergies. The Company expects that ongoing efforts to integrate the acquired dmc(2) businesses will likely result in realignment charges in future periods. LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity requirements include capital investments, working capital requirements, acquisitions, and, to a lesser extent, interest expense. The Company expects to be able to meet its working capital requirements and capital investment needs from cash and cash equivalents, cash flow from operations and use of its credit facilities or long-term borrowings. The Company has available a $560.0 million revolving credit facility, and had $400 million outstanding under this facility as of September 30, 2001. The Company also has $245.0 million available under a shelf registration pursuant to which various types of public securities may be issued. 12 Net cash provided by operating activities for the nine months ended September 30, 2001 was $116.1 million, compared to the $73.9 million recorded in the first nine months of 2000. The increase in cash flows reflects substantial reductions in working capital during the 2001 period. Cash used for investing activities was $541.0 million in the 2001 period (including $509.2 million for acquisitions) and $151.3 million in the 2000 period (including $114.5 million for acquisitions/divestitures). The 2000 period reflects proceeds from the sale of a business in the second quarter of 2000. Net cash provided by financing activities was $458.4 million in the 2001 period compared to $99.5 million in the 2000 period. The increase in 2001 reflects the financing of the acquisition of certain businesses of dmc(2). In connection with the acquisition of certain businesses of dmc(2), the Company entered into new unsecured senior credit facilities to fund the acquisition, pay off certain borrowings under its former revolving credit facility and provide for its ongoing working capital and other financing requirements. The new credit facilities include (1) a $373 million five-year revolving credit facility, (2) a $300 million capital markets 180-day term loan facility and (3) a $187 million 364-day revolving credit facility. The new credit facilities contain certain terms and conditions including leverage and coverage ratios. The capital markets facility expires on March 5, 2002 with a six-month extension available at the Company's option so long as no default or event of default has occurred or is continuing. The Company is presently reviewing alternatives to retire the capital markets facility during the initial term including: the sale of long-term securities in the U.S. capital markets, using cash flows from operations, using available borrowing on the revolving credit facility and through asset sales. The Company believes that it will have sufficient resources to repay the capital markets facility during the initial term of the agreement. ENVIRONMENTAL Refer to Note 6 of the Condensed Consolidated Financial Statements included herein for a description of the status of environmental matters. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS In June 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 141, "Business Combinations," and Statement No. 142, "Goodwill and Other Intangible Assets." Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. Statement 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized but, instead, tested for impairment at least annually in accordance with the provisions of Statement 142. The Company has adopted certain provisions of Statements 141 and 142 as discussed in Note 10 of the Condensed Consolidated Financial Statements, and is required to adopt the remaining provisions of Statements 141 and 142, effective January 1, 2002. As January 1, 2002, the Company expects to have unamortized goodwill of approximately $435 million, which will be subject to the transition provisions of Statements 141 and 142. Amortization expense related to goodwill was approximately $5.6 million and $6.2 million for the year ended December 31, 2000, and the nine months ended September 30, 2001, respectively. The Company is currently studying the effects of adopting the remaining rules (which are effective January 1, 2002), including whether any transitional adjustments will be required. In June 2001, the FASB issued Statement No. 143 "Accounting for Asset Retirement Obligations." Statement 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period and the capitalized cost is depreciated over the remaining useful life of the related asset. Upon settlement of the liability, the entity either settles the obligation for the amount recorded or incurs a gain or loss. Statement 143 is effective for fiscal years beginning after June 15, 2002. Management 13 is evaluating the effect of this statement on the Company's results of operations and financial position. In August 2001, the FASB issued Statement No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets," effective prospectively for fiscal years beginning after December 15, 2001. Statement 144 supersedes Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and the accounting and reporting provisions of APB No. 30 "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions ("Opinion 30") for the disposal of a segment of business (as previously defined under Opinion 30). The FASB issued Statement No. 144 to establish a single accounting model for long-lived assets to be disposed of by sale. Statement 144 broadens the presentation of discontinued operations in the income statement to include a component of an entity (rather than a segment of a business). A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of an entity. Statement 144 also requires that discontinued operations be measured at the lower of the carrying amount or fair value less cost to sell. The Company does not expect Statement No. 144 to have a material impact on its financial position or results of operations. FORWARD-LOOKING STATEMENTS Certain statements contained in this Discussion and Analysis and elsewhere in this quarterly report on Form 10-Q reflect the Company's current expectations with respect to the future performance and may constitute "forward-looking statements" within the meaning of Federal securities laws. These statements are subject to a variety of uncertainties, unknown risks and other factors concerning the Company's operations and business environment which are difficult to predict and are beyond the control of the Company. Factors that could cause actual results of the Company to differ materially from those matters expressed or implied in such forward-looking statements include the following: - The effects of the September 11, 2001 terrorist attacks on the United States and current economic conditions; - The success of the Company's integration of the recent dmc(2) acquisition; - The risks related to fluctuating currency rates and differing legal, political and regulatory requirements and social and economic conditions of many jurisdictions. - Access to capital primarily in the U.S. capital markets, and any restrictions placed on the Company by current or future financing arrangements. The risks and uncertainties identified above are not the only risks the Company faces. Additional risks and uncertainties not presently known to the Company or that it currently believes to be immaterial also may adversely affect the Company. Should any known or unknown risks and uncertainties develop into actual events, these developments could have material adverse effects on the Company's business, financial condition and results of operation. ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK FACTORS The Company's exposure to market risks is primarily limited to interest rate and foreign currency fluctuation risks. The Company's exposure to interest rate risk relates primarily to its debt portfolio. Its interest rate risk management objectives are to limit the effect of interest rate changes on earnings, cash flows and overall borrowing costs. To limit interest rate risk on borrowings, the Company maintains a percentage of fixed and variable debt within defined parameters. In managing the percentage of fixed versus variable rate debt, consideration is given to the interest rate environment and the Company's forecasted cash flows. This policy limits exposure from rising interest rates and allows the Company to benefit during periods of falling rates. The Company's interest rate exposure is generally limited to its revolving credit facilities. (See note 4 to the Condensed Consolidated Financial Statements.) 14 The Company manages exposures to changing foreign currency exchange rates principally through the purchase of put options on currencies and forward foreign exchange contracts. Put options are purchased to offset the exposure of foreign currency-denominated earnings to a depreciation in the value of the local currency to the U.S. dollar. The Company's primary foreign currency put option market exposure is the euro. Foreign subsidiaries also mitigate the risk of currency fluctuations on the cost of raw materials denominated in U.S. dollars through the purchase of dollars to cover the future payable. At September 30, 2001, $700 million remains outstanding under the facilities at interest rates based on LIBOR. At December 31, 2000, the Company had $195.5 million outstanding under similar arrangements. The increase in variable rate debt obligations increases the Company's risk to changes in market interest rates. The $700 million outstanding at September 30, 2001 carried an average interest rate of 5.03% and matures as follows: $300 million in 2002, $142 million in 2003 and $258 million in 2006. In total, the Company has $153.6 million of fixed rate debt outstanding with an average interest rate of 7.5%, all maturing after 2006. The fair value of these debt securities approximated the carrying amount at September 30, 2001. In addition, in September 2001, the Company completed the acquisition of certain businesses of dmc(2) (note 8 to the Condensed Consolidated Financial Statements). This acquisition increases the Company's exposure to fluctuations in foreign currencies versus the U.S. dollar, particularly in Europe and Asia. At September 30, 2001, the Company had forward contracts to sell euros for U.S. dollars in a notational amount of $8 million at an average rate of $.916/euro and outstanding put options to sell euros for US dollars having a notational amount of $11 million and an average strike price of $.89/euro. These forward and futures contracts have a fair value of approximately $135,000. PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS. Legal proceedings were reported in the Company's Form 10-Q for the quarter ended March 31, 2000 and are substantially unchanged since that time. ITEM 2 - CHANGE IN SECURITIES. No change. 15 ITEM 3 - DEFAULT UPON SENIOR SECURITIES. None. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 5 - OTHER INFORMATION. None. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K. (a) The exhibits listed in the attached Exhibit Index are filed pursuant to Item 6(a) of the Form 10-Q. (b) The Company filed a Current Report on Form 8-K dated September 7, 2001, reporting that the Company purchased from OM Group, Inc. the electronic materials, performance pigments, glass systems and Cerdec ceramics businesses that were previously owned by dmc(2) Degussa Metals Catalysts Cerdec A.G. 16 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FERRO CORPORATION (Registrant) Date: November 14, 2001 /s/ Hector R. Ortino --------------------------------------------- Hector R. Ortino Chairman and Chief Executive Officer Date: November 14, 2001 /s/ Bret W. Wise --------------------------------------------- Bret W. Wise Senior Vice President and Chief Financial Officer 17 EXHIBIT INDEX The following exhibits are filed with this report or are incorporated here by reference to a prior filing in accordance with Rule 12b-32 under the Securities and Exchange Act of 1934. (Asterisk denotes exhibits filed with this report). EXHIBIT: (3) Articles of Incorporation and by-laws (a) Eleventh Amended Articles of Incorporation. (Reference is made to Exhibit (3)(a) to Ferro Corporation's Quarterly Report on Form 10-Q for the three months ended June 30, 1998, which Exhibit is incorporated here by reference.) (b) Certificate of Amendment to the Eleventh Amended Articles of Incorporation of Ferro Corporation filed December 28, 1994. (Reference is made to Exhibit (3)(b) to Ferro Corporation's Quarterly Report on Form 10-Q for the three months ended June 30, 1998, which Exhibit is incorporated here by reference.) (c) Certificate of Amendment to the Eleventh Amended Articles of Incorporation of Ferro Corporation filed January 19, 1998. (Reference is made to Exhibit (3)(c) to Ferro Corporation's Quarterly Report on Form 10-Q for the three months ended June 30, 1998, which Exhibit is incorporated here by reference.) (d) Amended Code of Regulations. (Reference is made to Exhibit (3)(d) to Ferro Corporation's Quarterly Report on Form 10-Q for the three months ended June 30, 1998, which Exhibit is incorporated here by reference.) (4) Instruments defining rights of security holders, including indentures (a) Amended and Restated Shareholder Rights Agreement between Ferro Corporation and National City Bank, Cleveland, Ohio, as Rights Agent, dated as of December 10, 1999. (Reference is made to Exhibit 4(k) to Ferro Corporation's Form 10-K for the year ended December 31, 1999, which Exhibit is incorporated here by reference.) (b) The rights of the holders of Ferro's Debt Securities issued and to be issued pursuant to an Indenture between Ferro Corporation and Society National Bank, as Trustee, are described in the form of Indenture dated May 1, 1993. (Reference is made to Exhibit 4(j) to Ferro Corporation's Form 10-Q for the three months ended June 30, 1993, which Exhibit is incorporated here by reference.) (c) The rights of the holders of Ferro's Debt Securities issued and to be issued pursuant to a Senior Indenture between Ferro Corporation and Chase Manhattan Trust Company, National Association, as Trustee, are described in the Senior Indenture, dated March 25, 1998. (Reference is made to Exhibit 4 (c) to Ferro Corporation's Quarterly Report on Form 10-Q for the three months ended March 31, 1998, which Exhibit is incorporated here by reference.) (d) Form of Security (7 1/8% Debentures due 2028). (Reference is made to Exhibit 4(a-1) to Ferro Corporation's Form 8-K filed March 31, 1998, which Exhibit is incorporated here by reference.) 18 (10) Material Agreements (a) OMG-Ferro Purchase Agreement dated August 31, 2001 (Reference is made to Exhibit 2.0 to Ferro Corporation's Current Report on Form 8-K dated September 7, 2001, which Exhibit is incorporated here by reference.) *(b) Credit Agreement, dated as of August 31, 2001, among Ferro Corporation, as Borrower, Various Financial Institutions, as Lenders, Credit Suisse First Boston, as the Syndication Agent and a Joint Lead Arranger, National City Bank, as the Administrative Agent, the Swing Line Lender, the Letter of Credit Issuer and a Joint Lead Arranger, Citicorp U.S.A., Inc. and Key Bank National Association, as the Co-Documentation Agents. *(c) 364-Day Credit Agreement, dated as of August 31, 2000, among Ferro Corporation, as Borrower, Various Financial Institutions, as Lenders, Credit Suisse First Boston, as the Syndication Agent and a Joint Lead Arranger, National City Bank, as the Administrative Agent and a Joint Lead Arranger, Citicorp U.S.A., Inc. and Key Bank National Association, as the Co-Documentation Agents. *(d) Amendment No. 1 to Amended and Restated Participation Agreement, dated as of August 31, 2001, by and among Ferro Corporation, State Street Bank & Trust Company, as Trustee, the financial institutions named therein, and Citibank, N.A., as Agent. *(11) Computation of Earnings Per Share *(12) Ratio of Earnings to Fixed Charges 19 EX-10.B 3 l91036aex10-b.txt EXHIBIT 10(B) Exhibit 10(b) EXECUTION COPY ================================================================================ CREDIT AGREEMENT DATED AS OF AUGUST 31, 2001 AMONG FERRO CORPORATION AS BORROWER VARIOUS FINANCIAL INSTITUTIONS AS LENDERS CREDIT SUISSE FIRST BOSTON AS THE SYNDICATION AGENT AND A JOINT LEAD ARRANGER NATIONAL CITY BANK AS THE ADMINISTRATIVE AGENT, THE SWING LINE LENDER, THE LETTER OF CREDIT ISSUER AND A JOINT LEAD ARRANGER CITICORP USA, INC. KEYBANK NATIONAL ASSOCIATION AS THE CO-DOCUMENTATION AGENTS ----------------------------- CREDIT SUISSE FIRST BOSTON AS SOLE BOOK RUNNING MANAGER ================================================================================ TABLE OF CONTENTS
PAGE ---- SECTION 1. DEFINITIONS AND TERMS......................................................................1 1.1 Certain Defined Terms..........................................................................1 1.2 Computation of Time Periods...................................................................27 1.3 Accounting Terms..............................................................................27 1.4 Terms Generally...............................................................................27 1.5 Currency Equivalents..........................................................................27 SECTION 2. AMOUNT AND TERMS OF LOANS.................................................................28 2.1 Commitments for Loans.........................................................................28 2.2 Procedures for Borrowing and Disbursement of Funds............................................29 2.3 Competitive Bid Loans.........................................................................32 2.4 Notes; Loan Accounts..........................................................................36 2.5 Conversions of General Revolving Loans and Term Loans.........................................38 2.6 Refunding of, or Participation in, Swing Line Revolving Loans.................................39 2.7 Interest......................................................................................41 2.8 Selection and Continuation of Interest Periods................................................44 2.9 Increased Costs, Illegality, etc..............................................................45 2.10 Compensation..................................................................................47 2.11 Change of Lending Office; Replacement of Lenders..............................................48 SECTION 3. LETTERS OF CREDIT.........................................................................49 3.1 Letters of Credit.............................................................................49 3.2 Letter of Credit Requests: Notices of Issuance................................................50 3.3 Agreement to Repay Letter of Credit Drawings..................................................51 3.4 Letter of Credit Participations...............................................................51 3.5 Increased Costs...............................................................................54 3.6 Guaranty of Letter of Credit Obligations of Other Letter of Credit Obligors..................54 SECTION 4. FEES; COMMITMENTS.........................................................................56 4.1 Fees..........................................................................................56 4.2 Voluntary Termination/Reduction of Commitments................................................58 4.3 Mandatory Adjustments of Commitments, etc.....................................................59 4.4 Extension of Term Maturity Date...............................................................59 SECTION 5. PAYMENTS..................................................................................60 5.1 Voluntary Prepayments of Loans................................................................60 5.2 Mandatory Prepayments.........................................................................61 5.3 Repayment of Loans............................................................................64 5.4 Method and Place of Payment...................................................................64 5.5 Net Payments..................................................................................64 SECTION 6. CONDITIONS PRECEDENT......................................................................66
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PAGE ---- 6.1 Conditions Precedent at Closing Date..........................................................66 6.2 Conditions Precedent to All Credit Events (Other than any Competitive Bid Borrowing)..........68 6.3 Conditions Precedent to Each Competitive Bid Borrowing........................................69 SECTION 7. REPRESENTATIONS AND WARRANTIES............................................................69 7.1 Corporate Status, etc.........................................................................69 7.2 Subsidiaries..................................................................................70 7.3 Corporate Power and Authority, etc............................................................70 7.4 No Violation..................................................................................70 7.5 Governmental Approvals........................................................................70 7.6 Litigation....................................................................................70 7.7 Use of Proceeds; Margin Regulations...........................................................71 7.8 Financial Statements, etc.....................................................................71 7.9 No Material Adverse Change....................................................................72 7.10 Tax Returns and Payments......................................................................72 7.11 Title to Properties, etc......................................................................72 7.12 Lawful Operations, etc........................................................................72 7.13 Environmental Matters.........................................................................73 7.14 Compliance with ERISA.........................................................................73 7.15 Intellectual Property, etc....................................................................74 7.16 Investment Company Act, etc...................................................................74 7.17 Burdensome Contracts; Labor Relations.........................................................74 7.18 Existing Indebtedness.........................................................................74 7.19 True and Complete Disclosure..................................................................75 SECTION 8. AFFIRMATIVE COVENANTS.....................................................................75 8.1 Reporting Requirements........................................................................75 8.2 Books, Records and Inspections................................................................78 8.3 Insurance.....................................................................................78 8.4 Payment of Taxes and Claims...................................................................78 8.5 Corporate Franchises..........................................................................79 8.6 Good Repair...................................................................................79 8.7 Compliance with Statutes, etc.................................................................79 8.8 Compliance with Environmental Laws............................................................79 8.9 Fiscal Years, Fiscal Quarters.................................................................79 8.10 Hedge Agreements, etc.........................................................................80 8.11 Certain Subsidiaries to Join in Subsidiary Guaranty...........................................80 8.12 Most Favored Covenant Status..................................................................81 8.13 Senior Debt...................................................................................81 8.14 Debt Rating Downgrade.........................................................................81 SECTION 9. NEGATIVE COVENANTS........................................................................82 9.1 Changes in Business...........................................................................82
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TABLE OF CONTENTS (continued) PAGE ---- 9.2 Consolidation, Merger, Asset Sales, etc.......................................................82 9.3 Restrictions on Acquisitions..................................................................84 9.4 Limitation on Sales and Leasebacks............................................................84 9.5 Indebtedness..................................................................................85 9.6 Leverage Ratio................................................................................86 9.7 Fixed Charge Coverage Ratio...................................................................87 9.8 No Stock Repurchases While Index Debt Rating is Not Investment Grade, etc.....................87 9.9 Transactions with Affiliates..................................................................87 9.10 Plan Terminations, Minimum Funding, etc.......................................................88 9.11 Restricted Payments...........................................................................88 9.12 Restrictive Agreements........................................................................88 SECTION 10. EVENTS OF DEFAULT.........................................................................89 10.1 Events of Default.............................................................................89 10.2 Acceleration, etc.............................................................................91 10.3 Application of Liquidation Proceeds...........................................................92 SECTION 11. THE ADMINISTRATIVE AGENT..................................................................93 11.1 Appointment...................................................................................93 11.2 Delegation of Duties..........................................................................93 11.3 Exculpatory Provisions........................................................................93 11.4 Reliance by Administrative Agent..............................................................94 11.5 Notice of Default.............................................................................94 11.6 Non-Reliance..................................................................................94 11.7 Indemnification...............................................................................95 11.8 The Agents in Individual Capacity.............................................................95 11.9 Successor Administrative Agent................................................................96 11.10 Other Agents..................................................................................96 SECTION 12. MISCELLANEOUS.............................................................................96 12.1 Payment of Expenses etc.......................................................................96 12.2 Right of Setoff...............................................................................98 12.3 Notices.......................................................................................98 12.4 Benefit of Agreement..........................................................................98 12.5 No Waiver; Remedies Cumulative...............................................................103 12.6 Payments Pro Rata; Sharing of Setoffs, etc...................................................104 12.7 Calculations; Computations...................................................................105 12.8 Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial.......................105 12.9 Counterparts.................................................................................106 12.10 Effectiveness; Integration...................................................................106 12.11 Headings Descriptive.........................................................................106 12.12 Amendment or Waiver..........................................................................107 12.13 Survival of Indemnities......................................................................108
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PAGE ---- 12.14 Domicile of Loans............................................................................108 12.15 Confidentiality..............................................................................108 12.16 Lender Register..............................................................................109 12.17 Limitations on Liability of the Letter of Credit Issuers.....................................110 12.18 General Limitation of Liability..............................................................110 12.19 No Duty......................................................................................110 12.20 Lenders and Agent Not Fiduciary to Borrower, etc.............................................111 12.21 Survival of Representations and Warranties...................................................111 12.22 Severability.................................................................................111 12.23 Independence of Covenants....................................................................111 12.24 No Reliance on Margin Stock..................................................................111 12.25 Interest Rate Limitation.....................................................................112
Annex I - Information as to Lenders Annex II - Information as to Subsidiaries Annex III - Information as to ERISA Annex IV - Description of Existing Indebtedness and Letters of Credit Exhibit A-1 - Form of General Revolving Note Exhibit A-2 - Form of Swing Line Revolving Note Exhibit A-3 - Form of Term Note Exhibit A-4 - Form of Competitive Bid Note Exhibit B-1 - Form of Notice of Borrowing Exhibit B-2 - Form of Notice of Competitive Bid Borrowing Exhibit B-3 - Form of Notice of Conversion Exhibit B-4 - Form of Letter of Credit Request Exhibit C - Form of Subsidiary Guaranty Exhibit D - Form of Assignment Agreement Exhibit E - Form of Designation Agreement Exhibit F - Form of Lender Tax Certificate iv CREDIT AGREEMENT THIS CREDIT AGREEMENT, dated as of August 31, 2001 (this "AGREEMENT"), is among FERRO CORPORATION, an Ohio corporation (the "BORROWER"), the various financial institutions and other Persons from time to time parties hereto (the "LENDERS"), CREDIT SUISSE FIRST BOSTON ("CSFB"), as syndication agent (in such capacity, the "SYNDICATION AGENT") for the Lenders, NATIONAL CITY BANK ("NCB"), as administrative agent (in such capacity, the "ADMINISTRATIVE AGENT", and together with the Syndication Agent, the "AGENTS") for the Lenders, and CSFB and NCB, as joint lead arrangers (the "JOINT LEAD ARRANGERS"). WHEREAS, pursuant to the Heads of Agreement, dated as of April 23, 2001 (the "PURCHASE AGREEMENT"), by and between the Borrower and OM Group, Inc., a Delaware corporation ("OMG"), the Borrower will purchase the electronic materials, performance pigments and colors, glass systems and cerdec ceramics divisions (collectively, the "FERRO DIVISIONS") of dmc(2) Degussa Metals Catalysts Cerdec A.G. ("DMC(2)") from OMG (the "DMC(2) ACQUISITION"); WHEREAS, in order to (a) finance the DMC(2) Acquisition, (b) refinance existing indebtedness (the "REFINANCING") under the Borrower's existing credit facility (the "EXISTING CREDIT FACILITY"), (c) pay related fees and expenses (the "EXPENSE PAYMENTS", and together with the DMC(2) Acquisition and the Refinancing, the "TRANSACTION") and (d) provide for post-closing working capital and general corporate purposes of the Borrower and its Subsidiaries following the consummation of the Acquisition, the Borrower has requested that the Lenders make the Commitments available to the Borrower; and WHEREAS, the Lenders and the Letter of Credit Issuer are willing, on the terms and subject to the conditions hereinafter set forth, to extend the Commitments and make Loans to the Borrower and issue (or participate in) Letters of Credit; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. DEFINITIONS AND TERMS. 1.1 CERTAIN DEFINED TERMS. As used herein, the following terms shall have the meanings herein specified unless the context otherwise requires: "ACQUISITION" shall mean and include (i) any acquisition on a going concern basis (whether by purchase, lease or otherwise) of any assets, facilities and/or businesses operated by any person who is not a Subsidiary of the Borrower, and (ii) acquisitions of a majority of the outstanding equity or other similar interests in any such person (whether by merger, stock purchase or otherwise). "ADDITIONAL SECURED OBLIGATIONS" shall mean the Borrower's obligations in respect of (a) the issued and outstanding letters of credit set forth on Annex IV, (b) the Borrower's senior notes issued pursuant to its existing and future indentures and (c) the trust notes and trust certificates issued in connection with the Amended and Restated Participation Agreement, dated as of October 31, 1995 (as amended and restated as of November 30, 2000 and as further amended from time to time), by and among the Borrower, State Street Bank and Trust Company, not in its individual capacity except as expressly stated therein, the financial institutions named as purchasers thereto and Citibank, N.A., as agent (the "TRUST INSTRUMENTS"), that will, in each case, share on a PARI PASSU basis with the Obligations with respect to any collateral required to be provided pursuant to section 8.14; PROVIDED that, with respect to the Borrower's senior notes and the Trust Instruments, only the Borrower's and its Subsidiaries' Principal Domestic Manufacturing Properties and the Capital Stock of the Borrower's Domestic Subsidiaries will be required to be shared. "ADJUSTED LIBO RATE" shall mean with respect to each Interest Period for a LIBOR Loan, (i) the rate per annum 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, or the Alternative Currency, as the case may be, 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 Dollar deposits, or the Alternative Currency, as the case may be, with a maturity comparable to such Interest Period, divided (and rounded to the nearest ten thousandth of 1%) by (ii) a percentage equal to 100% minus the then stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves and without benefit of credits for proration, exceptions or offsets which may be available from time to time) applicable to any member bank of the Federal Reserve System in respect of Eurocurrency liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D); PROVIDED, HOWEVER, that in the event that the rate referred to in clause (i) above is not available at any such time for any reason, then the rate referred to in clause (i) shall instead be the average (rounded to the nearest ten thousandth of 1%) of the rates at which Dollar deposits of $5,000,000, or the Alternative Currency, as the case may be, are offered to the Reference Banks in the London interbank market at approximately 11:00 a.m. (London time), two Business Days prior to the commencement of such Interest Period, for contracts which would be entered into at the commencement of such Interest Period. "ADMINISTRATIVE AGENT" shall have the meaning provided in the first paragraph of this Agreement and shall include any successor to the Administrative Agent appointed pursuant to section 11.9. "ADMINISTRATIVE QUESTIONNAIRE" shall mean an Administrative Questionnaire in a form supplied by the Administrative Agent. "AFFILIATE" shall mean, with respect to any person, any other person directly or indirectly controlling, controlled by, or under direct or indirect common control with such person. A person shall be deemed to control a second person if such first person possesses, directly or indirectly, the power (i) to vote 20% or more of the securities having ordinary voting power for the election of directors or managers of such second person or (ii) to direct or cause the direction of the management and policies of such second person, whether through the ownership of voting securities, by contract or otherwise. Notwithstanding the foregoing, (x) a director, officer or employee of a person shall not, solely by reason of such status, be considered an Affiliate of such 2 person; and (y) neither the Administrative Agent nor any Lender shall in any event be considered an Affiliate of the Borrower or any other Credit Party or any of their respective Subsidiaries. "AGENTS" shall have the meaning provided in the first paragraph of this Agreement. "AGREEMENT" shall have the meaning provided in the first paragraph of this Agreement. "ALTERNATIVE CURRENCY" shall mean Euros. "ALTERNATIVE CURRENCY EQUIVALENT" shall mean, on any date of determination, the equivalent in the Alternative Currency of Dollars, determined in accordance with section 1.5. "ALTERNATIVE CURRENCY GENERAL REVOLVING LOAN" means a General Revolving Loan made in the Alternative Currency. "ALTERNATIVE CURRENCY GENERAL REVOLVING LOAN LIMITATION" shall mean an amount in the Alternative Currency with a Dollar Equivalent equal to $200,000,000. "APPLICABLE FACILITY FEE RATE" shall have the meaning provided in section 4.1(a). "APPLICABLE LIBOR MARGIN" shall have the meaning provided in section 2.7(h). "APPLICABLE LENDING OFFICE" shall mean, (i) with respect to each Lender and its General Revolving Loans and Term Loans which are Prime Rate Loans, such Lender's Domestic Lending Office, (ii) with respect to each Lender and its General Revolving Loans and Term Loans which are LIBOR Loans, such Lender's Eurodollar Lending Office, (iii) with respect to each Lender and its Competitive Bid Loans, such Lender's Domestic Lending Office, (iv) with respect to the Swing Line Lender and its Swing Line Revolving Loans, its Domestic Lending Office, and (v) with respect to any Designated Bidder and its Competitive Bid Loans, such Designated Bidder's Applicable Lending Office, located in the United States, as specified in the Designation Agreement of such Designated Bidder. "APPLICABLE PRIME RATE MARGIN" shall have the meaning provided in section 2.7(h). "ASSET SALE" shall mean the sale, transfer or other disposition (including by means of sale and leaseback transaction, and by means of mergers, consolidations, and liquidations of a corporation, partnership or limited liability company of the interests therein of the Borrower or any Subsidiary) by the Borrower or any Subsidiary to any person other than the Borrower or any Subsidiary of any of their respective assets (other than sales, transfers or other dispositions of inventory, or obsolete or excess furniture, fixtures, equipment or other property, tangible or intangible, in the ordinary course of business). "ASSIGNMENT AGREEMENT" shall mean an Assignment Agreement substantially in the form of Exhibit D hereto. "ATTRIBUTABLE DEBT" shall mean, as to any particular lease under which any person is at the time liable, at any date as of which the amount thereof is to be determined, the total net amount of rent required to be paid by such person under such lease during the remaining term 3 thereof (after giving effect to any extensions at the option of the lessor), discounted from the respective due dates thereof to such date at the rate of 1% per annum over the interest rate which would then be applicable to a new Borrowing of Eurodollar Loans under the General Revolving Facility with an Interest Period of six months, compounded semi-annually. The net amount of rent required to be paid under any such lease for any such period, after excluding amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges. In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated. "AUTHORIZED OFFICER" shall mean any officer or employee of the Borrower designated as such in writing to the Administrative Agent by the Borrower. "BANKRUPTCY CODE" shall have the meaning provided in section 10.1(h). "BORROWER" shall have the meaning provided in the first paragraph of this Agreement. "BORROWING" shall mean a General Revolving Borrowing, a Swing Line Revolving Borrowing, a Term Borrowing or a Competitive Bid Borrowing, as applicable. "BUSINESS DAY" shall mean (i) for all purposes other than as covered by clause (ii) below, any day excluding Saturday, Sunday and any day which shall be in the city in which the Payment Office is located a legal holiday or a day on which banking institutions are authorized by law or other governmental actions to close and (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on, LIBOR Loans, (A) any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in Dollar deposits (or, in the case of LIBOR Loans denominated in the Alternative Currency, such Alternative Currency) in the interbank Eurodollar market, and (B) with respect to LIBOR Loans denominated in the Alternative Currency, on which banks are not authorized or required to be closed in the principal financial center in the country of issue of such Alternative Currency (or in the case of LIBO Rate Loans denominated in Euros, Frankfurt am Main, Germany). "CAPITAL LEASE" as applied to any person shall mean any lease of any property (whether real, personal or mixed) by that person as lessee which, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that person. "CAPITALIZED LEASE OBLIGATIONS" shall mean all obligations under Capital Leases of the Borrower or any of its Subsidiaries in each case taken at the amount thereof accounted for as liabilities identified as "capital lease obligations" (or any similar words) on a consolidated balance sheet of the Borrower and its Subsidiaries prepared in accordance with GAAP. "CAPITAL STOCK" means, (a) in the case of a corporation, any and all capital or corporate stock, including shares of preferred or preference stock of such corporation, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) in respect of corporate or capital stock, (c) in the case of a partnership or limited liability company, any and all partnership or membership interests (whether general or limited) and (d) any other interest or participation that confers on a person 4 the right to receive a share of the profits and losses of, or distributions of assets of, the issuing person. "CERCLA" shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as the same may be amended from time to time, 42 U.S.C. Section 9601 et seq. "CHANGE OF CONTROL" shall mean and include any of the following: (i) during any period of two consecutive calendar years, individuals who at the beginning of such period constituted the Borrower's Board of Directors (together with any new directors (x) whose election by the Borrower's Board of Directors was, or (y) whose nomination for election by the Borrower's shareholders was (prior to the date of the proxy or consent solicitation relating to such nomination), approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved), shall cease for any reason to constitute a majority of the directors then in office; (ii) any person or group (as such term is defined in section 13(d)(3) of the 1934 Act), other than the Borrower, any trustee or other fiduciary holding securities under an employee benefit plan of the Borrower and the Current Holder Group, shall acquire, directly or indirectly, beneficial ownership (within the meaning of Rule 13d-3 and 13d-5 of the 1934 Act) of more than 50%, on a fully diluted basis, of the economic or voting interest in the Borrower's capital stock; and/or (iii) the shareholders of the Borrower approve a plan of complete liquidation of the Borrower or an agreement or agreements for the sale or disposition by the Borrower of all or substantially all of the Borrower's assets. "CLOSING DATE" shall mean the date, on or after the Effective Date, upon which the conditions specified in section 6.1 are satisfied. "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and the rulings issued thereunder. Section references to the Code are to the Code, as in effect at the Effective Date and any subsequent provisions of the Code, amendatory thereof, supplemental thereto or substituted therefor. "COMMITMENT" shall mean, with respect to each Lender, its General Revolving Commitment, its Swing Line Revolving Commitment and/or its Term Commitment, as applicable. "COMPETITIVE BID BORROWING" shall mean a borrowing consisting of one or more Competitive Bid Loans made pursuant to section 2.3. "COMPETITIVE BID LOAN" shall mean a Loan denominated in Dollars made pursuant to section 2.3. "COMPETITIVE BID NOTE" shall have the meaning provided in section 2.4(a). 5 "COMPETITIVE BID REDUCTION" shall have the meaning provided in section 2.1. "CONFIDENTIAL INFORMATION MEMORANDUM" shall have the meaning provided in section 7.8(c). "CONSOLIDATED AMORTIZATION EXPENSE" shall mean, for any period, all amortization expenses of the Borrower and its Subsidiaries, all as determined for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. "CONSOLIDATED DEPRECIATION EXPENSE" shall mean, for any period, all depreciation expenses of the Borrower and its Subsidiaries, all as determined for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. "CONSOLIDATED EBITDA" shall mean, for any period, Consolidated Net Income for such period; PLUS (A) the sum, without duplication, of the amounts for such period included in determining such Consolidated Net Income of (i) Consolidated Fixed Charges (other than dividends), (ii) Consolidated Income Tax Expense, (iii) Consolidated Depreciation Expense, (iv) Consolidated Amortization Expense, (v) non-cash losses and charges which are properly classified as extraordinary or nonrecurring (including any charges relating to the 2001 severance program in an aggregate amount not to exceed $7,000,000 and any restructuring and integration charges arising out of the DMC2 Acquisition in an aggregate amount not to exceed $30,000,000), and (vi) Expense Payments; LESS (B) gains on sales of assets (excluding sales in the ordinary course of business) and other gains which are properly classified as extraordinary or nonrecurring; all as determined for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. Notwithstanding the foregoing, in determining Consolidated Net Income for purposes of this definition there shall be excluded therefrom (i) the income (or loss) of any entity (other than Subsidiaries of the Borrower) in which the Borrower or any of its Subsidiaries has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to the Borrower or any of its Subsidiaries during such period, and (ii) the income of any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary. In addition and notwithstanding the foregoing, the Borrower's Consolidated EBITDA for any Testing Period shall (x) include the appropriate financial items for any person or business unit which has been acquired by the Borrower for any portion of such Testing Period prior to the date of acquisition, and (y) exclude the appropriate financial items for any person or business unit which has been disposed of by the Borrower, for the portion of such Testing Period prior to the date of disposition; PROVIDED that, with respect to the appropriate financial items for the Ferro Divisions, in computing Consolidated EBITDA for the period ending on the last day of (i) the fourth fiscal quarter of the 2001 fiscal year, such financial items shall be those for the fourth fiscal quarter of the 2001 fiscal year MULTIPLIED by four, (ii) the first fiscal quarter of the 2002 fiscal year, such financial items shall be those for the fourth fiscal quarter of the 2001 fiscal year and the first fiscal quarter of the 2002 fiscal year MULTIPLIED by two, (iii) the second fiscal quarter 6 of the 2002 fiscal year, such financial items shall be those for the fourth fiscal quarter of the 2001 fiscal year, the first fiscal quarter of the 2002 fiscal year and the second fiscal quarter of the 2002 fiscal year MULTIPLIED by 1.333. "CONSOLIDATED FIXED CHARGES" shall mean, for any period, the sum of (a) Consolidated Interest Expense during such period, PLUS (b) financing expenses paid in connection with Permitted Receivables Programs during such period, PLUS (c) all Capital Lease and Synthetic Lease expenses paid during such period, PLUS (d) dividends paid by the Borrower during such period. "CONSOLIDATED INCOME TAX EXPENSE" shall mean, for any period, all provisions for taxes based on the net income of the Borrower or any of its Subsidiaries (including, without limitation, any additions to such taxes, and any penalties and interest with respect thereto), all as determined for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. "CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, total interest expense (including that which is capitalized, that which is attributable to Capital Leases or Synthetic Leases and the pre-tax equivalent of dividends payable on Redeemable Stock) of the Borrower and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of the Borrower and its Subsidiaries, BUT EXCLUDING, HOWEVER, any amortization or write-off of deferred financing costs and any charges for prepayment penalties on prepayment of Indebtedness. "CONSOLIDATED NET INCOME" shall mean, for any period, the net income (or loss), without deduction for minority interests, of the Borrower and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP. "CONSOLIDATED NET TANGIBLE ASSETS" shall mean the aggregate amount of assets (less applicable reserves and other properly deductible items), after deducting therefrom (i) all current liabilities (excluding any thereof constituting Indebtedness by reason of being renewable or extendible for a maturity longer than one year), and (ii) all goodwill and intangibles, including trade names trademarks, patents and unamortized debt discount and expense, all as determined for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. "CONSOLIDATED NET WORTH" shall mean at any time for the determination thereof all amounts which, in conformity with GAAP, would be included under the caption "total stockholders' equity" (or any like caption) on a consolidated balance sheet of the Borrower as at such date; PROVIDED that in no event shall Consolidated Net Worth include any amounts in respect of Redeemable Stock. "CONTINUE", "CONTINUATION" and "CONTINUED" each refers to a continuation of General Revolving Loans and/or Term Loans consisting of LIBOR Loans for an additional Interest Period as provided in section 2.8. "CONVERT", "CONVERSION" and "CONVERTED" each refers to a conversion of General Revolving Loans or Term Loans of one Type into General Revolving Loans or Term Loans of another Type, pursuant to section 2.5, 2.8(b), 2.9 or 5.2. 7 "CREDIT DOCUMENTS" shall mean this Agreement, the Notes, any Letter of Credit Document, the Subsidiary Guaranty, the Short Term Credit Facility Agreement and any notes issued in connection therewith, and any pledge or security agreement delivered pursuant to section 8.14. "CREDIT EVENT" shall mean the making of any Loans and/or the issuance of any Letter of Credit. "CREDIT PARTY" shall mean the Borrower and each of its Subsidiaries which is a party to any Credit Document. "CSFB" shall have the meaning provided in the first paragraph of this Agreement, and its successors and assigns. "CURRENT HOLDER GROUP" shall mean (i) those persons who are officers and directors of the Borrower at the Effective Date, (ii) the spouses, heirs, legatees, descendants and blood relatives to the third degree of consanguinity of any such person, (iii) the executors and administrators of the estate of any such person, and any court appointed guardian of any such person, and/or (iv) any trust for the benefit of any such person referred to in the foregoing clauses (i) and (ii) or any other persons, so long as one or more members of the Current Holder Group has the exclusive right to control the voting and disposition of securities held by such trust. "DEBT" shall mean, on any date, without duplication, the outstanding principal amount of all Indebtedness of the Borrower and its Subsidiaries of the type referred to in clause (i) (which, in the case of the Loans, shall be deemed to equal the average daily outstanding amount of the Loans for the fiscal quarter ending on the date of determination LESS the amount of any Loans prepaid during such fiscal quarter pursuant to section 5.2), clause (ii), clause (iii), clause (iv) (which shall include only the face amount of letters of credit that have been drawn), clause (v), clause (vi), clause (vii), clause (viii) and clause (xii), in each case of the definition of Indebtedness (exclusive of intercompany Indebtedness between the Borrower and any of its Subsidiaries or between any Subsidiaries of the Borrower) and, without duplication, any Guaranty Obligation in respect of any of the foregoing. "DEFAULT" shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default. "DEFAULTING LENDER" shall mean any Lender with, respect to which a Lender Default is in effect. "DESIGNATED BIDDER" shall mean (i) an Eligible Transferee or (ii) a special purpose corporation which is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and that issues (or the parent of which issues) commercial paper rated at least Prime-1 (or the then equivalent grade) by Moody's or A-1 (or the then equivalent grade) by S&P, that, in either case, (A) is organized under the laws of the United States or any State thereof, (B) shall have become a party to this Agreement pursuant to section 12.4(d), and (C) is not otherwise a Lender. 8 "DESIGNATION AGREEMENT" shall mean a designation agreement entered into by a Lender (other than a Designated Bidder) and a Designated Bidder, and accepted by the Administrative Agent, in substantially the form of Exhibit E hereto. "DISPOSITION" shall mean any sale, transfer or other conveyance (including by way of merger) of any of the Borrower's or its Subsidiaries' assets (including accounts receivable and Capital Stock of Subsidiaries) to any other Person in a single transaction or series of transactions. "DMC(2)" shall have the meaning provided in the first whereas clause of this Agreement. "DMC(2) ACQUISITION" shall have the meaning provided in the first whereas clause of this Agreement. "DOLLARS", "U.S. DOLLARS" and the sign "$" each means lawful money of the United States. "DOLLAR EQUIVALENT" means, on any date of determination, the equivalent in Dollars of the Alternative Currency, determined in accordance with section 1.5. "DOMESTIC LENDING OFFICE" shall mean, with respect to any Lender, the office of such Lender specified as its Domestic Lending Office in its Administrative Questionnaire or in the Assignment Agreement pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. "DOMESTIC SUBSIDIARY" shall mean any Subsidiary organized under the laws of the United States of America, any State thereof, the District of Columbia, or any United States possession, the chief executive office and principal place of business of which is located in, and which conducts the majority of its business within, the United States of America and its territories and possessions. "EFFECTIVE DATE" shall have the meaning provided in section 12.10. "ELIGIBLE TRANSFEREE" shall mean and include a commercial bank, financial institution or other "accredited investor" (as defined in SEC Regulation D); PROVIDED that such person: (i) with respect only to assignments pursuant to section 12.4(c), is not disapproved in writing by the Borrower in a notice given to the Lender requesting such assignment and the Administrative Agent specifying the reasons for such disapproval, within five Business Days following the giving of notice to the Borrower of the identity of any proposed transferee (any such disapproval by the Borrower must be reasonable); PROVIDED that the Borrower shall not be entitled to exercise the foregoing right of disapproval if and so long as any Event of Default shall have occurred and be continuing; and (ii) is not a direct competitor of the Borrower or engaged in the same or similar business as the Borrower and its Subsidiaries considered as an entirety or is not an Affiliate of any such competitors of the Borrower and its Subsidiaries. 9 "EMU" shall mean economic and monetary union as contemplated in the Treaty on European Union. "EMU LEGISLATION" shall mean legislative measures of the European Council for the introduction of, changeover to or operation of a single or unified European currency (whether known as the euro or otherwise), being in part the implementation of the third stage of EMU. "ENVIRONMENTAL CLAIMS" shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, investigations or proceedings relating in any way to any Environmental Law or any permit issued under any such law (hereafter "CLAIMS"), including, without limitation, (i) any and all Claims by governmental or regulatory authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (ii) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the storage, treatment or Release (as defined in CERCLA) of any Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment. "ENVIRONMENTAL LAW" shall mean any applicable Federal, state, foreign or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy and rule of common law now or hereafter in effect and in each case as amended, and any binding and enforceable judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment issued to or rendered against the Borrower or any of its Subsidiaries relating to the environment, employee health and safety or Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C. Section 2601 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section 3803 ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 ET SEQ.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 ET SEQ., the Hazardous Material Transportation Act, 49 U.S.C. Section 1801 ET SEQ. and the Occupational Safety and Health Act, 29 U.S.C. Section 651 ET SEQ. (to the extent it regulates occupational exposure to Hazardous Materials); and any state and local or foreign counterparts or equivalents, in each case as amended from time to time. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the Effective Date and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor. "ERISA AFFILIATE" shall mean each person (as defined in section 3(9) of ERISA) which together with the Borrower or a Subsidiary of the Borrower would be deemed to be a "single employer" (i) within the meaning of section 414(b), (c), (m) or (o) of the Code or (ii) as a result of the Borrower or a Subsidiary of the Borrower being or having been a general partner of such person. "EURO" shall mean the single currency of Participating Member States of the European Union. 10 "EURODOLLAR LENDING OFFICE" shall mean, with respect to any Lender, the office of such Lender specified as its Eurodollar Lending Office in its Administrative Questionnaire or in the Assignment Agreement pursuant to which it became a Lender, or such other office or offices for LIBOR Loans of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. "EVENT OF DEFAULT" shall have the meaning provided in section 10.1. "EXCLUDED EQUITY PROCEEDS" means any proceeds received by the Borrower or any of its Subsidiaries from the sale or issuance by such person of its Capital Stock or any warrants or options in respect of any such Capital Stock or the exercise of any such warrants or options, in each case pursuant to any such sale, issuance or exercise constituting or resulting from (a) capital contributions to, or Capital Stock issuances by the Borrower or any of its Subsidiaries (exclusive of any such contribution or issuance resulting from a public offering or a widely distributed private offering exempted from the registration requirements of section 5 of the Securities Act of 1933, as amended), (b) any subscription agreement, option plan, incentive plan or similar arrangement with any officer, employee or director of such person or any of its Subsidiaries, (c) any loan made by the Borrower or any of its Subsidiaries in the form of loans to officers, directors and employees of the Borrower and any Subsidiaries for the sole purpose of purchasing the Capital Stock of the Borrower or the Capital Stock of any person that directly or indirectly holds the Capital Stock of the Borrower or of refinancing any such loans made by others (or purchases of such loans made by others), (d) the sale of any Capital Stock of the Borrower to any officer, director or employee described in clause (b) above; PROVIDED that such proceeds do not exceed $15,000,000 annually, (e) the exercise of any options or warrants issued to any officer, employee or director pursuant to any agreement, plan or arrangement described in clause (b) above or (f) the exercise of any warrants. "EXISTING CREDIT FACILITY" shall have the meaning provided in the second whereas clause of this Agreement. "EXISTING INDEBTEDNESS" shall have the meaning provided in section 7.18. "EXISTING INDEBTEDNESS AGREEMENTS" shall have the meaning provided in section 7.18. "EXPENSE PAYMENTS" shall have the meaning provided in the second whereas clause of this Agreement. "FACILITY" shall mean the General Revolving Facility, the Swing Line Revolving Facility or the Term Facility, as applicable, and "FACILITIES" shall mean all of the foregoing. "FACILITY FEE" shall have the meaning provided in section 4.1(a). "FACING FEE" shall have the meaning provided in section 4.1(c). "FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any period, a fluctuating interest rate equal for each day during such period to the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System arranged by Federal Funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding 11 Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal Funds brokers of recognized standing selected by the Administrative Agent. "FEES" shall mean all amounts payable pursuant to, or referred to in, section 4.1. "FERRO DIVISIONS" shall have the meaning provided in the first whereas clause of this Agreement. "FIXED CHARGE COVERAGE RATIO" shall mean, on any date, the ratio of (a) Consolidated EBITDA for the then most recent Testing Period, LESS capital expenditures determined in accordance with GAAP made during such Testing Period to (b) Consolidated Fixed Charges for the then most recent Testing Period. "FOREIGN SUBSIDIARY" shall mean any Subsidiary (i) which is not incorporated in the United States and substantially all of whose assets and properties are located, or substantially all of whose business is carried on, outside the United States, or (ii) substantially all of whose assets consist of Subsidiaries that are Foreign Subsidiaries as defined in clause (i) of this definition. "FUNDED DEBT" shall mean, as of any date of determination, all indebtedness for money borrowed having a maturity of more than 12 months from such date of determination or having a maturity of less than 12 months but by its terms being renewable or extendible beyond 12 months from such date at the option of the borrower or issuer. "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time; it being understood and agreed that determinations in accordance with GAAP for purposes of section 9, including defined terms as used therein, are subject (to the extent provided therein) to section 1.3 and 12.7(a). "GENERAL REVOLVING BORROWING" shall mean the incurrence of General Revolving Loans consisting of one Type of Loan by the Borrower from all of the Lenders having Commitments in respect thereof on a PRO RATA basis on a given date (or resulting from Conversions or Continuations on a given date), having in the case of LIBOR Loans the same Interest Period. "GENERAL REVOLVING COMMITMENT" shall mean, with respect to each Lender, the amount set forth opposite such Lender's name on Annex I as its "General Revolving Commitment" as the same may be reduced from time to time pursuant to section 4.2, 4.3 and/or 10.2 or adjusted from time to time as a result of assignments to or from such Lender pursuant to section 12.4. "GENERAL REVOLVING COMMITMENT AMOUNT" shall mean, on any date, $373,000,000, as such amount may be reduced from time to time pursuant to section 4.2, 4.3 and/or 10.2. "GENERAL REVOLVING FACILITY" shall mean the credit facility evidenced by the Total General Revolving Commitment. "GENERAL REVOLVING FACILITY PERCENTAGE" shall mean at any time for any Lender with a General Revolving Commitment, the percentage obtained by dividing such Lender's General 12 Revolving Commitment by the Total General Revolving Commitment; PROVIDED that if the Total General Revolving Commitment has been terminated, the General Revolving Facility Percentage for each Lender with a General Revolving Commitment shall be determined by dividing such Lender's General Revolving Commitment immediately prior to such termination by the Total General Revolving Commitment immediately prior to such termination. "GENERAL REVOLVING LOAN" shall have the meaning provided in section 2.1(a). "GENERAL REVOLVING MATURITY DATE" shall mean September 7, 2006, subject in any case to earlier termination as provided in this Agreement. "GENERAL REVOLVING NOTE" shall have the meaning provided in section 2.4(a). "GUARANTY OBLIGATIONS" shall mean as to any person (without duplication) any obligation of such person guaranteeing any Indebtedness ("PRIMARY INDEBTEDNESS") of any other person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including, without limitation, any obligation of such person, whether or not contingent, (a) to purchase any such primary Indebtedness or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary Indebtedness or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary Indebtedness of the ability of the primary obligor to make payment of such primary Indebtedness, or (d) otherwise to assure or hold harmless the owner of such primary Indebtedness against loss in respect thereof; PROVIDED that the term Guaranty Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guaranty Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary Indebtedness in respect of which such Guaranty Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such person is required to perform thereunder) as determined by such person in good faith. "HEDGE AGREEMENT" shall mean (i) any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement designed to protect against fluctuations in interest rates, (ii) any currency swap agreement, forward currency purchase agreement or similar agreement or arrangement designed to protect against fluctuations in currency exchange rates, and (iii) any forward commodity purchase agreement or similar agreement or arrangement designed to protect against fluctuations in raw material or other commodity prices. "HAZARDOUS MATERIALS" shall mean (i) any petrochemical or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; and (ii) any chemicals, materials or substances defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", "restricted hazardous materials", "extremely hazardous wastes", "restrictive hazardous wastes", "toxic substances", "toxic pollutants", "contaminants" or "pollutants", or words of similar meaning and regulatory effect, under any applicable Environmental Law. 13 "INDEBTEDNESS" of any person shall mean without duplication: (i) all indebtedness of such person for borrowed money; (ii) all bonds, notes, debentures and similar debt securities of such person; (iii) the deferred purchase price of capital assets or services which in accordance with GAAP would be shown on the liability side of the balance sheet of such person; (iv) the face amount of all letters of credit issued for the account of such person and, without duplication, all drafts drawn thereunder; (v) all obligations, contingent or otherwise, of such person in respect of bankers' acceptances; (vi) all Indebtedness of a second person secured by any Lien on any property owned by such first person, whether or not such indebtedness has been assumed; (vii) all Capitalized Lease Obligations of such person; (viii) the present value, determined on the basis of the implicit interest rate, of all basic rental obligations under all Synthetic Leases of such person; (ix) all obligations of such person to pay a specified purchase price for goods or services whether or not delivered or accepted, i.e., take-or-pay and similar obligations; (x) all net obligations of such person under Hedge Agreements; (xi) the full outstanding balance of trade receivables, notes or other instruments sold with full recourse (and the portion thereof subject to potential recourse, if sold with limited recourse), other than in any such case any thereof sold solely for purposes of collection of delinquent accounts and other than in connection with any Permitted Receivables Program; (xii) all obligations (other than intercompany obligations) of such person pursuant to any Permitted Receivables Program; (xiii) the stated value, or liquidation value if higher, of all Redeemable Stock of such person; and (xiv) all Guaranty Obligations of such person; PROVIDED that (x) neither trade payables nor other similar accrued expenses, in each case arising in the ordinary course of business, nor obligations in respect of insurance policies or performance or surety bonds which themselves are not guarantees of Indebtedness (nor drafts, acceptances or similar instruments evidencing the same nor obligations in respect of letters of credit supporting the payment of the same), shall constitute Indebtedness; and (y) the 14 Indebtedness of any person shall in any event include (without duplication) the Indebtedness of any other entity (including any general partnership in which such person is a general partner) to the extent such person is liable thereon as a result of such person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide expressly that such person is not liable thereon. "INDEX DEBT" shall mean senior, unsecured, long-term debentures or other debt securities of the Borrower that are not guaranteed by any other person or subject to any other credit support or enhancement. "INDEX DEBT RATING" shall mean, as of any date, the rating of the Borrower's Index Debt, as given by the Rating Agencies in their regular rating reports. "INTEREST PERIOD" with respect to any LIBOR Loan shall mean the interest period applicable thereto, as determined pursuant to section 2.8. "INVESTMENT GRADE" shall mean, with respect to Index Debt at any date of determination, that such Index Debt is rated by both Rating Agencies and that the Index Debt Rating is not lower than Baa3 from Moody's and not lower than BBB- from S&P. "JOINT LEAD ARRANGERS" shall have the meaning provided in the first paragraph of this Agreement. "LEASEHOLDS" of any person means all the right, title and interest of such person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures. "LENDER" shall have the meaning provided in the first paragraph of this Agreement and, except when used with reference to a Revolving Loan, a Term Loan, a Facility, a Commitment or a related term or defined term, shall also refer to each Designated Bidder to the extent it has made a Competitive Bid Loan which is then outstanding. "LENDER DEFAULT" shall mean (i) the refusal (which has not been retracted) of a Lender in violation of the requirements of this Agreement to make available its portion of any incurrence of Loans, to fund its portion of any Swing Line Participation Amount under section 2.6(b), or to fund its portion of any unreimbursed payment under section 3.4(c); or (ii) a Lender having notified the Administrative Agent and/or the Borrower that it does not intend to comply with the obligations under section 2.1, section 2.6(a) or (b) and/or section 3.4(c), in the case of either (i) or (ii) as a result of the appointment of a receiver or conservator with respect to such Lender at the direction or request of any regulatory agency or authority. "LENDER REGISTER" shall have the meaning provided in section 12.16. "LENDER TAX CERTIFICATE" shall have the meaning provided in section 5.5(c)(ii). "LETTER OF CREDIT" shall have the meaning provided in section 3.1(a). "LETTER OF CREDIT COMMITMENT AMOUNT" shall mean, on any date, $35,000,000, as such amount may be reduced from time to time pursuant to section 4.2, 4.3 and/or 10.2. 15 "LETTER OF CREDIT DOCUMENTS" shall have the meaning specified in section 3.2(a). "LETTER OF CREDIT FEE" shall have the meaning provided in section 4.1(b). "LETTER OF CREDIT ISSUER" shall mean in respect of any Letter of Credit issued hereunder, NCB, and/or such other Lender that is requested, and agrees, to so act by the Borrower, and is approved by the Administrative Agent. "LETTER OF CREDIT OUTSTANDINGS" shall mean, at any time, the sum, without duplication, of (i) the aggregate Stated Amount of all outstanding Letters of Credit (after converting the aggregate Stated Amount of all Alternative Currency Letters of Credit to the Dollar Equivalent thereof), and (ii) the aggregate amount of all Unpaid Drawings (after converting the aggregate Unpaid Drawings with respect to any disbursement made in the Alternative Currency to the Dollar Equivalent thereof). "LETTER OF CREDIT REQUEST" shall have the meaning provided in section 3.2(a). "LEVERAGE RATIO" shall mean, on any date, the ratio of (a) total Debt outstanding on such date to (b) Consolidated EBITDA for the then most recent Testing Period. "LIBOR LOANS" shall mean each Loan bearing interest at the rates provided in section 2.7(b). "LIEN" shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement or any lease in the nature thereof). "LOAN" shall mean a General Revolving Loan, a Swing Line Revolving Loan, a Term Loan or a Competitive Bid Loan, as applicable. "MARGIN STOCK" shall have the meaning provided in Regulation U. "MATERIAL ADVERSE EFFECT" shall mean (i) a material adverse effect on the business, operations, property, assets, liabilities, condition (financial or otherwise) or prospects of the Borrower, the Ferro Divisions or the Borrower and its Subsidiaries taken as a whole; (ii) any material adverse effect on the ability of the Borrower to perform its obligations under the Credit Documents to which it is a party; or (iii) any material adverse effect on the validity or effectiveness as against, or the enforceability against, any Credit Party of any of the Credit Documents to which it is a party. "MATERIAL SUBSIDIARY" shall mean, at any time, with reference to any person, any Subsidiary of such person (i) that has assets at such time comprising 5% or more of the consolidated assets of such person and its Subsidiaries, or (ii) whose operations in the current fiscal year are expected to, or whose operations in the most recent fiscal year did (or would have if such person had been a Subsidiary for such entire fiscal year), represent 5% or more of the consolidated earnings before interest, taxes, depreciation and amortization of such person and its Subsidiaries for such fiscal year. 16 "MINIMUM BORROWING AMOUNT" shall mean, with respect to (i) Swing Line Revolving Loans, $500,000, with minimum increments thereafter of $100,000; and (ii) General Revolving Loans and Term Loans which are (A) Prime Rate Loans, $1,000,000 (or the Alternative Currency Equivalent thereof with respect to Alternative Currency General Revolving Loans), with minimum increments thereafter of $100,000 (or the Alternative Currency Equivalent thereof with respect to Alternative Currency General Revolving Loans), or (B) LIBOR Loans, $5,000,000 (or the Alternative Currency Equivalent thereof with respect to Alternative Currency General Revolving Loans), with minimum increments thereafter of $1,000,000 (or the Alternative Currency Equivalent thereof with respect to Alternative Currency General Revolving Loans). "MONEY MARKET RATE LOAN" shall mean a Swing Line Revolving Loan bearing interest at a Quoted Rate. "MOODY'S" shall mean Moody's Investors Service, Inc. and its successors. "MORTGAGE" shall mean and include any mortgage, pledge, lien, security interest, conditional sale or other title retention agreement or other similar encumbrance. "MULTIEMPLOYER PLAN" shall mean a multiemployer plan, as defined in section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making or accruing an obligation to make contributions or has within any of the preceding three plan years made or accrued an obligation to make contributions. "MULTIPLE EMPLOYER PLAN" shall mean an employee benefit plan, other than a Multiemployer Plan, to which the Borrower or any ERISA Affiliate, and one or more employers other than the Borrower or an ERISA Affiliate, is making or accruing an obligation to make contributions or, in the event that any such plan has been terminated, to which the Borrower or an ERISA Affiliate made or accrued an obligation to make contributions during any of the five plan years preceding the date of termination of such plan. "NET DEBT PROCEEDS" shall mean with respect to the incurrence, sale or issuance by the Borrower or any Subsidiary of any Debt other than (x) Debt incurred as part of the Transaction or (y) Debt permitted by sections 9.5(a) through 9.5(f) and, if the Term Loans have been repaid in full, section 9.5(g), the EXCESS of: (a) the gross cash proceeds received by the Borrower or any such Subsidiary from such incurrence, sale, or issuance, OVER (b) the sum of (i) all reasonable and customary underwriting commissions and legal, investment banking, brokerage and accounting and other professional fees, sales commissions and disbursements and all other reasonable fees, expenses and charges, in each case actually incurred in connection with such incurrence, sale or issuance, (ii) in the case of any Debt incurred, sold or issued by any Foreign Subsidiary, any taxes or other costs or expenses resulting from repatriating any such proceeds to the United States, and (iii) in the case of any Debt incurred, sold or issued by a Subsidiary that is not a Wholly-Owned Subsidiary, an amount equal to the product of such gross cash proceeds (as reduced pursuant to subclauses (i) and (ii) of this clause (b)) multiplied by the percentage equity interest in such Subsidiary not held, directly or indirectly, by the Borrower. 17 "NET DISPOSITION PROCEEDS" means, with respect to any Disposition of any assets of the Borrower or any Subsidiary, other than Dispositions made as part of the Transaction and other sales permitted pursuant to section 9.2(a) and section 9.2(b), but including any sale or issuance of Capital Stock of any such Subsidiary to any Person other than the Borrower or any of its Subsidiaries, the EXCESS of (a) the sum of the gross cash proceeds received, directly or indirectly, by the Borrower or any Subsidiary from any such Disposition and any cash payments received in respect of promissory notes or other non-cash consideration delivered to the Borrower or such Subsidiary in respect thereof, OVER (b) the sum of (i) all reasonable and customary fees and expenses with respect to legal, investment banking, brokerage, accounting and other professional fees, sales commissions and disbursements and all other reasonable fees, expenses and charges, in each case actually incurred in connection with such Disposition, (ii) all taxes and other governmental costs and expenses actually paid or estimated by the Borrower (in good faith) to be payable in cash in connection with such Disposition (including, in the event of a Disposition of non-U.S. assets, any such taxes or other costs or expenses resulting from repatriating any such proceeds to the United States), (iii) the proceeds received by Foreign Subsidiaries to the extent such proceeds may not, under applicable law, charter provisions or otherwise, be paid to the Borrower or another Subsidiary in the form of a dividend or similar distribution, (iv) payments made by the Borrower or any Subsidiary to retire Indebtedness (other than the Loans) of the Borrower or any Subsidiary where payment of such Indebtedness is required in connection with such Disposition, (v) reserves for purchase price adjustments and retained fixed liabilities reasonably expected to be payable by the Borrower and its Subsidiaries in cash in connection therewith and (vi) in the case of any Disposition by a Subsidiary that is not a Wholly-Owned Subsidiary, an amount equal to the product of such gross cash proceeds (as reduced pursuant to subclauses (i) through (v) of this clause (b)) multiplied by the percentage equity interest in such Subsidiary not held, directly or indirectly, by the Borrower; PROVIDED that if, after the payment of all taxes, purchase price adjustments and retained fixed liabilities with respect to such Disposition, the amount of estimated taxes, purchase price adjustments or retained fixed liabilities, if any, pursuant to clause (b)(ii) or (b)(v) above exceeded the tax, purchase price adjustment or retained fixed liabilities amount actually paid in cash in respect of such Disposition, the aggregate amount of such excess shall, at such time, constitute Net Disposition Proceeds. "NET EQUITY PROCEEDS" shall mean with respect to any sale or issuance by the Borrower to any person of any Capital Stock of the Borrower, or any warrants or options with respect to any such Capital Stock or the exercise of any such warrants or options after the Effective Date (exclusive of any such proceeds constituting Excluded Equity Proceeds) the excess of: (i) the gross cash proceeds received by the Borrower from such sale, exercise or issuance, OVER (ii) the sum of all reasonable and customary underwriting commissions and legal, investment banking, brokerage, accounting and other professional fees, sales commissions and disbursements and all other reasonable fees, expenses and charges, in each case actually incurred in connection with such sale or issuance. "NCB" shall have the meaning provided in the first paragraph of this Agreement, and its successors and assigns. "1934 ACT" shall mean the Securities Exchange Act of 1934, as amended. 18 "NON-DEFAULTING LENDER" shall mean each Lender other than a Defaulting Lender. "NOTE" shall mean a General Revolving Note, a Swing Line Revolving Note, a Term Note or a Competitive Bid Note, as applicable. "NOTICE OF BORROWING" shall have the meaning provided in section 2.2(a) or shall mean a Notice of Competitive Bid Borrowing, as applicable. "NOTICE OF COMPETITIVE BID BORROWING" shall have the meaning provided in section 2.3(a). "NOTICE OF CONTINUATION" shall have the meaning provided in section 2.8(a). "NOTICE OF CONVERSION" shall have the meaning provided in section 2.5. "NOTICE OFFICE" shall mean the office of the Administrative Agent at 629 Euclid Avenue, LOC #3028, Cleveland, Ohio 44114, Attention: Agency Services (telephone: (216) 222-2314; facsimile: (216) 222-0012), or such other office, located in a city in the United States Eastern Time Zone, as the Administrative Agent may designate to the Borrower from time to time. "OBLIGATIONS" shall mean all amounts, direct or indirect, contingent or absolute, of every type or description, and at any time existing, owing by the Borrower to the Agents or any Lender or Designated Bidder pursuant to the terms of this Agreement or any other Credit Document. "OMG" shall have the meaning provided in the first whereas clause of this Agreement. "OPERATING LEASE" as applied to any person shall mean any lease of any property (whether real, personal or mixed) by that person as lessee which, in conformity with GAAP, is not accounted for as a Capital Lease on the balance sheet of that person. "PARI PASSU" shall mean, when used with reference to the ranking of any Debt of any person in relation to any other Debt of such person, that each such Debt (a) either (i) is not subordinate in right of payment to any other Debt of such person or (ii) is subordinate in right of payment to the same Debt of such person as is the other and is so subordinate to the same extent and (b) is not subordinate in right of payment to the other or to any Debt of such person as to which the other is not so subordinate. "PARTICIPANT" shall have the meaning provided in section 3.4(a). "PARTICIPATING MEMBER STATE" shall mean each state so described in any EMU Legislation. "PAYMENT OFFICE" shall mean the office of the Administrative Agent at 629 Euclid Avenue, LOC #3028, Cleveland, Ohio 44114, Attention: Agency Services (telephone: (216) 222-2314; facsimile: (216) 222-0012), or such other office, located in a city in the United States Eastern Time Zone, as the Administrative Agent may designate to the Borrower from time to time. 19 "PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto. "PERMITTED LIENS" shall mean: (a) any Liens for current taxes, assessments and other governmental charges not yet due and payable or being contested in good faith by the Borrower or one or more of its Subsidiaries by appropriate proceedings; (b) any mechanic's, materialman's, carrier's, warehousemen's or similar Liens for sums not yet due or being contested in good faith by the Borrower or one or more of its Subsidiaries by appropriate proceedings; (c) Liens in favor of the Lenders under this Agreement; (d) easements, rights-of-way, restrictions and other similar encumbrances on the Real Property of the Borrower or one or more of its Subsidiaries incurred in the ordinary course of business that individually or in the aggregate are not substantial in amount and that 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 Borrower or any of its Subsidiaries; (e) Liens incurred or deposits made in the ordinary course of business, including Liens in connection with workers' compensation, unemployment insurance and other types of social security and Liens to secure performance of tenders, statutory obligations, trade contracts (other than for Debt), surety and appeal bonds (in the case of appeal bonds such Lien shall not secure any reimbursement or indemnity obligation in an amount greater than $500,000), bids, leases that are not Capital Leases, performance bonds, sales contracts and other similar obligations, deposits securing liability to insurance carriers under insurance or self-insurance arrangements, in each case, not incurred in connection with the obtaining of credit or the payment of a deferred purchase price, and which do not, in the aggregate, result in a Material Adverse Effect; (f) Liens existing upon the date hereof; (g) Liens securing obligations incurred to finance the deferred purchase price of property; PROVIDED that (i) such Liens shall be created within 120 days after the acquisition of such property, (ii) such Liens do not at any time encumber any property other than the property financed by such obligations, (iii) the amount of the obligation secured thereby is not increased, and (iv) the principal amount of an obligation secured by any such Lien shall at no time exceed the lesser of (A) 100% of the original purchase price of such property and (B) the fair value (as determined in good faith by the Board of Directors of the Borrower) of such property at the time it was acquired; (h) Liens securing obligations assumed in connection with acquisitions made in accordance with Section 9.3; PROVIDED that (i) such Liens exist at the time of the acquisition and were not created in anticipation thereof, (ii) any such Lien is not spread to 20 cover any additional property or assets after the time of such acquisition, and (iii) the amount of the obligation secured by any such Lien is not increased; (i) judgment Liens to the extent the entry of such judgment does not constitute a Default or Event of Default under the terms of this Agreement; (j) Liens created in connection with the Permitted Receivables Programs; and (k) Liens (not otherwise permitted hereunder) that secure obligations not exceeding (as to the Borrower and its Subsidiaries) $5,000,000 in the aggregate at any time outstanding; PROVIDED that such Liens are limited to assets other than accounts. "PERMITTED RECEIVABLES PROGRAMS" shall have the meaning provided in section 9.2(b). "PERSON" shall mean any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise or any government or political subdivision or any agency, department or instrumentality thereof. "PLAN" shall mean any multiemployer or single-employer plan as defined in section 4001 of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute by) the Borrower or a Subsidiary of the Borrower or an ERISA Affiliate, and each such plan for the five year period immediately following the latest date on which the Borrower, or a Subsidiary of the Borrower or an ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan. "PRICING GRID" shall have the meaning provided in section 2.7(h). "PRIME RATE" shall mean, for any period, a fluctuating interest rate per annum as shall be in effect from time to time which rate per annum shall at all times be equal to the greater of (i) the rate of interest established by NCB in Cleveland, Ohio, from time to time, as its prime rate, whether or not publicly announced, which interest rate may or may not be the lowest rate charged by it for commercial loans or other extensions of credit; and (ii) the Federal Funds Effective Rate in effect from time to time PLUS 1/2 of 1% per annum. "PRIME RATE LOAN" shall mean each Loan bearing interest at the rate provided in section 2.7(a). "PRINCIPAL DOMESTIC MANUFACTURING PROPERTY" shall mean any building, structure or other facility, together with the land upon which it is erected and fixtures comprising a part thereof, used primarily for manufacturing, processing or warehousing of the Borrower's products and located in the United States of America, owned or leased by the Borrower or any Subsidiary, the gross book value (without deduction of any depreciation reserves) of which on the date as of which the determination is being made exceeds 1% of Consolidated Net Tangible Assets, other than any such building, structure or other facility or portion thereof or any such land or fixture (i) which is financed by obligations issued by a State, a Territory, or a possession of the United States, or any political subdivision of any of the foregoing, or the District of Columbia, the interest on which is excludible from gross income of the holders thereof pursuant to the provisions of section 745 of Title 48 of the United States Code (or any successor to such 21 provisions) as in effect at the time of the issuance of such obligations, or (ii) which, in the opinion of the Board of Directors of the Borrower, is not of material importance to the total business conducted by the Borrower and its Subsidiaries as an entirety. "PROHIBITED TRANSACTION" shall mean a transaction with respect to a Plan that is prohibited under section 4975 of the Code or section 406 of ERISA and not exempt under section 4975 of the Code or section 408 of ERISA. "PROPERTY" of any person shall mean all of the right, title and interest of such person in and to any and all property, tangible or intangible, real or personal or mixed, of every kind and character and wherever located or whenever acquired. "PURCHASE AGREEMENT" shall have the meaning provided in the first whereas clause of this Agreement. "QUOTED RATE" shall have the meaning provided in section 2.2(b). "RATING AGENCY" shall mean S&P or Moody's; collectively, the "RATING AGENCIES." "RCRA" shall mean the Resource Conservation and Recovery Act, as the same may be amended from time to time, 42 U.S.C. Section 6901 ET SEQ. "REAL PROPERTY" of any person shall mean all of the right, title and interest of such person in and to land, improvements and fixtures, including Leaseholds. "REDEEMABLE STOCK" shall mean with respect to any person any capital stock or similar equity interests of such person that (i) is by its terms subject to mandatory redemption, in whole or in part, pursuant to a sinking fund, scheduled redemption or similar provisions, at any time prior to the General Revolving Maturity Date; or (ii) otherwise is required to be repurchased or retired on a scheduled date or dates, upon the occurrence of any event or circumstance, at the option of the holder or holders thereof, or otherwise, at any time prior to the General Revolving Maturity Date, other than any such repurchase or retirement occasioned by a "change of control" or similar event; PROVIDED that Redeemable Stock shall not include the Series A ESOP Convertible Preferred Stock of the Borrower. "REFERENCE BANKS" shall mean (i) NCB and (ii) any other Lender or Lenders selected as a Reference Bank by the Administrative Agent and the Required Lenders; PROVIDED that if any of such Reference Banks is no longer a Lender, such other Lender or Lenders as may be selected by the Administrative Agent acting on instructions from the Required Lenders. "REFINANCING" shall have the meaning provided in the second whereas clause of this Agreement. "REGULATION D" shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements. 22 "REGULATION U" shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing margin requirements. "REPORTABLE EVENT" shall mean an event described in section 4043 of ERISA or the regulations thereunder with respect to a Plan, other than those events as to which the notice requirement is waived under subsections .22, .23, .24, .25, .27, .28, .29, .30, .31, .32, .34, .35, .62, .63, .64, .65 or .67 of PBGC Regulation section 4043. "REQUIRED LENDERS" shall mean Non-Defaulting Lenders whose outstanding General Revolving Loans, outstanding Term Loans and Unutilized General Revolving Commitments constitute at least 51% of the sum of the total outstanding General Revolving Loans, outstanding Term Loans and Unutilized General Revolving Commitments of Non-Defaulting Lenders (PROVIDED that, for purposes hereof, neither the Borrower, nor any of its Affiliates, shall be included in (i) the Lenders holding such amount of such General Revolving Loans or such Term Loans or having such amount of such Unutilized General Revolving Commitments, or (ii) determining the aggregate unpaid principal amount of such General Revolving Loans, Term Loans or such Unutilized General Revolving Commitments); and PROVIDED, FURTHER, that for purpose of declaring the Loans due and payable pursuant to section 10.2, and for all purposes after the Loans become due and payable pursuant to section 10.2 or after the Total Commitment expires or is terminated, the outstanding Competitive Bid Loans of the Non-Defaulting Lenders shall be included together with the outstanding General Revolving Loans and outstanding Term Loans in determining the Required Lenders; and PROVIDED, FURTHER, that so long as any Term Loans remain outstanding, "Required Lenders" shall mean Non-Defaulting Lenders whose outstanding General Revolving Loans and Unutilized General Revolving Commitments, and Non-Defaulting Lenders whose outstanding Term Loans in each case constitute at least 51% of such Facilities. "RESTRICTED PAYMENT" shall have the meaning provided in section 9.11. "REVOLVING LOAN" shall mean a General Revolving Loan or a Swing Line Revolving Loan, as applicable. "SALE AND LEASEBACK TRANSACTION" shall have the meaning provided in section 9.4. "S&P" shall mean Standard & Poor's Ratings Group, a division of McGraw Hill, Inc., and its successors. "SEC" shall mean the United States Securities and Exchange Commission. "SEC REGULATION D" shall mean Regulation D as promulgated under the Securities Act of 1933, as amended, as the same may be in effect from time to time. "SHORT TERM CREDIT FACILITY AGREEMENT" shall mean the 364-Day Credit Agreement, dated as of the date hereof, among the Borrower, the lenders party thereto, CSFB and NCB, as amended, supplemented, amended and restated or otherwise modified from time to time. 23 "SHORT TERM CREDIT FACILITY REVOLVING LOANS" shall mean the loans to be made pursuant to the terms of the Short Term Credit Facility Agreement. "STATED AMOUNT" of each Letter of Credit shall mean the maximum available to be drawn thereunder (regardless of whether any conditions or other requirements for drawing could then be met). "SUBSIDIARY" of any person shall mean and include (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such person directly or indirectly through Subsidiaries and (ii) any partnership, association, joint venture or other entity in which such person directly or indirectly through Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise expressly provided, all references herein to "Subsidiary" shall mean a Subsidiary of the Borrower. "SUBSIDIARY GUARANTY" shall have the meaning provided in section 8.11(a). "SUBORDINATED INDEBTEDNESS" shall mean any Indebtedness which has been subordinated to the Obligations in such manner and to such extent as the Administrative Agent (acting on instructions from the Required Lenders) may require. "SWING LINE LENDER" shall mean NCB and its successors and assigns having the Swing Line Revolving Commitment. "SWING LINE PARTICIPATION AMOUNT" shall have the meaning provided in section 2.6(b). "SWING LINE REVOLVING BORROWING" shall mean the incurrence of a Swing Line Revolving Loan of a single Type from the Swing Line Lender on a given date, having in the case of a Money Market Loan a single maturity date and Quoted Rate. "SWING LINE REVOLVING COMMITMENT" shall mean, with respect to the Swing Line Revolving Lender, its commitment to make Swing Line Revolving Loans up to an aggregate principal amount equal to the Swing Line Revolving Commitment Amount. "SWING LINE REVOLVING COMMITMENT AMOUNT" shall mean, on any date, $15,000,000, as such amount may be reduced from time to time pursuant to sections 4.2, 4.3 and/or 10.2 or adjusted from time to time as a result of assignments to or from the Swing Line Lender pursuant to section 12.4. "SWING LINE REVOLVING FACILITY" shall mean the credit facility evidenced by the Swing Line Revolving Commitment. "SWING LINE REVOLVING LOAN" shall have the meaning provided in section 2.1(b). "SWING LINE REVOLVING NOTE" shall have the meaning provided in section 2.4(a). 24 "SYNTHETIC LEASE" shall mean any lease (i) which is accounted for by the lessee as an Operating Lease, and (ii) under which the lessee is intended to be the "owner" of the leased property for Federal income tax purposes. "TAXES" shall mean any and all income, stamp or other taxes, duties, levies, imposts, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any taxing authority, and all interest, penalties or similar liabilities with respect thereto, but excluding income and franchise taxes imposed on or measured by the net income or receipts of the Administrative Agent or any Lender by the taxing authority under the laws of which the Administrative Agent or such Lender, as applicable, is organized or in which it maintains its applicable lending office. "TERM BORROWING" shall mean the incurrence of Term Loans of one Type by the Borrower from all of the Lenders having Commitments in respect thereof on a PRO RATA basis on the Closing Date. "TERM COMMITMENT" shall mean, with respect to each Lender, the amount set forth opposite such Lender's name on Annex I as its "Term Commitment." "TERM COMMITMENT AMOUNT" shall mean, on any date, $300,000,000. "TERM FACILITY" shall mean the credit facility evidenced by the Total Term Commitment. "TERM LOAN" shall have the meaning provided in section 2.1(c). "TERM MATURITY DATE" shall mean March 5, 2002 or such later date to which the Term Maturity Date has been extended as provided in section 4.4, subject in any case to earlier maturity as provided in this Agreement. "TERM NOTE" shall have the meaning provided in section 2.4(a). "TESTING PERIOD" shall mean for any determination a single period consisting of the four consecutive fiscal quarters of the Borrower then last ended (whether or not such quarters are all within the same fiscal year), EXCEPT that if a particular provision of this Agreement indicates that a Testing Period shall be of a different specified duration, such Testing Period shall consist of the particular fiscal quarter or quarters then last ended which are so indicated in such provision. "TOTAL COMMITMENT" shall mean all of the Commitments hereunder. "TOTAL GENERAL REVOLVING COMMITMENT" shall mean the sum of the General Revolving Commitments of the Lenders. "TOTAL TERM COMMITMENT" shall mean the sum of the Term Commitments of the Lenders. "TRANSACTION" shall have the meaning provided in the second whereas clause of this Agreement. 25 "TRANSACTION DOCUMENTS" means the Purchase Agreement and all of the principal agreements, documents, instruments, certificates, filings, consents, approvals, board of directors resolutions and opinions furnished pursuant to or in connection with the Transaction, and the transactions contemplated hereby or thereby, each as amended, supplemented, amended and restated or otherwise modified from time to time as permitted in accordance with the terms hereof or of any other Credit Document. "TREATY ON EUROPEAN UNION" shall mean the Treaty of Rome of March 25, 1957, as amended by the Single European Act 1986 and the Maastricht Treaty (which was signed at Maastricht in February 1992, and came into force on November 1, 1993), as amended from time to time. "TYPE" shall mean any type of Loan determined with respect to the interest option applicable thereto, I.E., (i) a Prime Rate Loan or a LIBOR Loan, in the case of Borrowings under the General Revolving Facility or the Term Facility , (ii) a Prime rate Loan or a Money Market Rate Loan, in the case of Borrowings under the Swing Line Revolving Facility, or (iii) a Competitive Bid Loan with interest at a fixed rate or on some other basis, in the case of Borrowings of Competitive Bid Loans. "UCC" shall mean the Uniform Commercial Code as at the time in effect in any applicable jurisdiction. "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any, by which the actuarial present value of the accumulated plan benefits under the Plan as of the close of its most recent plan year exceeds the fair market value of the assets allocable thereto, each determined in accordance with Statement of Financial Accounting Standards No. 87, based upon the actuarial assumptions used by the Plan's actuary in the most recent annual valuation of the Plan. "UNITED STATES" and "U.S." each means United States of America. "UNPAID DRAWING" shall have the meaning provided in section 3.3(a). "UNUTILIZED GENERAL REVOLVING COMMITMENT" for any Lender at any time shall mean the excess of (i) such Lender's General Revolving Commitment at such time over (ii) the sum of (x) the principal amount of General Revolving Loans made by such Lender and outstanding at such time and (y) such Lender's General Revolving Facility Percentage of Letter of Credit Outstandings at such time. "UNUTILIZED TOTAL GENERAL REVOLVING COMMITMENT" shall mean, at any time, the excess of (i) the Total General Revolving Commitment at such time over (ii) the sum of (x) the aggregate principal amount of all General Revolving Loans then outstanding plus (y) the aggregate Letter of Credit Outstandings at such time. "UNUTILIZED SWING LINE REVOLVING COMMITMENT" shall mean, at any time, the excess of (i) the Swing Line Revolving Commitment at such time over (ii) the aggregate principal amount of all Swing Line Revolving Loans then outstanding. 26 "WHOLLY-OWNED SUBSIDIARY" shall mean each Subsidiary of the Borrower at least 95% of whose capital stock, equity interests and partnership interests, other than director's qualifying shares or similar interests, are owned directly or indirectly by the Borrower. "WRITTEN", "WRITTEN" or "IN WRITING" shall mean any form of written communication or a communication by means of telex, facsimile transmission, telegraph or cable. 1.2 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 means "to but excluding". 1.3 ACCOUNTING TERMS. Except as otherwise specifically provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; PROVIDED that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision of section 8 or 9 hereof to eliminate the effect of any change occurring after the Effective Date in GAAP or in the application thereof to such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any such provision hereof for such purposes), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance with the requirements of this Agreement. 1.4 TERMS GENERALLY. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any person shall be construed to include such person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to sections, Annexes and Exhibits shall be construed to refer to sections of, and Annexes and Exhibits to, this Agreement, and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all real property, tangible and intangible assets and properties, including cash, securities, accounts and contract rights, and interests in any of the foregoing. 1.5 CURRENCY EQUIVALENTS. For purposes of this Agreement, except as otherwise specified herein, (i) the Dollar Equivalent of the Alternative Currency shall be determined by using the quoted spot rate at which the Administrative Agent offers to exchange Dollars for such Alternative Currency at its Payment Office at 9:00 A.M. (local time at the Payment Office) two Business Days prior to the date on which such equivalent is to be determined, and (ii) the Alternative Currency Equivalent of Dollars shall be determined by using the quoted spot rate at 27 which the Administrative Agent's Payment Office offers to exchange such Alternative Currency for Dollars at the Payment Office at 9:00 A.M. (local time at the Payment Office) two Business Days prior to the date on which such equivalent is to be determined; PROVIDED that (A) the Dollar Equivalent of any Unpaid Drawing in respect of any Letter of Credit denominated in the Alternative Currency shall be determined at the time the drawing under such Letter of Credit was paid or disbursed by the applicable Letter of Credit Issuer; (B) for purposes of sections 2.1(a), 3.1(b) and 5.2(a), the Dollar Equivalent of the Stated Amount of any Letter of Credit denominated in the Alternative Currency shall be calculated (x) on the date of the issuance of the respective Letter of Credit, (y) on the first Business Day of each calendar month thereafter and (z) in any other case where the same is required or permitted to be calculated, on such other day as the Administrative Agent may, in its sole discretion, consider appropriate; and (C) for purposes of sections 4.1(b) and (c), the Dollar Equivalent of the Stated Amount of any Letter of Credit denominated in the Alternative Currency shall be calculated on the first day of each calendar month in the quarterly period in which the respective payment is due pursuant to said sections. SECTION 2. AMOUNT AND TERMS OF LOANS. 2.1 COMMITMENTS FOR LOANS. Subject to and upon the terms and conditions herein set forth, each Lender severally agrees to make a Loan or Loans to the Borrower, which Loans shall be drawn, to the extent such Lender has a Commitment under a Facility, under the applicable Facility, as set forth below: (a) GENERAL REVOLVING FACILITY. Revolving Loans under the General Revolving Facility (each a "GENERAL REVOLVING LOAN" and, collectively, the "GENERAL REVOLVING LOANS"): (i) may be incurred by the Borrower at any time and from time to time on and after the Closing Date and prior to the earlier of the Business Day immediately preceding the General Revolving Maturity Date or the date the Total General Revolving Commitment is terminated; (ii) except as otherwise provided, may, at the option of the Borrower, be incurred and maintained as, or Converted into, General Revolving Loans which are Prime Rate Loans or LIBOR Loans, in each case denominated in Dollars or the Alternative Currency as agreed by the Borrower and the Lenders; PROVIDED that all General Revolving Loans made as part of the same Borrowing shall, unless otherwise specifically provided herein, consist of General Revolving Loans of the same Type; (iii) may be repaid or prepaid and reborrowed in accordance with the provisions hereof; (iv) may only be made if after giving effect thereto the Unutilized Total General Revolving Commitment exceeds the outstanding Swing Line Revolving Loans; (v) shall not exceed for any Lender at any time outstanding that aggregate principal amount which, when added to the product at such time of (A) such Lender's General Revolving Facility Percentage, TIMES (B) the aggregate Letter of Credit Outstandings, equals the General Revolving Commitment of such Lender at such time; (vi) shall not in the aggregate exceed the General Revolving Commitment Amount and (vii) with respect to Alternative Currency General Revolving Loans, shall not in the aggregate exceed the Alternative Currency General Revolving Loan Limitation. (b) SWING LINE REVOLVING FACILITY. Revolving Loans under the Swing Line Revolving Facility (each a "SWING LINE REVOLVING LOAN" and, collectively, the "SWING 28 LINE REVOLVING LOANS"): (i) may be incurred by the Borrower at any time and from time to time on and after the Closing Date and prior to the earlier of the General Revolving Maturity Date or the date the Swing Line Revolving Commitment is terminated; (ii) shall be made by only by the Swing Line Lender; (iii) shall be incurred only for working capital requirements of the Borrower and its Subsidiaries; (iv) may only be incurred and maintained as Prime Rate Loans or Money Market Rate Loans, in each case denominated in Dollars; (v) shall in the case of any Swing Line Revolving Loan have a maturity of not more than 30 days, as specified in the Notice of Borrowing related thereto; (vi) may be repaid or prepaid and reborrowed in accordance with the provisions hereof; (vii) may only be made if after giving effect thereto the Unutilized Total General Revolving Commitment exceeds the outstanding Swing Line Revolving Loans; and (viii) shall not in the aggregate exceed the Swing Line Revolving Commitment Amount. (c) TERM FACILITY. Term Loans under the Term Facility (each a "TERM LOAN" and, collectively, the "TERM Loans"): (i) may be incurred by the Borrower in a single Borrowing on the Closing Date, (ii) except as otherwise provided, may, at the option of the Borrower, be incurred and maintained as, or Converted into, Term Loans which are Prime Rate Loans or LIBOR Loans, in each case denominated in Dollars or the Alternative Currency as agreed by the Borrower and the Lenders; PROVIDED that all Term Loans made as part of the same Borrowing shall, unless otherwise specifically provided herein, consist of Term Loans of the same Type; (iii) may be repaid or prepaid in accordance with the provisions hereof; PROVIDED that any amounts paid or repaid may not be reborrowed; (iv) shall not exceed for any Lender such Lender's Term Commitment; and (v) shall not in the aggregate exceed the Term Commitment Amount. Except as may otherwise be specifically provided in this Agreement, the Total General Revolving Commitment shall be deemed used (and correspondently, the Unutilized Total General Revolving Commitment shall be deemed reduced) from time to time by the aggregate outstanding principal amount of the Competitive Bid Loans then outstanding, and such deemed usage of the Total General Revolving Commitment (and such deemed reduction in the Unutilized Total General Revolving Commitment) shall be pro rated among the Lenders according to their respective General Revolving Facility Percentages (such deemed usage of the Total General Revolving Commitment and such deemed reduction in the Unutilized Total General Revolving Commitment, each being a "COMPETITIVE BID REDUCTION"). 2.2 PROCEDURES FOR BORROWING AND DISBURSEMENT OF FUNDS. (a) NOTICE OF BORROWING. Whenever the Borrower desires to incur General Revolving Loans, Term Loans or a Swing Line Revolving Loan, it shall give the Administrative Agent at its Notice Office: (A) BORROWINGS UNDER THE GENERAL REVOLVING FACILITY AND THE TERM FACILITY OF LIBOR LOANS: prior to 12:00 noon (local time at its Notice Office), at least three Business Days' prior written or telephonic notice (in the case of telephonic notice, promptly confirmed in writing if so requested by the Administrative Agent) of each Borrowing of LIBOR Loans to be made hereunder, or (B) BORROWINGS UNDER THE GENERAL REVOLVING FACILITY, THE TERM FACILITY OR THE SWING LINE REVOLVING FACILITY OF PRIME RATE LOANS: prior to 10:00 a.m. (local 29 time at its Notice Office) on the proposed date thereof, written or telephonic notice (in the case of telephonic notice, promptly confirmed in writing if so requested by the Administrative Agent) of each Borrowing of Prime Rate Loans to be made hereunder, or (C) BORROWINGS UNDER THE SWING LINE REVOLVING FACILITY OF MONEY MARKET RATE LOANS: in the case of any Borrowing under the Swing Line Revolving Facility of a Money Market Rate Loan to be made hereunder, if the Administrative Agent shall have furnished the Borrower with a Quoted Rate therefor, prior to 12:00 noon (local time at its Notice Office) on the proposed date thereof (which shall be within such period as the Administrative Agent shall have specified for such Quoted Rate), written or telephonic notice thereof (in the case of telephonic notice, promptly confirmed in writing if so requested by the Administrative Agent), or (D) BORROWINGS UNDER THE GENERAL REVOLVING FACILITY OF ALTERNATIVE CURRENCY GENERAL REVOLVING LOANS: prior to 12:00 noon (local time at its Notice Office), at least five Business Days' prior written or telephonic notice (in the case of telephonic notice, promptly confirmed in writing if so requested by the Administrative Agent) of each Borrowing of Alternative Currency General Revolving Loans to be made hereunder. Each such notice (each such notice, a "NOTICE OF BORROWING") shall (if requested by the Administrative Agent to be confirmed in writing), be substantially in the form of Exhibit B-1, and in any event shall be irrevocable and shall specify: (i) the Facility under which such Borrowing is to be incurred; (i) the aggregate principal amount of the Loans to be made pursuant to such Borrowing; (ii) the date of the Borrowing (which shall be a Business Day); (iii) whether the Borrowing shall consist of Prime Rate Loans, LIBOR Loans or (in the case of the Swing Line Revolving Facility) a Money Market Rate Loan; (iv) if the requested Borrowing consists of LIBOR Loans, the Interest Period to be initially applicable thereto; (v) if the requested Borrowing is of a Money Market Rate Loan under the Swing Line Revolving Facility, the maturity date thereof (which shall not be more than 30 days and shall conform to the quotation by the Administrative Agent as provided below) and the Quoted Rate applicable thereto; and (vii) if the Borrowing is under the General Revolving Facility, what portion, if any, that consists of Alternative Currency General Revolving Loans. The Administrative Agent shall promptly give each Lender which has a Commitment under any applicable Facility written notice (or telephonic notice promptly confirmed in writing) of each proposed Borrowing under such Facility, of such Lender's proportionate share thereof and of the other matters covered by the Notice of Borrowing relating thereto. (B) BORROWINGS OF MONEY MARKET RATE LOANS. Whenever the Borrower proposes to submit a Notice of Borrowing with respect to a Swing Line Revolving Loan which will be a Money Market Rate Loan, it will prior to submitting such Notice of Borrowing notify the Administrative Agent of its intention and request the Administrative Agent to quote a fixed or floating interest rate (the "QUOTED RATE") to be applicable thereto prior to the proposed maturity thereof (which shall not exceed 30 days). The Administrative Agent will immediately so notify the Swing Line Lender, and if the Swing Line Lender is agreeable to a particular interest rate for the proposed maturity of such Money Market Rate Loan if such Loan is made on or prior to a specified date, the Administrative Agent shall quote such interest rate to the Borrower as the 30 Quoted Rate applicable to such proposed Money Market Rate Loan if made on or before such specified date for a maturity as so proposed by the Borrower. The Swing Line Lender contemplates that any Quoted Rate will be a rate of interest which reflects a margin corresponding to the Applicable LIBOR Margin plus the Applicable Facility Fee Rate, each as in effect at the time of quotation of any Quoted Rate, over the then prevailing Federal Funds Effective Rate, commercial paper, call money, overnight repurchase or other commonly quoted interest rate, or the Swing Line Lender's average fully absorbed cost of short term funds, in each case as selected and determined by the Swing Line Lender. Nothing herein shall be deemed to permit any Lender other than the Swing Line Lender any right of approval with respect to a Quoted Rate. (c) ACTIONS BY ADMINISTRATIVE AGENT ON TELEPHONE NOTICE. Without in any way limiting the obligation of the Borrower to confirm in writing any telephonic notice permitted to be given hereunder, the Administrative Agent may act prior to receipt of written confirmation without liability upon the basis of such telephonic notice believed by the Administrative Agent in good faith to be from an Authorized Officer of the Borrower entitled to give telephonic notices under this Agreement on behalf of the Borrower. In each such case, the Administrative Agent's record of the terms of such telephonic notice shall be conclusive absent manifest error. (d) MINIMUM BORROWING AMOUNTS, ETC. The aggregate principal amount of each Borrowing under a Facility by the Borrower shall not be less than the Minimum Borrowing Amount. More than one Borrowing may be incurred by the Borrower on any day under the same and/or any different Facility; PROVIDED that (i) if there are two or more Borrowings of LIBOR Loans on a single day, each such Borrowing shall have a different initial Interest Period, (ii) only one Borrowing may be made under the Swing Line Revolving Facility on any day, (iii) at no time shall there be more than 10 Borrowings of LIBOR Loans outstanding under the General Revolving Facility and (iv) only one Borrowing may be made under the Term Facility. (e) PRO RATA BORROWINGS. All Borrowings under a Facility shall be made by the Lenders having Commitments under such Facility PRO RATA on the basis of their respective Commitments under such Facility. It is understood that no Lender shall be responsible for any default by any other Lender in its obligation to make Loans hereunder and that each Lender shall be obligated to make the Loans provided to be made by it hereunder, regardless of the failure of any other Lender to fulfill its Commitment hereunder. (f) DISBURSEMENT OF FUNDS. (i) No later than 2:00 P.M. (local time at the Payment Office) on the date specified in each Notice of Borrowing relating to LIBOR Loans, and no later than 2:00 P.M. (local time at the Payment Office) on the date specified in each Notice of Borrowing relating to Prime Rate Loans, each Lender will make available its PRO RATA share, if any, of each Borrowing requested to be made on such date in the manner provided below. All amounts shall be made available to the Administrative Agent in Dollars or the Alternative Currency and immediately available funds at the Payment Office and the Administrative Agent promptly will make available to the Borrower by depositing to its account at the Payment Office the aggregate of the amounts so made available in the type of funds received. Unless the Administrative Agent shall have been notified by any Lender prior to the date of Borrowing that such Lender does not intend to make available to the Administrative Agent its portion of the Borrowing or Borrowings to be made on such date, the Administrative Agent may assume that 31 such Lender has made such amount available to the Administrative Agent on such date of Borrowing, and the Administrative Agent, in reliance upon such assumption, may (in its sole discretion and without any obligation to do so) make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender and the Administrative Agent has made available same to the Borrower, the Administrative Agent shall be entitled to recover such corresponding amount from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent's demand therefor, the Administrative Agent shall promptly notify the Borrower, and the Borrower shall immediately pay such corresponding amount to the Administrative Agent. The Administrative Agent shall also be entitled to recover from such Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to (x) if paid by such Lender, the overnight Federal Funds Effective Rate or (y) if paid by the Borrower, the then applicable rate of interest, calculated in accordance with section 2.7, for the respective Loans (but without any requirement to pay any amounts in respect thereof pursuant to section 2.10). (ii) Nothing in this section 2.2(f) and no subsequent termination of the Commitments pursuant to section 4.2 or 4.3 shall be deemed to relieve any Lender from its obligation to fulfill its Commitments hereunder and in existence from time to time or to prejudice any rights which the Borrower may have against any Lender as a result of any default by such Lender hereunder. 2.3 COMPETITIVE BID LOANS. (a) GENERAL. The Borrower and each Lender severally agrees that Competitive Bid Borrowings with respect only to the General Revolving Loans under this section may only be made on a Business Day during the period from the Closing Date until the date occurring one month prior to the earlier of the General Revolving Maturity Date or the date the Total General Revolving Commitment is terminated, in the manner, and subject to the terms and conditions, set forth below; PROVIDED that notwithstanding anything to the contrary contained herein, following the making of any Competitive Bid Borrowing, (x) the sum of the aggregate outstanding General Revolving Loans, the aggregate outstanding Swing Line Revolving Loans, the Letter of Credit Outstandings and the aggregate outstanding Competitive Bid Loans shall not exceed the Total General Revolving Commitment then in effect (computed without regard to any Competitive Bid Reduction) and (y) the Leverage Ratio shall not be greater than 3.00 to 1.00 on a pro forma basis after giving effect to such Competitive Bid Borrowing: (i) PERMITTED TYPES OF COMPETITIVE BID BORROWINGS. The only types of Competitive Bid Borrowings which can be made under this Agreement are the following: (A) a Competitive Bid Borrowing in which the rate of interest to be paid to each Lender participating in such Competitive Bid Borrowing shall be the fixed rate per annum bid by such Lender for such Competitive Bid Borrowing as provided below (a "FIXED RATE COMPETITIVE BID BORROWING"), and (B) a Competitive Bid Borrowing in which the rate of interest to be paid to each Lender participating in such Competitive Bid Borrowing shall be the 32 Adjusted LIBO Rate for the Interest Period applicable to such Competitive Bid Borrowing plus the margin in basis points which was bid by such Lender for such Competitive Bid Borrowing as provided below (an "ADJUSTED LIBO RATE COMPETITIVE BID BORROWING"). (ii) NOTICE OF COMPETITIVE BID BORROWING. The Borrower may request a Competitive Bid Borrowing under this section 2.3 by delivering to the Administrative Agent, by telecopier, electronic e-mail transmission, telex or cable, confirmed immediately in writing, a notice of a Competitive Bid Borrowing (a "NOTICE OF COMPETITIVE BID BORROWING"), in substantially the form of Exhibit B-2 hereto, specifying (x) the date and aggregate amount of the proposed Competitive Bid Borrowing, (y) the maturity date for repayment of each Competitive Bid Loan to be made as part of such Competitive Bid Borrowing (which maturity date shall be the last day of an Interest Period of one, two, three or six months duration following the date of such Competitive Bid Borrowing, but in no event later than the General Revolving Maturity Date), (z) the interest payment date or dates relating thereto, and any other terms to be applicable to such Competitive Bid Borrowing, not later than 10:00 A.M. (local time at the Notice Office) (A) at least two Business Days prior to the date of the proposed Competitive Bid Borrowing, if the Borrower shall specify in the Notice of Competitive Bid Borrowing that the Borrowing shall be a Fixed Rate Competitive Bid Borrowing), or (B) at least five Business Days prior to the date of the proposed Competitive Bid Borrowing, if the Borrower shall instead specify in the Notice of Competitive Bid Borrowing that the Borrowing shall be an Adjusted LIBO Rate Competitive Bid Borrowing. A Notice of Competitive Bid Borrowing shall specify that the requested Borrowing is either a Fixed Rate Competitive Bid Borrowing or an Adjusted LIBO Rate Competitive Bid Borrowing, but not both or either in the alternative. Competitive Bid Loans shall only be made in Dollars. If the Borrower and the Administrative Agent shall have so agreed, the Borrower shall pay to the Administrative Agent, for its own account, in connection with each request for a Competitive Bid Borrowing, promptly after receipt of an invoice therefor, a competitive bid administrative fee in such amount as has been so agreed. The Administrative Agent shall in turn promptly notify each Lender of each request for a Competitive Bid Borrowing received by it from the Borrower by sending such Lender a copy of the related Notice of Competitive Bid Borrowing. (iii) BIDDING BY LENDERS. Each Lender may, in its sole discretion, elect to irrevocably offer to make one or more Competitive Bid Loans to the Borrower as part of a proposed Competitive Bid Borrowing at a rate or rates of interest specified by such Lender in its sole discretion but responsive to the parameters for a Fixed Rate Competitive Bid Borrowing or an Adjusted LIBO Rate Competitive Bid Borrowing, as specified in such Notice of Competitive Bid Borrowing, by notifying the Administrative Agent (which shall give prompt notice thereof to the Borrower), before 10:00 A.M. (local 33 time at the Notice Office) (A) on the Business Day prior to the date of such proposed Competitive Bid Borrowing, in the case of a Notice of Competitive Bid Borrowing requesting a Fixed Rate Competitive Bid Borrowing and (B) four Business Days before the date of such proposed Competitive Bid Borrowing, in the case of a Notice of Competitive Bid Borrowing requesting an Adjusted LIBO Rate Competitive Bid Borrowing, of the minimum amount and maximum amount of each Competitive Bid Loan which such Lender would be willing to make as part of such proposed Competitive Bid Borrowing (which amounts may, subject to the proviso to the first sentence of this section 2.3(a), exceed such Lender's General Revolving Commitment), the margin or rate or rates of interest therefor (specified to four decimal places) and such Lender's Applicable Lending Office with respect to such Competitive Bid Loan; PROVIDED that if the Administrative Agent in its capacity as a Lender shall, in its sole discretion, elect to make any such offer, it shall notify the Borrower of such offer before 9:00 A.M. (local time at the Notice Office) on the date on which notice of such election is to be given to the Administrative Agent by the other Lenders. If any Lender shall elect not to make such an offer, such Lender shall so notify the Administrative Agent, before 10:00 A.M. (local time at the Notice Office) on the date on which notice of such election is to be given to the Administrative Agent by the other Lenders, and such Lender shall not be obligated to, and shall not, make any Competitive Bid Loan as part of such Competitive Bid Borrowing; PROVIDED that the failure by any Lender to give such notice shall not cause such Lender to be obligated to make any Competitive Bid Loan as part of such proposed Competitive Bid Borrowing. It is understood and agreed that the Borrower may not accept any offer to make a Competitive Bid Loan if such offer is not made on a timely basis or otherwise fails to comply with the requirements of this Agreement. (iv) ACCEPTANCE OF BIDS OR CANCELLATION OF COMPETITIVE BID BORROWING. The Borrower shall, in turn, (A) before 12:00 noon (local time at the Notice Office) on the date of such proposed Competitive Bid Borrowing, in the case of a Notice of Competitive Bid Borrowing delivered pursuant to clause (A) of paragraph (i) above and (B) before 12:00 noon (local time at the Notice Office) three Business Days before the date of such proposed Competitive Bid Borrowing, in the case of a Notice of Competitive Bid Borrowing delivered pursuant to clause (B) of paragraph (i) above, either (x) cancel such Competitive Bid Borrowing by giving the Administrative Agent notice to that effect, or (y) accept one or more of the offers made by any Lender or Lenders pursuant to paragraph (iii) above, in ascending order, from the lowest cost to the highest cost acceptable to the Borrower in its sole discretion (subject, if necessary, to ratable allocation between or among Lenders offering the same interest rates or margins), by giving notice to the Administrative Agent of the amount of each Competitive Bid Loan (which amount shall be equal to or greater than the minimum amount, and equal to or less than the maximum amount, notified to the Borrower by the Administrative Agent on behalf of such Lender for such Competitive Bid Loan pursuant to paragraph (iii) above) to be made by each Lender as part of such Competitive Bid Borrowing, and reject any remaining offers made by Lenders pursuant to paragraph (iii) above by giving the 34 Administrative Agent notice to that effect; PROVIDED that the aggregate principal amount of each Competitive Bid Borrowing may not exceed the applicable amount requested in the relevant Notice of Competitive Bid Borrowing. (v) NOTICE TO LENDERS OF CANCELLATION. If the Borrower notifies the Administrative Agent that such Competitive Bid Borrowing is cancelled pursuant to paragraph (iv)(x) above, the Administrative Agent shall give prompt notice thereof to the Lenders and such Competitive Bid Borrowing shall not be made. (vi) BORROWING PROCEDURES. If the Borrower accepts one or more of the offers made by any Lender or Lenders pursuant to paragraph (iv)(y) above, the Administrative Agent shall in turn promptly notify (A) each Lender that has made an offer as described in paragraph (iii) above, of the date and aggregate amount of such Competitive Bid Borrowing and whether or not any offer or offers made by such Lender pursuant to paragraph (iii) above have been accepted by the Borrower, (B) each Lender that is to make a Competitive Bid Loan as part of such Competitive Bid Borrowing, of the amount of each Competitive Bid Loan to be made by such Lender as part of such Competitive Bid Borrowing and (C) each Lender that is to make a Competitive Bid Loan as part of such Competitive Bid Borrowing, upon receipt, that the Administrative Agent has (to the extent not previously delivered) received forms of documents appearing to fulfill the applicable conditions set forth in section 6. Each Lender that is to make a Competitive Bid Loan as part of such Competitive Bid Borrowing shall, before 12:00 noon (local time at the Notice Office) on the date of such Competitive Bid Borrowing specified in the notice received from the Administrative Agent pursuant to clause (A) of the preceding sentence or any later time when such Lender shall have received notice from the Administrative Agent pursuant to clause (C) of the preceding sentence, make available for the account of its Applicable Lending Office to the Administrative Agent at its Payment Office such Lender's portion of such Competitive Bid Borrowing, in same day funds. Upon fulfillment of the applicable conditions set forth in section 6 and after receipt by the Administrative Agent of such funds, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent's Payment's Office. Promptly after each Competitive Bid Borrowing the Administrative Agent will notify each Lender of the amount of the Competitive Bid Borrowing, the consequent Competitive Bid Reduction and the dates upon which such Competitive Bid Reduction commenced and will terminate. (b) AMOUNT OF COMPETITIVE BID BORROWINGS. Each Competitive Bid Borrowing shall be in an aggregate amount not less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof and, following the making of each Competitive Bid Borrowing, the Borrower shall be in compliance with the limitations set forth in the proviso to the first sentence of section 2.3(a) above. (c) BORROWINGS, REPAYMENTS, PREPAYMENTS AND REBORROWINGS; TIME BETWEEN COMPETITIVE BID BORROWINGS. Within the limits and on the conditions set forth in this section 2.3, the Borrower may from time to time borrow under this section 2.3, repay or prepay pursuant to section 2.3(d) below, and reborrow under this section 2.3; PROVIDED that a Competitive Bid 35 Borrowing shall not be made within 10 Business Days of the date of any other Competitive Bid Borrowing. (d) REPAYMENT OF COMPETITIVE BID LOANS, ETC. The Borrower shall repay to the Administrative Agent for the account of each Lender which has made a Competitive Bid Loan, or each other holder of a Competitive Bid Note, on the maturity date of each Competitive Bid Loan (such maturity date being that specified by the Borrower for repayment of such Competitive Bid Loan in the related Notice of Competitive Bid Borrowing delivered pursuant to section 2.3(a)(ii) above and provided in the Competitive Bid Note evidencing such Competitive Bid Loan), the then unpaid principal amount of such Competitive Bid Loan. The Borrower shall have no right to prepay any principal amount of any Competitive Bid Loan unless, and then only on the terms, specified by the Borrower for such Competitive Bid Loan in the related Notice of Competitive Bid Borrowing delivered pursuant to section 2.3(a)(ii) above and set forth in the Competitive Bid Note evidencing such Competitive Bid Loan. Competitive Bid Loans made by any Lender shall be subject to mandatory prepayment in accordance with the provisions of section 5.2 hereof. Any such mandatory prepayment shall be accompanied by accrued interest on the amount of the prepayment to the date of prepayment and such breakage compensation as may be reasonably determined by such Lender as necessary to compensate it for all reasonable losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its Competitive Bid Loans) which such Lender may sustain by reason of such mandatory prepayment. (e) INTEREST ON COMPETITIVE BID LOANS. The Borrower shall pay interest on the unpaid principal amount of each Competitive Bid Loan from the date of such Competitive Bid Loan to the date the principal amount of such Competitive Bid Loan is repaid in full, at the rate of interest for such Competitive Bid Loan specified by the Lender making such Competitive Bid Loan in its notice with respect thereto delivered pursuant to section 2.3(a)(iii) above, payable on the interest payment date or dates specified by the Borrower for such Competitive Bid Loan in the related Notice of Competitive Bid Borrowing delivered pursuant to section 2.3(a)(ii) above, as provided in the Competitive Bid Note evidencing such Competitive Bid Loan. (f) COMPETITIVE BID NOTES. The indebtedness of the Borrower resulting from each Competitive Bid Loan made to the Borrower as part of a Competitive Bid Borrowing shall be evidenced by the Competitive Bid Note of the Borrower payable to the order of the Lender making such Competitive Bid Loan. 2.4 NOTES; LOAN ACCOUNTS. (a) FORMS OF NOTES. The Borrower's obligation to pay the principal of, and interest on, the Loans made to it by each Lender shall be evidenced (i) in the case of a General Revolving Loan, by a promissory note of the Borrower substantially in the form of Exhibit A-1 with blanks appropriately completed in conformity herewith (each a "GENERAL REVOLVING NOTE" and, collectively, the "GENERAL REVOLVING NOTES"), (ii) in the case of a Swing Line Revolving Loan, by a promissory note of the Borrower substantially in the form of Exhibit A-2 with blanks appropriately completed in conformity herewith (the "SWING LINE REVOLVING NOTE"), (iii) in the case of a Term Loan, by a promissory note of the Borrower substantially in the form of Exhibit A-3 with blanks appropriately completed in conformity herewith (each a "TERM NOTE" and, collectively, the "TERM NOTES"), and (iv) in the case of a 36 Competitive Bid Loan, by a promissory note of the Borrower substantially in the form of Exhibit A-4 with blanks appropriately completed in conformity herewith (a "COMPETITIVE BID NOTE" and collectively, the "COMPETITIVE BID NOTES"). The form of Competitive Bid Note issued to a Lender hereunder may be in a "grid" form with no specific dollar amount mentioned in words or figures and covering all Competitive Bid Loans made by such Lender, or if any Lender so requests, the Borrower will issue one or more Competitive Bid Notes in specified denominations, as evidence of particular Competitive Bid Loans, in which case the form of Competitive Bid Note attached hereto as Exhibit A-4 shall be appropriately completed to reflect such information. (b) TERMS OF GENERAL REVOLVING NOTES. The General Revolving Note issued by the Borrower to a Lender with a General Revolving Commitment shall: (i) be executed by the Borrower; (ii) be payable to the order of such Lender and be dated on or prior to the Closing Date (or if later, the date the of the first General Revolving Loan which is outstanding thereunder); (iii) be payable in the principal amount of General Revolving Loans evidenced thereby; (iv) mature on the General Revolving Maturity Date; (v) bear interest as provided in section 2.7 in respect of the Prime Rate Loans or LIBOR Loans, as the case may be, evidenced thereby; (vi) be subject to mandatory prepayment as provided in section 5.2; and (vii) be entitled to the benefits of this Agreement and the other Credit Documents. (c) TERMS OF SWING LINE REVOLVING NOTE. The Swing Line Revolving Note issued by the Borrower to the Swing Line Lender shall: (i) be executed by the Borrower; (ii) be payable to the order of such Lender and be dated on or prior to the Closing Date (or if later, the date the of the first Swing Line Revolving Loan which is outstanding thereunder); (iii) be payable in the principal amount of Swing Line Revolving Loans evidenced thereby; (iv) mature as to any Swing Line Revolving Loan on the maturity date therefor (which shall not in any event exceed 30 days) specified in the Notice of Borrowing related thereto; (v) bear interest as provided in section 2.7 in respect of the Prime Rate Loans or Money Market Rate Loans evidenced thereby; (vi) be subject to mandatory prepayment as provided in section 5.2; and (vii) be entitled to the benefits of this Agreement and the other Credit Documents. (d) TERMS OF TERM NOTES. The Term Note issued by the Borrower to a Lender with a Term Commitment shall: (i) be executed by the Borrower; (ii) be payable to the order of such Lender and be dated on or prior to the Closing Date; (iii) be payable in the principal amount of the Term Loans evidenced thereby; (iv) mature on the Term Maturity Date; (v) bear interest as provided in section 2.7 in respect of the Prime Rate Loans or LIBOR Loans, as the case may be, evidenced thereby; (vi) be subject to mandatory prepayment as provided in section 5.2; and (vii) be entitled to the benefits of this Agreement and the other Credit Documents. (e) TERMS OF COMPETITIVE BID NOTES. The Competitive Bid Note issued to a Lender which has made a Competitive Bid Loan shall: (i) be executed by the Borrower; (ii) be payable to the order of such Lender and be dated on or prior to the date the first Competitive Bid Loan is made by such Lender; (iii) be payable in the principal amount of the Competitive Bid Loans evidenced thereby; (iv) mature as to any Competitive Bid Loan evidenced thereby on the maturity date selected therefor in the applicable Notice of Competitive Bid Borrowing; (v) bear interest as to any such Competitive Bid Loan at the rate and payable on the dates provided therefor as contemplated by sections 2.3(e) and 2.7; (vi) be subject in the case of any Competitive Bid Loan evidenced thereby to optional or mandatory prepayment only as 37 contemplated by section 2.3(d); and (vii) be entitled to the benefits of this Agreement and the other Credit Documents. (f) LOAN ACCOUNTS OF LENDERS. Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (g) LOAN ACCOUNTS OF ADMINISTRATIVE AGENT. The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Type thereof, and the Interest Period and applicable interest rate if such Loan is a LIBOR Loan, (ii) the amount of any principal 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 for the account of the Lenders and each Lender's share thereof. (h) EFFECT OF LOAN ACCOUNTS, ETC. The entries made in the accounts maintained pursuant to section 2.4(f) and (g) 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 affect the obligation of the Borrower to repay or prepay the Loans in accordance with the terms of this Agreement. (i) ENDORSEMENTS OF AMOUNTS ON NOTES PRIOR TO TRANSFER. Each Lender will, prior to any transfer of any of the Notes issued to it by the Borrower, endorse on the reverse side thereof or the grid attached thereto the outstanding principal amount of Loans evidenced thereby. Failure to make any such notation or any error in any such notation shall not affect the Borrower's obligations in respect of such Loans. 2.5 CONVERSIONS OF GENERAL REVOLVING LOANS AND TERM LOANS. The Borrower shall have the option to Convert on any Business Day all or a portion at least equal to the applicable Minimum Borrowing Amount of the outstanding principal amount of its General Revolving Loans and Term Loans of one Type into a Borrowing or Borrowings pursuant to the same Facility of another Type of Loans which can be made pursuant to such Facility; PROVIDED that: (i) no partial Conversion of a Borrowing of LIBOR Loans shall reduce the outstanding principal amount of the LIBOR Loans made pursuant to such Borrowing to less than the Minimum Borrowing Amount applicable thereto; (ii) any Conversion of LIBOR Loans into Prime Rate Loans shall be made on, and only on, the last day of an Interest Period for such LIBOR Loans; (iii) Prime Rate Loans may only be Converted into LIBOR Loans if no Default under section 10.1(a) or Event of Default is in existence on the date of the Conversion unless the Required Lenders otherwise agree; and (iv) Borrowings of LIBOR Loans resulting from this section 2.5 shall conform to the requirements of section 2.2(d). Each such Conversion shall be effected by the Borrower giving the Administrative Agent at its Notice Office, prior to 11:00 A.M. (local time at such Notice Office), at least three Business Days' in the case of a conversion into LIBOR Loans (or prior to 11:00 A.M. (local time at such Notice Office) on the same Business Day, in the case of a Conversion into Prime Rate Loans) prior written notice (or telephonic notice promptly confirmed in writing if so requested by the Administrative Agent) (each a "NOTICE OF CONVERSION"), substantially in the form of Exhibit B-3, specifying the Loans to be so Converted, the Type of Loans to be Converted into and, if to be Converted into a 38 Borrowing of LIBOR Loans, the Interest Period to be initially applicable thereto. The Administrative Agent shall give each Lender prompt notice of any such proposed Conversion affecting any of its Loans. For the avoidance of doubt, the prepayment or repayment of any General Revolving Loans out of the proceeds of other General Revolving Loans by the Borrower is not considered a Conversion of General Revolving Loans into other General Revolving Loans. 2.6 REFUNDING OF, OR PARTICIPATION IN, SWING LINE REVOLVING LOANS. (a) If any Event of Default exists, the Swing Line Lender may, in its sole and absolute discretion, direct that the Swing Line Revolving Loans owing to it be refunded by delivering a notice to such effect to the Administrative Agent, specifying the aggregate principal amount thereof (a "NOTICE OF SWING LINE REFUNDING"). Promptly upon receipt of a Notice of Swing Line Refunding, the Administrative Agent shall give notice of the contents thereof to the Lenders with General Revolving Commitments and, unless an Event of Default specified in section 10.1(h) in respect of the Borrower has occurred, the Borrower. Each such Notice of Swing Line Refunding shall be deemed to constitute delivery by the Borrower of a Notice of Borrowing requesting General Revolving Loans consisting of Prime Rate Loans in the amount of the Swing Line Revolving Loans to which such Notice of Swing Line Refunding relates. Each Lender with a General Revolving Commitment (including the Swing Line Lender giving the Notice of Swing Line Refunding) hereby unconditionally agrees (notwithstanding that any of the conditions specified in section 6.2 hereof or elsewhere in this Agreement shall not have been satisfied, but subject to the provisions of paragraph (b) and (d) below) to make a General Revolving Loan to the Borrower in an amount equal to such Lender's General Revolving Facility Percentage of the aggregate amount of the Swing Line Revolving Loans to which such Notice of Swing Line Refunding relates. Each such Lender shall make the amount of such General Revolving Loan available to the Administrative Agent in immediately available funds at the Payment Office not later than 2:00 P.M. (local time at the Payment Office), if such notice is received by such Lender prior to 11:00 A.M. (local time at its Domestic Lending Office), or not later than 2:00 P.M. (local time at the Payment Office) on the next Business Day, if such notice is received by such Lender after such time. The proceeds of such General Revolving Loans shall be made immediately available to the Swing Line Lender giving such Notice of Swing Line Refunding and applied by it to repay the principal amount of the Swing Line Revolving Loans to which such Notice of Swing Line Refunding related. The Borrower irrevocably and unconditionally agrees that, notwithstanding anything to the contrary contained in this Agreement, General Revolving Loans made as herein provided in response to a Notice of Swing Line Refunding shall constitute General Revolving Loans hereunder consisting of Prime Rate Loans. (b) If prior to the time a General Revolving Loan would otherwise have been made as provided above as a consequence of a Notice of Swing Line Refunding, any of the events specified in section 10.1(h) shall have occurred in respect of the Borrower or one or more of the Lenders with General Revolving Commitments shall determine that it is legally prohibited from making a General Revolving Loan under such circumstances, each Lender (other than the Swing Line Lender giving the Notice of Swing Line Refunding), or each Lender (other than such Swing Line Lender) so prohibited, as the case may be, shall, on the date such General Revolving Loan would have been made by it (the "PURCHASE DATE"), purchase an undivided participating interest in the outstanding Swing Line Revolving Loans to which such Notice of Swing Line Refunding related, in an amount (the "SWING LINE PARTICIPATION AMOUNT") equal to such Lender's General Revolving Facility Percentage of such Swing Line Revolving Loans. On the Purchase Date, each 39 such Lender or each such Lender so prohibited, as the case may be, shall pay to the Swing Line Lender, in immediately available funds, such Lender's Swing Line Participation Amount, and promptly upon receipt thereof the Swing Line Lender shall, if requested by such other Lender, deliver to such Lender a participation certificate, dated the date of the Swing Line Lender's receipt of the funds from, and evidencing such Lender's participating interest in such Swing Line Revolving Loans and its Swing Line Participation Amount in respect thereof. If any amount required to be paid by a Lender to the Swing Line Lender pursuant to the above provisions in respect of any Swing Line Participation Amount is not paid on the date such payment is due, such Lender shall pay to the Swing Line Lender on demand interest on the amount not so paid at the overnight Federal Funds Effective Rate from the due date until such amount is paid in full. (c) Whenever, at any time after the Swing Line Lender has received from any other Lender such Lender's Swing Line Participation Amount, the Swing Line Lender receives any payment from or on behalf of the Borrower on account of the related Swing Line Revolving Loans, the Swing Line Lender will promptly distribute to such Lender its General Revolving Facility Percentage of such payment on account of its Swing Line Participation Amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded); PROVIDED that in the event such payment received by the Swing Line Lender is required to be returned, such Lender will return to the Swing Line Lender any portion thereof previously distributed to it by the Swing Line Lender. (d) Each Lender's obligation to make General Revolving Loans and/or to purchase participations in connection with a Notice of Swing Line Refunding (which shall in all events be within such Lender's Unutilized General Revolving Commitment, taking into account all outstanding participations in connection with Swing Line Refundings) shall be subject to the conditions that (i) such Lender shall have received a Notice of Swing Line Refunding complying with the provisions hereof; and (ii) at the time the Swing Line Revolving Loans which are the subject of such Notice of Swing Line Refunding were made, the Swing Line Lender making the same had no actual written notice from another Lender that an Event of Default had occurred and was continuing); but otherwise shall be absolute and unconditional, shall be solely for the benefit of the Swing Line Lender which gives such Notice of Swing Line Refunding, and shall not be affected by any circumstance, including, without limitation, (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against any other Lender, any Credit Party, or any other person, or any Credit Party may have against any Lender or other person, as the case may be, for any reason whatsoever; (B) the occurrence or continuance of a Default or Event of Default; (C) any event or circumstance involving a Material Adverse Effect upon the Borrower; (D) any breach of any Credit Document by any party thereto; or (E) any other circumstance, happening or event, whether or not similar to any of the foregoing. 40 2.7 INTEREST. (a) INTEREST RATE FOR PRIME RATE LOANS. During such periods as a General Revolving Loan, a Swing Line Revolving Loan or a Term Loan is a Prime Rate Loan, the unpaid principal amount thereof shall bear interest at a fluctuating rate per annum which shall at all times be equal to the Applicable Prime Rate Margin (defined below) for such Prime Rate Loan PLUS the Prime Rate in effect from time to time. (b) INTEREST RATE FOR LIBOR LOANS. During such periods as a General Revolving Loan or a Term Loan is a LIBOR Loan, the unpaid principal amount thereof shall bear interest at a rate per annum which shall at all times during any Interest Period applicable thereto be the Applicable LIBOR Margin (as defined below) for such LIBOR Loan PLUS the relevant Adjusted LIBO Rate for such Interest Period. (c) INTEREST RATE FOR MONEY MARKET RATE LOANS. During such periods as a Swing Line Revolving Loan is a Money Market Rate Loan, the unpaid principal amount thereof shall bear interest at the rate per annum which shall be equal to the Quoted Rate therefor. (d) INTEREST RATE FOR COMPETITIVE BID LOANS. The Borrower shall pay interest on each Competitive Bid Loan in accordance with the provisions of section 2.3(e). (e) DEFAULT INTEREST. Notwithstanding the above provisions, if a Default under section 10.1(a) or Event of Default is in existence, all outstanding amounts of principal and, to the extent permitted by law, all overdue interest, in respect of each Loan shall bear interest, payable on demand, at a fluctuating rate per annum equal to 2% per annum above the interest rate which would be applicable under section 2.7(a) to Prime Rate Loans in effect from time to time. If any amount (other than the principal of and interest on the Loans) payable by the Borrower under the Credit Documents is not paid when due, such amount shall bear interest, payable on demand, at a fluctuating rate per annum equal to 2% per annum above the interest rate which would be applicable under section 2.7(a) to Prime Rate Loans in effect from time to time. (f) ACCRUAL AND PAYMENT OF INTEREST. Interest shall accrue from and including the date of any Borrowing to but excluding the date of any prepayment or repayment thereof and shall be payable (in Dollars or the Alternative Currency, as applicable): (i) in the case of any Swing Line Revolving Loan, (A) at the end of each month, (B) on any prepayment (on the amount prepaid) and (C) after maturity (whether by acceleration or otherwise), on demand; and (ii) in the case of any General Revolving Loan or Term Loan, (A) which is a Prime Rate Loan, monthly in arrears on the first Business Day of the succeeding calendar month, (B) which is a LIBOR Loan, on the last day of each Interest Period applicable thereto and, in the case of an Interest Period in excess of three months, on the dates which are successively three months after the commencement of such Interest Period, and (C) on any repayment, prepayment or Conversion (on the amount repaid, prepaid or Converted), at maturity (whether by acceleration or otherwise) and, after such maturity, on demand; and 41 (iii) in the case of any Competitive Bid Loan, (A) on the interest payment date or dates contemplated by section 2.3(e), at the maturity date thereof, which shall in any event be no more than six months, (B) on any prepayment (on the amount prepaid), and (C) after maturity (whether by acceleration or otherwise), on demand. (g) COMPUTATIONS OF INTEREST. All computations of interest hereunder shall be made in accordance with section 12.7(b). (h) INTEREST MARGINS. As used herein, the terms "APPLICABLE LIBOR MARGIN", as applied to any LIBOR Loan, and "APPLICABLE PRIME RATE MARGIN" as applied to any Prime Rate Loan, mean for any date the particular rate per annum determined by the Administrative Agent in accordance with (other than with respect to Term Loans) the pricing grid table (the "PRICING GRID") which appears below under the heading "Applicable LIBOR Margin" or "Applicable Prime Rate Margin", as applicable, based upon the Index Debt Rating, applicable on such date, and (with respect to all Loans) the following provisions: (i) With respect to Term Loans, the Applicable LIBOR Margin will be 200.0 basis points per annum and the Applicable Prime Rate Margin will be 0.0 basis points per annum; PROVIDED that if any Term Loans remain outstanding following the earlier of (A) the Term Maturity Date or (B) the date of any downgrade in the Index Debt Rating by either Rating Agency below Category 3 as set forth in the Pricing Grid, the Applicable LIBOR Margin and the Applicable Prime Rate Margin shall each be increased by 100.0 basis points for the first month following such date and by an additional 50.0 basis points for each month thereafter. (ii) with respect to Revolving Loans: (A) initially, until changed hereunder in accordance with the following provisions, the Applicable LIBOR Margin will be 112.5 basis points per annum and the Applicable Prime Rate Margin will be 12.5 basis points per annum; PROVIDED that, during the six month period following the Closing Date, the Applicable LIBOR Margin and the Applicable Prime Rate Margin shall be subject to increases and not to decreases based on a decline in the Index Debt Rating, in accordance with the Pricing Grid. (B) notwithstanding the above provisions, during any period when a Default under section 10.1(a) or an Event of Default has occurred and is continuing, the Applicable LIBOR Margin and the Applicable Prime Rate Margin shall be the highest rate per annum indicated therefor in the Pricing Grid, regardless of the then Index Debt Rating. (C) for purposes of determination of the Applicable LIBOR Margin and the Applicable Prime Rate Margin, (1) if either Moody's or S&P shall not have in effect an Index Debt Rating (other than by reason of the circumstances referred to in the last sentence of this paragraph), then such Rating Agency shall be deemed to have established a rating in Category 5; (2) if the Index Debt Rating shall fall within different Categories, the Applicable Rate shall be based on the 42 lower of the two ratings; and (3) if the Index Debt Rating shall be changed (other than as a result of a change in the rating system of Moody's or S&P), such change shall be effective as of the date on which it is first announced by the applicable Rating Agency. Each change in the Applicable LIBOR Margin and the Applicable Prime Rate Margin shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If the rating system of Moody's or S&P shall change, or if either such Rating Agency shall cease to be in the business of rating corporate debt obligations, the Borrower and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such Rating Agency and, pending the effectiveness of any such amendment, the Applicable LIBOR Margin Rate and the Applicable Prime Rate Margin Rate shall be determined by reference to the rating most recently in effect prior to such change or cessation. (D) any changes in the Applicable LIBOR Margin and the Applicable Prime Rate Margin shall be determined by the Administrative Agent in accordance with the above provisions and the Administrative Agent will promptly provide notice of such determinations to the Borrower and the Lenders. Any such determination by the Administrative Agent pursuant to this section 2.7(h) shall be conclusive and binding absent manifest error. (E) any time during which the Leverage Ratio is greater than or equal to 3.5 to 1.00, the Applicable LIBOR Margin and the Applicable Prime Rate Margin shall be increased by 25.0 basis points, and at any time during which the Leverage Ratio is greater than or equal to 4.0 to 1.00, the Applicable LIBOR Margin and the Applicable Prime Rate Margin shall be increased by an additional 12.5 basis points. 43 PRICING GRID (EXPRESSED IN BASIS POINTS)
INDEX DEBT APPLICABLE APPLICABLE FACILITY RATINGS LIBOR MARGIN PRIME RATE MARGIN FEE RATE CATEGORY 1 82.5 00.0 17.5 BBB+ or better by S&P Baa1 or better by Moody's CATEGORY 2 100.0 00.0 25.0 BBB by S&P Baa2 by Moody's CATEGORY 3 112.5 12.5 37.5 BBB- by S&P Baa3 by Moody's CATEGORY 4 157.5 57.0 42.5 BB+ by S&P Ba1 by Moody's CATEGORY 5 200.0 100.0 50.0 BB or less by S&P Ba2 or less by Moody's
(i) INFORMATION AS TO INTEREST RATES. The Administrative Agent upon determining the interest rate for any Borrowing shall promptly notify the Borrower and the affected Lenders thereof. If the Administrative Agent is unable to determine the Adjusted LIBO Rate for any Borrowing of LIBOR Loans based on the quotation service referred to in clause (i) of the definition of the term Adjusted LIBO Rate, it will promptly so notify the Reference Banks and each Reference Bank will furnish the Administrative Agent timely information for the purpose of determining the Adjusted LIBO Rate for such Borrowing. If any one or more of the Reference Banks shall not timely furnish such information, the Administrative Agent shall determine the Adjusted LIBO Rate for such Borrowing on the basis of timely information furnished by the remaining Reference Banks. 2.8 SELECTION AND CONTINUATION OF INTEREST PERIODS. (a) The Borrower shall have the right (x) at the time it gives a Notice of Borrowing or Notice of Conversion in respect of the making of or Conversion into a Borrowing of General Revolving Loans or Term Loans consisting of LIBOR Loans, to select in such Notice the Interest Period to be applicable to such Borrowing, and (y) prior to 12:00 noon (local time at the Notice Office) on the third Business Day prior to the expiration of an Interest Period applicable to a Borrowing of General Revolving Loans or Term Loans consisting of LIBOR Loans, to elect by giving the Administrative Agent written or telephonic notice (in the case of telephonic notice, promptly confirmed in writing if so requested by the Administrative Agent) to Continue all or the Minimum Borrowing Amount of the principal amount of such Loans as one or 44 more Borrowings of LIBOR Loans and to select the Interest Period to be applicable to any such Borrowing (any such notice, a "NOTICE OF CONTINUATION"), which Interest Period shall, at the option of the Borrower, be a one, two, three or six month period; PROVIDED that notwithstanding anything to the contrary contained above, the Borrower's right to select an Interest Period or to effect any Continuation shall be subject to the applicable provisions of section 2.10 and to the following: (i) the initial Interest Period for any Borrowing of LIBOR Loans shall commence on the date of such Borrowing (the date of a Borrowing resulting from a Conversion or Continuation shall be the date of such Conversion or Continuation) and each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period expires; (ii) if any Interest Period begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of such calendar month; (iii) if any Interest Period would otherwise expire on a day which is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; PROVIDED that if any Interest Period would otherwise expire on a day which is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; (iv) no Interest Period for any LIBOR Loan may be selected which would end after the General Revolving Maturity Date or Term Maturity Date, as applicable; (v) each Borrowing of LIBOR Loans resulting from any Continuation shall be in at least the Minimum Borrowing Amount applicable thereto; and (vi) no Interest Period may be elected at any time when a Default under section 10.1(a) or an Event of Default is then in existence unless the Required Lenders otherwise agree. (b) If upon the expiration of any Interest Period the Borrower has failed to (or may not) elect a new Interest Period to be applicable to the respective Borrowing of LIBOR Loans as provided above, the Borrower shall be deemed to have elected to Convert such Borrowing to Prime Rate Loans effective as of the expiration date of such current Interest Period. 2.9 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in the case of clause (i) below, the Administrative Agent or (y) in the case of clauses (ii) and (iii) below, any Lender, shall have determined on a reasonable basis (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto): (i) on any date for determining the Adjusted LIBO Rate for any Interest Period that, by reason of any changes arising after the Effective Date affecting the interbank Eurodollar market, adequate and fair means do not exist for ascertaining the 45 applicable interest rate on the basis provided for in the definition of Adjusted LIBO Rate; or (ii) at any time, that such Lender shall incur increased costs or reductions in the amounts received or receivable hereunder in an amount which such Lender deems material with respect to any LIBOR Loans (other than any increased cost or reduction in the amount received or receivable resulting from the imposition of or a change in the rate of taxes or similar charges) because of (x) any change since the Effective Date in any applicable law, governmental rule, regulation, guideline, order or request (whether or not having the force of law), or in the interpretation or administration thereof and including the introduction of any new law or governmental rule, regulation, guideline, order or request (such as, for example, but not limited to, a change in official reserve requirements, but, in all events, excluding reserves includable in the Adjusted LIBO Rate pursuant to the definition thereof) and/or (y) other circumstances adversely affecting the interbank Eurodollar market or the position of such Lender in such market; or (iii) at any time, that the making or continuance of any LIBOR Loan has become unlawful by compliance by such Lender in good faith with any change since the Effective Date in any law, governmental rule, regulation, guideline or order, or the interpretation or application thereof, or would conflict with any thereof not having the force of law but with which such Lender customarily complies or has become impracticable as a result of a contingency occurring after the Effective Date which materially adversely affects the interbank Eurodollar market; THEN, and in any such event, such Lender (or the Administrative Agent in the case of clause (i) above) shall (x) on or promptly following such date or time and (y) within 10 Business Days of the date on which such event no longer exists give notice (by telephone confirmed in writing) to the Borrower and to the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in the case of clause (i) above, LIBOR Loans shall no longer be available until such time as the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice by the Administrative Agent no longer exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower with respect to LIBOR Loans which have not yet been incurred or Converted shall be deemed rescinded by the Borrower or, in the case of a Notice of Borrowing, shall, at the option of the Borrower, be deemed converted into a Notice of Borrowing for Prime Rate Loans to be made on the date of Borrowing contained in such Notice of Borrowing, (y) in the case of clause (ii) above, the Borrower shall pay to such Lender, upon written demand therefor, such additional amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender shall determine) as shall be required to compensate such Lender, for such increased costs or reductions in amounts receivable hereunder (a written notice as to the additional amounts owed to such Lender, showing the basis for the calculation thereof, which basis must be reasonable, submitted to the Borrower by such Lender shall, absent manifest error, be final and conclusive and binding upon all parties hereto) and (z) in the case of clause (iii) above, the Borrower shall take one of the actions specified in section 2.9(b) as promptly as possible and, in any event, within the time period required by law. 46 (b) At any time that any LIBOR Loan is affected by the circumstances described in section 2.9(a)(ii) or (iii), the Borrower may (and in the case of a LIBOR Loan affected pursuant to section 2.9(a)(iii) the Borrower shall) either if the affected LIBOR Loan is then being made pursuant to a Borrowing, by giving the Administrative Agent telephonic notice (confirmed promptly in writing) thereof on the same date that the Borrower was notified by a Lender pursuant to section 2.9(a)(ii) or (iii), cancel said Borrowing, convert the related Notice of Borrowing into one requesting a Borrowing of Prime Rate Loans or require the affected Lender to make its requested Loan as a Prime Rate Loan, or if the affected LIBOR Loan is then outstanding, upon at least one Business Day's notice to the Administrative Agent, require the affected Lender to Convert each such LIBOR Loan into a Prime Rate Loan; PROVIDED that if more than one Lender is affected at any time, then all affected Lenders must be treated the same pursuant to this section 2.9(b). (c) If any Lender shall have determined that after the Effective Date, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged by law with the interpretation or administration thereof, or compliance by such Lender or its parent corporation with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank, or comparable agency, in each case made subsequent to the Effective Date, has or would have the effect of reducing by an amount reasonably deemed by such Lender to be material the rate of return on such Lender's or its parent corporation's capital or assets as a consequence of such Lender's commitments or obligations hereunder to a level below that which such Lender or its parent corporation could have achieved but for such adoption, effectiveness, change or compliance (taking into consideration such Lender's or its parent corporation's policies with respect to capital adequacy), then from time to time, within 15 days after demand by such Lender (with a copy to the Administrative Agent), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or its parent corporation for such reduction. Each Lender, upon determining in good faith that any additional amounts will be payable pursuant to this section 2.9(c), will give prompt written notice thereof to the Borrower, which notice shall set forth, in reasonable detail, the basis of the calculation of such additional amounts, which basis must be reasonable, although the failure to give any such notice shall not release or diminish any of the Borrower's obligations to pay additional amounts pursuant to this section 2.9(c) upon the subsequent receipt of such notice. (d) Notwithstanding anything in this Agreement to the contrary, no Lender shall be entitled to compensation or payment or reimbursement of other amounts under section 2.9 or 3.5 for any amounts incurred or accruing more than 180 days prior to the giving of notice to the Borrower of additional costs or other amounts of the nature described in such sections; PROVIDED that if a change in applicable law, rule, regulation, guideline or order, or in the interpretation or application thereof, becomes effective during such 180 day period but is retroactive to an earlier date, such 180 day period shall be extended to include the period of retroactive effect thereof, and no Lender shall demand compensation for any reduction referred to in section 2.9(c) or payment or reimbursement of other amounts under section 3.5 if it shall not at the time be the general policy or practice of such Lender to demand such compensation, payment or reimbursement in similar circumstances under comparable provisions of other credit agreements. 47 2.10 COMPENSATION. The Borrower shall compensate each applicable Lender, upon its written request (which request shall set forth the detailed basis for requesting and the method of calculating such compensation), for all reasonable losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its LIBOR Loans or Money Market Rate Loans) which such Lender may sustain: if for any reason (other than a default by such Lender or the Administrative Agent), a Borrowing of LIBOR Loans does not occur on a date specified therefor in a Notice of Borrowing, Notice of Conversion or Notice of Continuation (whether or not rescinded or withdrawn by or on behalf of such Borrower or deemed rescinded or withdrawn pursuant to section 2.9(a)), or a Borrowing of Money Market Rate Loans does not occur on a date specified therefor in a Notice of Borrowing; if any repayment, prepayment, Conversion or Continuation of any of its LIBOR Loans occurs on a date which is not the last day of an Interest Period applicable thereto; if any repayment or prepayment of any Money Market Rate Loan occurs on a date which is not the maturity date thereof; if any prepayment of any LIBOR Loans or Money Market Rate Loans, as the case may be, is not made on any date specified in a notice of prepayment given by or on behalf of the Borrower; if the Borrower, pursuant to section 2.11(b) hereof, requires any Lender (other than a Defaulting Lender) to transfer its LIBOR Loans and/or Money Market Rate Loans, as the case may be, on any date other than the last day of the Interest Period or maturity date thereof; or as a consequence of (x) any other default by the Borrower to repay its LIBOR Loans or Money Market Rate Loans, as the case may be, when required by the terms of this Agreement or (y) an election made pursuant to section 2.9(b). Such loss, cost, expense and liability to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the interest rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor or the then maturity date thereof in the case of any Money Market Rate Loan (or, in the case of a failure to effect a Borrowing, Conversion or Continuation, for the period that would have been the Interest Period for such Loan or the period to maturity of such Loan, in the case of a Money Market Rate Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for Dollar deposits of a comparable amount and period from other banks in the London interbank market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this section shall be delivered to the Borrower and shall be conclusive absent convincing evidence of error. The Borrower shall pay such Lender the amount shown as due on any such request within 30 days after receipt by the Borrower thereof. 2.11 CHANGE OF LENDING OFFICE; REPLACEMENT OF LENDERS. (a) Each Lender agrees that, upon the occurrence of any event giving rise to the operation of section 2.9(a)(ii) or (iii), 2.9(c) or 3.5 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another Applicable Lending Office for any Loans or Commitment affected by such event; PROVIDED that such designation is made on such terms that such Lender and its Applicable Lending Office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of any such section. 48 (b) If any Lender requests any compensation, reimbursement or other payment under section 2.9(a)(ii) or (iii), 2.9(c) or 3.5 with respect to such Lender, or if any Lender is a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with the restrictions contained in section 12.4(b)), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); PROVIDED that the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not be unreasonably withheld or delayed, such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts), and in the case of any such assignment resulting from a claim for compensation, reimbursement or other payments required to be made under section 2.9(a)(ii) or (iii), 2.9(c) or 3.5 with respect to such Lender, such assignment will result in a reduction in such compensation, reimbursement or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. (c) Nothing in this section 2.11 shall affect or postpone any of the obligations of the Borrower or the right of any Lender provided in section 2.9 or 3.5. SECTION 3. LETTERS OF CREDIT. 3.1 LETTERS OF CREDIT. (a) Subject to and upon the terms and conditions herein set forth, the Borrower may request a Letter of Credit Issuer at any time and from time to time on or after the Closing Date and prior to the date that is 60 Business Days prior to the General Revolving Maturity Date to issue, for the account of the Borrower or any of its Subsidiaries (the Borrower or any such Subsidiary, a "LETTER OF CREDIT OBLIGOR"), and in support of worker compensation, liability insurance, releases of contract retention obligations, contract performance guarantee requirements and other bonding obligations of the Borrower or any such other Letter of Credit Obligor incurred in the ordinary course of its business, and such other standby obligations of the Borrower and the other Letter of Credit Obligors that are acceptable to the Letter of Credit Issuer, and subject to and upon the terms and conditions herein set forth, such Letter of Credit Issuer agrees to issue from time to time, irrevocable standby letters of credit denominated and payable in Dollars or the Alternative Currency in such form as may be approved by such Letter of Credit Issuer and the Administrative Agent (each such letter of credit, a "LETTER OF CREDIT" and collectively, the "LETTERS OF CREDIT"). (b) Notwithstanding the foregoing, no Letter of Credit shall be issued, and the Stated Amount of any outstanding Letter of Credit shall not be increased, if after giving effect thereto the Letter of Credit Outstandings would exceed either (x) the Letter of Credit Commitment Amount or (y) when added to the aggregate principal amount of all General Revolving Loans, Competitive Bid Loans and Swing Line Revolving Loans then outstanding, the General Revolving Commitment Amount at such time; no individual Letter of Credit (other than any Existing Letter of Credit) shall be issued which has an initial Stated Amount less than $100,000 unless such lesser Stated Amount is acceptable to the Letter of 49 Credit Issuer; and each Letter of Credit shall have an expiry date (including any renewal periods) occurring not later than the earlier of one year from the date of issuance thereof, unless a longer period is approved by the relevant Letter of Credit Issuer and Lenders (other than any Defaulting Lender) holding a majority of the Total General Revolving Commitment, and 15 Business Days prior to the General Revolving Maturity Date, in each case on terms acceptable to the Administrative Agent and the relevant Letter of Credit Issuer. (c) Notwithstanding the foregoing, in the event a Lender Default exists, no Letter of Credit Issuer shall be required to issue any Letter of Credit unless either (i) such Letter of Credit Issuer has entered into arrangements satisfactory to it and the Borrower to eliminate such Letter of Credit Issuer's risk with respect to the participation in Letters of Credit of the Defaulting Lender or Lenders, including by cash collateralizing such Defaulting Lender's or Lenders' General Revolving Facility Percentage of the Letter of Credit Outstandings; or (ii) the issuance of such Letter of Credit, taking into account the potential failure of the Defaulting Lender or Lenders to risk participate therein, will not cause the Letter of Credit Issuer to incur aggregate credit exposure hereunder with respect to Revolving Loans and Letter of Credit Outstandings in excess of its Revolving Commitment, and the Borrower has undertaken, for the benefit of such Letter of Credit Issuer, pursuant to an instrument satisfactory in form and substance to such Letter of Credit Issuer, not to thereafter incur Loans or Letter of Credit Outstandings hereunder which would cause the Letter of Credit Issuer to incur aggregate credit exposure hereunder with respect to Revolving Loans and Letter of Credit Outstandings in excess of its Revolving Commitment. 3.2 LETTER OF CREDIT REQUESTS: NOTICES OF ISSUANCE. (a) Whenever it desires that a Letter of Credit be issued, the Borrower shall give the Administrative Agent and the Letter of Credit Issuer written or telephonic notice (in the case of telephonic notice, promptly confirmed in writing if so requested by the Administrative Agent) which, if in the form of written notice shall be substantially in the form of Exhibit B-4, or transmit by electronic communication (if arrangements for doing so have been approved by the Letter of Credit Issuer), prior to 12:00 noon (local time at its Notice Office) at least three Business Days (or such shorter period as may be acceptable to the relevant Letter of Credit Issuer) prior to the proposed date of issuance (which shall be a Business Day) (each a "LETTER OF CREDIT REQUEST"), which Letter of Credit Request shall include such supporting documents that such Letter of Credit Issuer customarily requires in connection therewith (including, in the case of a Letter of Credit for an account party other than the Borrower, an application for, and if applicable a reimbursement agreement with respect to, such Letter of Credit). Any such documents executed in connection with the issuance of a Letter of Credit, including the Letter of Credit itself, are herein referred to as "LETTER OF CREDIT DOCUMENTS". In the event of any inconsistency between any of the terms or provisions of any Letter of Credit Document and the terms and provisions of this Agreement respecting Letters of Credit, the terms and provisions of this Agreement shall control. The Administrative Agent shall promptly notify each Lender of each Letter of Credit Request. (b) Each Letter of Credit Issuer shall, on the date of each issuance of a Letter of Credit by it, give the Administrative Agent, each applicable Lender and the Borrower written notice of the issuance of such Letter of Credit, accompanied by a copy to the Administrative Agent of the Letter of Credit or Letters of Credit issued by it. Each Letter of Credit Issuer shall provide to the Administrative Agent a quarterly (or monthly if requested by any applicable 50 Lender) summary describing each Letter of Credit issued by such Letter of Credit Issuer and then outstanding and an identification for the relevant period of the daily aggregate Letter of Credit Outstandings represented by Letters of Credit issued by such Letter of Credit Issuer. 3.3 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The Borrower hereby agrees to reimburse (or cause any Letter of Credit Obligor for whose account a Letter of Credit was issued to reimburse) each Letter of Credit Issuer, by making payment directly to such Letter of Credit Issuer in immediately available funds at the payment office of such Letter of Credit Issuer, for any payment or disbursement made by such Letter of Credit Issuer under any Letter of Credit (each such amount so paid or disbursed until reimbursed, an "UNPAID DRAWING") immediately after, and in any event on the date on which, such Letter of Credit Issuer notifies the Borrower (or any such other Letter of Credit Obligor for whose account such Letter of Credit was issued) of such payment or disbursement (which notice to the Borrower (or such other Letter of Credit Obligor) shall be delivered reasonably promptly after any such payment or disbursement), such payment to be made in Dollars (and in the amount which is the Dollar equivalent of any such payment or disbursement made or denominated in the Alternative Currency), with interest on the amount so paid or disbursed by such Letter of Credit Issuer, to the extent not reimbursed prior to 1:00 P.M. (local time at the payment office of the Letter of Credit Issuer) on the date of such payment or disbursement, from and including the date paid or disbursed to but not including the date such Letter of Credit Issuer is reimbursed therefor at a rate per annum which shall be the rate then applicable to Revolving Loans which are Prime Rate Loans (plus an additional 2% per annum if not reimbursed on the date of such payment or disbursement), any such interest also to be payable on demand. (b) The Borrower's obligation under this section 3.3 to reimburse, or cause another Letter of Credit Obligor to reimburse, each Letter of Credit Issuer with respect to Unpaid Drawings (including, in each case, interest thereon) shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower or any other Letter of Credit Obligor may have or have had against such Letter of Credit Issuer, the Administrative Agent, any other Letter of Credit Issuer or any Lender, including, without limitation, any defense based upon the failure of any drawing under a Letter of Credit to conform to the terms of the Letter of Credit or any non-application or misapplication by the beneficiary of the proceeds of such drawing; PROVIDED that the Borrower shall not be obligated to reimburse, or cause another Letter of Credit Obligor to reimburse, a Letter of Credit Issuer for any wrongful payment made by such Letter of Credit Issuer under a Letter of Credit as a result of acts or omissions constituting willful misconduct or gross negligence on the part of such Letter of Credit Issuer. 3.4 LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the issuance by a Letter of Credit Issuer of any Letter of Credit (and on the Closing Date with respect to any Existing Letter of Credit), such Letter of Credit Issuer shall be deemed to have sold and transferred to each Lender with a Revolving Commitment, and each such Lender (each a "PARTICIPANT") shall be deemed irrevocably and unconditionally to have purchased and received from such Letter of Credit Issuer, without recourse or warranty, an undivided interest and participation, to the extent of such Lender's General Revolving Facility Percentage, in such Letter of Credit, each substitute letter of credit, each drawing made thereunder, the obligations of the Borrower under this Agreement with respect thereto (although Letter of Credit Fees shall be payable directly to the 51 Administrative Agent for the account of the Lenders as provided in section 4.1(b) and the Participants shall have no right to receive any portion of any fees of the nature contemplated by section 4.1(c)), the obligations of any Letter of Credit Obligor under any Letter of Credit Documents pertaining thereto, and any security for, or guaranty pertaining to, any of the foregoing. Upon any change in the Revolving Commitments of the Lenders pursuant to section 12.4(c), it is hereby agreed that, with respect to all outstanding Letters of Credit and Unpaid Drawings, there shall be an automatic adjustment to the participations pursuant to this section 3.4 to reflect the new General Revolving Facility Percentages of the assigning and assignee Lender. (b) In determining whether to pay under any Letter of Credit, a Letter of Credit Issuer shall not have any obligation relative to the Participants other than to determine that any documents required to be delivered under such Letter of Credit have been delivered and that they appear to comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by a Letter of Credit Issuer under or in connection with any Letter of Credit if taken or omitted in the absence of gross negligence or willful misconduct, shall not create for such Letter of Credit Issuer any resulting liability. (c) In the event that a Letter of Credit Issuer makes any payment under any Letter of Credit and the Borrower shall not have reimbursed (or caused any applicable Letter of Credit Obligor to reimburse) such amount in full to such Letter of Credit Issuer pursuant to section 3.3(a), such Letter of Credit Issuer shall promptly notify the Administrative Agent, and the Administrative Agent shall promptly notify each Participant of such failure, and each Participant shall promptly and unconditionally pay to the Administrative Agent for the account of such Letter of Credit Issuer, the amount of such Participant's General Revolving Facility Percentage of such payment in Dollars (the Administrative Agent having determined in the case of any payment by a Letter of Credit Issuer made in the Alternative Currency the equivalent thereof in Dollars) and in same day funds; PROVIDED that no Participant shall be obligated to pay to the Administrative Agent its General Revolving Facility Percentage of such unreimbursed amount for any wrongful payment made by such Letter of Credit Issuer under a Letter of Credit as a result of acts or omissions constituting willful misconduct or gross negligence on the part of such Letter of Credit Issuer. If the Administrative Agent so notifies any Participant required to fund a payment under a Letter of Credit prior to 11:00 A.M. (local time at its Notice Office) on any Business Day, such Participant shall make available to the Administrative Agent for the account of the relevant Letter of Credit Issuer such Participant's General Revolving Facility Percentage of the amount of such payment on such Business Day in same day funds. If and to the extent such Participant shall not have so made its General Revolving Facility Percentage of the amount of such payment available to the Administrative Agent for the account of the relevant Letter of Credit Issuer, such Participant agrees to pay to the Administrative Agent for the account of such Letter of Credit Issuer, forthwith on demand such amount, together with interest thereon, for each day from such date until the date such amount is paid to the Administrative Agent for the account of such Letter of Credit Issuer at the Federal Funds Effective Rate. The failure of any Participant to make available to the Administrative Agent for the account of the relevant Letter of Credit Issuer its General Revolving Facility Percentage of any payment under any Letter of Credit shall not relieve any other Participant of its obligation hereunder to make available to the Administrative Agent for the account of such Letter of Credit Issuer its General Revolving Facility Percentage of any payment under any Letter of Credit on the date required, as specified above, but no Participant shall be responsible for the failure of any other Participant to make 52 available to the Administrative Agent for the account of such Letter of Credit Issuer such other Participant's General Revolving Facility Percentage of any such payment. (d) Whenever a Letter of Credit Issuer receives a payment of a reimbursement obligation as to which the Administrative Agent has received for the account of such Letter of Credit Issuer any payments from the Participants pursuant to section 3.4(c) above, such Letter of Credit Issuer shall pay to the Administrative Agent and the Administrative Agent shall promptly pay to each Participant which has paid its General Revolving Facility Percentage thereof, in Dollars and in same day funds, an amount equal to such Participant's General Revolving Facility Percentage of the principal amount thereof and interest thereon accruing after the purchase of the respective participations, as and to the extent so received. (e) The obligations of the Participants to make payments to the Administrative Agent for the account of each Letter of Credit Issuer with respect to Letters of Credit shall be irrevocable and not subject to counterclaim, set-off or other defense or any other qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances, including, without limitation, any of the following circumstances: (i) any lack of validity or enforceability of this Agreement or any of the other Credit Documents; (ii) the existence of any claim, set-off defense or other right which the Borrower (or any other Letter of Credit Obligor) may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any person for whom any such transferee may be acting), the Administrative Agent, any Letter of Credit Issuer, any Lender, or other person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between the Borrower (or any other Letter of Credit Obligor) and the beneficiary named in any such Letter of Credit), other than any claim which the Borrower (or any other Letter of Credit Obligor which is the account party with respect to a Letter of Credit) may have against any applicable Letter of Credit Issuer for gross negligence or wilful misconduct of such Letter of Credit Issuer in making payment under any applicable Letter of Credit; (iii) any draft, certificate or other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Credit Documents: or (v) the occurrence of any Default or Event of Default. (f) To the extent the Letter of Credit Issuer is not indemnified by the Borrower, the Participants will reimburse and indemnify the Letter of Credit Issuer, in proportion to their respective General Revolving Facility Percentages, for and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or 53 disbursements of whatsoever kind or nature which may be imposed on, asserted against or incurred by the Letter of Credit Issuer in performing its respective duties in any way related to or arising out of its issuance of Letters of Credit; PROVIDED that no Participants shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or disbursements resulting from the Letter of Credit Issuer's gross negligence or willful misconduct. 3.5 INCREASED COSTS. If after the Effective Date, the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Letter of Credit Issuer or any Lender with any request or directive (whether or not having the force of law) by any such authority, central bank or comparable agency (in each case made subsequent to the Effective Date) shall either (i) impose, modify or make applicable any reserve, deposit, capital adequacy or similar requirement against Letters of Credit issued by such Letter of Credit Issuer or such Lender's participation therein, or (ii) impose on such Letter of Credit Issuer or any Lender any other conditions affecting this Agreement, any Letter of Credit or such Lender's participation therein; and the result of any of the foregoing is to increase the cost to such Letter of Credit Issuer or such Lender of issuing, maintaining or participating in any Letter of Credit, or to reduce the amount of any sum received or receivable by such Letter of Credit Issuer or such Lender hereunder (other than any increased cost or reduction in the amount received or receivable resulting from the imposition of or a change in the rate of taxes or similar charges), then, upon demand to the Borrower by such Letter of Credit Issuer or such Lender (a copy of which notice shall be sent by such Letter of Credit Issuer or such Lender to the Administrative Agent), the Borrower shall pay to such Letter of Credit Issuer or such Lender such additional amount or amounts as will compensate any such Letter of Credit Issuer or such Lender for such increased cost or reduction. A certificate submitted to the Borrower by any Letter of Credit Issuer or any Lender, as the case may be (a copy of which certificate shall be sent by such Letter of Credit Issuer or such Lender to the Administrative Agent), setting forth, in reasonable detail, the basis for the determination of such additional amount or amounts necessary to compensate any Letter of Credit Issuer or such Lender as aforesaid shall be conclusive and binding on the Borrower absent manifest error, although the failure to deliver any such certificate shall not release or diminish any of the Borrower's obligations to pay additional amounts pursuant to this section 3.5. Reference is hereby made to the provisions of section 2.9(d) for certain limitations upon the rights of a Letter of Credit Issuer or Lender under this section. 3.6 GUARANTY OF LETTER OF CREDIT OBLIGATIONS OF OTHER LETTER OF CREDIT OBLIGORS. (a) The Borrower hereby unconditionally guarantees, for the benefit of the Administrative Agent and the Lenders, the full and punctual payment of the Obligations of each other Letter of Credit Obligor under each Letter of Credit Document to which such other Letter of Credit Obligor is now or hereafter becomes a party. Upon failure by any such other Letter of Credit Obligor to pay punctually any such amount, the Borrower shall forthwith on demand by the Administrative Agent pay the amount not so paid at the place and in the currency and otherwise in the manner specified in this Agreement or any applicable Letter of Credit Document. (b) As a separate, additional and continuing obligation, the Borrower unconditionally and irrevocably undertakes and agrees, for the benefit of the Administrative Agent and the 54 Lenders, that, should any amounts not be recoverable from the Borrower under section 3.6(a) for any reason whatsoever (including, without limitation, by reason of any provision of any Credit Document or any other agreement or instrument executed in connection therewith being or becoming void, unenforceable, or otherwise invalid under any applicable law) then, notwithstanding any notice or knowledge thereof by any Lender, the Administrative Agent, any of their respective Affiliates, or any other person, at any time, the Borrower as sole, original and independent obligor, upon demand by the Administrative Agent, will make payment to the Administrative Agent, for the account of the Lenders and the Administrative Agent, of all such obligations not so recoverable by way of full indemnity, in such currency and otherwise in such manner as is provided in the Credit Documents. (c) The obligations of the Borrower under this section shall be unconditional and absolute and, without limiting the generality of the foregoing shall not be released, discharged or otherwise affected by the occurrence, one or more times, of any of the following: (i) any extension, renewal, settlement, compromise, waiver or release in respect to any obligation of any other Letter of Credit Obligor under any Letter of Credit Document, by operation of law or otherwise; (ii) any modification or amendment of or supplement to this Agreement, any Note or any other Credit Document; (iii) any release, non-perfection or invalidity of any direct or indirect security for any obligation of the Borrower under this Agreement, any Note or any other Credit Document or of any other Letter of Credit Obligor under any Letter of Credit Document; (iv) any change in the corporate existence, structure or ownership of any other Letter of Credit Obligor or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any other Letter of Credit Obligor or its assets or any resulting release or discharge of any obligation of any other Letter of Credit Obligor contained in any Letter of Credit Document; (v) the existence of any claim, set-off or other rights which the Borrower may have at any time against any other Letter of Credit Obligor, the Administrative Agent, any Lender or any other person, whether in connection herewith or any unrelated transactions; (vi) any invalidity or unenforceability relating to or against any other Letter of Credit Obligor for any reason of any Letter of Credit Document, or any provision of applicable law or regulation purporting to prohibit the payment by any other Letter of Credit Obligor of any Obligations in respect of any Letter of Credit; or (vii) any other act or omission to act or delay of any kind by any other Letter of Credit Obligor, the Administrative Agent, any Lender or any other person or any other circumstance whatsoever which might, but for the provisions of this section, constitute a legal or equitable discharge of the Borrower's obligations under this section. 55 (d) The Borrower's obligations under this section shall remain in full force and effect until the Commitments shall have terminated and the principal of and interest on the Notes and all other amounts payable by the Borrower under the Credit Documents and by any other Letter of Credit Obligor under the Letter of Credit Documents shall have been paid in full. If at any time any payment of any of the Obligations of any other Letter of Credit Obligor in respect of any Letter of Credit Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of such other Letter of Credit Obligor, the Borrower's obligations under this section with respect to such payment shall be reinstated at such time as though such payment had been due but not made at such time. (e) The Borrower irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any person against any other Letter of Credit Obligor or any other person, or against any collateral or guaranty of any other person. (f) Until the indefeasible payment in full of all of the Obligations and the termination of the Commitments of the Lenders hereunder, the Borrower shall have no rights, by operation of law or otherwise, upon making any payment under this section to be subrogated to the rights of the payee against any other Letter of Credit Obligor with respect to such payment or otherwise to be reimbursed, indemnified or exonerated by any other Letter of Credit Obligor in respect thereof. (g) In the event that acceleration of the time for payment of any amount payable by any other Letter of Credit Obligor under any Letter of Credit Document is stayed upon insolvency, bankruptcy or reorganization of such other Letter of Credit Obligor, all such amounts otherwise subject to acceleration under the terms of any applicable Letter of Credit Document shall nonetheless be payable by the Borrower under this section forthwith on demand by the Administrative Agent. SECTION 4. FEES; COMMITMENTS. 4.1 FEES. (a) FACILITY FEES. (i) The Borrower agrees to pay to the Administrative Agent a Facility Fee ("FACILITY FEE") for the account of each Non-Defaulting Lender which has a General Revolving Commitment, for the period from and including the Effective Date to but not including the date the Total General Revolving Commitment has been terminated and no Loans or Letters of Credit are outstanding. In the case of any such Lender, the portion of the Facility Fee to which it shall be entitled shall be computed for each day at a rate per annum equal to the Applicable Facility Fee Rate for such day on the amount of its General Revolving Facility Percentage of the Total General Revolving Commitment on such day, whether used or unused. Accrued Facility Fees shall be payable in arrears on the first Business Day of each April, July, October and January and on the date when the Total General Revolving Commitment has been terminated and no General Revolving Loans or Letters of Credit are outstanding. (ii) As used herein the term "APPLICABLE FACILITY FEE RATE" shall mean the particular rate per annum determined by the Administrative Agent in accordance with the Pricing Grid which appears in section 2.7(h), based upon the Index Debt Rating, applicable on any date, and the following provisions: 56 (A) Initially, until changed hereunder in accordance with the following provisions, the Applicable Facility Fee Rate will be 37.50 basis points per annum; PROVIDED that any time during which the Leverage Ratio is greater than or equal to 4.0 to 1.0, the Applicable Facility Fee Rate will be increased by 12.5 basis points per annum. (B) Effective on the effective date of any change in the Applicable LIBOR Margin and the Applicable Prime Rate Margin pursuant to section 2.7(h)(iii), the Applicable Facility Fee Rate shall change on the same date to the Applicable Facility Fee Rate which corresponds to the changed Applicable LIBOR Margin and the Applicable Prime Rate Margin, as indicated in the Pricing Grid which appears in section 2.7(h) hereof. (C) Notwithstanding the above provisions, during any period when a Default under section 10.1(a) or an Event of Default has occurred and is continuing, the Applicable Facility Fee Rate shall be the highest rate per annum indicated therefor in the Pricing Grid, regardless of the then Index Debt Rating. (D) Any changes in the Applicable Facility Fee Rate shall be determined by the Administrative Agent in accordance with the above provisions and the Administrative Agent will promptly provide notice of such determinations to the Borrower and the Lenders. Any such determination by the Administrative Agent pursuant to this section 4.1(a)(ii) shall be conclusive and binding absent manifest error. (b) LETTER OF CREDIT FEES. The Borrower agrees to pay to the Administrative Agent, for the account of each Non-Defaulting Lender, PRO RATA on the basis of its Percentage, a fee in respect of each Letter of Credit (the "LETTER OF CREDIT FEE"), computed for each day at the rate per annum equal to the Applicable LIBOR Margin then in effect on the Stated Amount of all Letters of Credit outstanding on such day. Accrued Letter of Credit Fees shall be due and payable quarterly in arrears on the first Business Day of each April, July, October and January and on the date when the Total Commitment expires or is terminated and no Letters of Credit remain outstanding. The Borrower also agrees to pay to the Administrative Agent, for the account of each Non-Defaulting Lender, PRO RATA on the basis of its Percentage, additional Letter of Credit Fees, on demand, at the rate of 200 basis points per annum, on the Stated Amount of each Letter of Credit, for any period when a Default under section 10.1(a) or Event of Default is in existence. (c) FACING FEES. The Borrower to pay directly to each Letter of Credit Issuer a fee in respect of each Letter of Credit issued by it (a "FACING FEE"), computed for each day at the rate of 1/8 of 1% per annum on the Stated Amount of such Letter of Credit issued by such Letter of Credit Issuer which is outstanding on such day. Accrued Facing Fees shall be due and payable quarterly in arrears on the first Business Day of each April, July, October and January and on the date on which the Total Commitment expires or is terminated and no Letters of Credit remain outstanding. (d) ADDITIONAL CHARGES OF LETTER OF CREDIT ISSUER. The Borrower agrees to pay directly to each Letter of Credit Issuer upon each issuance of, drawing under, and/or amendment, extension, renewal or transfer of, a Letter of Credit issued by it such amount as shall at the time 57 of such issuance, drawing, amendment, extension, renewal or transfer be the administrative or processing charge which such Letter of Credit Issuer is customarily charging for issuances of, drawings under or amendments, extensions, renewals or transfers of, letters of credit issued by it. (e) OTHER FEES. The Borrower shall pay to the Agents and/or the Joint Lead Arrangers, on the Closing Date and thereafter, for its or their own account and/or for distribution to the Lenders, such fees as heretofore agreed in writing by the Borrower, the Joint Lead Arrangers and the Agents. (f) COMPUTATIONS OF FEES. All computations of Fees shall be made in accordance with section 12.7(b). 4.2 VOLUNTARY TERMINATION/REDUCTION OF COMMITMENTS. Upon at least three Business Days' prior written notice (or telephonic notice confirmed in writing) to the Administrative Agent at its Notice Office (which notice the Administrative Agent shall promptly transmit to each of the Lenders), the Borrower shall have the right to: (a) TERMINATION OF TOTAL COMMITMENT: terminate the Total Commitment; PROVIDED that, (i) all outstanding Revolving Loans, Swing Line Revolving Loans and Term Loans are contemporaneously prepaid in accordance with section 5.1 and all outstanding Competitive Bid Loans are contemporaneously prepaid in accordance with section 2.3(d), and (ii) either (A) no Letters of Credit remain outstanding, or (B) the Borrower shall contemporaneously either (x) cause all outstanding Letters of Credit to be surrendered for cancellation (any such Letters of Credit to be replaced by letters of credit issued by other financial institutions acceptable to each Letter of Credit Issuer and the Required Lenders), or (y) the Borrower shall pay to the Administrative Agent an amount in cash and/or Cash Equivalents equal to 100% of the Letter of Credit Outstandings and the Administrative Agent shall hold such payment as security for the reimbursement obligations of the Borrower and any other Letter of Credit Obligor in respect of Letters of Credit pursuant to a cash collateral agreement to be entered into in form and substance reasonably satisfactory to the Administrative Agent, each Letter of Credit Issuer and the Borrower (which shall permit certain investments in Cash Equivalents satisfactory to the Administrative Agent, each Letter of Credit Issuer and the Borrower until the proceeds are applied to the secured obligations); (b) PARTIAL REDUCTIONS OF UNUTILIZED TOTAL GENERAL REVOLVING COMMITMENT: partially and permanently reduce the Unutilized Total General Revolving Commitment; PROVIDED that (i) any such reduction shall apply to proportionately and permanently reduce the General Revolving Commitment of each of the Lenders; (ii) any partial reduction of the Unutilized Total General Revolving Commitment pursuant to this section 4.2(b) shall be in the amount of at least $5,000,000 (or, if greater, in integral multiples of $1,000,000); and (iii) after giving effect to any partial reduction of the Unutilized Total General Revolving Commitment pursuant to this section 4.2(b), the Unutilized Total General Revolving Commitment shall exceed the Swing Line Revolving Commitment Amount then in effect by at least $20,000,000; and/or 58 (c) PARTIAL REDUCTIONS OF UNUTILIZED SWING LINE REVOLVING COMMITMENT: partially and permanently reduce the Unutilized Swing Line Revolving Commitment; PROVIDED that any partial reduction of the Unutilized Swing Line Revolving Commitment pursuant to this section 4.2(c) shall be in the amount of at least $1,000,000 (or, if greater, in integral multiples of $1,000,000). 4.3 MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC. (a) The Total Commitment (and the Commitment of each Lender) shall terminate on September 30, 2001, UNLESS the Closing Date has occurred on or prior to such date. (b) The Total Commitment (other than the Term Commitment) shall terminate (and the Commitment of each Lender (other than the Term Commitment) shall terminate) on the earlier of (x) the General Revolving Maturity Date and (y) the date on which a Change of Control occurs. (c) The Term Commitment shall terminate on the Closing Date, after the Term Loans have been made. (d) To the extent that, pursuant to section 5.2(f) or section 5.2(g), any Loans are or would be required to be mandatorily prepaid with (or as a result of the receipt of) Net Debt Proceeds, Net Equity Proceeds or Net Disposition Proceeds, the General Revolving Commitment Amount shall be permanently reduced, on a dollar-for-dollar basis, by an amount equal to the amount of such prepayment; PROVIDED that any term or provision hereof to the contrary notwithstanding, such reduction to the General Revolving Commitment Amount shall be made whether or not any prepayment of the General Revolving Loans is actually made pursuant to section 5.2(f) or section 5.2(g), as the case may be; PROVIDED, FURTHER, that the General Revolving Commitment Amount shall not be reduced below $300,000,000 as a result of this section. 4.4 EXTENSION OF TERM MATURITY DATE. At any time after January 1, 2002, upon 30 days prior written notice to the Administrative Agent, the Borrower may, in its sole discretion, so long as no Default or Event of Default has occurred and is continuing on the Term Maturity Date, extend the Term Maturity Date for another 180 days. If the Borrower so decides, the Administrative Agent will so advise the Lenders, and the Borrower, the Administrative Agent and all of the Lenders shall execute and deliver a definitive written instrument so extending the Term Maturity Date. No such extension of the Term Maturity Date shall be valid or effective for any purpose unless such definitive written instrument is so signed and delivered within 30 days following the giving by the Administrative Agent of notice to the Lenders that the Borrower has decided on such an extension. SECTION 5. PAYMENTS. 5.1 VOLUNTARY PREPAYMENTS OF LOANS. The Borrower may not voluntarily prepay any Competitive Bid Loan, in whole or in part, unless such prepayment is permitted and made as contemplated by section 2.3(d). The Borrower shall have the right to prepay any of its General Revolving Loans, Swing Line Revolving Loans or Term Loans, in whole or in part, without premium or penalty, from time to time on the following terms and conditions: 59 (a) NOTICES: the Borrower shall give the Administrative Agent at the Notice Office written or telephonic notice (in the case of telephonic notice, promptly confirmed in writing if so requested by the Administrative Agent) of its intent to prepay the Loans, the amount of such prepayment and (in the case of LIBOR Loans) the specific Borrowing(s) pursuant to which made, which notice shall be received by the Administrative Agent by (i) 12:00 noon (local time at the Notice Office) three Business Days prior to the date of such prepayment, in the case of any prepayment of LIBOR Loans, or (ii) 12:00 noon (local time at the Notice Office) on the date of such prepayment, in the case of any prepayment of Prime Rate Loans, and which notice shall promptly be transmitted by the Administrative Agent to each of the affected Lenders; (b) PARTIAL PREPAYMENTS UNDER THE GENERAL REVOLVING FACILITY AND THE TERM FACILITY: in the case any partial prepayment of any Borrowing under the General Revolving Facility or the Term Facility, such partial prepayment shall be in an aggregate principal of at least $1,000,000 (or the Alternative Currency Equivalent thereof with respect to Alternative Currency General Revolving Loans) or an integral multiple of $100,000 (or the Alternative Currency Equivalent thereof with respect to Alternative Currency General Revolving Loans) in excess thereof, in the case of any Borrowing comprised of Prime Rate Loans and at least $5,000,000 (or the Alternative Currency Equivalent thereof with respect to Alternative Currency General Revolving Loans) or an integral multiple of $1,000,000 (or the Alternative Currency Equivalent thereof with respect to Alternative Currency General Revolving Loans) in excess thereof, in the case of any Borrowing comprised of LIBOR Loans; (c) PARTIAL PREPAYMENTS UNDER THE SWING LINE REVOLVING FACILITY: in the case any partial prepayment of any Borrowing under the Swing Line Revolving Facility, such partial prepayment shall be in an aggregate principal of at least $500,000 or an integral multiple of $100,000 in excess thereof; (d) MINIMUM BORROWING AMOUNT REMAINING AFTER PARTIAL PREPAYMENTS: no partial prepayment of any Loans made pursuant to a Borrowing shall reduce the aggregate principal amount of such Loans outstanding pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount applicable thereto; (e) PREPAYMENTS TO BE APPLIED PRO RATA: each prepayment in respect of any Loans made pursuant to a Borrowing shall be applied PRO RATA among such Loans; and (f) BREAKAGE COMPENSATION: each prepayment of LIBOR Loans or Money Market Rate Loans pursuant to this section 5.1 on any date other than the last day of the Interest Period applicable thereto, in the case of a LIBOR Loan, or the maturity date 60 thereof, in the case of a Money Market Rate Loan, as applicable, shall be accompanied by any amounts payable in respect thereof under section 2.10. 5.2 MANDATORY PREPAYMENTS. The Loans shall be subject to mandatory prepayment in accordance with the following provisions: (a) IF OUTSTANDING GENERAL REVOLVING LOANS, SWING LINE REVOLVING LOANS AND LETTER OF CREDIT OUTSTANDINGS EXCEED GENERAL REVOLVING COMMITMENT AMOUNT. If on any date (after giving effect to any other payments on such date) the sum of (i) the aggregate outstanding principal amount of General Revolving Loans (after converting the aggregate outstanding principal amount of all General Revolving Loans denominated in the Alternative Currency to the Dollar Equivalent thereof) and Swing Line Revolving Loans, PLUS (ii) the aggregate amount of Letter of Credit Outstandings, EXCEEDS the General Revolving Commitment Amount as then in effect, THEN the Borrower shall prepay on such date that principal amount of General Revolving Loans and, after General Revolving Loans have been paid in full, Swing Line Revolving Loans, and after Swing Line Revolving Loans have been paid in full, Unpaid Drawings, in an aggregate amount at least equal to such excess and conforming in the case of partial prepayments of any Loans to the applicable requirements as to the amounts of partial prepayments which are contained in section 5.1. If, after giving effect to the prepayment of General Revolving Loans, Swing Line Revolving Loans and Unpaid Drawings, the aggregate amount of Letter of Credit Outstandings exceeds the General Revolving Commitment Amount as then in effect, the Borrower shall pay to the Administrative Agent an amount in cash and/or Cash Equivalents equal to such excess and the Administrative Agent shall hold such payment as security for the reimbursement obligations of the Borrower and the other Letter of Credit Obligors in respect of Letters of Credit pursuant to a cash collateral agreement to be entered into in form and substance reasonably satisfactory to the Administrative Agent and the Borrower (which shall permit certain investments in Cash Equivalents satisfactory to the Administrative Agent and the Borrower until the proceeds are applied to the secured obligations). (b) IF OUTSTANDING SWING LINE REVOLVING LOANS EXCEED UNUTILIZED TOTAL GENERAL REVOLVING COMMITMENT AMOUNT. If on any date (after giving effect to any other payments on such date) the aggregate outstanding principal amount of Swing Line Revolving Loans exceeds the Unutilized Total General Revolving Commitment as then in effect, THEN the Borrower shall prepay on such date Swing Line Revolving Loans in an aggregate amount at least equal to such excess and conforming in the case of partial prepayments of Swing Line Revolving Loans to the requirements as to the amounts of partial prepayments of Swing Line Revolving Loans which are contained in section 5.1. (c) IF OUTSTANDING SWING LINE REVOLVING LOANS EXCEED SWING LINE REVOLVING COMMITMENT AMOUNT. If on any date (after giving effect to any other payments on such date) the aggregate outstanding principal amount of Swing Line Revolving Loans exceeds the Swing Line Revolving Commitment Amount at such time, THEN the Borrower shall prepay on such date Swing Line Revolving Loans in an aggregate amount at least equal to such excess and conforming in the case of partial 61 prepayments of Swing Line Revolving Loans to the requirements as to the amounts of partial prepayments of Swing Line Revolving Loans which are contained in section 5.1. (d) IF OUTSTANDING ALTERNATIVE CURRENCY GENERAL REVOLVING LOANS EXCEED ALTERNATIVE CURRENCY GENERAL REVOLVING LOAN LIMITATION. If on any date the aggregate outstanding principal amount of General Revolving Loans denominated in the Alternative Currency exceeds the Alternative Currency General Revolving Loan Limitation as then in effect, THEN the Borrower shall prepay on such date General Revolving Loans denominated in the Alternative Currency in an aggregate amount at least equal to such excess and conforming in the case of partial prepayments of General Revolving Loans denominated in the Alternative Currency to the requirements as to the amounts of partial prepayments of General Revolving Loans denominated in the Alternative Currency which are contained in section 5.1. (e) MANDATORY PREPAYMENT -- CHANGE OF CONTROL. On the date a Change of Control occurs, notwithstanding anything to the contrary contained in this Agreement, no further Borrowings shall be made and the then outstanding principal amount of all Loans, if any, and other Obligations, shall become due and payable and shall be prepaid in full, together with accrued interest and Fees, and the Borrower shall contemporaneously either (i) cause all outstanding Letters of Credit to be surrendered for cancellation (any such Letters of Credit to be replaced by letters of credit issued by other financial institutions acceptable to the Required Lenders), or (ii) the Borrower shall pay to the Administrative Agent an amount in cash and/or Cash Equivalents equal to 110% of the Letter of Credit Outstandings and the Administrative Agent shall hold such payment as security for the reimbursement obligations of the Borrower and the other Letter of Credit Obligors in respect of Letters of Credit pursuant to a cash collateral agreement to be entered into in form and substance reasonably satisfactory to the Administrative Agent, each Letter of Credit Issuer and the Borrower (which shall permit certain investments in Cash Equivalents satisfactory to the Administrative Agent, each Letter of Credit Issuer and the Borrower until the proceeds are applied to the secured obligations). (f) MANDATORY PREPAYMENT -- NET DEBT PROCEEDS AND NET EQUITY PROCEEDS. No later than one Business Day following the receipt of any Net Debt Proceeds or Net Equity Proceeds by the Borrower or any Subsidiary, the Borrower shall deliver to the Administrative Agent a calculation of the amount of such Net Debt Proceeds or Net Equity Proceeds and, to the extent the amount of such Net Debt Proceeds or Net Equity Proceeds, with respect to any single transaction or series of related transactions, exceeds $2,000,000, the Borrower shall make a mandatory prepayment of the Loans in an amount equal to 100% of such Net Debt Proceeds or Net Equity Proceeds, as the case may be, to be applied (i) FIRST, to the prepayment of outstanding Term Loans until all Term Loans shall have been repaid in full, (ii) SECOND, to the prepayment of outstanding Short Term Credit Facility Revolving Loans (and a reduction of the commitment therefor) pursuant to the terms of the Short Term Credit Facility Agreement until all Short Term Credit Facility Revolving Loans have been repaid in full and the commitment therefor has been reduced to zero, and (iii) THIRD, if the Leverage Ratio is greater than 3.00 to 1.00 at the time of the receipt of such Net Debt Proceeds or the Net Equity Proceeds, as the case may be, in each case after giving pro forma effect to 62 the application of such proceeds, to the prepayment of outstanding General Revolving Loans (and, pursuant to section 4.3(d), a reduction in the General Revolving Commitment Amount). (g) MANDATORY PREPAYMENT-- NET DISPOSITION PROCEEDS. No later than 30 days following the receipt of any Net Disposition Proceeds by the Borrower or any Subsidiary, the Borrower shall deliver to the Administrative Agent a calculation of the amount of such Net Disposition Proceeds, and, to the extent the amount of such Net Disposition Proceeds, with respect to any single transaction or series of related transactions, exceeds $5,000,000, the Borrower shall make a mandatory prepayment of the Loans in an amount equal to 100% of such Net Disposition Proceeds, to be applied (i) FIRST, to the prepayment of outstanding Short Term Credit Facility Revolving Loans (and a reduction of the commitment therefor) pursuant to the terms of the Short Term Credit Facility Agreement until all Short Term Credit Facility Revolving Loans have been repaid in full and the commitment therefor has been reduced to zero, and (ii) SECOND, if the Leverage Ratio is greater than 3.00 to 1.00 at the time of the receipt of such Net Disposition Proceeds, after giving pro forma effect to the application of such Net Disposition Proceeds, to the prepayment of outstanding General Revolving Loans (and, pursuant to section 4.3(d), a reduction in the General Revolving Commitment Amount). (h) PARTICULAR LOANS TO BE PREPAID. With respect to each repayment or prepayment of Loans required by this section 5.2, the Borrower shall designate the Types of Loans which are to be repaid or prepaid and the specific Borrowing(s) pursuant to which such repayment or prepayment is to be made; PROVIDED that (i) the Borrower shall first so designate all Loans that are Prime Rate Loans and LIBOR Loans with Interest Periods ending on the date of repayment or prepayment prior to designating any other LIBOR Loans for repayment or prepayment, (ii) if the outstanding principal amount of LIBOR Loans made pursuant to a Borrowing is reduced below the applicable Minimum Borrowing Amount as a result of any such repayment or prepayment, then all the Loans outstanding pursuant to such Borrowing shall be converted into Prime Rate Loans, and (iii) each repayment and prepayment of any Loans made pursuant to a Borrowing shall be applied PRO RATA among such Loans. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall, subject to the above, make such designation in its sole discretion with a view, but no obligation, to minimize breakage costs owing under section 2.10. Any repayment or prepayment of LIBOR Loans pursuant to this section 5.2 shall in all events be accompanied by such compensation as is required by section 2.10. 5.3 REPAYMENT OF LOANS. The Borrower shall repay in full the unpaid principal amount of the Loans made to it (in Dollars or the Alternative Currency, as applicable) on the General Revolving Maturity Date or the Term Maturity Date, as applicable. 5.4 METHOD AND PLACE OF PAYMENT. (a) Except as otherwise specifically provided herein, all payments under this Agreement shall be made to the Administrative Agent for the ratable (based on its PRO RATA share) account of the Lenders entitled thereto, not later than 12:00 noon (local time at the Payment Office) on the date when due and shall be made at the Payment Office in immediately available funds and in lawful money of the United States of America, it 63 being understood that written notice by the Borrower to the Administrative Agent to make a payment from the funds in the Borrower's account at the Payment Office shall constitute the making of such payment to the extent of such funds held in such account. Any payments under this Agreement which are made later than 12:00 noon (local time at the Payment Office) shall be deemed to have been made on the next succeeding Business Day. Whenever any payment to be made hereunder shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable during such extension at the applicable rate in effect immediately prior to such extension. (b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, Unpaid Drawings, interest and Fees then due hereunder and an Event of Default is not then in existence, such funds shall be applied (i) FIRST, towards payment of interest and Fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and Fees then due to such parties, and (ii) SECOND, towards payment of principal and Unpaid Drawings then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and Unpaid Drawings then due to such parties. 5.5 NET PAYMENTS. (a) All payments made by the Borrower hereunder, under any Note or any other Credit Document, will be made without setoff, counterclaim or other defense. Except as otherwise provided for in section 5.5(d), all such payments will be made free and clear of, and without deduction or withholding for, any Taxes. In the event that any Taxes are imposed and required by law to be deducted or withheld from any payment required to made by the Borrower under any Note or any other Credit Document, then: (i) subject to clause (d) below, the amount of such payment shall be increased as may be necessary such that such payment is made, after withholding or deduction for or on account of such Taxes, in an amount that is not less than the amount provided for in such Note or other Credit Document and (ii) the Borrower shall withhold the full amount of such Taxes from such payment (as increased pursuant to clause (a)(i)) and shall pay such amount to the authority imposed such Taxes in accordance with applicable law. The Borrower will furnish to the Administrative Agent within 45 days after the date of any withholding or deduction on account of United States withholding taxes certified copies of tax receipts, or other evidence satisfactory to the Lender, evidencing payment thereof by the Borrower. (b) Subject to clause (d), the Borrower shall indemnify the Administrative Agent and each Lender for any Taxes levied, imposed or assessed on (and whether or not paid directly by) the Administrative Agent or such Lender (and whether or not such Taxes are correctly or legally asserted by the relevant taxing authority). Promptly upon having knowledge that any such Taxes have been levied, imposed or assessed, and promptly upon notice thereof by the Administrative Agent or any Lender, the Borrower shall pay such Taxes directly to the relevant taxing authority (PROVIDED that neither the Administrative Agent nor any Lender shall be under any obligation to provide any such notice to the Borrower). In addition, the Borrower shall indemnify the Administrative Agent and each Lender for any incremental Taxes that may become payable by the Administrative Agent or any Lender as a result of any failure of the Borrower to pay any Taxes when due to the appropriate taxing authority or to deliver to the Administrative Agent, pursuant to clause (a), documentation evidencing the payment of Taxes. With respect to 64 indemnification for Taxes actually paid by the Administrative Agent or any Lender or the indemnification provided in the immediately preceding sentence, such indemnification shall be made within 30 days after the date the Administrative Agent or such Lender, as the case may be, makes written demand therefor. The Borrower acknowledges that any payment made to the Administrative Agent or any Lender or to any taxing authority in respect of the indemnification obligations of the Borrower provided in this clause shall constitute a payment in respect of which the provisions of clause (a) and this clause shall apply. (c) Each Lender that is not a United States person (as such term is defined in section 7701(a)(30) of the Code) for Federal income tax purposes agrees to provide to the Borrower and the Administrative Agent on or prior to the Effective Date, or in the cases of a Lender that is an assignee or transferee of an interest under this Agreement pursuant to section 12.4 (unless the respective Lender was already a Lender hereunder immediately prior to such assignment or transfer and such Lender is in compliance with the provisions of this section 5.5(c)), on the date of such assignment or transfer to such Lender, (i) two accurate and complete original signed copies of Internal Revenue Service Form W-8BEN, claiming eligibility of such Lender for benefits of an income tax treaty to which the United States is a party, or W-8ECI (or successor forms), or (ii) if the Lender is not a "bank" within the meaning of section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue Service Form W-8BEN or W-8ECI pursuant to clause (i) above, (x) a certificate substantially in the form of Exhibit F (any such certificate, a "LENDER TAX CERTIFICATE") and (y) two accurate and complete original signed copies of Internal Revenue Service Form W-8BEN (or successor form). In addition, each Lender agrees that from time to time after the Effective Date, when a lapse in time or change in circumstances renders the previous certification obsolete or inaccurate in any material respect, it will deliver to the Borrower and the Administrative Agent two new accurate and complete original signed copies of Internal Revenue Service Form W-8BEN or W-8ECI, or Form W-8BEN and a Lender Tax Certificate, as the case may be, and such other forms as may be required in order to confirm or establish the entitlement of such Lender to a continued exemption from or reduction in United States withholding tax with respect to payments under this Agreement, any Note or any other Credit Document, or it shall immediately notify the Borrower and the Administrative Agent of its inability to deliver any such Form or Certificate, in which case such Lender shall not be required to deliver any such Form or Certificate pursuant to this section 5.5(c). (d) The Borrower shall not be obligated to pay any additional amounts pursuant to clause (a), in respect of United States federal withholding taxes to the extent imposed as a result of the failure of such Lender to deliver to the Borrower the Internal Revenue Service forms and/or Lender Tax Certificate, as applicable to such Lender, required to be provided to the Borrower pursuant to section 5.5(c); PROVIDED that the Borrower shall be obligated to pay additional amounts to any such Lender pursuant to clause (a), in respect United States federal withholding taxes if any such failure to deliver the Internal Revenue Service forms and/or Lender Tax Certificate, as applicable, resulted from a change in any applicable statute, treaty, regulation or other applicable law or any interpretation of any of the foregoing occurring after the date hereof, which change rendered such Lender no longer legally entitled to deliver such forms and/or Lender Tax Certificate, as applicable. SECTION 6. CONDITIONS PRECEDENT. 65 6.1 CONDITIONS PRECEDENT AT CLOSING DATE. The obligation of the Lenders to make Loans, and of any Letter of Credit Issuer to issue Letters of Credit, is subject to the satisfaction of each of the following conditions on the Closing Date: (a) EFFECTIVENESS; NOTES. On or prior to the Closing Date, (i) the Effective Date shall have occurred and (ii) there shall have been delivered to the Administrative Agent for the account of each Lender each appropriate Note executed by the Borrower, in each case, in the amount, maturity and as otherwise provided herein. (b) FEES, ETC. The Borrower shall have paid or caused to be paid all fees required to be paid by it on or prior to such date pursuant to section 4.1 hereof and all reasonable fees and expenses of the Administrative Agent and of special counsel to the Administrative Agent which have been invoiced on or prior to such date in connection with the preparation, execution and delivery of this Agreement and the other Credit Documents and the consummation of the transactions contemplated hereby and thereby. (c) CHARTER AND GOOD STANDING OF THE BORROWER. The Administrative Agent shall have received, in sufficient quantity for the Administrative Agent and the Lenders, (i) a copy of the articles of incorporation of the Borrower, including any amendments or restatements thereof, certified as of a recent date by the Secretary of State of Ohio, and (ii) a copy of a certificate of good standing for the Borrower, issued as of a recent date by the Secretary of State of Ohio. (d) CORPORATE SECRETARY'S CERTIFICATE OF THE BORROWER. The Administrative Agent shall have received, in sufficient quantity for the Administrative Agent and the Lenders, a certificate of the Secretary or an Assistant Secretary of the Borrower, dated the Closing Date, certifying (i) a true and correct copy of resolutions of the Board of Directors of the Borrower, approving the Credit Documents to which the Borrower is or may become a party, and certifying that such resolutions were duly adopted and are in full force and effect, (ii) a true and correct copy of the Code of Regulations of the Borrower, and (iii) the names and true signatures of the officers of the Borrower who are authorized to sign the Credit Documents to which the Borrower is a party and any other documents to which the Borrower is a party which may be executed and delivered in connection herewith. (e) CLOSING DATE CERTIFICATE OF THE BORROWER. The Administrative Agent shall have received, in sufficient quantity for the Administrative Agent and the Lenders, a certificate, dated the Closing Date, duly executed on behalf of the Borrower, to the effect that (i) no Default or Event of Default is in existence, (ii) all agreements, covenants and conditions required to be performed or complied with by the Borrower or any of the other Credit Parties under this Agreement or any of the other Credit Documents on or prior to the Closing Date have duly performed or complied with prior to or at the Closing Date, and (iii) all representations and warranties of the Borrower contained in this Agreement are true and correct on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date, except for any such representations and warranties which expressly relate to an earlier specified 66 date, in which case such representations and warranties are reaffirmed as true and correct as of the date when made. (f) OPINION OF COUNSEL. The Administrative Agent shall have received an opinion, addressed to the Administrative Agent and each of the Lenders and dated the Closing Date, from Squire, Sanders & Dempsey L.L.P., special counsel to the Borrower, and covering such matters incident to the transactions contemplated hereby as the Administrative Agent may reasonably request, such opinion to be in form and substance satisfactory to the Administrative Agent. (g) CONSUMMATION OF TRANSACTION. The Administrative Agent shall have received evidence satisfactory to it that (i) all actions necessary to consummate the Transaction shall have been taken in accordance with the applicable Transaction Documents and (ii) all governmental and third party approvals necessary in connection with the Transaction have been obtained and are in full force and effect, and all applicable waiting periods have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the Transaction. (h) TRANSACTION DOCUMENTS. The Administrative Agent shall have received (with copies for each Lender that shall have expressly requested copies thereof) copies of fully executed versions of the Transaction Documents, certified to be true and complete copies thereof by an Authorized Officer of the Borrower. The Purchase Agreement shall be in full force and effect and shall not have been modified or waived in any material respect, nor shall there have been any forbearance to exercise any material rights with respect to any of the terms or provisions relating to the conditions to the consummation of the DMC2 Acquisition as set forth in the Purchase Agreement unless otherwise agreed to by the Required Lenders. (i) EXISTING CREDIT FACILITY. Contemporaneously with the Closing Date, the Borrower shall have terminated the commitments of the lenders under its Existing Credit Facility and prepaid any borrowings thereunder. (j) INDEX DEBT RATING. The Borrower shall have received an Index Debt Rating of Investment Grade from both S&P and Moody's. (k) SHORT TERM CREDIT FACILITY AGREEMENT. The Administrative Agent shall have received evidence satisfactory to it that all conditions precedent set forth in Article 6 of the Short Term Credit Facility Agreement shall have been consummated to the satisfaction of the Administrative Agent. (l) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings and all documents incidental to the transactions contemplated hereby shall be satisfactory in substance and form to the Administrative Agent and the Lenders and the Administrative Agent and its special counsel and the Lenders shall have received all such counterpart originals or certified or other copies of such documents as the Administrative Agent or its special counsel or any Lender may reasonably request. 67 6.2 CONDITIONS PRECEDENT TO ALL CREDIT EVENTS (OTHER THAN ANY COMPETITIVE BID BORROWING). The obligations of the Lenders to make each Revolving Loan and/or Term Loan and/or of a Letter of Credit Issuer to issue each Letter of Credit is subject, at the time thereof, to the satisfaction of the following conditions: (a) NOTICE OF BORROWING, ETC. The Administrative Agent shall have received a Notice of Borrowing meeting the requirements of section 2.2 with respect to the incurrence of Loans or a Letter of Credit Request meeting the requirement of section 3.2 with respect to the issuance of a Letter of Credit. (b) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of each such Credit Event and also after giving effect thereto, (i) there shall exist no Default or Event of Default and (ii) all representations and warranties of the Credit Parties contained herein or in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Credit Event, except to the extent that such representations and warranties expressly relate to an earlier specified date, in which case such representations and warranties shall have been true and correct in all material respects as of the date when made. The acceptance of the benefits of each such Credit Event shall constitute a representation and warranty by the Borrower to each of the Lenders that all of the applicable conditions specified in section 6.1 and/or 6.2, as the case may be, have been satisfied as of the times referred to in sections 6.1 and 6.2. All of the certificates, legal opinions and other documents and papers referred to in this section 6, unless otherwise specified, shall be delivered to the Administrative Agent for the account of each of the Administrative Agent and the Lenders and, except for the Notes, in sufficient counterparts for the Administrative Agent and the Lenders, and the Administrative Agent will promptly distribute to the Lenders their respective Notes and the copies of such other certificates, legal opinions and documents. 6.3 CONDITIONS PRECEDENT TO EACH COMPETITIVE BID BORROWING. The obligation of each Lender which is to make a Competitive Bid Loan on the occasion of a Competitive Bid Borrowing (including the initial Competitive Bid Borrowing) to make such Competitive Bid Loan as part of such Competitive Bid Borrowing is subject to satisfaction of each of the following conditions; (a) NOTICE OF COMPETITIVE BID BORROWING. The Administrative Agent shall have received the written confirmatory Notice of Competitive Bid Borrowing with respect thereto. (b) COMPETITIVE BID NOTE. Prior to the time such Competitive Bid Borrowing is to be made by any applicable Lender, the Administrative Agent shall have received a Competitive Bid Note payable to the order of such Lender. (c) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time thereof and also after giving effect thereto, (i) there shall exist no Default or Event of Default and (ii) all representations and warranties of the Credit Parties contained herein or in the other 68 Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Credit Event, except to the extent that such representations and warranties expressly relate to an earlier specified date, in which case such representations and warranties shall have been true and correct in all material respects as of the date when made. The acceptance of the benefits of each Competitive Bid Loan shall constitute a representation and warranty by the Borrower to each of the Lenders that all of the applicable conditions specified in this section 6.3 exist as of that time. The Administrative Agent will promptly distribute to the Lenders participating in such Competitive Bid Borrowing their respective Competitive Bid Notes (to the extent not previously delivered). SECTION 7. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders to enter into this Agreement and to make the Loans and/or to issue and/or to participate in the Letters of Credit provided for herein, the Borrower makes the following representations and warranties to, and agreements with, the Lenders, all of which shall survive the execution and delivery of this Agreement and each Credit Event: 7.1 CORPORATE STATUS, ETC. Each of the Borrower and its Subsidiaries (i) is a duly organized or formed and validly existing corporation, partnership or limited liability company, as the case may be, in good standing under the laws of the jurisdiction of its formation and has the corporate, partnership or limited liability company power and authority, as applicable, to own its property and assets and to transact the business in which it is engaged and presently proposes to engage, and (ii) has duly qualified and is authorized to do business in all jurisdictions where it is required to be so qualified except where the failure to be so qualified would not have a Material Adverse Effect. 7.2 SUBSIDIARIES. Annex II hereto sets forth, as of the date hereof, each Subsidiary of the Borrower (and the direct and indirect ownership interest of the Borrower therein). 7.3 CORPORATE POWER AND AUTHORITY, ETC. Each Credit Party has the corporate or other organizational power and authority to execute, deliver and carry out the terms and provisions of the Credit Documents to which it is party and has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of the Credit Documents to which it is party. Each Credit Party has duly executed and delivered each Credit Document to which it is party and each Credit Document to which it is party constitutes the legal, valid and binding agreement or obligation of such Credit Party enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law). 7.4 NO VIOLATION. Neither the execution, delivery and performance by any Credit Party of the Credit Documents to which it is party nor compliance with the terms and provisions thereof (i) will contravene any provision of any law, statute, rule, regulation, order, writ, injunction or decree of any court or governmental instrumentality applicable to such Credit Party 69 or its properties and assets, (ii) will conflict with, or result in any breach of, any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of such Credit Party pursuant to, the terms of any promissory note, bond, debenture, indenture, mortgage, deed of trust, credit or loan agreement, or any other material agreement or other instrument, to which such Credit Party is a party or by which it or any of its property or assets are bound or to which it may be subject, or (iii) will violate any provision of the certificate or articles of incorporation, code of regulations or by-laws, or other charter documents of such Credit Party. 7.5 GOVERNMENTAL APPROVALS. No order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, any foreign or domestic governmental or public body or authority, or any subdivision thereof, is required to authorize or is required as a condition to (i) the execution, delivery and performance by any Credit Party of any Credit Document to which it is a party, or (ii) the legality, validity, binding effect or enforceability of any Credit Document to which any Credit Party is a party. 7.6 LITIGATION. There are no actions, suits, investigations, or proceedings pending or, to, the knowledge of the Borrower, threatened with respect to the Borrower or any of its Subsidiaries (i) that have, or could reasonably be expected to have, a Material Adverse Effect, or (ii) which question the validity or enforceability of any of the Credit Documents, the consummation of the Transaction or of any action to be taken by the Borrower or any of the other Credit Parties pursuant to any of the Credit Documents. 7.7 USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of all Loans and Credit Events shall be used (i) to finance the Acquisition, (ii) for the Refinancing, (iii) to make the Expense Payments and (iv) for post-closing working capital and general corporate purposes of the Borrower and its Subsidiaries following the consummation of the Acquisition. (b) No part of the proceeds of any Credit Event will be used directly or indirectly to purchase or carry Margin Stock, or to extend credit to others for the purpose of purchasing or carrying any Margin Stock, in violation of any of the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. At no time would more than 25% of the value of the assets of the Borrower or of the Borrower and its consolidated Subsidiaries that are subject to any "arrangement" (as such term is used in section 221.2(g) of such Regulation U) hereunder be represented by Margin Stock. 7.8 FINANCIAL STATEMENTS, ETC. (a) The Borrower has furnished to the Lenders and the Administrative Agent complete and correct copies of (i) the audited consolidated balance sheets of the Borrower and its consolidated subsidiaries as of December 31, 1998, December 31, 1999 and December 31, 2000 and the related audited consolidated statements of income, shareholders' equity, and cash flows of the Borrower and its consolidated subsidiaries for the fiscal years then ended (the "BORROWER FINANCIAL STATEMENTS"), accompanied by the report thereon of KPMG LLP, (ii) to the extent available, the unaudited consolidated balance sheets and consolidated statements of income of the Ferro Divisions for the years ended September 30, 1998, September 30, 1999 and December 31, 2000, and for the three months ended December 70 31, 1999, (iii) to the extent available, the audited consolidated balance sheet and related consolidated statement of income of DMC2 for the fiscal year ended December 31, 2000, (iv) the unaudited consolidated financial statements of the Borrower and its consolidated subsidiaries, DMC2 and the Ferro Divisions for the six months ended June 30, 2001, and (v) the pro forma consolidated balance sheets and statements of income of the Borrower and its consolidated subsidiaries and the Ferro Divisions for December 31, 2000 and for the six months ended June 30, 2001, in each case giving effect to the Transaction and reflecting the proposed legal and capital structures of the Borrower and its consolidated subsidiaries. All Borrower Financial Statements have been prepared in accordance with GAAP, consistently applied (except as stated therein), fairly present the financial position of the Borrower and its consolidated subsidiaries as of the respective dates indicated and the consolidated results of their operations and cash flows for the respective periods indicated, and have been certified by the chief financial officer of the Borrower. (b) The Borrower has received consideration which is the reasonable equivalent value of the obligations and liabilities that the Borrower has incurred to the Administrative Agent and the Lenders. The Borrower now has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage and is now solvent and able to pay its debts as they mature and the Borrower, as of the Closing Date, owns property having a value, both at fair valuation and at present fair salable value, greater than the amount required to pay the Borrower's debts; and the Borrower is not entering into the Credit Documents with the intent to hinder, delay or defraud its creditors. For purposes of this section 7.8(b), "DEBT" means any liability on a claim, and "CLAIM" means (x) right to payment whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (y) right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. (c) The Borrower has delivered or caused to be delivered to the Lenders prior to the execution and delivery of this Agreement (i) a copy of the Borrower's Report on Form 10-K as filed (without Exhibits) with the SEC for its fiscal year ended December 31, 2000, which contains a general description of the business and affairs of the Borrower and its Subsidiaries, (ii) a confidential information brochure dated July 2001 prepared by the Administrative Agent (with assistance from the Borrower) which contains information with respect to the business, properties and operations of the Borrower and its Subsidiaries (the "CONFIDENTIAL INFORMATION MEMORANDUM"). 7.9 NO MATERIAL ADVERSE CHANGE. Since December 31, 2000, there has been no change in the business, performance, operations, projections, prospects, liabilities or condition (financial or other) of the Borrower, the Ferro Divisions or the Borrower and its Subsidiaries taken as a whole, or their properties and assets considered as an entirety, EXCEPT FOR any changes none of which, individually or in the aggregate, has had or could reasonably be expected to have, a Material Adverse Effect. 7.10 TAX RETURNS AND PAYMENTS. Each of the Borrower and each of its Subsidiaries has filed all federal income tax returns and all other material tax returns, domestic and foreign, 71 required to be filed by it and has paid all material taxes and assessments payable by it which have become due, other than those not yet delinquent and except for those contested in good faith. The Borrower and each of its Subsidiaries has established on its books such charges, accruals and reserves in respect of taxes, assessments, fees and other governmental charges for all fiscal periods as are required by GAAP. The Borrower knows of no proposed assessment for additional federal, foreign or state taxes for any period, or of any basis therefor, which, individually or in the aggregate, taking into account such charges, accruals and reserves in respect thereof as the Borrower and its Subsidiaries have made, could reasonably be expected to have a Material Adverse Effect. 7.11 TITLE TO PROPERTIES, ETC. The Borrower and each of its Subsidiaries has good and marketable title, in the case of real property, and good title (or valid Leaseholds, in the case of any leased property), in the case of all other property, to all of its properties and assets free and clear of Liens other than Permitted Liens. The interests of the Borrower and each of its Subsidiaries in the properties reflected in the most recent consolidated balance sheet of the Borrower referred to in section 7.8, taken as a whole, were sufficient, in the judgment of the Borrower, as of the date of such balance sheet for purposes of the ownership and operation of the businesses conducted by the Borrower and such Subsidiaries. 7.12 LAWFUL OPERATIONS, ETC. Except for known situations or incidents which are reserved for on the most recent consolidated balance sheet of the Borrower referred to in section 7.8 or which, if not so reserved, could not reasonably be expected to have a Material Adverse Effect, the Borrower and each of its Subsidiaries is in full compliance with all material requirements imposed by law, whether federal or state, including (without limitation) Environmental Laws and zoning ordinances. 7.13 ENVIRONMENTAL MATTERS. (a) The Borrower and each of its Subsidiaries is in compliance with all Environmental Laws governing its business, except to the extent that any such failure to comply (together with any resulting penalties, fines or forfeitures) would not reasonably be expected to have a Material Adverse Effect. All licenses, permits, registrations or approvals required for the business of the Borrower and each of its Subsidiaries under any Environmental Law have been secured and the Borrower and each of its Subsidiaries is in substantial compliance therewith, except for such licenses, permits, registrations or approvals the failure to secure or to comply therewith is not reasonably likely to have a Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries has received written notice, or otherwise knows, that it is in any respect in noncompliance with, breach of or default under any Environmental Laws, and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute noncompliance, breach of or default thereunder, except in each such case, such noncompliance, breaches or defaults as would not reasonably be expected to, in the aggregate, have a Material Adverse Effect. There are no Environmental Claims pending or, to the best knowledge of the Borrower, threatened wherein an unfavorable decision, ruling or finding would reasonably be expected to have a Material Adverse Effect. (b) Hazardous Materials have not at any time been (i) generated, used, treated or stored on, or transported to or from, any Real Property of the Borrower or any of its Subsidiaries 72 or (ii) released on any such Real Property, in each case where such occurrence or event is not in compliance with Environmental Laws and is reasonably likely to have a Material Adverse Effect. 7.14 COMPLIANCE WITH ERISA. Compliance by the Borrower with the provisions hereof and Credit Events contemplated hereby will not involve any prohibited transaction within the meaning of ERISA or section 4975 of the Code. The Borrower and each of its Subsidiaries, (i) has fulfilled all obligations under minimum funding standards of ERISA and the Code with respect to each Plan that is not a Multiemployer Plan or a Multiple Employer Plan, (ii) has satisfied all respective contribution obligations in respect of each Multiemployer Plan and each Multiple Employer Plan, (iii) is in compliance in all material respects with all other applicable provisions of ERISA and the Code with respect to each Plan, each Multiemployer Plan and each Multiple Employer Plan, and (iv) has not incurred any liability under the Title IV of ERISA to the PBGC (except for annual premiums payable to the PBGC) with respect to any Plan, any Multiemployer Plan, any Multiple Employer Plan, or any trust established thereunder. No Plan or trust created thereunder has been terminated, and there have been no Reportable Events, with respect to any Plan or trust created thereunder or with respect to any Multiemployer Plan or Multiple Employer Plan, which termination or Reportable Event will or could result in the termination of such Plan, Multiemployer Plan or Multiple Employer Plan and give rise to a material liability of the Borrower or any ERISA Affiliate in respect thereof. Except as set forth on Annex III, neither the Borrower nor any ERISA Affiliate is at the date hereof, or has been at any time within the two years preceding the date hereof, an employer required to contribute to any Multiemployer Plan or Multiple Employer Plan, or a "contributing sponsor" (as such term is defined in section 4001 of ERISA) in any Multiemployer Plan or Multiple Employer Plan. Neither the Borrower nor any ERISA Affiliate has any contingent liability with respect to any post-retirement "welfare benefit plan" (as such term is defined in ERISA) except as has been disclosed to the Lenders in writing. 7.15 INTELLECTUAL PROPERTY, ETC. The Borrower and each of its Subsidiaries has obtained or has the right to use all material patents, trademarks, service marks, trade names, copyrights, licenses and other rights with respect to the foregoing necessary for the present and planned future conduct of its business, without any known conflict with the rights of others, EXCEPT for such patents, trademarks, service marks, trade names, copyrights, licenses and rights, the loss of which, and such conflicts, which in any such case individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. 7.16 INVESTMENT COMPANY ACT, ETC. Neither the Borrower nor any of its Subsidiaries is subject to regulation with respect to the creation or incurrence of Indebtedness under the Investment Company Act of 1940, as amended, the ICC Termination Act of 1995, as amended, the Federal Power Act, as amended, the Public Utility Holding Company Act of 1935, as amended, or any applicable state public utility law. 7.17 BURDENSOME CONTRACTS; LABOR RELATIONS. Neither the Borrower nor any of its Subsidiaries (i) is subject to any burdensome contract, agreement, corporate restriction, judgment, decree or order, (ii) is a party to any labor dispute affecting any bargaining unit or other group of employees generally, (iii) is subject to any material strike, slow down, workout or other concerted interruptions of operations by employees of the Borrower or any Subsidiary, whether or not relating to any labor contracts, (iv) is subject to any significant pending or, to the 73 knowledge of the Borrower, threatened, unfair labor practice complaint, before the National Labor Relations Board, and (v) is subject to any significant pending or, to the knowledge of the Borrower, threatened, grievance or significant arbitration proceeding arising out of or under any collective bargaining agreement, (vi) is subject to any significant pending or, to the knowledge of the Borrower, threatened, significant strike, labor dispute, slowdown or stoppage, or (vii) is, to the knowledge of the Borrower, involved or subject to any union representation organizing or certification matter with respect to the employees of the Borrower or any of its Subsidiaries, EXCEPT (with respect to any matter specified in any of the above clauses), for such matters as, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 7.18 EXISTING INDEBTEDNESS. Annex IV sets forth a true and complete list, as of the date or dates set forth therein, of all Indebtedness of the Borrower and each of its Subsidiaries, on a consolidated basis, which (i) has an outstanding principal amount of at least $5,000,000, or may be incurred pursuant to existing commitments or lines of credit, or (ii) is secured by any Lien on any property of the Borrower or any Subsidiary, and which will be outstanding on the Closing Date after giving effect to any Borrowing hereunder which is expected to be made on the Closing Date, other than the Indebtedness created under the Credit Documents (all such Indebtedness, whether or not in a principal amount meeting such threshold and required to be so set forth on Annex IV, herein the "EXISTING INDEBTEDNESS"). The Borrower has provided to the Administrative Agent prior to the date of execution hereof true and complete copies (or summary descriptions) of all agreements and instruments governing the Indebtedness set forth on Annex IV (the "EXISTING INDEBTEDNESS AGREEMENTS"). 7.19 TRUE AND COMPLETE DISCLOSURE. All factual information (taken as a whole) heretofore or contemporaneously furnished by or on behalf of the Borrower or any of its Subsidiaries in writing to the Administrative Agent or any Lender for purposes of or in connection with this Agreement or any transaction contemplated herein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of such person in writing to any Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any material fact necessary to make such information (taken as a whole) not misleading at such time in light of the circumstances under which such information was provided, except that any such future information which may consist of financial projections prepared by the Borrower is only represented herein as being based on good faith estimates and assumptions believed by such persons to be reasonable at the time made, it being recognized by the Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ materially from the projected results. SECTION 8. AFFIRMATIVE COVENANTS. The Borrower hereby covenants and agrees that on the Effective Date and thereafter so long as this Agreement is in effect and until such time as the Total Commitment has been terminated, no Notes remain outstanding and the Loans, together with interest, Fees and all other Obligations incurred hereunder and under the other Credit Documents, have been paid in full: 74 8.1 REPORTING REQUIREMENTS. The Borrower will furnish to each Lender and the Administrative Agent: (a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any event within 95 days after the close of each fiscal year of the Borrower, the consolidated balance sheets of the Borrower and its consolidated Subsidiaries as at the end of such fiscal year and the related consolidated statements of income, of stockholders' equity and of cash flows for such fiscal year, in each case setting forth comparative figures for the preceding fiscal year, all in reasonable detail and accompanied by the opinion with respect to such consolidated financial statements of independent public accountants of recognized national standing selected by the Borrower, which opinion shall be unqualified and shall (i) state that such accountants audited such consolidated financial statements in accordance with generally accepted auditing standards, that such accountants believe that such audit provides a reasonable basis for their opinion, and that in their opinion such consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Borrower and its consolidated subsidiaries as at the end of such fiscal year and the consolidated results of their operations and cash flows for such fiscal year in conformity with generally accepted accounting principles, or (ii) contain such statements as are customarily included in unqualified reports of independent accountants in conformity with the recommendations and requirements of the American Institute of Certified Public Accountants (or any successor organization). Such financial statements and opinion shall be accompanied by a certificate of such accountants stating that during the course of their examination no Default or Event of Default existing at the end of such fiscal year came to their attention, or if any did come to their attention, briefly describing the same. (b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any event within 50 days after the close of each of the first three fiscal quarters in each fiscal year of the Borrower, the unaudited consolidated balance sheets of the Borrower and its consolidated Subsidiaries as at the end of such fiscal quarter and the related unaudited consolidated statements of income and of cash flows for such fiscal quarter and/or for the fiscal year to date, and setting forth, in the case of such unaudited consolidated statements of income and of cash flows, comparative figures for the related periods in the prior fiscal year, and which shall be certified on behalf of the Borrower by the Chief Financial Officer or other Authorized Officer of the Borrower, subject to changes resulting from normal year-end audit adjustments. (c) OFFICER'S COMPLIANCE CERTIFICATES. At the time of the delivery of the financial statements provided for in sections 8.1(a) and (b), a certificate on behalf of the Borrower of the Chief Financial Officer or other Authorized Officer of the Borrower to the effect that, to the best knowledge of the Borrower, no Default or Event of Default exists or, if any Default or Event of Default does exist, specifying the nature and extent thereof and the actions the Borrower proposes to take with respect thereto, which certificate shall set forth the calculations required to establish compliance with the provisions of sections 9.6 and 9.7 of this Agreement. 75 (d) NOTICE OF DEFAULT. Promptly, and in any event within 3 Business Days after the Borrower or any of its Subsidiaries obtains knowledge thereof, notice of the occurrence of any event which constitutes a Default or Event of Default, which notice shall specify the nature thereof, the period of existence thereof and what action the Borrower proposes to take with respect thereto. (e) ERISA. Promptly, and in any event within 10 Business Days after the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate knows of the occurrence of any of the following, the Borrower will deliver to each of the Lenders a certificate on behalf of the Borrower of an Authorized Officer of the Borrower setting forth the full details as to such occurrence and the action, if any, that the Borrower, such Subsidiary or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given to or filed with or by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator with respect thereto: (i) that a Reportable Event has occurred with respect to any Plan; (ii) the institution of any steps by the Borrower, any ERISA Affiliate, the PBGC or any other person to terminate any Plan; (iii) the institution of any steps by the Borrower or any ERISA Affiliate to withdraw from any Plan; (iv) the institution of any steps by the Borrower or any Subsidiary to withdraw from any Multiemployer Plan or Multiple Employer Plan, if such withdrawal could result in withdrawal liability (as described in Part 1 of Subtitle E of Title IV of ERISA) in excess of $5,000,000; (v) a non-exempt "prohibited transaction" within the meaning of section 406 of ERISA in connection with any Plan; (vi) that a Plan has an Unfunded Current Liability exceeding $5,000,000; (vii) any material increase exceeding $5,000,000 in the contingent liability of the Borrower or any Subsidiary with respect to any post-retirement welfare liability; or (viii) the taking of any action by, or the threatening of the taking of any action by, the Internal Revenue Service, the Department of Labor or the PBGC with respect to any of the foregoing. (f) ENVIRONMENTAL MATTERS. Promptly upon, and in any event within 10 Business Days after, an officer of the Borrower or any of its Subsidiaries obtains knowledge thereof, notice of one or more of the following environmental matters: (i) any pending or overtly threatened in writing material Environmental Claim against the Borrower or any of its Subsidiaries or any Real Property owned or operated by the 76 Borrower or any of its Subsidiaries; (ii) any condition or occurrence on or arising from any Real Property owned or operated by the Borrower or any of its Subsidiaries that (A) results in material noncompliance by the Borrower or any of its Subsidiaries with any applicable Environmental Law or (B) would reasonably be expected to form the basis of a material Environmental Claim against the Borrower or any of its Subsidiaries or any such Real Property; (iii) any condition or occurrence on any Real Property owned, leased or operated by the Borrower or any of its Subsidiaries that would reasonably be expected to cause such Real Property to be subject to any material restrictions on the ownership, occupancy, use or transferability by the Borrower or any of its Subsidiaries of such Real Property under any Environmental Law; and (iv) the taking of any material removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Real Property owned, leased or operated by the Borrower or any of its Subsidiaries as required by any Environmental Law or any governmental or other administrative agency. All such notices shall describe in reasonable detail the nature of the Environmental Claim, the Borrower's or such Subsidiary's response thereto and the potential exposure in dollars, if known or reasonably quantifiable, of the Borrower and its Subsidiaries with respect thereto. (g) SEC REPORTS AND REGISTRATION STATEMENTS. Promptly after transmission thereof or other filing with the SEC, copies of all registration statements (other than the exhibits thereto and any registration statement on Form S-8 or its equivalent) and all annual, quarterly or current reports that the Borrower or any of its Subsidiaries files with the SEC on Form 10-K, 10-Q or 8-K (or any successor forms). (h) ANNUAL AND QUARTERLY REPORTS, PROXY STATEMENTS AND OTHER REPORTS DELIVERED TO STOCKHOLDERS GENERALLY. Promptly after transmission thereof to its stockholders, copies of all annual, quarterly and other reports and all proxy statements that the Borrower furnishes to its stockholders generally. (i) OTHER INFORMATION. With reasonable promptness, such other information or documents (financial or otherwise) relating to the Borrower or any of its Subsidiaries as any Lender may reasonably request from time to time. 8.2 BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will cause each of its Subsidiaries to, (i) keep proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower or such Subsidiaries, as the case may be, in accordance with GAAP; and (ii) permit, upon reasonable notice to the Chief Financial Officer of the Borrower, officers and designated representatives of the Administrative Agent or any of the Lenders to visit and inspect any of the properties or assets of the Borrower and any of its Subsidiaries in whomsoever's possession (but only to the extent the Borrower or such Subsidiary has the right to do so to the extent in the possession of another person), to examine the books of account of the Borrower and any of its Subsidiaries, and make copies thereof and take extracts therefrom, and to discuss the affairs, finances and accounts of the Borrower and of any of its Subsidiaries with, and be advised as to the same by, its and their officers and independent accountants and independent actuaries, if any, all at such reasonable times and intervals and to such reasonable extent as the Administrative Agent or any of the Lenders may request. 77 8.3 INSURANCE. The Borrower will, and will cause each of its Subsidiaries to, (i) maintain insurance coverage by such insurers and in such forms and amounts and against such risks as are generally consistent with the insurance coverage maintained by the Borrower and its Subsidiaries at the date hereof, and (ii) forthwith upon any Lender's written request, furnish to such Lender (with a copy to the Administrative Agent) such information about such insurance as such Lender may from time to time reasonably request, which information shall be prepared in form and detail satisfactory to such Lender and certified by an Authorized Officer of the Borrower. 8.4 PAYMENT OF TAXES AND CLAIMS. The Borrower will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid, could become a Lien or charge upon any properties of the Borrower or any of its Subsidiaries; PROVIDED that neither the Borrower nor any of its Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP; and PROVIDED, FURTHER, that the Borrower will not be considered to be in default of any of the provisions of this sentence if the Borrower or any Subsidiary fails to pay any such amount which, individually or in the aggregate, is immaterial and such nonpayment could not reasonably be expected to result in a Material Adverse Effect. 8.5 CORPORATE FRANCHISES. The Borrower will do, and will cause each of its Subsidiaries to do, or cause to be done, all things necessary to preserve and keep in full force and effect its corporate existence, rights and authority; PROVIDED that nothing in this section 8.5 shall be deemed to prohibit (i) any transaction permitted by section 9.2; (ii) the termination of existence of any Subsidiary if (A) the Borrower determines that such termination is in its best interest and (B) such termination is not adverse in any material respect to the Lenders; or (iii) the loss of any rights, authorities or franchises if the loss thereof, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 8.6 GOOD REPAIR. The Borrower will, and will cause each of its Subsidiaries to, ensure that its material properties and equipment used or useful in its business in whomsoever's possession they may be, are kept in good repair, working order and condition, normal wear and tear excepted, and that from time to time there are made in such properties and equipment all needful and proper repairs, renewals, replacements, extensions, additions, betterments and improvements, thereto, to the extent and in the manner customary for companies in similar businesses. 8.7 COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will cause each of its Subsidiaries to, comply, in all material respects, with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property, other than those (i) the noncompliance with which would not have, and which would not be reasonably expected to have, a Material Adverse Effect; and/or (ii) imposed by Environmental Laws, as to which section 8.8 shall be applicable. 78 8.8 COMPLIANCE WITH ENVIRONMENTAL LAWS. Without limitation of the covenants contained in section 8.7 hereof, the Borrower will comply, and will cause each of its Subsidiaries to comply, in all material respects, with all Environmental Laws applicable to the ownership, lease or use of all Real Property now or hereafter owned, leased or operated by the Borrower or any of its Subsidiaries, and will promptly pay or cause to be paid all costs and expenses incurred in connection with such compliance, EXCEPT to the extent that such compliance with Environmental Laws is being contested in good faith and by appropriate proceedings and for which adequate reserves have been established to the extent required by GAAP, and an adverse outcome in such proceedings is not reasonably expected to have a Material Adverse Effect. 8.9 FISCAL YEARS, FISCAL QUARTERS. If the Borrower shall change any of its or any of its Subsidiaries' fiscal years or fiscal quarters (other than the fiscal year or fiscal quarters of a person which becomes a Subsidiary, made at the time such person becomes a Subsidiary to conform to the Borrower's fiscal year and fiscal quarters), the Borrower will promptly, and in any event within 30 days following any such change, deliver a notice to the Administrative Agent and the Lenders describing such change and any material accounting entries made in connection therewith and stating whether such change will have any impact upon any financial computations to be made hereunder, and if any such impact is foreseen, describing in reasonable detail the nature and extent of such impact. If the Required Lenders determine that any such change will have any impact upon any financial computations to be made hereunder which is adverse to the Lenders, the Borrower will, if so requested by the Administrative Agent, enter into an amendment to this Agreement, in form and substance reasonably satisfactory to the Administrative Agent and the Required Lenders, modifying any of the financial covenants or related provisions hereof in such manner as the Required Lenders determine is necessary to eliminate such adverse effect. 8.10 HEDGE AGREEMENTS, ETC. If the Borrower determines to enter into any Hedge Agreement, it may do so, and if any Subsidiary of the Borrower determines to enter into any Hedge Agreement, the Borrower will ensure that it does so, but only if such Hedge Agreement is entered into in compliance with the following requirements: (i) the principal purpose of such Hedge Agreement, insofar as the Borrower or any Subsidiary is concerned, is to provide protection to the Borrower or any such Subsidiary from fluctuations and other changes in interest rates, currency exchange rates and/or raw material or commodity prices, as and to the extent considered reasonably necessary by the Borrower; and (ii) such Hedge Agreement does not expose the Borrower or its Subsidiaries to predominantly speculative risks unrelated to the amount of assets, Indebtedness or other liabilities intended to be subject to coverage on a notional basis under such Hedge Agreement and any other Hedge Agreements related thereto. 8.11 CERTAIN SUBSIDIARIES TO JOIN IN SUBSIDIARY GUARANTY. (a) In the event that at any time after the Closing Date (x) the Borrower has any Material Subsidiary (other than a Foreign Subsidiary as to which section 8.11(b) applies) which is not a party to the Subsidiary Guaranty, or (y) an Event of Default shall have occurred and be continuing and the Borrower has any Subsidiary which is not a party to the Subsidiary Guaranty, 79 THEN the Borrower will notify the Administrative Agent in writing of such event, identifying the Subsidiary in question and referring specifically to the rights of the Administrative Agent and the Lenders under this section. The Borrower will, within 30 days following request therefor from the Administrative Agent (who may give such request on its own initiative and who shall so give such request if so instructed by the Required Lenders), cause such Subsidiary to deliver to the Administrative Agent, in sufficient quantities for the Lenders, (i) a Subsidiary Guaranty (as modified, amended or supplemented from time to time in accordance with the terms thereof and hereof, the "SUBSIDIARY GUARANTY"), substantially in the form attached hereto as Exhibit C, if the Subsidiary Guaranty has not previously been executed and delivered, (ii) if the Subsidiary Guaranty has previously been executed and delivered, a joinder supplement, reasonably satisfactory in form and substance to the Administrative Agent and the Required Lenders, duly executed by such Subsidiary, pursuant to which such Subsidiary joins in the Subsidiary Guaranty as a guarantor thereunder, and (ii) if such Subsidiary is a corporation, resolutions of the Board of Directors of such Subsidiary, certified by the Secretary or an Assistant Secretary of such Subsidiary as duly adopted and in full force and effect, authorizing the execution and delivery of such joinder supplement, or if such Subsidiary is not a corporation, such other evidence of the authority of such Subsidiary to execute such joinder supplement as the Administrative Agent may reasonably request. (b) Notwithstanding the foregoing provisions of this section 8.11, the Borrower shall not, unless an Event of Default shall have occurred and be continuing, be required to cause a Foreign Subsidiary to join in the Subsidiary Guaranty if to do so would subject the Borrower to liability for additional United States income taxes by virtue of section 956 of the Code in an amount the Borrower considers material. 8.12 MOST FAVORED COVENANT STATUS. Should the Borrower at any time after the Effective Date, issue or guarantee any unsecured Indebtedness for money borrowed or represented by bonds, notes, debentures or similar securities in an aggregate amount exceeding $50,000,000, to any lender or group of lenders acting in concert with one another, or one or more institutional investors, pursuant to a loan agreement, credit agreement, note purchase agreement, indenture, guaranty or other similar instrument, which agreement, indenture, guaranty or instrument, includes affirmative or negative business or financial covenants (or any events of default or other type of restriction which would have the practical effect of any affirmative or negative business or financial covenant, including, without limitation, any "put" or mandatory prepayment of such Indebtedness upon the occurrence of a "change of control") which are applicable to the Borrower, other than those set forth herein or in any of the other Credit Documents, the Borrower shall promptly so notify the Administrative Agent and the Lenders and, if the Administrative Agent shall so request by written notice to the Borrower (after a determination has been made by the Required Lenders that any of the above-referenced documents or instruments contain any such provisions, which either individually or in the aggregate, are more favorable to the holders of such unsecured Indebtedness than any of the provisions set forth herein), the Borrower, the Administrative Agent and the Lenders shall promptly amend this Agreement to incorporate some or all of such provisions, in the discretion of the Administrative Agent and the Required Lenders, into this Agreement and, to the extent necessary and reasonably desirable to the Administrative Agent and the Required Lenders, into any of the other Credit Documents, all at the election of the Administrative Agent and the Required Lenders. 80 8.13 SENIOR DEBT. The Borrower will at all times ensure that (i) the claims of the Lenders in respect of the Obligations of the Borrower will in all respects rank prior to or on a parity with the claims of every senior unsecured creditor of the Borrower, and (ii) any Indebtedness of the Borrower which is subordinated in any manner to the claims of any other creditor of the Borrower will be subordinated in like manner to such claims of the Lenders. 8.14 DEBT RATING DOWNGRADE. If the Borrower's Index Debt Rating ceases to be Investment Grade by both Rating Agencies at any time following the Closing Date, the Borrower will, and will cause each of its Domestic Subsidiaries that are Material Subsidiaries to, within 30 days following the date of such downgrade, pledge to the Administrative Agent, for the benefit of the Lenders and the obligees of the Additional Secured Obligations, pursuant to pledge agreements (in form and substance satisfactory to the Administrative Agent), (i) 100%, in the case of each Domestic Subsidiary that is a Material Subsidiary, and 65%, in the case of each Foreign Subsidiary that is a Material Subsidiary, of the issued and outstanding Capital Stock of each of its Material Subsidiaries and (ii) all of the tangible and intangible assets (other than trade receivables and related collateral, credit support and similar rights sold pursuant to the Permitted Receivables Programs) of the Borrower and each of its Domestic Subsidiaries that are Material Subsidiaries, in each case as security for the Obligations and the Additional Secured Obligations. The Borrower will, and will cause each such Material Subsidiary to, take all such actions as requested by the Administrative Agent to ensure that the Administrative Agent has a first priority perfected Lien (subject to Permitted Liens) on and security interest in all Capital Stock and all tangible and intangible assets of the Borrower and its Material Subsidiaries pledged in favor of the Administrative Agent and to deliver legal opinions addressed to all Lenders, the obligees of the Additional Secured Obligations and the Administrative Agent, in form and substance and from counsel, reasonably acceptable to the Administrative Agent, relating to the actions described in this section. The Administrative Agent and the applicable obligees of the Additional Secured Obligations, or agents on their behalf, will enter into an intercreditor agreement in form and substance satisfactory to each of them with respect to the collateral pledged pursuant to this section. SECTION 9. NEGATIVE COVENANTS. The Borrower hereby covenants and agrees that on the Effective Date and thereafter for so long as this Agreement is in effect and until such time as the Total Commitment has been terminated, no Notes remain outstanding and the Loans, together with interest, Fees and all other Obligations incurred hereunder and under the other Credit Documents, have been paid in full: 9.1 CHANGES IN BUSINESS. Neither the Borrower nor any of its Subsidiaries will engage in any business if, as a result, the general nature of the business, taken on a consolidated basis, which would then be engaged in by the Borrower and its Subsidiaries, would be substantially changed from the general nature of the business engaged in by the Borrower and its Subsidiaries on the Effective Date. 9.2 CONSOLIDATION, MERGER, ASSET SALES, ETC. The Borrower will not, and will not permit any Subsidiary to, (i) enter into any transaction of merger or consolidation, (ii) sell all or substantially all of its Property and business, (iii) otherwise make or effect any Asset Sale, or 81 (iv) agree to do any of the foregoing at any future time, EXCEPT that the following shall be permitted: (a) CERTAIN INTERCOMPANY MERGERS, ETC. If no Default or Event of Default shall have occurred and be continuing or would result therefrom, (i) the merger, consolidation or amalgamation of any Subsidiary of the Borrower with or into the Borrower; PROVIDED that the Borrower is the surviving or continuing or resulting corporation; (ii) the merger, consolidation or amalgamation of any Subsidiary of the Borrower with or into another Subsidiary of the Borrower; PROVIDED that the surviving or continuing or resulting corporation is a Wholly-Owned Subsidiary of the Borrower; and PROVIDED, FURTHER, that if any such Subsidiary is a guarantor under the Subsidiary Guaranty, the surviving or continuing or resulting corporation is or contemporaneously therewith becomes a guarantor under the Subsidiary Guaranty; (iii) the liquidation, winding up or dissolution of any Subsidiary of the Borrower; (iv) the making of any Asset Sale by the Borrower to any Wholly-Owned Subsidiary; (v) the making of any Asset Sale by any Subsidiary to the Borrower; and (vi) the making of any Asset Sale by any Subsidiary of the Borrower to any Wholly-Owned Subsidiary of the Borrower; PROVIDED that if the selling Subsidiary is a guarantor under the Subsidiary Guaranty the purchasing Subsidiary must be, or contemporaneously become, a guarantor under the Subsidiary Guaranty. (b) ASSET SALES IN PERMITTED RECEIVABLES PROGRAMS. The Borrower or any of its Subsidiaries may make any Asset Sale consisting of trade receivables and related collateral, credit support and similar rights, pursuant to one or more receivables programs, to a person who is not a Subsidiary of the Borrower; PROVIDED that (i) the consideration to be received by the Borrower and its Subsidiaries for any such Asset Sale consists of cash; (ii) no Default or Event of Default shall have occurred and be continuing or would result therefrom; and (iii) the aggregate outstanding balance of the trade receivables subject to all such programs at any point in time is not in excess of $300,000,000; PROVIDED that if at any time the Leverage Ratio is greater than 3.00 to 1.00 after giving pro forma effect to such receivables programs or the Index Debt Rating is not Investment Grade, the aggregate outstanding balance of the trade receivables subject to all such programs at such time may not exceed $200,000,000 (collectively, the "PERMITTED RECEIVABLES PROGRAMS"). 82 (c) OTHER PERMITTED ASSET SALES. In addition to the Asset Sales permitted in sections 9.2(a) and 9.2(b) above, if no Default or Event of Default shall have occurred and be continuing or would result therefrom, the Borrower or any of its Subsidiaries may make any other Asset Sale to a person who is not a Subsidiary of the Borrower; PROVIDED that: (i) in the case of any such Asset Sale or related series of Asset Sales where the fair value (as determined by management of the Borrower) of the Property covered thereby exceeds $50,000,000 in the aggregate, at least 75% of the consideration to be received by the Borrower and its Subsidiaries consists of cash; (ii) the cumulative aggregate consideration for all such Asset Sales completed during the calendar year ended December 31, 2001, or any subsequent calendar year, does not exceed $140,000,000 in the case of any such calendar year; and (iii) in the case of any such transaction involving consideration in excess of $50,000,000, at least five Business Days prior to the date of completion of such transaction the Borrower shall have delivered to the Administrative Agent an officer's certificate executed on behalf of the Borrower by an Authorized Officer of the Borrower, which certificate shall contain (1) a description of the proposed transaction, the date such transaction is scheduled to be consummated, the estimated purchase price or other consideration for such transaction, (2) a certification that no Default or Event of Default has occurred and is continuing, or would result from consummation of such transaction, and (3) which shall (if requested by the Administrative Agent) include a certified copy of the draft or definitive documentation pertaining thereto; For the avoidance of doubt, no amounts in respect of Asset Sales made in Permitted Receivables Programs pursuant to section 9.2(b) shall be included in any dollar computations pursuant to this section 9.2(c). 9.3 RESTRICTIONS ON ACQUISITIONS. The Borrower will not, and will not permit any Subsidiary to, consummate (a) Acquisitions for an aggregate consideration in excess of $50,000,000 in any fiscal year if, at the time of any such Acquisition, the Leverage Ratio would be greater than or equal to 3.00 to 1.00 after giving pro forma effect to such Acquisition, or (b) any single Acquisition for an aggregate consideration in excess of $75,000,000 for such Acquisition (PROVIDED that the aggregate amount of all Acquisitions consummated during the term of this Agreement does not exceed $300,000,000) if, at the time of such Acquisition, the Leverage Ratio would be less than 3.00 to 1.00 after giving pro forma effect to such Acquisition. Without limitation of the foregoing, the Borrower will not directly or indirectly use any proceeds of a Credit Event hereunder to finance an Acquisition which is actively opposed by the Board of Directors (or similar governing body) of the selling person or the person whose equity interests are to be acquired, UNLESS all of the Lenders specifically approve or consent to such Acquisition in writing. 83 9.4 LIMITATION ON SALES AND LEASEBACKS. The Borrower will not itself, and it will not permit any Domestic Subsidiary to, enter into any arrangement with any bank, insurance company or other lender or investor (not including the Borrower or any Subsidiary) or to which any such lender or investor is a party, providing for the leasing by the Borrower or any Domestic Subsidiary for a period, including renewals, in excess of three years of any Principal Domestic Manufacturing Property which has been or is to be sold or transferred, more than 120 days after the acquisition thereof or the completion of construction and commencement of full operation thereof, by the Borrower or any Domestic Subsidiary to such lender or investor or to any person to whom funds have been or are to be advanced by such lender or investor on the security of such Principal Domestic Manufacturing Property (herein referred to as a "SALE AND LEASEBACK TRANSACTION") unless either: (a) the Borrower or such Domestic Subsidiary could create Debt secured by a Mortgage on the Principal Domestic Manufacturing Property to be leased back in an amount equal to the Attributable Debt with respect to such sale and leaseback transaction without equally and ratably securing the Obligations, or (b) the Borrower within 120 days after the sale or transfer shall have been made by the Borrower or by any such Domestic Subsidiary, applies an amount equal to the greater of (i) the net proceeds of the sale of the Principal Domestic Manufacturing Property sold and leased back pursuant to such arrangement or (ii) the fair market value of the Principal Domestic Manufacturing Property so sold and leased back at the time of entering into such arrangements (as determined by any two of the following: the Chairman of the Board of the Borrower, its President, any Vice President, Finance of the Borrower, its Treasurer and its Controller) to the retirement of Funded Debt of the Borrower which is PARI PASSU with the Obligations; PROVIDED that the amount to be applied to the retirement of Funded Debt of the Borrower shall be reduced by (a) the amount by which the General Revolving Commitment Amount was permanently reduced during the 120 days after such sale, if any such reduction in fact occurred, and (b) the principal amount of such Funded Debt, other than Obligations, voluntarily retired by the Borrower within 120 days after such sale. Notwithstanding the foregoing, no retirement referred to in this clause (2) may be effected by payment at maturity or pursuant to any mandatory sinking fund payment or any mandatory prepayment provision. 9.5 INDEBTEDNESS. The Borrower will not, and will not permit any of its Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness of the Borrower or any of its Subsidiaries, EXCEPT: (a) CREDIT DOCUMENTS: Indebtedness incurred under this Agreement and the other Credit Documents; (b) EXISTING INDEBTEDNESS: Existing Indebtedness and any refinancing, extension, renewal or refunding of any such Existing Indebtedness not involving an increase in the principal amount thereof or a reduction of more than 10% in the remaining weighted average life to maturity thereof (computed in accordance with standard financial practice); PROVIDED that any Existing Indebtedness set forth on Annex IV or 84 otherwise referred to in section 6.1 as being intended to be refinanced by Loans incurred hereunder or otherwise retired, may not be otherwise refinanced; (c) INTERCOMPANY DEBT: unsecured Indebtedness of (i) the Borrower owed to any of its Subsidiaries and (ii) any of the Borrower's Subsidiaries owed to the Borrower or to another Subsidiary of the Borrower; (d) HEDGE AGREEMENTS: Indebtedness of the Borrower and its Subsidiaries under Hedge Agreements; (e) SHORT TERM CREDIT FACILITY AGREEMENT: Indebtedness incurred under the Short Term Credit Facility Agreement; (f) ADDITIONAL UNSECURED INDEBTEDNESS: additional unsecured Indebtedness of the Borrower and its Subsidiaries in an aggregate principal amount not to exceed $25,000,000 at any time outstanding; (g) PERMITTED RECEIVABLES PROGRAMS: Indebtedness incurred under the Permitted Receivables Programs; provided that, until the Term Loans have been repaid in full, any increase in the amount of such Indebtedness over the amount existing on the Closing Date shall be applied to a prepayment of the Loans pursuant to section 5.2(f); (h) BOND ISSUANCES: Indebtedness incurred in connection with the issuance by the Borrower of public or private debt securities; and (i) ADDITIONAL INDEBTEDNESS AND GUARANTY OBLIGATIONS: additional Indebtedness and Guaranty Obligations of the Borrower and/or any of its Subsidiaries not otherwise permitted pursuant to the foregoing clauses, without limitation as to aggregate amount; PROVIDED that at the time of incurrence thereof and after giving effect thereto, (i) no Event of Default shall have occurred and be continuing or shall result therefrom, (ii) if such Indebtedness or Guaranty Obligation is secured by any collateral, such Indebtedness is permitted by this Agreement, and (iii) the Borrower would have been in compliance with the covenants contained in sections 9.6 and 9.7 hereof if such Indebtedness had been incurred at the beginning of the most recent Testing Period for which financial information has been furnished to the Lenders hereunder, and such Indebtedness remained outstanding throughout such Testing Period; PROVIDED, FURTHER, that if, at the time of incurrence of such Indebtedness and after giving pro forma effect thereto, the Leverage Ratio is greater than 3.00 to 1.00 or the Index Debt Rating is not Investment Grade, the Borrower and its Subsidiaries may only incur and suffer to exist up to $50,000,000 in aggregate principal amount of such additional Indebtedness and Guaranty Obligations; PROVIDED, FURTHER, that, in any event, the amount of secured Indebtedness permitted hereunder, other than in connection with any Permitted Receivables Program, shall not exceed $20,000,000 at any time outstanding. 9.6 LEVERAGE RATIO. The Borrower will not permit the Leverage Ratio during any period set forth below to exceed the amount set forth opposite such period: 85 PERIOD LEVERAGE RATIO 12/31/01 to 06/29/02 4.75:1 06/30/02 to 09/29/02 4.50:1 09/30/02 to 12/30/02 4.00:1 12/31/02 to 06/29/03 3.75:1 06/30/03 to 12/30/03 3.25:1 12/31/03 and thereafter 3.00:1 9.7 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the Fixed Charge Coverage Ratio for any Testing Period ending on a date set forth below to be less than the amount set forth opposite such date: FIXED CHARGE DATE COVERAGE RATIO 12/31/01 1.25:1 03/31/02 1.35:1 06/30/02 1.50:1 09/30/02 1.75:1 12/31/02 1.75:1 03/31/03 2.00:1 06/30/03 2.15:1 09/30/03 2.25:1 12/31/03 2.50:1 03/31/04 2.50:1 06/30/04 2.75:1 09/30/04 2.75:1 12/31/04 3.00:1 03/31/05 3.50:1 and thereafter 9.8 NO STOCK REPURCHASES WHILE INDEX DEBT RATING IS NOT INVESTMENT GRADE, ETC. The Borrower will not, at any time when its Index Debt Rating is not Investment Grade, directly or indirectly make, or permit any of its Subsidiaries to directly or indirectly make, any purchase, redemption, retirement or other acquisition of (i) any shares of Capital Stock (other than the Series A ESOP Convertible Preferred Stock of the Borrower) of any class of the Borrower (other than for a consideration consisting solely of Capital Stock of the same class of the Borrower), or (ii) any warrants, rights or options to acquire, or any securities convertible into or exchangeable for, any Capital Stock (other than the Series A ESOP Convertible Preferred Stock of the Borrower) of the Borrower. 86 9.9 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not permit any Subsidiary to, enter into any transaction or series of transactions with any Affiliate (other than, in the case of the Borrower, any Subsidiary, and in the case of a Subsidiary, the Borrower or another Subsidiary) other than in the ordinary course of business of and pursuant to the reasonable requirements of the Borrower's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than would obtain in a comparable arm's-length transaction with a person other than an Affiliate, EXCEPT agreements and transactions with and payments to employees, officers, directors, shareholders and other Affiliates which are either (i) entered into in the ordinary course of business and not prohibited by any of the provisions of this Agreement, or (ii) entered into outside the ordinary course of business, approved by the directors or shareholders of the Borrower, and not prohibited by any of the provisions of this Agreement. 9.10 PLAN TERMINATIONS, MINIMUM FUNDING, ETC. The Borrower will not, and will not permit any ERISA Affiliate to, (i) terminate any Plan or Plans so as to result in liability of the Borrower or any ERISA Affiliate to the PBGC in excess of, in the aggregate, $5,000,000, (ii) permit to exist one or more events or conditions which reasonably present a material risk of the termination by the PBGC of any Plan or Plans with respect to which the Borrower or any ERISA Affiliate would, in the event of such termination, incur liability to the PBGC in excess of such amount in the aggregate, or (iii) fail to comply with the minimum funding standards of ERISA and the Code with respect to any Plan. 9.11 RESTRICTED PAYMENTS. The Borrower will not declare, pay or make any payment, dividend, distribution or exchange (in cash, property or obligations) on or in respect of any class of Capital Stock (now or hereafter outstanding) of the Borrower or on any warrants, options or other rights with respect to any class of Capital Stock (now or hereafter outstanding) of the Borrower (other than (i) dividends or distributions payable in its Capital Stock or warrants to purchase its Capital Stock and (ii) splits or reclassifications of its Capital Stock into additional or other shares of its Capital Stock) or apply any of its funds, property or assets to the purchase, redemption, exchange, sinking fund or other retirement of any shares of any class of Capital Stock (now or hereafter outstanding, other than the Series A ESOP Convertible Preferred Stock of the Borrower) of the Borrower, or warrants, options or other rights with respect to any class of Capital Stock (now or hereafter outstanding, other than the Series A ESOP Convertible Preferred Stock of the Borrower) of the Borrower (the foregoing prohibited acts being herein collectively referred to as "RESTRICTED PAYMENTS") in an amount in excess of $30,000,000 in the aggregate in any fiscal year if, at any time during such fiscal year, the Leverage Ratio is greater than 3.00 to 1.00 after giving pro forma effect to such Restricted Payments. 9.12 RESTRICTIVE AGREEMENTS. The Borrower will not, and will not permit any of its Subsidiaries to, enter into any agreement prohibiting (a) the creation or assumption of any Lien upon its properties, revenues or assets, whether now owned or hereafter acquired, (b) its ability to amend or otherwise modify any Credit Document or (c) the ability of any Subsidiary to make any payments, directly or indirectly, to the Borrower, including by way of dividends, advances, repayments of loans, reimbursements of management and other intercompany charges, expenses and accruals or other returns on investments. The foregoing prohibitions shall not apply to restrictions contained (i) in any Credit Document or (ii) in the case of clause (a), any agreement 87 governing any Indebtedness permitted by section 9.5 as to the assets financed with the proceeds of such Indebtedness. SECTION 10. EVENTS OF DEFAULT. 10.1 EVENTS OF DEFAULT. Any of the following specified events shall constitute an Event of Default (each an "EVENT OF DEFAULT"): (a) PAYMENTS: the Borrower shall (i) default in the payment when due of any principal of the Loans or any reimbursement obligation in respect of any Unpaid Drawing; or (ii) default, and such default shall continue for five or more Business Days, in the payment when due of any interest on the Loans or any Fees or any other amounts owing hereunder or under any other Credit Document; or (b) REPRESENTATIONS, ETC.: any representation, warranty or statement made by the Borrower or any other Credit Party herein or in any other Credit Document or in any statement or certificate delivered or required to be delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made; or (c) CERTAIN NEGATIVE COVENANTS: the Borrower shall default in the due performance or observance by it of any term, covenant or agreement contained in sections 9.2 through 9.8, inclusive, of this Agreement, or sections 9.10 through 9.12, inclusive, of this Agreement; or (d) OTHER COVENANTS: the Borrower shall default in the due performance or observance by it of any term, covenant or agreement contained in this Agreement or any other Credit Document, other than those referred to in section 10.1(a) or (b) or (c) above, and such default is not remedied within 30 days after the earlier of (i) an officer of the Borrower obtaining actual knowledge of such default and (ii) the Borrower receiving written notice of such default from the Administrative Agent or the Required Lenders (any such notice to be identified as a "notice of default" and to refer specifically to this paragraph); or (e) CROSS DEFAULT UNDER OTHER AGREEMENTS: the Borrower or any of its Subsidiaries shall (i) default in any payment when due with respect to the Short Term Credit Facility Agreement, (ii) default in any payment when due with respect to any Indebtedness (other than the Obligations) owed to any Lender, or having an aggregate unpaid principal amount (or Capitalized Lease Obligation, in the case of a Capital Lease, or present value, based on the implicit interest rate, in the case of a Synthetic Lease) of $25,000,000 or greater, and such default shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness, or (iii) default in the observance or performance of any agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto (and all grace periods applicable to such observance, performance or condition shall have expired), or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders 88 of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause any such Indebtedness to become due prior to its stated maturity; or any such Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be due and payable, or shall be required to be prepaid (other than by a regularly scheduled required prepayment or redemption, prior to the stated maturity thereof), or (f) OTHER CREDIT DOCUMENTS: any Credit Document shall cease for any reason (other than termination in accordance with its terms) to be in full force and effect; or any Credit Party shall default in any payment obligation thereunder; or any Credit Party shall default in any material respect in the due performance and observance of any other obligation thereunder and such default shall continue unremedied for a period of at least 30 days after notice by the Administrative Agent or the Required Lenders; or any Credit Party shall (or seek to) disaffirm or otherwise limit its obligations thereunder otherwise than in strict compliance with the terms thereof; or (g) JUDGMENTS: one or more judgments, orders or decrees shall be entered against the Borrower and/or any of its Subsidiaries involving a liability (other than a liability covered by insurance, as to which the carrier has adequate claims paying ability and has not effectively reserved its rights) of $10,000,000 or more in the aggregate for all such judgments, orders and decrees for the Borrower and its Subsidiaries, and any such judgments or orders or decrees shall not have been vacated, discharged or stayed or bonded pending appeal within 30 days (or such longer period, not in excess of 60 days, during which enforcement thereof, and the filing of any judgment lien, is effectively stayed or prohibited) from the entry thereof; or (h) BANKRUPTCY, ETC.: any of the following shall occur: (i) the Borrower or any of its Material Subsidiaries (the Borrower and each of such other persons, each a "PRINCIPAL PARTY") shall commence a voluntary case concerning itself under Title 11 of the United States Code entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto (the "BANKRUPTCY CODE"); or (ii) an involuntary case is commenced against any Principal Party under the Bankruptcy Code and the petition is not controverted within 10 days, or is not dismissed within 60 days, after commencement of the case; or (iii) a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of any Principal Party; or (iv) any Principal Party commences (including by way of applying for or consenting to the appointment of, or the taking of possession by, a rehabilitator, receiver, custodian, trustee, conservator or liquidator (collectively, a "CONSERVATOR") of itself or all or any substantial portion of its property) any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency, liquidation, rehabilitation, conservatorship or 89 similar law of any jurisdiction whether now or hereafter in effect relating to such Principal Party; or (v) any such proceeding is commenced against any Principal Party to the extent such proceeding is consented to by such person or remains undismissed for a period of 60 days; or (vi) any Principal Party is adjudicated insolvent or bankrupt; or (vii) any order of relief or other order approving any such case or proceeding is entered; or (viii) any Principal Party suffers any appointment of any conservator or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of 60 days; or (ix) any Principal Party makes a general assignment for the benefit of creditors; or (x) any corporate (or similar organizational) action is taken by any Principal Party for the purpose of effecting any of the foregoing; or (i) ERISA: (i) any of the events described in clauses (i) through (viii) of section 8.1(e) shall have occurred; or (ii) there shall result from any such event or events the imposition of a lien, the granting of a security interest, or a liability or a material risk of incurring a liability; and (iii) any such event or events or any such lien, security interest or liability, individually, and/or in the aggregate, in the opinion of the Required Lenders, has had, or could reasonably be expected to have, a Material Adverse Effect. 10.2 ACCELERATION, ETC. Upon the occurrence of any Event of Default, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent shall, upon the written request of the Required Lenders, by written notice to the Borrower, take any or all of the following actions, without prejudice to the rights of the Administrative Agent or any Lender to enforce its claims against the Borrower or any other Credit Party in any manner permitted under applicable law: (a) declare the Total Commitment terminated, whereupon the Commitment of each Lender shall forthwith terminate immediately without any other notice of any kind; (b) declare the principal of and any accrued interest in respect of all Loans, all Unpaid Drawings and all other Obligations owing hereunder and under the other Credit Documents to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; (c) terminate any Letter of Credit which may be terminated in accordance with its terms; 90 (d) direct the Borrower to pay (and the Borrower hereby agrees that on receipt of such notice or upon the occurrence of an Event of Default with respect to the Borrower under section 10.1(h), it will pay) to the Administrative Agent an amount of cash equal to the aggregate Stated Amount of all Letters of Credit then outstanding (such amount to be held as security for the Borrower's (and any other Letter of Credit Obligor's) reimbursement obligations in respect thereof); and/or (e) exercise any other right or remedy available under any of the Credit Documents or applicable law; PROVIDED that, if an Event of Default specified in section 10.1(h) shall occur with respect to the Borrower, the result which would occur upon the giving of written notice by the Administrative Agent as specified in clauses (a) and/or (b) above shall occur automatically without the giving of any such notice; and PROVIDED, FURTHER, that any declaration pursuant to clause (b) above, or any other acceleration of the maturity of the Loans or any other Obligations, shall automatically and simultaneously terminate the Total Commitment, whereupon the Commitment of each Lender shall forthwith terminate immediately without any other notice of any kind. 10.3 APPLICATION OF LIQUIDATION PROCEEDS. All monies received by the Administrative Agent or any Lender from the exercise of remedies hereunder or under the other Credit Documents or under any other documents relating to this Agreement shall, unless otherwise required by the terms of the other Credit Documents or by applicable law, be applied as follows: (i) FIRST, to the payment of all expenses (to the extent not otherwise paid by the Borrower or any of the other Credit Parties) incurred by the Agents and the Lenders in connection with the exercise of such remedies, including, without limitation, all reasonable costs and expenses of collection, reasonable documented attorneys' fees, court costs and any foreclosure expenses; (ii) SECOND, to the payment PRO RATA of interest then accrued on the outstanding Loans; (iii) THIRD, to the payment PRO RATA of any fees then accrued and payable to the Agents, any Letter of Credit Issuer or any Lender under this Agreement in respect of the Loans or the Letter of Credit Outstandings; (iv) FOURTH, to the payment PRO RATA of (A) the principal balance then owing on the outstanding Loans, and (B) the Stated Amount of the Letter of Credit Outstandings (to be held and applied by the Administrative Agent as security for the reimbursement obligations in respect thereof); (v) FIFTH, to the payment to the Lenders of any amounts then accrued and unpaid under sections 2.9, 2.10, 3.5 and 5.5 hereof, and if such proceeds are insufficient to pay such amounts in full, to the payment of such amounts PRO RATA; (vi) SIXTH, to the payment PRO RATA of all other amounts owed by the Borrower to the Agents, to any Letter of Credit Issuer or any Lender under this Agreement or any 91 other Credit Document, and if such proceeds are insufficient to pay such amounts in full, to the payment of such amounts PRO RATA; and (vii) FINALLY, any remaining surplus after all of the Obligations have been paid in full, to the Borrower or to whomsoever shall be lawfully entitled thereto. SECTION 11. THE ADMINISTRATIVE AGENT. 11.1 APPOINTMENT. Each Lender hereby irrevocably designates and appoints NCB as Administrative Agent to act as specified herein and in the other Credit Documents, and each such Lender hereby irrevocably authorizes NCB as the Administrative Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. The Administrative Agent agrees to act as such upon the express conditions contained in this section 11. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein or in the other Credit Documents, nor any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent. The provisions of this section 11 are solely for the benefit of the Administrative Agent, and the Lenders, and the Borrower and its Subsidiaries shall not have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement, the Administrative Agent shall act solely as agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation or relationship of agency or trust with or for the Borrower or any of its Subsidiaries. 11.2 DELEGATION OF DUTIES. The Administrative Agent may execute any of its duties under this Agreement or any other Credit Document by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care except to the extent otherwise required by section 11.3. 11.3 EXCULPATORY PROVISIONS. Neither the Administrative Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such person under or in connection with this Agreement (except for its or such person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or of its Subsidiaries or any of their respective officers contained in this Agreement, any other Credit Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Credit Document or for any failure of the Borrower or any Subsidiary of the Borrower or any of their respective officers to perform its obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement, or to 92 inspect the properties, books or records of the Borrower or any of its Subsidiaries. The Administrative Agent shall not be responsible to any Lender for the effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Agreement or any Credit Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statement or in any financial or other statements, instruments, reports, certificates or any other documents in connection herewith or therewith furnished or made by the Administrative Agent to the Lenders or by or on behalf of the Borrower or any of its Subsidiaries to the Administrative Agent or any Lender or be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained herein or therein or as to the use of the proceeds of the Loans or of the existence or possible existence of any Default or Event of Default. 11.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, facsimile transmission, telex or teletype message, statement, order or other document or conversation believed by it, in good faith, to be genuine and correct and to have been signed, sent or made by the proper person or persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower or any of its Subsidiaries), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Credit Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Credit Documents in accordance with a request of the Required Lenders (or all of the Lenders, or all of the Lenders (other than any Defaulting Lender), as applicable, as to any matter which, pursuant to section 12.12, can only be effectuated with the consent of all Lenders, or all Lenders (other than any Defaulting Lender), as the case may be), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders. 11.5 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required 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 or Event of Default as it shall deem advisable in the best interests of the Lenders. 11.6 NON-RELIANCE. Each Lender expressly acknowledges that neither of the Agents nor any of their officers, directors, employees, agents, attorneys-in-fact or Affiliates have made any representations or warranties to it and that no act by the Agents hereinafter taken, including 93 any review of the affairs of the Borrower or any of its Subsidiaries, shall be deemed to constitute any representation or warranty by the Agents to any Lender. Each Lender represents to each Agent that it has, independently and without reliance upon the Agents, or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower and its Subsidiaries and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Agents, or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower and its Subsidiaries. The Agents shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, assets, property, financial and other conditions, prospects or creditworthiness of the Borrower or any of its Subsidiaries which may come into the possession of the Agents or any of their officers, directors, employees, agents, attorneys-in-fact or Affiliates. 11.7 INDEMNIFICATION. The Lenders agree to indemnify each Agent in its capacity as such ratably according to their respective Loans and Unutilized Commitments, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, reasonable expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Obligations) be imposed on, incurred by or asserted against each Agent in its capacity as such in any way relating to or arising out of this Agreement or any other Credit Document, or any documents contemplated by or referred to herein or the transactions contemplated hereby or any action taken or omitted to be taken by the Agents under or in connection with any of the foregoing, but only to the extent that any of the foregoing is not paid by the Borrower; PROVIDED that no Lender shall be liable to the Agents for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements to the extent resulting from either Agent's gross negligence or willful misconduct. If any indemnity furnished to the Agents for any purpose shall, in the opinion of either Agent, be insufficient or become impaired, the Agents may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. The agreements in this section 11.7 shall survive the payment of all Obligations. 11.8 THE AGENTS IN INDIVIDUAL CAPACITY. The Agents and their Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower, its Subsidiaries and their Affiliates as though not acting as an Agent hereunder. With respect to the Loans made by it and all Obligations owing to it, each Agent shall have the same rights and powers under this Agreement as any Lender and may exercise the same as though it were not an Agent, and the terms "Lender" and "Lenders" shall include either Agent in its individual capacity. 11.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign as the Administrative Agent upon not less than 20 Business Days' notice to the Lenders and the Borrower, with such registration to be effective only upon the appointment and acceptance of a 94 successor Administrative Agent as provided below. The Administrative Agent may be removed as the Administrative Agent for cause upon not less than 20 Business Days' notice to the Administrative Agent and the Borrower from the Required Lenders. The Required Lenders shall appoint from among the Lenders a successor Administrative Agent for the Lenders, subject to prior approval by the Borrower if no Event of Default has occurred and is continuing (such approval not to be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term "Administrative Agent" shall include such successor agent effective upon its appointment, and the resigning or removed Administrative Agent's rights, powers and duties as the Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement. After the retiring or removed Administrative Agent's resignation or removal hereunder as the Administrative Agent, the provisions of this section 11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. 11.10 OTHER AGENTS. Any Lender identified herein as the Syndication Agent, a Joint Lead Arranger, a Co-Documentation Agent, a Managing Agent, a Co-Agent or any other corresponding title, other than "Administrative Agent", shall have no right, power, obligation, liability, responsibility or duty under this Agreement or any other Credit Document except those applicable to all Lenders as such. Each Lender acknowledges that it has not relied, and will not rely, on any Lender so identified in deciding to enter into this Agreement or in taking or not taking any action hereunder. SECTION 12. MISCELLANEOUS. 12.1 PAYMENT OF EXPENSES ETC. (a) Whether or not the transactions contemplated hereby are consummated, the Borrower agrees to pay (or reimburse the Agents for) all reasonable out-of-pocket costs and expenses of the Agents in connection with the negotiation, preparation, execution and delivery of the Credit Documents and the documents and instruments referred to therein, including, without limitation, the reasonable fees and disbursements of Mayer, Brown & Platt, special counsel to the Agents. (b) The Borrower agrees to pay (or reimburse the Agents, the Lenders and their Affiliates for) all reasonable out-of-pocket costs and expenses of the Agents, the Lenders and their Affiliates in connection with any amendment, waiver or consent relating to any of the Credit Documents which is requested by any Credit Party, including, without limitation, the reasonable fees and disbursements of Mayer, Brown & Platt, special counsel to the Agents. (c) The Borrower agrees to pay (or reimburse the Agents, the Lenders and their Affiliates for) all reasonable out-of-pocket costs and expenses of the Agents, the Lenders and their Affiliates in connection with the enforcement of any of the Credit Documents or the other documents and instruments referred to therein, including, without limitation, (i) the reasonable fees and disbursements of Mayer, Brown & Platt, special counsel to the Agents, and (ii) the reasonable fees and disbursements of any individual counsel to any Lender (including allocated costs of internal counsel). 95 (d) Without limitation of the preceding section 12.1(c), in the event of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of the Borrower or any of its Subsidiaries, the Borrower agrees to pay all costs of collection and defense, including reasonable attorneys' fees in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, which shall be due and payable together with all required service or use taxes. (e) The Borrower agrees to pay and hold the Agents, each of the Lenders harmless from and against any and all present and future stamp and other similar taxes with respect to the foregoing matters and save each such Agent and each of the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to any such indemnified person) to pay such taxes. (f) The Borrower agrees to indemnify the Agents, each Lender, and their respective officers, directors, trustees, employees, representatives, agents and Affiliates (collectively, the "INDEMNITEES") from and hold each of them harmless against any and all losses, liabilities, claims, damages or expenses reasonably incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of (i) any investigation, litigation or other proceeding (whether or not any Lender is a party thereto) related to the entering into and/or performance of any Credit Document or the use of the proceeds of any Loans hereunder or the consummation of any transactions contemplated in any Credit Document, other than any such investigation, litigation or proceeding arising out of transactions solely between any of the Lenders or the Agents, transactions solely involving the assignment by a Lender of all or a portion of its Loans and Commitments, or the granting of participations therein, as provided in this Agreement, or arising solely out of any examination of a Lender by any regulatory or other governmental authority having jurisdiction over it, or (ii) the actual or alleged presence of Hazardous Materials in the air, surface water or groundwater or on the surface or subsurface of any Real Property owned, leased or at any time operated by the Borrower or any of its Subsidiaries, the release, generation, storage, transportation, handling or disposal of Hazardous Materials at any location, whether or not owned or operated by the Borrower or any of its Subsidiaries, if the Borrower or any such Subsidiary could have or is alleged to have any responsibility in respect thereof, the non-compliance of any such Real Property with foreign, federal, state and local laws, regulations and ordinances (including applicable permits thereunder) applicable thereto, or any Environmental Claim asserted against the Borrower or any of its Subsidiaries, in respect of any such Real Property, including, in each case, without limitation, the reasonable documented fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding (but excluding any such losses, liabilities, claims, damages or expenses to the extent incurred by reason of the gross negligence or willful misconduct of the person to be indemnified or of any other Indemnitee who is such person or an Affiliate of such person). To the extent that the undertaking to indemnify, pay or hold harmless any person set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the Borrower shall 96 make the maximum contribution to the payment and satisfaction of each of the indemnified liabilities which is permissible under applicable law. 12.2 RIGHT OF SETOFF. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default, each Lender is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to the Borrower or to any other person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other Indebtedness at any time held or owing by such Lender (including, without limitation, by branches, agencies and Affiliates of such Lender wherever located) to or for the credit or the account of the Borrower against and on account of the Obligations and liabilities of the Borrower to such Lender under this Agreement or under any of the other Credit Documents, including, without limitation, all interests in Obligations the Borrower purchased by such Lender pursuant to section 12.4(c), and all other claims of any nature or description arising out of or connected with this Agreement or any other Credit Document, irrespective of whether or not such Lender shall have made any demand hereunder and although said Obligations, liabilities or claims, or any of them, shall be contingent or unmatured. Each Lender agrees to promptly notify the Borrower after any such set off and application; PROVIDED that the failure to give such notice shall not affect the validity of such set off and application. 12.3 NOTICES. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telegraphic, telex, facsimile or electronic e-mail transmission or cable communication) and mailed, telegraphed, telexed, transmitted, cabled or delivered, if to the Borrower, at 1000 Lakeside Avenue, Cleveland, Ohio 44114, attention: D. Thomas George, Vice President and Treasurer (facsimile: (216) 875-7237); if to any Lender at its address specified for such Lender on Annex I hereto or the Assignment Agreement or Designation Agreement pursuant to which it became a Lender hereunder; if to the Administrative Agent, at its Notice Office; or at such other address as shall be designated by any party in a written notice to the other parties hereto. All such notices and communications shall be mailed, telegraphed, telexed, telecopied, transmitted or cabled or sent by overnight courier, and shall be effective when received. 12.4 BENEFIT OF AGREEMENT. (a) SUCCESSORS AND ASSIGNS GENERALLY. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns; PROVIDED that the Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of all the Lenders (other than any Defaulting Lender); and PROVIDED, FURTHER, that any assignment by a Lender of its rights and obligations hereunder shall be effected in accordance with section 12.4(c). (b) GRANT OF PARTICIPATIONS BY LENDERS. Notwithstanding the foregoing, each Lender may, without notice to or the consent of the Borrower or the Administrative Agent, at any time grant participations in any of its rights hereunder or under any of the Notes to (x) an Affiliate of such Lender which is a commercial bank, financial institution or other "accredited investor" (as defined in SEC Regulation D), (y) another Lender which is not a Defaulting 97 Lender, or (z) one or more Eligible Transferees; PROVIDED that in the case of any such participation, (i) except as provided below, the participant shall not have any rights under this Agreement or any of the other Credit Documents, including rights of consent, approval or waiver (the participant's rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the participant relating thereto), (ii) such Lender's obligations under this Agreement (including, without limitation, its Commitment hereunder) shall remain unchanged, (iii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iv) such Lender shall remain the holder of any Note for all purposes of this Agreement and (v) the Borrower, the Administrative Agent, and the other Lenders shall continue to deal solely and directly with the selling Lender in connection with such Lender's rights and obligations under this Agreement, and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation, except that the participant shall be entitled to the benefits of sections 2.9, 2.10 and 5.5 of this Agreement to the extent that such Lender would be entitled to such benefits if the participation had not been entered into or sold, and PROVIDED, FURTHER, that no Lender shall transfer, grant or sell any participation under which the participant shall have rights to approve any amendment to or waiver of this Agreement or any other Credit Document except to the extent such amendment or waiver would (1) change any date upon which a mandatory and automatic reduction in any Commitment in which such Participant is participating is scheduled to be made, or change the amount thereof, (2) change any date upon which an installment payment of any Loans in which such Participant is participating is scheduled to be made, or change the amount thereof, (3) change any date upon which a reimbursement obligation in respect of a Letter of Credit or Unpaid Drawing in which such Participant is participating is scheduled to be made, or change the amount thereof, (4) extend the final scheduled maturity of the Loans in which such participant is participating (it being understood that any waiver of the making of, or the application of, any mandatory prepayment to such Loans shall not constitute an extension of the final maturity date thereof), (5) reduce the rate or extend the time of payment of interest or Fees on any such Loan or Commitment (except in connection with a waiver of the applicability of any post-default increase in interest rates), (6) reduce the principal amount of any such Loan, (7) increase such participant's participating interest in any Commitment over the amount thereof then in effect, (8) extend the expiration or termination of any Letter of Credit beyond the scheduled expiration of any Commitment with respect thereto in which such participant is participating, (9) release any Credit Party from its obligations under the Subsidiary Guaranty, except strictly in accordance with the provisions of the Credit Documents, or (10) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement. Each Lender that sells a 98 participation in any of its rights hereunder or under any of the Notes shall, as agent of the Borrower solely for the purpose of this section 12.4(b), record in book entries maintained by such Lender the name and the amount of the participation of each participant entitled to receive payments in respect of such participations. (c) ASSIGNMENTS BY LENDERS. Notwithstanding the foregoing, (x) any Lender may assign all or a fixed portion of its Loans and/or Commitment, and its rights and obligations hereunder, which does not have to be PRO RATA among the Facilities, to another Lender that is not a Defaulting Lender, or to an Affiliate of any Lender (including itself) and which is not a Defaulting Lender and which is a commercial bank, financial institution or other "accredited investor" (as defined in SEC Regulation D), and (y) any Lender may assign all, or if less than all, a fixed portion, equal to at least $5,000,000 in the aggregate for the assigning Lender or assigning Lenders, of its Loans and/or Commitment and its rights and obligations hereunder, which does not have to be PRO RATA among the Facilities, to one or more Eligible Transferees, each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment Agreement; PROVIDED that, (i) assignments by the Swing Line Lender of its Swing Line Revolving Commitment and its Swing Line Revolving Loans may only be made if all of its Swing Line Revolving Commitment and all of its Swing Line Revolving Loans are assigned to a single assignee and only if the assignee thereof is or becomes a Lender with a General Revolving Commitment; (ii) in the case of any assignment of a portion of any Loans and/or Commitment of a Lender, such Lender shall retain a minimum fixed portion of all Loans and Commitments equal to at least $5,000,000; (iii) at the time of any such assignment, Annex I shall be deemed modified to reflect the Commitments of such new Lender and of the existing Lenders; (iv) upon surrender of the old Notes, new Notes will be issued, at the Borrower's expense, to such new Lender and to the assigning Lender, such new Notes to be in conformity with the requirements of section 2.4 (with appropriate modifications) to the extent needed to reflect the revised Commitments; (v) in the case of clause (y) only, the consent of the Administrative Agent and, so long as no Default or Event of Default shall have occurred or be continuing, the Borrower shall be required in connection with any such assignment (which consent, in each case, shall not be unreasonably withheld or delayed); (vi) in the case of any assignment of all or any portion of a General Revolving Commitment to any person, other than another Lender that is not a Defaulting Lender, the consent of each Letter of Credit Issuer shall be required in connection with any such assignment (which consent shall not be unreasonably withheld or delayed); and (vii) the Administrative Agent shall receive at the time of each such assignment, from the assigning or assignee Lender, the payment of a non-refundable 99 assignment fee of $3,500; PROVIDED, that no such assignment fee shall be payable in the case of an assignee which is already a Lender or an Affiliate of a Lender; PROVIDED, FURTHER, that such transfer or assignment will not be effective until the Assignment Agreement in respect thereof is recorded by the Administrative Agent on the Lender Register maintained by it as provided herein. To the extent of any assignment pursuant to this section 12.4(c), the assigning Lender shall be relieved of its obligations hereunder with respect to its assigned Commitments. At the time of each assignment pursuant to this section 12.4(c) to a person which is not already a Lender hereunder and which is not a United States person (as such term is defined in section 7701(a)(30) of the Code) for Federal income tax purposes, the respective assignee Lender shall provide to the Borrower and the Administrative Agent the appropriate Internal Revenue Service Forms (and, if applicable a Lender Tax Certificate) described in section 5.5(c). To the extent that an assignment of all or any portion of a Lender's Commitment and related outstanding Obligations pursuant to this section 12.4(c) would, at the time of such assignment, result in increased costs under section 2.9 from those being charged by the respective assigning Lender prior to such assignment, then the Borrower shall not be obligated to pay such increased costs (although the Borrower shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective assignment). Nothing in this section 12.4(c) shall prevent or prohibit (i) any Lender which is a bank, trust company or other financial institution from pledging its Notes or Loans to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank, or (ii) any Lender which is a trust, limited liability company, mutual fund, partnership or other investment company from pledging its Notes or Loans to a trustee or agent for the benefit of holders of certificates or debt securities issued by it. No such pledge, or any assignment pursuant to or in lieu of an enforcement of such a pledge, shall relieve the transferor Lender from its obligations hereunder. (d) DESIGNATED BIDDER PROVISIONS. (i) Notwithstanding the foregoing, each Lender may assign to one or more banks or other entities any Competitive Bid Note or Notes held by it. In addition, each Lender (other than the Designated Bidders) may designate one or more banks or other entities to have a right to make Competitive Bid Loans as a Lender pursuant to section 2.3; PROVIDED that (a) no such Lender shall be entitled to make more than three such designations, (b) each such Lender making one or more of such designations shall retain the right to make Competitive Bid Loans as a Lender pursuant to section 2.3, (c) each such designation shall be to a Designated Bidder, and (d) the parties to each such designation shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Lender Register, a Designation Agreement. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Designation Agreement, the designee thereunder shall be a party hereto with a right to make Competitive Bid Loans as a Lender pursuant to section 2.3 and the obligations related thereto. (ii) By executing and delivering a Designation Agreement, the Lender making the designation thereunder and its designee thereunder confirm and agree with each other and the 100 other parties hereto as follows: (A) such Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (B) such Lender 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 or any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (C) such designee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in section 7.8(a) and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into the Designation Agreement; (D) such designee will, independently and without reliance upon the Administrative Agent, such designating Lender or any other Lender 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; (E) such designee confirms that it is a Designated Bidder; (F) such designee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (G) such designee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (iii) Upon its receipt of a Designation Agreement executed by a designating Lender and a designee representing that it is a Designated Bidder, the Administrative Agent shall, if such Designation Agreement has been properly completed, (A) accept such Designation Agreement, (B) record the information contained therein in the Lender Register and (C) give prompt notice thereof to the Borrower. (e) NO SEC REGISTRATION OR BLUE SKY COMPLIANCE. Notwithstanding any other provisions of this section 12.4, no transfer or assignment of the interests or obligations of any Lender hereunder or any grant of participation therein shall be permitted if such transfer, assignment or grant would require the Borrower to file a registration statement with the SEC or to qualify the Loans under the "Blue Sky" laws of any State. (f) REPRESENTATIONS OF LENDERS. Each Lender initially party to this Agreement hereby represents, and each person that became a Lender pursuant to an assignment permitted by this section 12.4 will, upon its becoming party to this Agreement, represent that it is a commercial bank, financial institution or other "accredited investor" (as defined in SEC Regulation D) which makes or acquires loans in the ordinary course of its business and that it will make or acquire Loans for its own account in the ordinary course of such business; PROVIDED that subject to the preceding sections 12.4(b), (c) and (d), the disposition of any promissory notes or other evidences of or interests in Indebtedness held by such Lender shall at all times be within its exclusive control. (g) GRANTS BY LENDERS TO SPVS. (i) Notwithstanding anything to the contrary contained herein, any Lender (a "DESIGNATING LENDER") may grant to a special purpose funding vehicle (an "SPV"), identified as such in writing from time to time by the Designating Lender to the Administrative Agent, the Borrower and the other Lenders, the option to provide to the 101 Borrower all or any part of any Loan that such Designating Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; PROVIDED that (i) nothing herein shall constitute a commitment by any SPV to make any Loan, (ii) if an SPV elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Designating Lender shall be obligated to make such Loan pursuant to the terms hereof, and (iii) the Designating Lender shall remain liable for any indemnity or other payment obligation with respect to its Commitment hereunder. The making of a Loan by an SPV hereunder shall utilize the Commitment of the Designating Lender to the same extent, and as if, such Loan were made by such Designating Lender. (ii) As to any Loans or portion thereof made by it, each SPV shall have all the rights that a Lender making such Loans or portion thereof would have had under this Agreement; PROVIDED that each SPV shall have granted to its Designating Lender an irrevocable power of attorney, to deliver and receive all communications and notices under this Agreement (and any other Credit Documents) and to exercise on such SPV's behalf, all of such SPV's voting rights under this Agreement. No additional Note shall be required to evidence the Loans or portion thereof made by an SPV; and the related Designating Lender shall be deemed to hold its Note as agent for such SPV to the extent of the Loans or portion thereof funded by such SPV. In addition, any payments for the account of any SPV shall be paid to its Designating Lender as agent for such SPV. (iii) Each party hereto hereby agrees that no SPV shall be liable for any indemnity or payment under this Agreement for which a Lender would otherwise be liable. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPV, it will not institute against, or join any other person in instituting against, such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. (iv) In addition, notwithstanding anything to the contrary contained in this section 12.4, any SPV may (A) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Designating Lender or to any financial institutions providing liquidity and/or credit support to or for the account of such SPV to support the funding or maintenance of Loans and (B) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancements to such SPV. This section 12.4(g) may not be amended without the written consent of any Designating Lender affected thereby. 12.5 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of the Administrative Agent or any Lender in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Borrower and the Administrative Agent or any Lender shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. No notice to or demand on the Borrower in any case shall 102 entitle the Borrower to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Administrative Agent or the Lenders to any other or further action in any circumstances without notice or demand. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default or Event of Default, regardless of whether the Administrative Agent, any Lender or the Letter of Credit Issuer may have had notice or knowledge of such Default or Event of Default at the time. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which the Administrative Agent or any Lender would otherwise have. 12.6 PAYMENTS PRO RATA; SHARING OF SETOFFS, ETC. (a) The Administrative Agent agrees that promptly after its receipt of each payment from or on behalf of the Borrower in respect of any Obligations, it shall distribute such payment to the Lenders (other than any Lender that has expressly waived in writing its right to receive its PRO RATA share thereof) PRO RATA based upon their respective shares, if any, of the Obligations with respect to which such payment was received. As to any such payment received by the Administrative Agent prior to 1:00 P.M. (local time at the Payment Office) in funds which are immediately available on such day, the Administrative Agent will use all reasonable efforts to distribute such payment in immediately available funds on the same day to the Lenders as aforesaid. (b) Each of the Lenders agrees that, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker's lien, by counterclaim or cross action, by the enforcement of any right under the Credit Documents, or otherwise) which is applicable to the payment of the principal of, or interest on, the General Revolving Loans, Swing Line Revolving Loans, Term Loans or reimbursement obligations with respect to Unpaid Drawings, or Fees, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such Obligation then owed and due to such Lender bears to the total of such Obligation then owed and due to all of the Lenders immediately prior to such receipt, THEN such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in the Obligations to such Lenders in such amount as shall result in a proportional participation by all of the Lenders in such amount; PROVIDED that (i) if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest, and (ii) the provisions of this section 12.6(b) shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement, or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in Letters of Credit to any assignee or participant pursuant to section 12.4, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this section 12.6(b) shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation. (c) Notwithstanding anything to the contrary contained herein, the provisions of the preceding sections 12.6(a) and (b) shall be subject to the express provisions of this Agreement 103 which require, or permit, differing payments to be made to Lenders which are not Defaulting Lenders, as opposed to Defaulting Lenders. (d) If any Lender shall fail to make any payment required to be made by it to the Administrative Agent pursuant to section 2.6(b) or 3.4(c), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision of this Agreement), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender's obligations to the Administrative Agent under such sections until all such unsatisfied obligations are fully paid. 12.7 CALCULATIONS; COMPUTATIONS. (a) The financial statements to be furnished to the Lenders pursuant hereto shall be made and prepared in accordance with GAAP consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by the Borrower to the Lenders); PROVIDED that if at any time the computations determining compliance with section 9 utilize accounting principles different from those utilized in the financial statements furnished to the Lenders, such computations shall set forth in reasonable detail a description of the differences and the effect upon such computations. (b) All computations of interest on Loans hereunder and all computations of Facility Fees, Letter of Credit Fees and other Fees hereunder shall be made on the actual number of days elapsed over a year of 360 days. 12.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL. (a) IS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. TO THE FULLEST EXTENT PERMITTED BY LAW, THE BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK GOVERNS THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS. Any legal action or proceeding with respect to this Agreement or any other Credit Document may be brought in the courts of the State of New York, New York County, and of the United States District Court for the Southern District of New York, and, by execution and delivery of this Agreement, the Borrower hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The Borrower hereby further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Borrower at its address for notices pursuant to section 12.3, such service to become effective 30 days after such mailing or at such earlier time as may be provided under applicable law. Nothing herein shall affect the right of the Administrative Agent or any Lender to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Borrower in any other jurisdiction. (b) The Borrower hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or any other Credit Document brought in the courts 104 referred to in section 12.8(a) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. (c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH. 12.9 COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same agreement. A set of counterparts executed by all the parties hereto shall be lodged with the Borrower and the Administrative Agent. 12.10 EFFECTIVENESS; INTEGRATION. This Agreement shall become effective on the date (the "EFFECTIVE DATE") on which the Borrower and each of the Lenders shall have signed a copy hereof (whether the same or different copies) and shall have delivered the same to the Administrative Agent at the Notice Office of the Administrative Agent or, in the case of the Lenders, shall have given to the Administrative Agent telephonic (confirmed in writing), written telex or facsimile transmission notice (actually received) at such office that the same has been signed and mailed to it. This Agreement, the other Credit Documents and any separate letter agreements with respect to fees payable to the Administrative Agent, for its own account and benefit and/or for the account, benefit of, and distribution to, the Lenders, constitute the entire contract among the parties relating to the subject matter hereof and thereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof or thereof. 12.11 HEADINGS DESCRIPTIVE. The headings of the several sections and other portions of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. 12.12 AMENDMENT OR WAIVER. Neither this Agreement nor any terms hereof or thereof may be changed, waived, discharged or terminated UNLESS such change, waiver, discharge or termination is in writing signed by the Borrower and the Required Lenders; PROVIDED that no such change, waiver, discharge or termination shall, without the consent of each Lender affected thereby, 105 (a) change any date upon which a mandatory and automatic reduction in any Commitment of such Lender is scheduled to be made, or change the amount thereof, (b) change any date upon which an installment payment of any Loans made by such Lender is scheduled to be made, or change the amount thereof, (c) change any date upon which a reimbursement of an Unpaid Drawing is scheduled to be made, or reduce the amount thereof, if such Lender is a Participant with respect thereto; (d) extend the final scheduled maturity of any Commitment or Loan of such Lender (it being understood that any waiver of the making of, or the application of, any mandatory prepayment to such Loans shall not constitute an extension of the final maturity date thereof), (e) reduce the rate or extend the time of payment of interest or Fees on any Loan or Commitment of such Lender (except in connection with a waiver of the applicability of any post-default increase in interest rates), (f) reduce the principal amount of any Loan of any Lender, (g) increase such Lender's Commitment over the amount thereof then in effect, (h) extend the expiration or termination of any Letter of Credit beyond the scheduled expiration of such Lender's Commitment with respect thereto, (i) release the Borrower from any obligations as a guarantor of its Subsidiaries' obligations under any Credit Document, (j) release (i) any Credit Party from the Subsidiary Guaranty or any pledge or security agreement, or (ii) all or substantially all of the collateral pledged pursuant to the terms of this Agreement, in each case except strictly in accordance with the provisions of the Credit Documents, (k) change the definition of the term "Change of Control" or any of the provisions of section 4.3 or 5.2 which are applicable upon a Change of Control, (l) amend, modify or waive any provision of this section 12.12, or sections 8.14, 11.7, 12.1, 12.4, 12.6 or 12.7(b), or any other provision of any of the Credit Documents pursuant to which the consent or approval of all Lenders is by the terms of such provision explicitly required, (m) reduce the percentage specified in, or otherwise modify, the definition of Required Lenders, or (n) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement; and 106 PROVIDED, FURTHER, that no change, waiver or other modification affecting the rights and benefits of a Lender and not all Lenders in a like or similar manner, shall be made without the written consent of such Lender. No provision of section 3 or 11 may be amended without the consent of (x) any Letter of Credit Issuer adversely affected thereby or (y) the Administrative Agent, respectively. 12.13 SURVIVAL OF INDEMNITIES. All indemnities set forth herein including, without limitation, in section 2.9, 2.10, 3.5, 11.7 or 12.1 shall survive the execution and delivery of this Agreement and the making and repayment of Loans. 12.14 DOMICILE OF LOANS. Each Lender may transfer and carry its Loans at, to or for the account of any branch office, subsidiary or affiliate of such Lender; PROVIDED that the Borrower shall not be responsible for costs arising under section 2.9 resulting from any such transfer (other than a transfer pursuant to section 2.11) to the extent not otherwise applicable to such Lender prior to such transfer. 12.15 CONFIDENTIALITY. (a) Each of the Administrative Agent, the Letter of Credit Issuers and the Lenders agrees to maintain the confidentiality of the Confidential Information (as defined below), EXCEPT that Confidential Information may be disclosed (1) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of such Confidential Information and instructed to keep such Confidential Information confidential), (2) to any direct or indirect contractual counterparty in any swap, hedge or similar agreement (or to any such contractual counterparty's professional advisor), so long as such contractual counterparty (or such professional advisor) agrees to be bound by the provisions of this section 12.15, (3) to the extent requested by any regulatory authority, (4) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, it being understood and agreed that unless prohibited by law or court order any such person will use reasonable efforts to advise the Borrower reasonably in advance of any required disclosure to be made pursuant to subpoena, discovery proceedings in any litigation or governmental investigation or any court order, (5) to any other party to this Agreement, (6) to any other creditor of the Borrower or any other Credit Party which is a direct or intended beneficiary of any of the Credit Documents, (7) in connection with the exercise of any remedies hereunder or under any of the other Credit Documents, or any suit, action or proceeding relating to this Agreement or any of the other Credit Documents or the enforcement of rights hereunder or thereunder, (8) subject to an agreement containing provisions substantially the same as those of this section 12.15, to any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement, (9) with the consent of the Borrower, or (10) to the extent such Confidential Information (i) becomes publicly available other than as a result of a breach of this section 12.15, or (ii) becomes available to the Administrative Agent, any Letter of Credit Issuer or any Lender on a nonconfidential basis from a source other than the Borrower without a duty of confidentiality to the Borrower being violated. (b) For the purposes of this section 12.15, "CONFIDENTIAL INFORMATION" means all information received from or on behalf of the Borrower and/or its Subsidiaries, or obtained by the Administrative Agent, any Letter of Credit Issuer or any Lender based on an inspection or 107 review of the books and records of the Borrower and/or its Subsidiaries, relating to the Borrower, its Subsidiaries or their business, other than any such information that is available to the Administrative Agent, any Letter of Credit Issuer or any Lender on a nonconfidential basis prior to disclosure by the Borrower; PROVIDED that, in the case of information received or obtained from or on behalf of the Borrower and/or any of its Subsidiaries after the date hereof, such information is clearly identified at the time of delivery or the time obtained as confidential. (c) Any person required to maintain the confidentiality of Confidential Information as provided in this section 12.15 shall be considered to have complied with its obligation to do so if such person has exercised the same degree of care to maintain the confidentiality of such Confidential Information as such person would accord to its own confidential information. The Borrower hereby agrees that the failure of the Administrative Agent, any Letter of Credit Issuer or any Lender to comply with the provisions of this section 12.15 shall not relieve the Borrower, or any other Credit Party, of any of its obligations under this Agreement or any of the other Credit Documents. 12.16 LENDER REGISTER. The Borrower hereby designates the Administrative Agent to serve as its agent, solely for purposes of this section 12.16, to maintain a register (the "LENDER REGISTER") on or in which it will record the names and addresses of the Lenders, and the Commitments from time to time of each of the Lenders, the Loans made to the Borrower by each of the Lenders and each repayment and prepayment in respect of the principal amount of such Loans of each such Lender. Failure to make any such recordation, or (absent manifest error) any error in such recordation, shall not affect the Borrower's obligations in respect of such Loans. With respect to any Lender, the transfer of the Commitment of such Lender and the rights to the principal of, and interest on, any Loan made pursuant to such Commitment shall not be effective until such transfer is recorded on the Lender Register maintained by the Administrative Agent with respect to ownership of such Commitment and Loans and prior to such recordation all amounts owing to the transferor with respect to such Commitment and Loans shall remain owing to the transferor. The registration of assignment or transfer of all or part of any Commitments and Loans shall be recorded by the Administrative Agent on the Lender Register only upon the acceptance by the Administrative Agent of a properly executed and delivered Assignment Agreement pursuant to section 12.4(c). The Borrower agrees to indemnify the Administrative Agent from and against any and all losses, claims, damages and liabilities of whatsoever nature which may be imposed on, asserted against or incurred by the Administrative Agent in performing its duties under this section 12.16, except to the extent attributable to the gross negligence or wilful misconduct of the Administrative Agent. The Lender Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. 12.17 LIMITATIONS ON LIABILITY OF THE LETTER OF CREDIT ISSUERS. The Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letters of Credit. Neither any Letter of Credit Issuer nor any of its officers or directors shall be liable or responsible for: (a) the use which may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by a Letter of Credit Issuer against presentation of documents that do not 108 comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to such Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, EXCEPT that the Borrower (or a Subsidiary which is the account party in respect of the Letter of Credit in question) shall have a claim against a Letter of Credit Issuer, and a Letter of Credit Issuer shall be liable to the Borrower (or such Subsidiary), to the extent of any direct, but not consequential, damages suffered by the Borrower (or such Subsidiary) which the Borrower (or such Subsidiary) proves were caused by (i) such Letter of Credit Issuer's willful misconduct or gross negligence in determining whether documents presented under a Letter of Credit comply with the terms of such Letter of Credit or (ii) such Letter of Credit Issuer's willful failure to make lawful payment under any Letter of Credit after the presentation to it of documentation strictly complying with the terms and conditions of such Letter of Credit. In furtherance and not in limitation of the foregoing, a Letter of Credit Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation. 12.18 GENERAL LIMITATION OF LIABILITY. No claim may be made by the Borrower, any Lender, the Administrative Agent, any Letter of Credit Issuer or any other person against the Administrative Agent, any Letter of Credit Issuer, or any other Lender or the Affiliates, directors, officers, employees, attorneys or agents of any of them for any damages other than actual compensatory damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement or any of the other Credit Documents, or any act, omission or event occurring in connection therewith; and each of the Borrower, each Lender, the Administrative Agent and each Letter of Credit Issuer hereby, to the fullest extent permitted under applicable law, waives, releases and agrees not to sue or counterclaim upon any such claim for any special, consequential or punitive damages, whether or not accrued and whether or not known or suspected to exist in its favor. 12.19 NO DUTY. All attorneys, accountants, appraisers, consultants and other professional persons (including the firms or other entities on behalf of which any such person may act) retained by the Administrative Agent or any Lender with respect to the transactions contemplated by the Credit Documents shall have the right to act exclusively in the interest of the Administrative Agent or such Lender, as the case may be, and shall have no duty of disclosure, duty of loyalty, duty of care, or other duty or obligation of any type or nature whatsoever to the Borrower, to any of its Subsidiaries, or to any other person, with respect to any matters within the scope of such representation or related to their activities in connection with such representation. The Borrower agrees, on behalf of itself and its Subsidiaries, not to assert any claim or counterclaim against any such persons with regard to such matters, all such claims and counterclaims, now existing or hereafter arising, whether known or unknown, foreseen or unforeseeable, being hereby waived, released and forever discharged. 12.20 LENDERS AND AGENT NOT FIDUCIARY TO BORROWER, ETC. The relationship among the Borrower and its Subsidiaries, on the one hand, and the Administrative Agent, each Letter of Credit Issuer and the Lenders, on the other hand, is solely that of debtor and creditor, and the Administrative Agent, each Letter of Credit Issuer and the Lenders have no fiduciary or other special relationship with the Borrower and its Subsidiaries, and no term or provision of any Credit Document, no course of dealing, no written or oral communication, or other action, shall be construed so as to deem such relationship to be other than that of debtor and creditor. 109 12.21 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties herein shall survive the making of Loans and the issuance of Letters of Credit hereunder, the execution and delivery of this Agreement, the Notes and the other documents the forms of which are attached as Exhibits hereto, the issue and delivery of the Notes, any disposition thereof by any holder thereof, and any investigation made by the Administrative Agent or any Lender or any other holder of any of the Notes or on its behalf. All statements contained in any certificate or other document delivered to the Administrative Agent or any Lender or any holder of any Notes by or on behalf of the Borrower or of its Subsidiaries pursuant hereto or otherwise specifically for use in connection with the transactions contemplated hereby shall constitute representations and warranties by the Borrower hereunder, made as of the respective dates specified therein or, if no date is specified, as of the respective dates furnished to the Administrative Agent or any Lender. 12.22 SEVERABILITY. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. 12.23 INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given independent effect so that if a particular action, event, condition or circumstance is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations or restrictions of, another covenant, shall not avoid the occurrence of a Default or an Event of Default if such action is taken or event, condition or circumstance exists. 12.24 NO RELIANCE ON MARGIN STOCK. Each Lender represents to the Administrative Agent and each of the other Lenders that it in good faith is not relying upon any "margin stock" (as defined in Regulation U) as collateral in the extension or maintenance of the credit provided for in this Agreement. 12.25 INTEREST RATE LIMITATION. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the "CHARGES"), shall exceed the maximum lawful rate (the "MAXIMUM RATE") which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Prime Rate to the date of repayment, shall have been received by such Lender. 110 IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written. FERRO CORPORATION BY:________________________________ TITLE: CREDIT SUISSE FIRST BOSTON, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITIES AS A JOINT LEAD ARRANGER AND THE SYNDICATION AGENT BY:________________________________ TITLE: BY:________________________________ TITLE: NATIONAL CITY BANK, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITIES AS THE LETTER OF CREDIT ISSUER, A JOINT LEAD ARRANGER AND THE ADMINISTRATIVE AGENT BY:________________________________ TITLE: BANCA NAZIONALE DEL LAVORO S.P.A., NEW YORK BRANCH, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-AGENT BY:________________________________ TITLE: BY:________________________________ TITLE: BANK HAPOALIM B.M., AS A LENDER BY:________________________________ TITLE: THE BANK OF NEW YORK, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-AGENT BY:________________________________ TITLE: THE BANK OF TOKYO-MITSUBISHI, LTD. CHICAGO BRANCH, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A MANAGING AGENT BY:________________________________ TITLE: CITICORP USA, INC., INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-DOCUMENTATION AGENT BY:________________________________ TITLE: FIFTH THIRD BANK, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-AGENT BY:________________________________ TITLE: BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-AGENT BY:________________________________ TITLE: BY:________________________________ TITLE: KEYBANK NATIONAL ASSOCIATION, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-DOCUMENTATION AGENT BY:________________________________ TITLE: MELLON BANK, N.A., INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-AGENT BY:________________________________ TITLE: NATIONAL AUSTRALIA BANK LIMITED, A.C.N. 004044937, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A MANAGING AGENT BY:________________________________ TITLE: THE NORINCHUKIN BANK, AS A LENDER BY:________________________________ TITLE: THE NORTHERN TRUST COMPANY, AS A LENDER BY:________________________________ TITLE: SUNTRUST BANK, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-AGENT BY:________________________________ TITLE: EX-10.C 4 l91036aex10-c.txt EXHIBIT 10(C) Exhibit 10(c) EXECUTION COPY ================================================================================ 364-DAY CREDIT AGREEMENT DATED AS OF AUGUST 31, 2001 AMONG FERRO CORPORATION AS BORROWER VARIOUS FINANCIAL INSTITUTIONS AS LENDERS CREDIT SUISSE FIRST BOSTON AS THE SYNDICATION AGENT AND A JOINT LEAD ARRANGER NATIONAL CITY BANK AS THE ADMINISTRATIVE AGENT AND A JOINT LEAD ARRANGER CITICORP USA, INC. KEYBANK NATIONAL ASSOCIATION AS THE CO-DOCUMENTATION AGENTS ----------------------------- CREDIT SUISSE FIRST BOSTON AS SOLE BOOK RUNNING MANAGER ================================================================================
TABLE OF CONTENTS Page ---- SECTION 1. DEFINITIONS AND TERMS......................................................................1 1.1 Certain Defined Terms..........................................................................1 1.2 Computation of Time Periods...................................................................25 1.3 Accounting Terms..............................................................................25 1.4 Terms Generally...............................................................................25 SECTION 2. AMOUNT AND TERMS OF LOANS.................................................................26 2.1 Commitments for Loans.........................................................................26 2.2 Procedures for Borrowing and Disbursement of Funds............................................26 2.3 Competitive Bid Loans.........................................................................28 2.4 Notes; Loan Accounts..........................................................................33 2.5 Conversions of Loans..........................................................................34 2.6 Intentionally Omitted.........................................................................35 2.7 Interest......................................................................................35 2.8 Selection and Continuation of Interest Periods................................................38 2.9 Increased Costs, Illegality, etc..............................................................39 2.10 Compensation..................................................................................41 2.11 Change of Lending Office; Replacement of Lenders..............................................42 SECTION 3. INTENTIONALLY OMITTED.....................................................................43 SECTION 4. FEES; COMMITMENTS.........................................................................43 4.1 Fees..........................................................................................43 4.2 Voluntary Termination/Reduction of Commitments................................................44 4.3 Mandatory Adjustments of Commitments, etc.....................................................44 4.4 Extension of Maturity Date....................................................................45 SECTION 5. PAYMENTS..................................................................................45 5.1 Voluntary Prepayments of Loans...............................................................45 5.2 Mandatory Prepayments.........................................................................46 5.3 Repayment of Loans............................................................................47 5.4 Method and Place of Payment...................................................................47 5.5 Net Payments..................................................................................48 SECTION 6. CONDITIONS PRECEDENT......................................................................50 6.1 Conditions Precedent at Closing Date..........................................................50
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TABLE OF CONTENTS (Continued) Page ---- 6.2 Conditions Precedent to All Credit Events (Other than any Competitive Bid Borrowing)..........50 6.3 Conditions Precedent to Each Competitive Bid Borrowing........................................51 SECTION 7. REPRESENTATIONS AND WARRANTIES............................................................52 7.1 Corporate Status, etc.........................................................................52 7.2 Subsidiaries..................................................................................52 7.3 Corporate Power and Authority, etc............................................................52 7.4 No Violation..................................................................................52 7.5 Governmental Approvals........................................................................53 7.6 Litigation....................................................................................53 7.7 Use of Proceeds; Margin Regulations...........................................................53 7.8 Financial Statements, etc.....................................................................53 7.9 No Material Adverse Change....................................................................54 7.10 Tax Returns and Payments......................................................................55 7.11 Title to Properties, etc......................................................................55 7.12 Lawful Operations, etc........................................................................55 7.13 Environmental Matters.........................................................................55 7.14 Compliance with ERISA.........................................................................56 7.15 Intellectual Property, etc....................................................................56 7.16 Investment Company Act, etc...................................................................57 7.17 Burdensome Contracts; Labor Relations.........................................................57 7.18 Existing Indebtedness.........................................................................57 7.19 True and Complete Disclosure..................................................................57 SECTION 8. AFFIRMATIVE COVENANTS.....................................................................58 8.1 Reporting Requirements........................................................................58 8.2 Books, Records and Inspections................................................................61 8.3 Insurance.....................................................................................61 8.4 Payment of Taxes and Claims...................................................................61 8.5 Corporate Franchises..........................................................................62 8.6 Good Repair...................................................................................62 8.7 Compliance with Statutes, etc.................................................................62 8.8 Compliance with Environmental Laws............................................................62 8.9 Fiscal Years, Fiscal Quarters.................................................................62 8.10 Hedge Agreements, etc.........................................................................63 8.11 Certain Subsidiaries to Join in Subsidiary Guaranty...........................................63
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TABLE OF CONTENTS (Continued) Page ---- 8.12 Most Favored Covenant Status..................................................................64 8.13 Senior Debt...................................................................................64 8.14 Debt Rating Downgrade.........................................................................65 SECTION 9. NEGATIVE COVENANTS........................................................................65 9.1 Changes in Business...........................................................................65 9.2 Consolidation, Merger, Asset Sales, etc.......................................................65 9.3 Restrictions on Acquisitions..................................................................67 9.4 Limitation on Sales and Leasebacks............................................................68 9.5 Indebtedness..................................................................................68 9.6 Leverage Ratio................................................................................70 9.7 Fixed Charge Coverage Ratio...................................................................70 9.8 No Stock Repurchases While Index Debt Rating is Not Investment Grade, etc.....................71 9.9 Transactions with Affiliates..................................................................71 9.10 Plan Terminations, Minimum Funding, etc.......................................................71 9.11 Restricted Payments...........................................................................71 9.12 Restrictive Agreements........................................................................72 SECTION 10. EVENTS OF DEFAULT.........................................................................72 10.1 Events of Default.............................................................................72 10.2 Acceleration, etc.............................................................................75 10.3 Application of Liquidation Proceeds...........................................................75 SECTION 11. THE ADMINISTRATIVE AGENT..................................................................76 11.1 Appointment...................................................................................76 11.2 Delegation of Duties..........................................................................77 11.3 Exculpatory Provisions........................................................................77 11.4 Reliance by Administrative Agent..............................................................77 11.5 Notice of Default.............................................................................78 11.6 Non-Reliance..................................................................................78 11.7 Indemnification...............................................................................79 11.8 The Agents in Individual Capacity.............................................................79 11.9 Successor Administrative Agent................................................................79 11.10 Other Agents..................................................................................80 SECTION 12. MISCELLANEOUS.............................................................................80
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TABLE OF CONTENTS (Continued) Page ---- 12.1 Payment of Expenses etc.......................................................................80 12.2 Right of Setoff...............................................................................81 12.3 Notices.......................................................................................82 12.4 Benefit of Agreement..........................................................................82 12.5 No Waiver; Remedies Cumulative................................................................88 12.6 Payments Pro Rata; Sharing of Setoffs, etc....................................................88 12.7 Calculations; Computations....................................................................89 12.8 Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial........................89 12.9 Counterparts..................................................................................90 12.10 Effectiveness; Integration....................................................................90 12.11 Headings Descriptive..........................................................................91 12.12 Amendment or Waiver...........................................................................91 12.13 Survival of Indemnities.......................................................................92 12.14 Domicile of Loans.............................................................................92 12.15 Confidentiality...............................................................................92 12.16 Lender Register...............................................................................93 12.17 Intentionally Omitted.........................................................................94 12.18 General Limitation of Liability...............................................................94 12.19 No Duty.......................................................................................94 12.20 Lenders and Agent Not Fiduciary to Borrower, etc..............................................94 12.21 Survival of Representations and Warranties....................................................94 12.22 Severability..................................................................................95 12.23 Independence of Covenants.....................................................................95 12.24 No Reliance on Margin Stock...................................................................95 12.25 Interest Rate Limitation......................................................................95
-iv- TABLE OF CONTENTS (Continued) Page ---- Annex I - Information as to Lenders Annex II - Information as to Subsidiaries Annex III - Information as to ERISA Annex IV - Description of Existing Indebtedness and Letters of Credit Exhibit A-1 - Form of Revolving Note Exhibit A-2 - Form of Competitive Bid Note Exhibit B-1 - Form of Notice of Borrowing Exhibit B-2 - Form of Notice of Competitive Bid Borrowing Exhibit B-3 - Form of Notice of Conversion Exhibit C - Form of Subsidiary Guaranty Exhibit D - Form of Assignment Agreement Exhibit E - Form of Designation Agreement Exhibit F - Form of Lender Tax Certificate -v- 364-DAY CREDIT AGREEMENT THIS 364-DAY CREDIT AGREEMENT, dated as of August 31, 2001 (this "AGREEMENT"), is among FERRO CORPORATION, an Ohio corporation (the "BORROWER"), the various financial institutions and other Persons from time to time parties hereto (the "LENDERS"), CREDIT SUISSE FIRST BOSTON ("CSFB"), as syndication agent (in such capacity, the "SYNDICATION AGENT") for the Lenders, NATIONAL CITY BANK ("NCB"), as administrative agent (in such capacity, the "ADMINISTRATIVE AGENT", and together with the Syndication Agent, the "AGENTS"), for the Lenders, and CSFB and NCB, as joint lead arrangers (the "JOINT LEAD ARRANGERS"). WHEREAS, pursuant to the Heads of Agreement, dated as of April 23, 2001 (the "PURCHASE AGREEMENT"), by and between the Borrower and OM Group, Inc., a Delaware corporation ("OMG"), the Borrower will purchase the electronic materials, performance pigments and colors, glass systems and cerdec ceramics divisions (collectively, the "FERRO DIVISIONS") of dmc(2) Degussa Metals Catalysts Cerdec A.G. ("DMC(2)") from OMG (the "DMC(2) ACQUISITION"); WHEREAS, in order to (a) finance the DMC(2) Acquisition, (b) refinance existing indebtedness (the "REFINANCING") under the Borrower's existing credit facility (the "EXISTING CREDIT FACILITY"), (c) pay related fees and expenses (the "EXPENSE PAYMENTS", and together with the DMC(2) Acquisition and the Refinancing, the "TRANSACTION") and (d) provide for post-closing working capital and general corporate purposes of the Borrower and its Subsidiaries following the consummation of the Acquisition, the Borrower has requested that the Lenders make the Commitments available to the Borrower; and WHEREAS, the Lenders are willing, on the terms and subject to the conditions hereinafter set forth, to extend the Commitments and make Loans to the Borrower; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1.DEFINITIONS AND TERMS. 1.1 CERTAIN DEFINED TERMS. As used herein, the following terms shall have the meanings herein specified unless the context otherwise requires: "ACQUISITION" shall mean and include (i) any acquisition on a going concern basis (whether by purchase, lease or otherwise) of any assets, facilities and/or businesses operated by any person who is not a Subsidiary of the Borrower, and (ii) acquisitions of a majority of the outstanding equity or other similar interests in any such person (whether by merger, stock purchase or otherwise). "ADDITIONAL SECURED OBLIGATIONS" shall mean the Borrower's obligations in respect of (a) the issued and outstanding letters of credit set forth on Annex IV, (b) the Borrower's senior notes issued pursuant to its existing and future indentures and (c) the trust notes and trust certificates issued in connection with the Amended and Restated Participation Agreement, dated as of October 31, 1995 (as amended and restated as of November 30, 2000 and as further amended from time to time), by and among the Borrower, State Street Bank and Trust Company, not in its individual capacity except as expressly stated therein, the financial institutions named as purchasers thereto and Citibank, N.A., as agent (the "TRUST INSTRUMENTS"), that will, in each case, share on a PARI PASSU basis with the Obligations with respect to any collateral required to be provided pursuant to section 8.14; PROVIDED that, with respect to the Borrower's senior notes and the Trust Instruments, only the Borrower's and its Subsidiaries' Principal Domestic Manufacturing Properties and the Capital Stock of the Borrower's Domestic Subsidiaries will be required to be shared. "ADJUSTED LIBO RATE" shall mean with respect to each Interest Period for a LIBOR Loan, (i) the rate per annum 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 Dollar deposits with a maturity comparable to such Interest Period, divided (and rounded to the nearest ten thousandth of 1%) by (ii) a percentage equal to 100% minus the then stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves and without benefit of credits for proration, exceptions or offsets which may be available from time to time) applicable to any member bank of the Federal Reserve System in respect of Eurocurrency liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D); PROVIDED, HOWEVER, that in the event that the rate referred to in clause (i) above is not available at any such time for any reason, then the rate referred to in clause (i) shall instead be the average (rounded to the nearest ten thousandth of 1%) of the rates at which Dollar deposits of $5,000,000 are offered to the Reference Banks in the London interbank market at approximately 11:00 a.m. (London time), two Business Days prior to the commencement of such Interest Period, for contracts which would be entered into at the commencement of such Interest Period. "ADMINISTRATIVE AGENT" shall have the meaning provided in the first paragraph of this Agreement and shall include any successor to the Administrative Agent appointed pursuant to section 11.9. "ADMINISTRATIVE QUESTIONNAIRE" shall mean an Administrative Questionnaire in a form supplied by the Administrative Agent. 2 "AFFILIATE" shall mean, with respect to any person, any other person directly or indirectly controlling, controlled by, or under direct or indirect common control with such person. A person shall be deemed to control a second person if such first person possesses, directly or indirectly, the power (i) to vote 20% or more of the securities having ordinary voting power for the election of directors or managers of such second person or (ii) to direct or cause the direction of the management and policies of such second person, whether through the ownership of voting securities, by contract or otherwise. Notwithstanding the foregoing, (x) a director, officer or employee of a person shall not, solely by reason of such status, be considered an Affiliate of such person; and (y) neither the Administrative Agent nor any Lender shall in any event be considered an Affiliate of the Borrower or any other Credit Party or any of their respective Subsidiaries. "AGENTS" shall have the meaning provided in the first paragraph of this Agreement. "AGREEMENT" shall have the meaning provided in the first paragraph of this Agreement. "APPLICABLE FACILITY FEE RATE" shall have the meaning provided in section 4.1(a). "APPLICABLE LIBOR MARGIN" shall have the meaning provided in section 2.7(g). "APPLICABLE LENDING OFFICE" shall mean, (i) with respect to each Lender and its Loans which are Prime Rate Loans, such Lender's Domestic Lending Office, (ii) with respect to each Lender and its Loans which are LIBOR Loans, such Lender's Eurodollar Lending Office, (iii) with respect to each Lender and its Competitive Bid Loans, such Lender's Domestic Lending Office, and (iv) with respect to any Designated Bidder and its Competitive Bid Loans, such Designated Bidder's Applicable Lending Office, located in the United States, as specified in the Designation Agreement of such Designated Bidder. "APPLICABLE PRIME RATE MARGIN" shall have the meaning provided in section 2.7(g). "ASSET SALE" shall mean the sale, transfer or other disposition (including by means of sale and leaseback transaction, and by means of mergers, consolidations, and liquidations of a corporation, partnership or limited liability company of the interests therein of the Borrower or any Subsidiary) by the Borrower or any Subsidiary to any person other than the Borrower or any Subsidiary of any of their respective assets (other than sales, transfers or other dispositions of inventory, or obsolete or excess furniture, fixtures, equipment or other property, tangible or intangible, in the ordinary course of business). "ASSIGNMENT AGREEMENT" shall mean an Assignment Agreement substantially in the form of Exhibit D hereto. "ATTRIBUTABLE DEBT" shall mean, as to any particular lease under which any person is at the time liable, at any date as of which the amount thereof is to be determined, the total net amount of rent required to be paid by such person under such lease during the remaining term thereof (after giving effect to any extensions at the option of the lessor), discounted from the 3 respective due dates thereof to such date at the rate of 1% per annum over the interest rate which would then be applicable to a new Borrowing of Eurodollar Loans under the Facility with an Interest Period of six months, compounded semi-annually. The net amount of rent required to be paid under any such lease for any such period, after excluding amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges. In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated. "AUTHORIZED OFFICER" shall mean any officer or employee of the Borrower designated as such in writing to the Administrative Agent by the Borrower. "BANKRUPTCY CODE" shall have the meaning provided in section 10.1(h). "BORROWER" shall have the meaning provided in the first paragraph of this Agreement. "BORROWING" shall mean the incurrence of Loans of a single Type by the Borrower from all of the Lenders having Commitments in respect thereof on a PRO RATA basis on a given date (or resulting from Conversions or Continuations on a given date), which Loans shall, in the case of LIBOR Loans, have the same Interest Period. "BUSINESS DAY" shall mean (i) for all purposes other than as covered by clause (ii) below, any day excluding Saturday, Sunday and any day which shall be in the city in which the Payment Office is located a legal holiday or a day on which banking institutions are authorized by law or other governmental actions to close and (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on, LIBOR Loans, any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in Dollar deposits in the interbank Eurodollar market. "CAPITAL LEASE" as applied to any person shall mean any lease of any property (whether real, personal or mixed) by that person as lessee which, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that person. "CAPITALIZED LEASE OBLIGATIONS" shall mean all obligations under Capital Leases of the Borrower or any of its Subsidiaries in each case taken at the amount thereof accounted for as liabilities identified as "capital lease obligations" (or any similar words) on a consolidated balance sheet of the Borrower and its Subsidiaries prepared in accordance with GAAP. "CAPITAL STOCK" means, (a) in the case of a corporation, any and all capital or corporate stock, including shares of preferred or preference stock of such corporation, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) in respect of corporate or capital stock, (c) in the case of a partnership or limited liability company, any and all partnership or membership interests 4 (whether general or limited) and (d) any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing person. "CERCLA" shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as the same may be amended from time to time, 42 U.S.C. Section 9601 ET SEQ. "CHANGE OF CONTROL" shall mean and include any of the following: (i) during any period of two consecutive calendar years, individuals who at the beginning of such period constituted the Borrower's Board of Directors (together with any new directors (x) whose election by the Borrower's Board of Directors was, or (y) whose nomination for election by the Borrower's shareholders was (prior to the date of the proxy or consent solicitation relating to such nomination), approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved), shall cease for any reason to constitute a majority of the directors then in office; (ii) any person or group (as such term is defined in section 13(d)(3) of the 1934 Act), other than the Borrower, any trustee or other fiduciary holding securities under an employee benefit plan of the Borrower and the Current Holder Group, shall acquire, directly or indirectly, beneficial ownership (within the meaning of Rule 13d-3 and 13d-5 of the 1934 Act) of more than 50%, on a fully diluted basis, of the economic or voting interest in the Borrower's capital stock; and/or (iii) the shareholders of the Borrower approve a plan of complete liquidation of the Borrower or an agreement or agreements for the sale or disposition by the Borrower of all or substantially all of the Borrower's assets. "CLOSING DATE" shall mean the date, on or after the Effective Date, upon which the conditions specified in section 6.1 are satisfied. "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and the rulings issued thereunder. Section references to the Code are to the Code, as in effect at the Effective Date and any subsequent provisions of the Code, amendatory thereof, supplemental thereto or substituted therefor. "COMMITMENT" shall mean, with respect to each Lender, the amount set forth opposite such Lender's name on Annex I as its "Commitment" as the same may be reduced from time to time pursuant to section 4.2, 4.3 and/or 10.2 or adjusted from time to time as a result of assignments to or from such Lender pursuant to section 12.4. 5 "COMMITMENT AMOUNT" shall mean, on any date, $187,000,000, as such amount may be reduced from time to time pursuant to section 4.2, 4.3 and/or 10.2. "COMPETITIVE BID BORROWING" shall mean a borrowing consisting of one or more Competitive Bid Loans made pursuant to section 2.3. "COMPETITIVE BID LOAN" shall mean a Loan denominated in Dollars made pursuant to section 2.3. "COMPETITIVE BID NOTE" shall have the meaning provided in section 2.4(a). 2.1. "COMPETITIVE BID REDUCTION" shall have the meaning provided in section "CONFIDENTIAL INFORMATION MEMORANDUM" shall have the meaning provided in section 7.8(c). "CONSOLIDATED AMORTIZATION EXPENSE" shall mean, for any period, all amortization expenses of the Borrower and its Subsidiaries, all as determined for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. "CONSOLIDATED DEPRECIATION EXPENSE" shall mean, for any period, all depreciation expenses of the Borrower and its Subsidiaries, all as determined for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. "CONSOLIDATED EBITDA" shall mean, for any period, Consolidated Net Income for such period; PLUS (A) the sum, without duplication, of the amounts for such period included in determining such Consolidated Net Income of (i) Consolidated Fixed Charges (other than dividends), (ii) Consolidated Income Tax Expense, (iii) Consolidated Depreciation Expense, (iv) Consolidated Amortization Expense, (v) non-cash losses and charges which are properly classified as extraordinary or nonrecurring (including any charges relating to the 2001 severance program in an aggregate amount not to exceed $7,000,000 and any restructuring and integration charges arising out of the DMC(2) Acquisition in an aggregate amount not to exceed $30,000,000), and (vi) Expense Payments; LESS (B) gains on sales of assets (excluding sales in the ordinary course of business) and other gains which are properly classified as extraordinary or nonrecurring; all as determined for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. Notwithstanding the foregoing, in determining Consolidated Net Income for purposes of this definition there shall be excluded therefrom (i) the income (or loss) of any entity (other than Subsidiaries of the Borrower) in which the Borrower or any of its Subsidiaries has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to the Borrower or any of its Subsidiaries during such period, and (ii) the income of any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its 6 charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary. In addition and notwithstanding the foregoing, the Borrower's Consolidated EBITDA for any Testing Period shall (x) include the appropriate financial items for any person or business unit which has been acquired by the Borrower for any portion of such Testing Period prior to the date of acquisition, and (y) exclude the appropriate financial items for any person or business unit which has been disposed of by the Borrower, for the portion of such Testing Period prior to the date of disposition; PROVIDED that, with respect to the appropriate financial items for the Ferro Divisions, in computing Consolidated EBITDA for the period ending on the last day of (i) the fourth fiscal quarter of the 2001 fiscal year, such financial items shall be those for the fourth fiscal quarter of the 2001 fiscal year MULTIPLIED by four, (ii) the first fiscal quarter of the 2002 fiscal year, such financial items shall be those for the fourth fiscal quarter of the 2001 fiscal year and the first fiscal quarter of the 2002 fiscal year MULTIPLIED by two, (iii) the second fiscal quarter of the 2002 fiscal year, such financial items shall be those for the fourth fiscal quarter of the 2001 fiscal year, the first fiscal quarter of the 2002 fiscal year and the second fiscal quarter of the 2002 fiscal year MULTIPLIED by 1.333. "CONSOLIDATED FIXED CHARGES" shall mean, for any period, the sum of (a) Consolidated Interest Expense during such period, PLUS (b) financing expenses paid in connection with Permitted Receivables Programs during such period, PLUS (c) all Capital Lease and Synthetic Lease expenses paid during such period, PLUS (d) dividends paid by the Borrower during such period. "CONSOLIDATED INCOME TAX EXPENSE" shall mean, for any period, all provisions for taxes based on the net income of the Borrower or any of its Subsidiaries (including, without limitation, any additions to such taxes, and any penalties and interest with respect thereto), all as determined for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. "CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, total interest expense (including that which is capitalized, that which is attributable to Capital Leases or Synthetic Leases and the pre-tax equivalent of dividends payable on Redeemable Stock) of the Borrower and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of the Borrower and its Subsidiaries, BUT EXCLUDING, HOWEVER, any amortization or write-off of deferred financing costs and any charges for prepayment penalties on prepayment of Indebtedness. "CONSOLIDATED NET INCOME" shall mean, for any period, the net income (or loss), without deduction for minority interests, of the Borrower and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP. "CONSOLIDATED NET TANGIBLE ASSETS" shall mean the aggregate amount of assets (less applicable reserves and other properly deductible items), after deducting therefrom (i) all current liabilities (excluding any thereof constituting Indebtedness by reason of being renewable or extendible for a maturity longer than one year), and (ii) all goodwill and intangibles, including 7 trade names trademarks, patents and unamortized debt discount and expense, all as determined for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. "CONSOLIDATED NET WORTH" shall mean at any time for the determination thereof all amounts which, in conformity with GAAP, would be included under the caption "total stockholders' equity" (or any like caption) on a consolidated balance sheet of the Borrower as at such date; PROVIDED that in no event shall Consolidated Net Worth include any amounts in respect of Redeemable Stock. "CONTINUE", "CONTINUATION" and "CONTINUED" each refers to a continuation of the Loans consisting of LIBOR Loans for an additional Interest Period as provided in section 2.8. "CONVERT", "CONVERSION" and "CONVERTED" each refers to a conversion of Loans of one Type into Loans of another Type, pursuant to section 2.5, 2.8(b), 2.9 or 5.2. "CREDIT DOCUMENTS" shall mean this Agreement, the Notes, any Letter of Credit Document (as defined in the Five Year Credit Facility Agreement), the Subsidiary Guaranty, the Five Year Credit Facility Agreement and any notes issued in connection therewith, and any pledge or security agreement delivered pursuant to section 8.14. "CREDIT EVENT" shall mean the making of any Loans. "CREDIT PARTY" shall mean the Borrower and each of its Subsidiaries which is a party to any Credit Document. "CSFB" shall have the meaning provided in the first paragraph of this Agreement, and its successors and assigns. "CURRENT HOLDER GROUP" shall mean (i) those persons who are officers and directors of the Borrower at the Effective Date, (ii) the spouses, heirs, legatees, descendants and blood relatives to the third degree of consanguinity of any such person, (iii) the executors and administrators of the estate of any such person, and any court appointed guardian of any such person, and/or (iv) any trust for the benefit of any such person referred to in the foregoing clauses (i) and (ii) or any other persons, so long as one or more members of the Current Holder Group has the exclusive right to control the voting and disposition of securities held by such trust. "DEBT" shall mean, on any date, without duplication, the outstanding principal amount of all Indebtedness of the Borrower and its Subsidiaries of the type referred to in clause (i) (which, in the case of the Loans, shall be deemed to equal the average daily outstanding amount of the Loans for the fiscal quarter ending on the date of determination LESS the amount of any Loans prepaid during such fiscal quarter pursuant to section 5.2), clause (ii), clause (iii), clause (iv) (which shall include only the face amount of letters of credit that have been drawn), clause (v), clause (vi), clause (vii), clause (viii) and clause (xii), in each case of the definition of 8 Indebtedness (exclusive of intercompany Indebtedness between the Borrower and any of its Subsidiaries or between any Subsidiaries of the Borrower) and, without duplication, any Guaranty Obligation in respect of any of the foregoing. "DEFAULT" shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default. "DEFAULTING LENDER" shall mean any Lender with, respect to which a Lender Default is in effect. "DESIGNATED BIDDER" shall mean (i) an Eligible Transferee or (ii) a special purpose corporation which is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and that issues (or the parent of which issues) commercial paper rated at least Prime-1 (or the then equivalent grade) by Moody's or A-1 (or the then equivalent grade) by S&P, that, in either case, (A) is organized under the laws of the United States or any State thereof, (B) shall have become a party to this Agreement pursuant to section 12.4(d), and (C) is not otherwise a Lender. "DESIGNATION AGREEMENT" shall mean a designation agreement entered into by a Lender (other than a Designated Bidder) and a Designated Bidder, and accepted by the Administrative Agent, in substantially the form of Exhibit E hereto. "DISPOSITION" shall mean any sale, transfer or other conveyance (including by way of merger) of any of the Borrower's or its Subsidiaries' assets (including accounts receivable and Capital Stock of Subsidiaries) to any other Person in a single transaction or series of transactions. "DMC(2)" shall have the meaning provided in the first whereas clause of this Agreement. "DMC(2) ACQUISITION" shall have the meaning provided in the first whereas clause of this Agreement. "DOLLARS", "U.S. DOLLARS" and the sign "$" each means lawful money of the United States. "DOMESTIC LENDING OFFICE" shall mean, with respect to any Lender, the office of such Lender specified as its Domestic Lending Office in its Administrative Questionnaire or in the Assignment Agreement pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. "DOMESTIC SUBSIDIARY" shall mean any Subsidiary organized under the laws of the United States of America, any State thereof, the District of Columbia, or any United States possession, the chief executive office and principal place of business of which is located in, and which conducts the majority of its business within, the United States of America and its territories and possessions. 9 "EFFECTIVE DATE" shall have the meaning provided in section 12.10. "ELIGIBLE TRANSFEREE" shall mean and include a commercial bank, financial institution or other "accredited investor" (as defined in SEC Regulation D); PROVIDED that such person: (i) with respect only to assignments pursuant to section 12.4(c), is not disapproved in writing by the Borrower in a notice given to the Lender requesting such assignment and the Administrative Agent, specifying the reasons for such disapproval, within five Business Days following the giving of notice to the Borrower of the identity of any proposed transferee (any such disapproval by the Borrower must be reasonable); PROVIDED that the Borrower shall not be entitled to exercise the foregoing right of disapproval if and so long as any Event of Default shall have occurred and be continuing; and (ii) is not a direct competitor of the Borrower or engaged in the same or similar business as the Borrower and its Subsidiaries considered as an entirety or is not an Affiliate of any such competitors of the Borrower and its Subsidiaries. "ENVIRONMENTAL CLAIMS" shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, investigations or proceedings relating in any way to any Environmental Law or any permit issued under any such law (hereafter "CLAIMS"), including, without limitation, (i) any and all Claims by governmental or regulatory authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (ii) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the storage, treatment or Release (as defined in CERCLA) of any Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment. "ENVIRONMENTAL LAW" shall mean any applicable Federal, state, foreign or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy and rule of common law now or hereafter in effect and in each case as amended, and any binding and enforceable judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment issued to or rendered against the Borrower or any of its Subsidiaries relating to the environment, employee health and safety or Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C. Section 2601 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section 3803 ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 ET SEQ.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 ET SEQ., the Hazardous Material Transportation Act, 49 U.S.C. Section 1801 ET SEQ. and the Occupational Safety and Health Act, 29 U.S.C. Section 651 ET SEQ. (to the extent it regulates occupational exposure to Hazardous Materials); and any state and local or foreign counterparts or equivalents, in each case as amended from time to time. 10 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the Effective Date and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor. "ERISA AFFILIATE" shall mean each person (as defined in section 3(9) of ERISA) which together with the Borrower or a Subsidiary of the Borrower would be deemed to be a "single employer" (i) within the meaning of section 414(b), (c), (m) or (o) of the Code or (ii) as a result of the Borrower or a Subsidiary of the Borrower being or having been a general partner of such person. "EURODOLLAR LENDING OFFICE" shall mean, with respect to any Lender, the office of such Lender specified as its Eurodollar Lending Office in its Administrative Questionnaire or in the Assignment Agreement pursuant to which it became a Lender, or such other office or offices for LIBOR Loans of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. "EVENT OF DEFAULT" shall have the meaning provided in section 10.1. "EXCLUDED EQUITY PROCEEDS" means any proceeds received by the Borrower or any of its Subsidiaries from the sale or issuance by such person of its Capital Stock or any warrants or options in respect of any such Capital Stock or the exercise of any such warrants or options, in each case pursuant to any such sale, issuance or exercise constituting or resulting from (a) capital contributions to, or Capital Stock issuances by the Borrower or any of its Subsidiaries (exclusive of any such contribution or issuance resulting from a public offering or a widely distributed private offering exempted from the registration requirements of section 5 of the Securities Act of 1933, as amended), (b) any subscription agreement, option plan, incentive plan or similar arrangement with any officer, employee or director of such person or any of its Subsidiaries, (c) any loan made by the Borrower or any of its Subsidiaries in the form of loans to officers, directors and employees of the Borrower and any Subsidiaries for the sole purpose of purchasing the Capital Stock of the Borrower or the Capital Stock of any person that directly or indirectly holds the Capital Stock of the Borrower or of refinancing any such loans made by others (or purchases of such loans made by others), (d) the sale of any Capital Stock of the Borrower to any officer, director or employee described in clause (b) above; PROVIDED that such proceeds do not exceed $15,000,000 annually, (e) the exercise of any options or warrants issued to any officer, employee or director pursuant to any agreement, plan or arrangement described in clause (b) above or (f) the exercise of any warrants. "EXISTING CREDIT FACILITY" shall have the meaning provided in the second whereas clause of this Agreement. "EXISTING INDEBTEDNESS" shall have the meaning provided in section 7.18. "EXISTING INDEBTEDNESS AGREEMENTS" shall have the meaning provided in section 7.18. 11 "EXPENSE PAYMENTS" shall have the meaning provided in the second whereas clause of this Agreement. "FACILITY" shall mean the credit facility evidenced by the Total Commitment. "FACILITY FEE" shall have the meaning provided in section 4.1(a). "FACILITY PERCENTAGE" shall mean at any time for any Lender with a Commitment, the percentage obtained by dividing such Lender's Commitment by the Total Commitment; PROVIDED that if the Total Commitment has been terminated, the Facility Percentage for each Lender with a Commitment shall be determined by dividing such Lender's Commitment immediately prior to such termination by the Total Commitment immediately prior to such termination. "FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any period, a fluctuating interest rate equal for each day during such period to the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System arranged by Federal Funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal Funds brokers of recognized standing selected by the Administrative Agent. "FEES" shall mean all amounts payable pursuant to, or referred to in, section 4.1. "FERRO DIVISIONS" shall have the meaning provided in the first whereas clause of this Agreement. "FIXED CHARGE COVERAGE RATIO" shall mean, on any date, the ratio of (a) Consolidated EBITDA for the then most recent Testing Period, LESS capital expenditures determined in accordance with GAAP made during such Testing Period to (b) Consolidated Fixed Charges for the then most recent Testing Period. "FIVE YEAR CREDIT FACILITY AGREEMENT" shall mean the credit agreement, dated as of the date hereof, among the Borrower, the various financial institutions party thereto, CSFB and NCB, as amended, supplemented, amended and restated or otherwise modified from time to time. "FIVE YEAR CREDIT FACILITY REVOLVING LOANS" shall mean the revolving Loans to be made pursuant to the terms of the Five Year Credit Facility Agreement. "FIVE YEAR CREDIT FACILITY TERM LOANS" shall mean the term Loans to be made pursuant to the terms of the Five Year Credit Facility Agreement. 12 "FOREIGN SUBSIDIARY" shall mean any Subsidiary (i) which is not incorporated in the United States and substantially all of whose assets and properties are located, or substantially all of whose business is carried on, outside the United States, or (ii) substantially all of whose assets consist of Subsidiaries that are Foreign Subsidiaries as defined in clause (i) of this definition. "FUNDED DEBT" shall mean, as of any date of determination, all indebtedness for money borrowed having a maturity of more than 12 months from such date of determination or having a maturity of less than 12 months but by its terms being renewable or extendible beyond 12 months from such date at the option of the borrower or issuer. "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time; it being understood and agreed that determinations in accordance with GAAP for purposes of section 9, including defined terms as used therein, are subject (to the extent provided therein) to section 1.3 and 12.7(a). "GUARANTY OBLIGATIONS" shall mean as to any person (without duplication) any obligation of such person guaranteeing any Indebtedness ("PRIMARY INDEBTEDNESS") of any other person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including, without limitation, any obligation of such person, whether or not contingent, (a) to purchase any such primary Indebtedness or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary Indebtedness or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary Indebtedness of the ability of the primary obligor to make payment of such primary Indebtedness, or (d) otherwise to assure or hold harmless the owner of such primary Indebtedness against loss in respect thereof; PROVIDED that the term Guaranty Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guaranty Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary Indebtedness in respect of which such Guaranty Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such person is required to perform thereunder) as determined by such person in good faith. "HEDGE AGREEMENT" shall mean (i) any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement designed to protect against fluctuations in interest rates, (ii) any currency swap agreement, forward currency purchase agreement or similar agreement or arrangement designed to protect against fluctuations in currency exchange rates, and (iii) any forward commodity purchase agreement or similar agreement or arrangement designed to protect against fluctuations in raw material or other commodity prices. "HAZARDOUS MATERIALS" shall mean (i) any petrochemical or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde 13 foam insulation, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; and (ii) any chemicals, materials or substances defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", "restricted hazardous materials", "extremely hazardous wastes", "restrictive hazardous wastes", "toxic substances", "toxic pollutants", "contaminants" or "pollutants", or words of similar meaning and regulatory effect, under any applicable Environmental Law. "INDEBTEDNESS" of any person shall mean without duplication: (i) all indebtedness of such person for borrowed money; (ii) all bonds, notes, debentures and similar debt securities of such person; (iii) the deferred purchase price of capital assets or services which in accordance with GAAP would be shown on the liability side of the balance sheet of such person; (iv) the face amount of all letters of credit issued for the account of such person and, without duplication, all drafts drawn thereunder; (v) all obligations, contingent or otherwise, of such person in respect of bankers' acceptances; (vi) all Indebtedness of a second person secured by any Lien on any property owned by such first person, whether or not such indebtedness has been assumed; (vii) all Capitalized Lease Obligations of such person; (viii) the present value, determined on the basis of the implicit interest rate, of all basic rental obligations under all Synthetic Leases of such person; (ix) all obligations of such person to pay a specified purchase price for goods or services whether or not delivered or accepted, I.E., take-or-pay and similar obligations; (x) all net obligations of such person under Hedge Agreements; (xi) the full outstanding balance of trade receivables, notes or other instruments sold with full recourse (and the portion thereof subject to potential recourse, if sold with limited recourse), other than in any such case any thereof sold solely for purposes of collection of delinquent accounts and other than in connection with any Permitted Receivables Program; (xii) all obligations (other than intercompany obligations) of such person pursuant to any Permitted Receivables Program; 14 (xiii) the stated value, or liquidation value if higher, of all Redeemable Stock of such person; and (xiv) all Guaranty Obligations of such person; PROVIDED that (x) neither trade payables nor other similar accrued expenses, in each case arising in the ordinary course of business, nor obligations in respect of insurance policies or performance or surety bonds which themselves are not guarantees of Indebtedness (nor drafts, acceptances or similar instruments evidencing the same nor obligations in respect of letters of credit supporting the payment of the same), shall constitute Indebtedness; and (y) the Indebtedness of any person shall in any event include (without duplication) the Indebtedness of any other entity (including any general partnership in which such person is a general partner) to the extent such person is liable thereon as a result of such person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide expressly that such person is not liable thereon. "INDEX DEBT" shall mean senior, unsecured, long-term debentures or other debt securities of the Borrower that are not guaranteed by any other person or subject to any other credit support or enhancement. "INDEX DEBT RATING" shall mean, as of any date, the rating of the Borrower's Index Debt, as given by the Rating Agencies in their regular rating reports. "INTEREST PERIOD" with respect to any LIBOR Loan shall mean the interest period applicable thereto, as determined pursuant to section 2.8. "INVESTMENT GRADE" shall mean, with respect to Index Debt at any date of determination, that such Index Debt is rated by both Rating Agencies and that the Index Debt Rating is not lower than Baa3 from Moody's and not lower than BBB- from S&P. "JOINT LEAD ARRANGERS" shall have the meaning provided in the first paragraph of this Agreement. "LEASEHOLDS" of any person means all the right, title and interest of such person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures. "LENDER" shall have the meaning provided in the first paragraph of this Agreement and, except when used with reference to a Loan, the Facility, a Commitment or a related term or defined term, shall also refer to each Designated Bidder to the extent it has made a Competitive Bid Loan which is then outstanding. "LENDER DEFAULT" shall mean (i) the refusal (which has not been retracted) of a Lender in violation of the requirements of this Agreement to make available its portion of any incurrence of Loans; or (ii) a Lender having notified the Administrative Agent and/or the Borrower that it 15 does not intend to comply with the obligations under section 2.1, in the case of either (i) or (ii) as a result of the appointment of a receiver or conservator with respect to such Lender at the direction or request of any regulatory agency or authority. "LENDER REGISTER" shall have the meaning provided in section 12.16. "LENDER TAX CERTIFICATE" shall have the meaning provided in section 5.5(c)(ii). "LEVERAGE RATIO" shall mean, on any date, the ratio of (a) total Debt outstanding on such date to (b) Consolidated EBITDA for the then most recent Testing Period. "LIBOR LOANS" shall mean each Loan bearing interest at the rates provided in section 2.7(b). "LIEN" shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement or any lease in the nature thereof). "LOAN" shall have the meaning provided in section 2.1 or shall mean a Competitive Bid Loan, as applicable. "MARGIN STOCK" shall have the meaning provided in Regulation U. "MATERIAL ADVERSE EFFECT" shall mean (i) a material adverse effect on the business, operations, property, assets, liabilities, condition (financial or otherwise) or prospects of the Borrower, the Ferro Divisions or the Borrower and its Subsidiaries, taken as a whole; (ii) any material adverse effect on the ability of the Borrower to perform its obligations under the Credit Documents to which it is a party; or (iii) any material adverse effect on the validity or effectiveness as against, or the enforceability against, any Credit Party of any of the Credit Documents to which it is a party. "MATERIAL SUBSIDIARY" shall mean, at any time, with reference to any person, any Subsidiary of such person (i) that has assets at such time comprising 5% or more of the consolidated assets of such person and its Subsidiaries, or (ii) whose operations in the current fiscal year are expected to, or whose operations in the most recent fiscal year did (or would have if such person had been a Subsidiary for such entire fiscal year), represent 5% or more of the consolidated earnings before interest, taxes, depreciation and amortization of such person and its Subsidiaries for such fiscal year. "MATURITY DATE" shall mean September 6, 2002, subject in any case to earlier termination or extension as provided in this Agreement. 16 "MINIMUM BORROWING AMOUNT" shall mean, with respect to (i) Loans which are Prime Rate Loans, $1,000,000, with minimum increments thereafter of $100,000, and (ii) Loans which are LIBOR Loans, $5,000,000, with minimum increments thereafter of $1,000,000. "MOODY'S" shall mean Moody's Investors Service, Inc. and its successors. "MORTGAGE" shall mean and include any mortgage, pledge, lien, security interest, conditional sale or other title retention agreement or other similar encumbrance. "MULTIEMPLOYER PLAN" shall mean a multiemployer plan, as defined in section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making or accruing an obligation to make contributions or has within any of the preceding three plan years made or accrued an obligation to make contributions. "MULTIPLE EMPLOYER PLAN" shall mean an employee benefit plan, other than a Multiemployer Plan, to which the Borrower or any ERISA Affiliate, and one or more employers other than the Borrower or an ERISA Affiliate, is making or accruing an obligation to make contributions or, in the event that any such plan has been terminated, to which the Borrower or an ERISA Affiliate made or accrued an obligation to make contributions during any of the five plan years preceding the date of termination of such plan. "NET DEBT PROCEEDS" shall mean with respect to the incurrence, sale or issuance by the Borrower or any Subsidiary of any Debt other than (x) Debt incurred as part of the Transaction or (y) Debt permitted by sections 9.5(a) through 9.5(f) and, if the Five Year Credit Facility Term Loans have been repaid in full, section 9.5(g), the EXCESS of: (a) the gross cash proceeds received by the Borrower or any such Subsidiary from such incurrence, sale, or issuance, OVER (b) the sum of (i) all reasonable and customary underwriting commissions and legal, investment banking, brokerage and accounting and other professional fees, sales commissions and disbursements and all other reasonable fees, expenses and charges, in each case actually incurred in connection with such incurrence, sale or issuance, (ii) in the case of any Debt incurred, sold or issued by any Foreign Subsidiary, any taxes or other costs or expenses resulting from repatriating any such proceeds to the United States, and (iii) in the case of any Debt incurred, sold or issued by a Subsidiary that is not a Wholly-Owned Subsidiary, an amount equal to the product of such gross cash proceeds (as reduced pursuant to subclauses (i) and (ii) of this clause (b)) multiplied by the percentage equity interest in such Subsidiary not held, directly or indirectly, by the Borrower. "NET DISPOSITION PROCEEDS" means, with respect to any Disposition of any assets of the Borrower or any Subsidiary, other than Dispositions made as part of the Transaction and other sales permitted pursuant to section 9.2(a) and section 9.2(b), but including any sale or issuance of Capital Stock of any such Subsidiary to any Person other than the Borrower or any of its Subsidiaries, the EXCESS of (a) the sum of the gross cash proceeds received, directly or indirectly, by the Borrower or any Subsidiary from any such Disposition and any cash payments received in respect of promissory notes or other non-cash consideration delivered to the Borrower or such Subsidiary in respect thereof, OVER (b) the sum of (i) all reasonable and customary fees and 17 expenses with respect to legal, investment banking, brokerage, accounting and other professional fees, sales commissions and disbursements and all other reasonable fees, expenses and charges, in each case actually incurred in connection with such Disposition, (ii) all taxes and other governmental costs and expenses actually paid or estimated by the Borrower (in good faith) to be payable in cash in connection with such Disposition (including, in the event of a Disposition of non-U.S. assets, any such taxes or other costs or expenses resulting from repatriating any such proceeds to the United States), (iii) the proceeds received by Foreign Subsidiaries to the extent such proceeds may not, under applicable law, charter provisions or otherwise, be paid to the Borrower or another Subsidiary in the form of a dividend or similar distribution, (iv) payments made by the Borrower or any Subsidiary to retire Indebtedness (other than the Loans) of the Borrower or any Subsidiary where payment of such Indebtedness is required in connection with such Disposition, (v) reserves for purchase price adjustments and retained fixed liabilities reasonably expected to be payable by the Borrower and its Subsidiaries in cash in connection therewith and (vi) in the case of any Disposition by a Subsidiary that is not a Wholly-Owned Subsidiary, an amount equal to the product of such gross cash proceeds (as reduced pursuant to subclauses (i) through (v) of this clause (b)) multiplied by the percentage equity interest in such Subsidiary not held, directly or indirectly, by the Borrower; PROVIDED that if, after the payment of all taxes, purchase price adjustments and retained fixed liabilities with respect to such Disposition, the amount of estimated taxes, purchase price adjustments or retained fixed liabilities, if any, pursuant to clause (b)(ii) or (b)(v) above exceeded the tax, purchase price adjustment or retained fixed liabilities amount actually paid in cash in respect of such Disposition, the aggregate amount of such excess shall, at such time, constitute Net Disposition Proceeds. "NET EQUITY PROCEEDS" shall mean with respect to any sale or issuance by the Borrower to any person of any Capital Stock of the Borrower, or any warrants or options with respect to any such Capital Stock or the exercise of any such warrants or options after the Effective Date (exclusive of any such proceeds constituting Excluded Equity Proceeds) the excess of: (i) the gross cash proceeds received by the Borrower from such sale, exercise or issuance, OVER (ii) the sum of all reasonable and customary underwriting commissions and legal, investment banking, brokerage, accounting and other professional fees, sales commissions and disbursements and all other reasonable fees, expenses and charges, in each case actually incurred in connection with such sale or issuance. "NCB" shall have the meaning provided in the first paragraph of this Agreement, and its successors and assigns. "1934 ACT" shall mean the Securities Exchange Act of 1934, as amended. "NON-DEFAULTING LENDER" shall mean each Lender other than a Defaulting Lender. "NOTE" shall mean a Revolving Note or a Competitive Bid Note, as applicable. 18 "NOTICE OF BORROWING" shall have the meaning provided in section 2.2(a) or shall mean a Notice of Competitive Bid Borrowing, as applicable. "NOTICE OF COMPETITIVE BID BORROWING" shall have the meaning provided in section 2.3(a). "NOTICE OF CONTINUATION" shall have the meaning provided in section 2.8(a). "NOTICE OF CONVERSION" shall have the meaning provided in section 2.5. "NOTICE OFFICE" shall mean the office of the Administrative Agent at 629 Euclid Avenue, LOC #3028, Cleveland, Ohio 44114, Attention: Agency Services (telephone: (216) 222-2314; facsimile: (216) 222-0012), or such other office, located in a city in the United States Eastern Time Zone, as the Administrative Agent may designate to the Borrower from time to time. "OBLIGATIONS" shall mean all amounts, direct or indirect, contingent or absolute, of every type or description, and at any time existing, owing by the Borrower to the Agents or any Lender or Designated Bidder pursuant to the terms of this Agreement or any other Credit Document. "OMG" shall have the meaning provided in the first whereas clause of this Agreement. "OPERATING LEASE" as applied to any person shall mean any lease of any property (whether real, personal or mixed) by that person as lessee which, in conformity with GAAP, is not accounted for as a Capital Lease on the balance sheet of that person. "PARI PASSU" shall mean, when used with reference to the ranking of any Debt of any person in relation to any other Debt of such person, that each such Debt (a) either (i) is not subordinate in right of payment to any other Debt of such person or (ii) is subordinate in right of payment to the same Debt of such person as is the other and is so subordinate to the same extent and (b) is not subordinate in right of payment to the other or to any Debt of such person as to which the other is not so subordinate. "PAYMENT OFFICE" shall mean the office of the Administrative Agent at 629 Euclid Avenue, LOC #3028, Cleveland, Ohio 44114, Attention: Agency Services (telephone: (216) 222-2314 or (216) 575-560; facsimile: (216) 222-0012), or such other office, located in a city in the United States Eastern Time Zone, as the Administrative Agent may designate to the Borrower from time to time. "PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto. "PERMITTED LIENS" shall mean: 19 (a) any Liens for current taxes, assessments and other governmental charges not yet due and payable or being contested in good faith by the Borrower or one or more of its Subsidiaries by appropriate proceedings; (b) any mechanic's, materialman's, carrier's, warehousemen's or similar Liens for sums not yet due or being contested in good faith by the Borrower or one or more of its Subsidiaries by appropriate proceedings; (c) Liens in favor of the Lenders under this Agreement; (d) easements, rights-of-way, restrictions and other similar encumbrances on the Real Property of the Borrower or one or more of its Subsidiaries incurred in the ordinary course of business that individually or in the aggregate are not substantial in amount and that 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 Borrower or any of its Subsidiaries; (e) Liens incurred or deposits made in the ordinary course of business, including Liens in connection with workers' compensation, unemployment insurance and other types of social security and Liens to secure performance of tenders, statutory obligations, trade contracts (other than for Debt), surety and appeal bonds (in the case of appeal bonds such Lien shall not secure any reimbursement or indemnity obligation in an amount greater than $500,000), bids, leases that are not Capital Leases, performance bonds, sales contracts and other similar obligations, deposits securing liability to insurance carriers under insurance or self-insurance arrangements, in each case, not incurred in connection with the obtaining of credit or the payment of a deferred purchase price, and which do not, in the aggregate, result in a Material Adverse Effect; (f) Liens existing upon the date hereof; (g) Liens securing obligations incurred to finance the deferred purchase price of property; PROVIDED that (i) such Liens shall be created within 120 days after the acquisition of such property, (ii) such Liens do not at any time encumber any property other than the property financed by such obligations, (iii) the amount of the obligation secured thereby is not increased, and (iv) the principal amount of an obligation secured by any such Lien shall at no time exceed the lesser of (A) 100% of the original purchase price of such property and (B) the fair value (as determined in good faith by the Board of Directors of the Borrower) of such property at the time it was acquired; (h) Liens securing obligations assumed in connection with acquisitions made in accordance with Section 9.3; PROVIDED that (i) such Liens exist at the time of the acquisition and were not created in anticipation thereof, (ii) any such Lien is not spread to cover any additional property or assets after the time of such acquisition, and (iii) the amount of the obligation secured by any such Lien is not increased; 20 (i) judgment Liens to the extent the entry of such judgment does not constitute a Default or Event of Default under the terms of this Agreement; (j) Liens created in connection with the Permitted Receivables Programs; and (k) Liens (not otherwise permitted hereunder) that secure obligations not exceeding (as to the Borrower and its Subsidiaries) $5,000,000 in the aggregate at any time outstanding; PROVIDED that such Liens are limited to assets other than accounts. "PERMITTED RECEIVABLES PROGRAMS" shall have the meaning provided in section 9.2(b). "PERSON" shall mean any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise or any government or political subdivision or any agency, department or instrumentality thereof. "PLAN" shall mean any multiemployer or single-employer plan as defined in section 4001 of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute by) the Borrower or a Subsidiary of the Borrower or an ERISA Affiliate, and each such plan for the five year period immediately following the latest date on which the Borrower, or a Subsidiary of the Borrower or an ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan. "PRICING GRID" shall have the meaning provided in section 2.7(g). "PRIME RATE" shall mean, for any period, a fluctuating interest rate per annum as shall be in effect from time to time which rate per annum shall at all times be equal to the greater of (i) the rate of interest established by NCB in Cleveland, Ohio, from time to time, as its prime rate, whether or not publicly announced, which interest rate may or may not be the lowest rate charged by it for commercial loans or other extensions of credit; and (ii) the Federal Funds Effective Rate in effect from time to time PLUS 1/2 of 1% per annum. "PRIME RATE LOAN" shall mean each Loan bearing interest at the rate provided in section 2.7(a). "PRINCIPAL DOMESTIC MANUFACTURING PROPERTY" shall mean any building, structure or other facility, together with the land upon which it is erected and fixtures comprising a part thereof, used primarily for manufacturing, processing or warehousing of the Borrower's products and located in the United States of America, owned or leased by the Borrower or any Subsidiary, the gross book value (without deduction of any depreciation reserves) of which on the date as of which the determination is being made exceeds 1% of Consolidated Net Tangible Assets, other than any such building, structure or other facility or portion thereof or any such land or fixture (i) which is financed by obligations issued by a State, a Territory, or a possession of the United States, or any political subdivision of any of the foregoing, or the District of Columbia, the interest on which is excludible from gross income of the holders thereof pursuant to the 21 provisions of section 745 of Title 48 of the United States Code (or any successor to such provisions) as in effect at the time of the issuance of such obligations, or (ii) which, in the opinion of the Board of Directors of the Borrower, is not of material importance to the total business conducted by the Borrower and its Subsidiaries as an entirety. "PROHIBITED TRANSACTION" shall mean a transaction with respect to a Plan that is prohibited under section 4975 of the Code or section 406 of ERISA and not exempt under section 4975 of the Code or section 408 of ERISA. "PROPERTY" of any person shall mean all of the right, title and interest of such person in and to any and all property, tangible or intangible, real or personal or mixed, of every kind and character and wherever located or whenever acquired. "PURCHASE AGREEMENT" shall have the meaning provided in the first whereas clause of this Agreement. "RATING AGENCY" shall mean S&P or Moody's; collectively, the "RATING AGENCIES." "RCRA" shall mean the Resource Conservation and Recovery Act, as the same may be amended from time to time, 42 U.S.C. Section 6901 ET SEQ. "REAL PROPERTY" of any person shall mean all of the right, title and interest of such person in and to land, improvements and fixtures, including Leaseholds. "REDEEMABLE STOCK" shall mean with respect to any person any capital stock or similar equity interests of such person that (i) is by its terms subject to mandatory redemption, in whole or in part, pursuant to a sinking fund, scheduled redemption or similar provisions, at any time prior to the Maturity Date; or (ii) otherwise is required to be repurchased or retired on a scheduled date or dates, upon the occurrence of any event or circumstance, at the option of the holder or holders thereof, or otherwise, at any time prior to the Maturity Date, other than any such repurchase or retirement occasioned by a "change of control" or similar event; PROVIDED that Redeemable Stock shall not include the Series A ESOP Convertible Preferred Stock of the Borrower. "REFERENCE BANKS" shall mean (i) NCB and (ii) any other Lender or Lenders selected as a Reference Bank by the Administrative Agent and the Required Lenders; PROVIDED that if any of such Reference Banks is no longer a Lender, such other Lender or Lenders as may be selected by the Administrative Agent acting on instructions from the Required Lenders. "REFINANCING" shall have the meaning provided in the second whereas clause of this Agreement. 22 "REGULATION D" shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements. "REGULATION U" shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing margin requirements. "REPORTABLE EVENT" shall mean an event described in section 4043 of ERISA or the regulations thereunder with respect to a Plan, other than those events as to which the notice requirement is waived under subsections .22, .23, .24, .25, .27, .28, .29, .30, .31, .32, .34, .35, .62, .63, .64, .65 or .67 of PBGC Regulation section 4043. "REQUIRED LENDERS" shall mean Non-Defaulting Lenders whose outstanding Loans and Unutilized Commitments constitute at least 51% of the sum of the total outstanding Loans and Unutilized Commitments of Non-Defaulting Lenders (PROVIDED that, for purposes hereof, neither the Borrower, nor any of its Affiliates, shall be included in (i) the Lenders holding such amount of such Loans or having such amount of such Unutilized Commitments, or (ii) determining the aggregate unpaid principal amount of such Loans or such Unutilized Commitments); and PROVIDED, FURTHER, that for purpose of declaring the Loans due and payable pursuant to section 10.2, and for all purposes after the Loans become due and payable pursuant to section 10.2 or after the Total Commitment expires or is terminated, the outstanding Competitive Bid Loans of the Non-Defaulting Lenders shall be included together with the outstanding Loans in determining the Required Lenders. "RESTRICTED PAYMENT" shall have the meaning provided in section 9.11. "REVOLVING NOTE" shall have the meaning provided in section 2.4(a). "SALE AND LEASEBACK TRANSACTION" shall have the meaning provided in section 9.4. "S&P" shall mean Standard & Poor's Ratings Group, a division of McGraw Hill, Inc., and its successors. "SEC" shall mean the United States Securities and Exchange Commission. "SEC REGULATION D" shall mean Regulation D as promulgated under the Securities Act of 1933, as amended, as the same may be in effect from time to time. "SUBSIDIARY" of any person shall mean and include (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such person directly or indirectly through 23 Subsidiaries and (ii) any partnership, association, joint venture or other entity in which such person directly or indirectly through Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise expressly provided, all references herein to "Subsidiary" shall mean a Subsidiary of the Borrower. "SUBSIDIARY GUARANTY" shall have the meaning provided in section 8.11(a). "SUBORDINATED INDEBTEDNESS" shall mean any Indebtedness which has been subordinated to the Obligations in such manner and to such extent as the Administrative Agent (acting on instructions from the Required Lenders) may require. "SYNTHETIC LEASE" shall mean any lease (i) which is accounted for by the lessee as an Operating Lease, and (ii) under which the lessee is intended to be the "owner" of the leased property for Federal income tax purposes. "TAXES" shall mean any and all income, stamp or other taxes, duties, levies, imposts, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any taxing authority, and all interest, penalties or similar liabilities with respect thereto, but excluding income and franchise taxes imposed on or measured by the net income or receipts of the Administrative Agent or any Lender by the taxing authority under the laws of which the Administrative Agent or such Lender, as applicable, is organized or in which it maintains its applicable lending office. "TESTING PERIOD" shall mean for any determination a single period consisting of the four consecutive fiscal quarters of the Borrower then last ended (whether or not such quarters are all within the same fiscal year), EXCEPT that if a particular provision of this Agreement indicates that a Testing Period shall be of a different specified duration, such Testing Period shall consist of the particular fiscal quarter or quarters then last ended which are so indicated in such provision. "TOTAL COMMITMENT" shall mean all the Commitments hereunder. "TRANSACTION" shall have the meaning provided in the second whereas clause of this Agreement. "TRANSACTION DOCUMENTS" means the Purchase Agreement and all of the principal agreements, documents, instruments, certificates, filings, consents, approvals, board of directors resolutions and opinions furnished pursuant to or in connection with the Transaction, and the transactions contemplated hereby or thereby, each as amended, supplemented, amended and restated or otherwise modified from time to time as permitted in accordance with the terms hereof or of any other Credit Document. "TYPE" shall mean any type of Loan determined with respect to the interest option applicable thereto, I.E., (i) a Prime Rate Loan or a LIBOR Loan, in the case of Borrowings under 24 the Facility, or (ii) a Competitive Bid Loan with interest at a fixed rate or on some other basis, in the case of Borrowings of Competitive Bid Loans. "UCC" shall mean the Uniform Commercial Code as at the time in effect in any applicable jurisdiction. "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any, by which the actuarial present value of the accumulated plan benefits under the Plan as of the close of its most recent plan year exceeds the fair market value of the assets allocable thereto, each determined in accordance with Statement of Financial Accounting Standards No. 87, based upon the actuarial assumptions used by the Plan's actuary in the most recent annual valuation of the Plan. "UNITED STATES" and "U.S." each means United States of America. "UNUTILIZED COMMITMENT" for any Lender at any time shall mean the excess of (i) such Lender's Commitment at such time over (ii) the principal amount of Loans made by such Lender and outstanding at such time. "UNUTILIZED TOTAL COMMITMENT" shall mean, at any time, the excess of (i) the Total Commitment at such time over (ii) the aggregate principal amount of all Loans then outstanding. "WHOLLY-OWNED SUBSIDIARY" shall mean each Subsidiary of the Borrower at least 95% of whose capital stock, equity interests and partnership interests, other than director's qualifying shares or similar interests, are owned directly or indirectly by the Borrower. "WRITTEN", "WRITTEN" or "IN WRITING" shall mean any form of written communication or a communication by means of telex, facsimile transmission, telegraph or cable. 1.2 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 means "to but excluding". 1.3 ACCOUNTING TERMS. Except as otherwise specifically provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; PROVIDED that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision of section 8 or 9 hereof to eliminate the effect of any change occurring after the Effective Date in GAAP or in the application thereof to such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any such provision hereof for such purposes), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance with the requirements of this Agreement. 25 1.4 TERMS GENERALLY. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any person shall be construed to include such person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to sections, Annexes and Exhibits shall be construed to refer to sections of, and Annexes and Exhibits to, this Agreement, and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all real property, tangible and intangible assets and properties, including cash, securities, accounts and contract rights, and interests in any of the foregoing. SECTION 2. AMOUNT AND TERMS OF LOANS. 2.1 COMMITMENTS FOR LOANS. Subject to and upon the terms and conditions herein set forth, each Lender that has a Commitment severally agrees to make Loans (each a "LOAN" and, collectively, the "LOANS") to the Borrower. Loans (i) may be incurred by the Borrower at any time and from time to time on and after the Closing Date and prior to the earlier of the Business Day immediately preceding the Maturity Date or the date the Total Commitment is terminated; (ii) except as otherwise provided, may, at the option of the Borrower, be incurred and maintained as, or Converted into, Loans which are Prime Rate Loans or LIBOR Loans, in each case denominated in Dollars; PROVIDED that all Loans made as part of the same Borrowing shall, unless otherwise specifically provided herein, consist of Loans of the same Type; (iii) may be repaid or prepaid and reborrowed in accordance with the provisions hereof; and (iv) shall not, at any time of determination, in the aggregate exceed the aggregate amount of the Total Commitment at such time. Except as may otherwise be specifically provided in this Agreement, the Total Commitment shall be deemed used (and correspondently, the Unutilized Total Commitment shall be deemed reduced) from time to time by the aggregate outstanding principal amount of the Competitive Bid Loans then outstanding, and such deemed usage of the Total Commitment (and such deemed reduction in the Unutilized Total Commitment) shall be pro rated among the Lenders according to their respective Facility Percentages (such deemed usage of the Total Commitment and such deemed reduction in the Unutilized Total Commitment, each being a "COMPETITIVE BID REDUCTION"). 26 2.2 PROCEDURES FOR BORROWING AND DISBURSEMENT OF FUNDS. (a) NOTICE OF BORROWING. Whenever the Borrower desires to incur Loans it shall give the Administrative Agent at its Notice Office: (A) BORROWINGS OF LIBOR LOANS: prior to 12:00 noon (local time at its Notice Office), at least three Business Days' prior written or telephonic notice (in the case of telephonic notice, promptly confirmed in writing if so requested by the Administrative Agent) of each Borrowing of LIBOR Loans to be made hereunder, or (B) BORROWINGS OF PRIME RATE LOANS: prior to 10:00 a.m. (local time at its Notice Office) on the proposed date thereof written or telephonic notice (in the case of telephonic notice, promptly confirmed in writing if so requested by the Administrative Agent) of each Borrowing of Prime Rate Loans to be made hereunder. Each such notice (each such notice, a "NOTICE OF BORROWING") shall (if requested by the Administrative Agent to be confirmed in writing), be substantially in the form of Exhibit B-1, and in any event shall be irrevocable and shall specify: (i) the aggregate principal amount of the Loans to be made pursuant to such Borrowing; (ii) the Type of Loan to be included in such Borrowing; (iii) the date of the Borrowing (which shall be a Business Day); and (iv) if the requested Borrowing consists of LIBOR Loans, the Interest Period to be initially applicable thereto. The Administrative Agent shall promptly give each Lender which has a Commitment under the Facility written notice (or telephonic notice promptly confirmed in writing) of each proposed Borrowing, of such Lender's proportionate share thereof and of the other matters covered by the Notice of Borrowing relating thereto. (b) ACTIONS BY ADMINISTRATIVE AGENT ON TELEPHONE NOTICE. Without in any way limiting the obligation of the Borrower to confirm in writing any telephonic notice permitted to be given hereunder, the Administrative Agent may act prior to receipt of written confirmation without liability upon the basis of such telephonic notice believed by the Administrative Agent in good faith to be from an Authorized Officer of the Borrower entitled to give telephonic notices under this Agreement on behalf of the Borrower. In each such case, the Administrative Agent's record of the terms of such telephonic notice shall be conclusive absent manifest error. (c) MINIMUM BORROWING AMOUNTS, ETC. The aggregate principal amount of each Borrowing by the Borrower shall not be less than the Minimum Borrowing Amount. More than one Borrowing may be incurred by the Borrower on any day under the Facility; PROVIDED that (i) if there are two or more Borrowings of LIBOR Loans on a single day, each such Borrowing shall have a different initial Interest Period, and (ii) at no time shall there be more than 10 Borrowings of LIBOR Loans outstanding under the Facility. (d) PRO RATA BORROWINGS. All Borrowings shall be made by the Lenders having Commitments PRO RATA on the basis of their respective Commitments. It is understood that no Lender shall be responsible for any default by any other Lender in its obligation to make Loans 27 hereunder and that each Lender shall be obligated to make the Loans provided to be made by it hereunder, regardless of the failure of any other Lender to fulfill its Commitment hereunder. (e) DISBURSEMENT OF FUNDS. (i) No later than 2:00 P.M. (local time at the Payment Office) on the date specified in each Notice of Borrowing relating to LIBOR Loans, and no later than 2:00 P.M. (local time at the Payment Office) on the date specified in each Notice of Borrowing relating to Prime Rate Loans, each Lender will make available its PRO RATA share, if any, of each Borrowing requested to be made on such date in the manner provided below. All amounts shall be made available to the Administrative Agent in Dollars and immediately available funds at the Payment Office and the Administrative Agent promptly will make available to the Borrower by depositing to its account at the Payment Office the aggregate of the amounts so made available in the type of funds received. Unless the Administrative Agent shall have been notified by any Lender prior to the date of Borrowing that such Lender does not intend to make available to the Administrative Agent its portion of the Borrowing or Borrowings to be made on such date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such date of Borrowing, and the Administrative Agent, in reliance upon such assumption, may (in its sole discretion and without any obligation to do so) make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender and the Administrative Agent has made available same to the Borrower, the Administrative Agent shall be entitled to recover such corresponding amount from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent's demand therefor, the Administrative Agent shall promptly notify the Borrower, and the Borrower shall immediately pay such corresponding amount to the Administrative Agent. The Administrative Agent shall also be entitled to recover from such Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to (x) if paid by such Lender, the overnight Federal Funds Effective Rate or (y) if paid by the Borrower, the then applicable rate of interest, calculated in accordance with section 2.7, for the respective Loans (but without any requirement to pay any amounts in respect thereof pursuant to section 2.10). (ii) Nothing in this section 2.2(e) and no subsequent termination of the Commitments pursuant to section 4.2 or 4.3 shall be deemed to relieve any Lender from its obligation to fulfill its Commitments hereunder and in existence from time to time or to prejudice any rights which the Borrower may have against any Lender as a result of any default by such Lender hereunder. 2.3 COMPETITIVE BID LOANS. (a) GENERAL. The Borrower and each Lender severally agrees that Competitive Bid Borrowings under this section may only be made on a Business Day during the period from the Closing Date until the date occurring one month prior to the earlier of the Maturity Date or the date the Total Commitment is terminated, in the manner, and subject to the terms and conditions, set forth below; PROVIDED that notwithstanding anything to the contrary contained herein, following the making of any Competitive Bid Borrowing, (x) the sum of the 28 aggregate outstanding Loans and the aggregate outstanding Competitive Bid Loans shall not exceed the Total Commitment then in effect (computed without regard to any Competitive Bid Reduction) and (y) the Leverage Ratio shall not be greater than 3.00 to 1.00 on a pro forma basis after giving effect to such Competitive Bid Borrowing: (i) PERMITTED TYPES OF COMPETITIVE BID BORROWINGS. The only types of Competitive Bid Borrowings which can be made under this Agreement are the following: (A) a Competitive Bid Borrowing in which the rate of interest to be paid to each Lender participating in such Competitive Bid Borrowing shall be the fixed rate per annum bid by such Lender for such Competitive Bid Borrowing as provided below (a "Fixed Rate Competitive Bid Borrowing"), and (B) a Competitive Bid Borrowing in which the rate of interest to be paid to each Lender participating in such Competitive Bid Borrowing shall be the Adjusted LIBO Rate for the Interest Period applicable to such Competitive Bid Borrowing plus the margin in basis points which was bid by such Lender for such Competitive Bid Borrowing as provided below (an "ADJUSTED LIBO RATE COMPETITIVE BID BORROWING"). (ii) NOTICE OF COMPETITIVE BID BORROWING. The Borrower may request a Competitive Bid Borrowing under this section 2.3 by delivering to the Administrative Agent, by telecopier, electronic e-mail transmission, telex or cable, confirmed immediately in writing, a notice of a Competitive Bid Borrowing (a "NOTICE OF COMPETITIVE BID BORROWING"), in substantially the form of Exhibit B-2 hereto, specifying (x) the date and aggregate amount of the proposed Competitive Bid Borrowing, (y) the maturity date for repayment of each Competitive Bid Loan to be made as part of such Competitive Bid Borrowing (which maturity date shall be the last day of an Interest Period of one, two, three or six months duration following the date of such Competitive Bid Borrowing, but in no event later than the Maturity Date), (z) the interest payment date or dates relating thereto, and any other terms to be applicable to such Competitive Bid Borrowing, not later than 10:00 A.M. (local time at the Notice Office) (A) at least two Business Days prior to the date of the proposed Competitive Bid Borrowing, if the Borrower shall specify in the Notice of Competitive Bid Borrowing that the Borrowing shall be a Fixed Rate Competitive Bid Borrowing), or (B) at least five Business Days prior to the date of the proposed Competitive Bid Borrowing, if the Borrower shall instead specify in the Notice of Competitive Bid Borrowing that the Borrowing shall be an Adjusted LIBO Rate Competitive Bid Borrowing. 29 A Notice of Competitive Bid Borrowing shall specify that the requested Borrowing is either a Fixed Rate Competitive Bid Borrowing or an Adjusted LIBO Rate Competitive Bid Borrowing, but not both or either in the alternative. Competitive Bid Loans shall only be made in Dollars. If the Borrower and the Administrative Agent shall have so agreed, the Borrower shall pay to the Administrative Agent, for its own account, in connection with each request for a Competitive Bid Borrowing, promptly after receipt of an invoice therefor, a competitive bid administrative fee in such amount as has been so agreed. The Administrative Agent shall in turn promptly notify each Lender of each request for a Competitive Bid Borrowing received by it from the Borrower by sending such Lender a copy of the related Notice of Competitive Bid Borrowing. (iii) BIDDING BY LENDERS. Each Lender may, in its sole discretion, elect to irrevocably offer to make one or more Competitive Bid Loans to the Borrower as part of a proposed Competitive Bid Borrowing at a rate or rates of interest specified by such Lender in its sole discretion but responsive to the parameters for a Fixed Rate Competitive Bid Borrowing or an Adjusted LIBO Rate Competitive Bid Borrowing, as specified in such Notice of Competitive Bid Borrowing, by notifying the Administrative Agent (which shall give prompt notice thereof to the Borrower), before 10:00 A.M. (local time at the Notice Office) (A) on the Business Day prior to the date of such proposed Competitive Bid Borrowing, in the case of a Notice of Competitive Bid Borrowing requesting a Fixed Rate Competitive Bid Borrowing and (B) four Business Days before the date of such proposed Competitive Bid Borrowing, in the case of a Notice of Competitive Bid Borrowing requesting an Adjusted LIBO Rate Competitive Bid Borrowing, of the minimum amount and maximum amount of each Competitive Bid Loan which such Lender would be willing to make as part of such proposed Competitive Bid Borrowing (which amounts may, subject to the proviso to the first sentence of this section 2.3(a), exceed such Lender's Commitment), the margin or rate or rates of interest therefor (specified to four decimal places) and such Lender's Applicable Lending Office with respect to such Competitive Bid Loan; PROVIDED that if the Administrative Agent in its capacity as a Lender shall, in its sole discretion, elect to make any such offer, it shall notify the Borrower of such offer before 9:00 A.M. (local time at the Notice Office) on the date on which notice of such election is to be given to the Administrative Agent by the other Lenders. If any Lender shall elect not to make such an offer, such Lender shall so notify the Administrative Agent, before 10:00 A.M. (local time at the Notice Office) on the date on which notice of such election is to be given to the Administrative Agent by the other Lenders, and such Lender shall not be obligated to, and shall not, make any Competitive Bid Loan as part of such Competitive Bid Borrowing; PROVIDED that the failure by any Lender to give such notice shall not cause such Lender to be obligated to make any Competitive Bid Loan as part of such proposed Competitive Bid Borrowing. It is understood and agreed that the Borrower may not accept any offer to make a Competitive Bid Loan if such offer is not made on a timely basis or otherwise fails to comply with the requirements of this Agreement. 30 (iv) ACCEPTANCE OF BIDS OR CANCELLATION OF COMPETITIVE BID BORROWING. The Borrower shall, in turn, (A) before 12:00 noon (local time at the Notice Office) on the date of such proposed Competitive Bid Borrowing, in the case of a Notice of Competitive Bid Borrowing delivered pursuant to clause (A) of paragraph (i) above and (B) before 12:00 noon (local time at the Notice Office) three Business Days before the date of such proposed Competitive Bid Borrowing, in the case of a Notice of Competitive Bid Borrowing delivered pursuant to clause (B) of paragraph (i) above, either (x) cancel such Competitive Bid Borrowing by giving the Administrative Agent notice to that effect, or (y) accept one or more of the offers made by any Lender or Lenders pursuant to paragraph (iii) above, in ascending order, from the lowest cost to the highest cost acceptable to the Borrower in its sole discretion (subject, if necessary, to ratable allocation between or among Lenders offering the same interest rates or margins), by giving notice to the Administrative Agent of the amount of each Competitive Bid Loan (which amount shall be equal to or greater than the minimum amount, and equal to or less than the maximum amount, notified to the Borrower by the Administrative Agent on behalf of such Lender for such Competitive Bid Loan pursuant to paragraph (iii) above) to be made by each Lender as part of such Competitive Bid Borrowing, and reject any remaining offers made by Lenders pursuant to paragraph (iii) above by giving the Administrative Agent notice to that effect; PROVIDED that the aggregate principal amount of each Competitive Bid Borrowing may not exceed the applicable amount requested in the relevant Notice of Competitive Bid Borrowing. (v) NOTICE TO LENDERS OF CANCELLATION. If the Borrower notifies the Administrative Agent that such Competitive Bid Borrowing is cancelled pursuant to paragraph (iv)(x) above, the Administrative Agent shall give prompt notice thereof to the Lenders and such Competitive Bid Borrowing shall not be made. (vi) BORROWING PROCEDURES. If the Borrower accepts one or more of the offers made by any Lender or Lenders pursuant to paragraph (iv)(y) above, the Administrative Agent shall in turn promptly notify (A) each Lender that has made an offer as described in paragraph (iii) above, of the date and aggregate amount of such Competitive Bid Borrowing and whether or not any offer or offers made by such Lender pursuant to paragraph (iii) above have been accepted by the Borrower, (B) each Lender that is to make a Competitive Bid Loan as part of such Competitive Bid Borrowing, of the amount of each Competitive Bid Loan to be made by such Lender as part of such Competitive Bid Borrowing and (C) each Lender that is to make a Competitive Bid Loan as part of such Competitive Bid Borrowing, upon receipt, that the Administrative Agent has (to the extent not previously delivered) received forms of documents appearing to fulfill the applicable conditions set forth in section 6. Each Lender that is to make a 31 Competitive Bid Loan as part of such Competitive Bid Borrowing shall, before 12:00 noon (local time at the Notice Office) on the date of such Competitive Bid Borrowing specified in the notice received from the Administrative Agent pursuant to clause (A) of the preceding sentence or any later time when such Lender shall have received notice from the Administrative Agent pursuant to clause (C) of the preceding sentence, make available for the account of its Applicable Lending Office to the Administrative Agent at its Payment Office such Lender's portion of such Competitive Bid Borrowing, in same day funds. Upon fulfillment of the applicable conditions set forth in section 6 and after receipt by the Administrative Agent of such funds, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent's Payment's Office. Promptly after each Competitive Bid Borrowing the Administrative Agent will notify each Lender of the amount of the Competitive Bid Borrowing, the consequent Competitive Bid Reduction and the dates upon which such Competitive Bid Reduction commenced and will terminate. (b) AMOUNT OF COMPETITIVE BID BORROWINGS. Each Competitive Bid Borrowing shall be in an aggregate amount not less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof and, following the making of each Competitive Bid Borrowing, the Borrower shall be in compliance with the limitations set forth in the proviso to the first sentence of section 2.3(a) above. (c) BORROWINGS, REPAYMENTS, PREPAYMENTS AND REBORROWINGS; TIME BETWEEN COMPETITIVE BID BORROWINGS. Within the limits and on the conditions set forth in this section 2.3, the Borrower may from time to time borrow under this section 2.3, repay or prepay pursuant to section 2.3(d) below, and reborrow under this section 2.3; PROVIDED that a Competitive Bid Borrowing shall not be made within 10 Business Days of the date of any other Competitive Bid Borrowing. (d) REPAYMENT OF COMPETITIVE BID LOANS, ETC. The Borrower shall repay to the Administrative Agent for the account of each Lender which has made a Competitive Bid Loan, or each other holder of a Competitive Bid Note, on the maturity date of each Competitive Bid Loan (such maturity date being that specified by the Borrower for repayment of such Competitive Bid Loan in the related Notice of Competitive Bid Borrowing delivered pursuant to section 2.3(a)(ii) above and provided in the Competitive Bid Note evidencing such Competitive Bid Loan), the then unpaid principal amount of such Competitive Bid Loan. The Borrower shall have no right to prepay any principal amount of any Competitive Bid Loan unless, and then only on the terms, specified by the Borrower for such Competitive Bid Loan in the related Notice of Competitive Bid Borrowing delivered pursuant to section 2.3(a)(ii) above and set forth in the Competitive Bid Note evidencing such Competitive Bid Loan. Competitive Bid Loans made by any Lender shall be subject to mandatory prepayment in accordance with the provisions of section 5.2 hereof. Any such mandatory prepayment shall be accompanied by accrued interest on the amount of the prepayment to the date of prepayment and such breakage compensation as may be reasonably determined by such Lender as necessary to compensate it for all reasonable 32 losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its Competitive Bid Loans) which such Lender may sustain by reason of such mandatory prepayment. (e) INTEREST ON COMPETITIVE BID LOANS. The Borrower shall pay interest on the unpaid principal amount of each Competitive Bid Loan from the date of such Competitive Bid Loan to the date the principal amount of such Competitive Bid Loan is repaid in full, at the rate of interest for such Competitive Bid Loan specified by the Lender making such Competitive Bid Loan in its notice with respect thereto delivered pursuant to section 2.3(a)(iii) above, payable on the interest payment date or dates specified by the Borrower for such Competitive Bid Loan in the related Notice of Competitive Bid Borrowing delivered pursuant to section 2.3(a)(ii) above, as provided in the Competitive Bid Note evidencing such Competitive Bid Loan. (f) COMPETITIVE BID NOTES. The indebtedness of the Borrower resulting from each Competitive Bid Loan made to the Borrower as part of a Competitive Bid Borrowing shall be evidenced by the Competitive Bid Note of the Borrower payable to the order of the Lender making such Competitive Bid Loan. 2.4 NOTES; LOAN ACCOUNTS. (a) FORMS OF NOTES. The Borrower's obligation to pay the principal of, and interest on, the Loans made to it by each Lender shall be evidenced (i) in the case of a Loan, by a promissory note of the Borrower substantially in the form of Exhibit A-1 with blanks appropriately completed in conformity herewith (each a "REVOLVING NOTE" and, collectively, the "REVOLVING NOTES"), and (ii) in the case of a Competitive Bid Loan, by a promissory note of the Borrower substantially in the form of Exhibit A-2 with blanks appropriately completed in conformity herewith (a "COMPETITIVE BID NOTE" and collectively, the "COMPETITIVE BID NOTES"). The form of Competitive Bid Note issued to a Lender hereunder may be in a "grid" form with no specific dollar amount mentioned in words or figures and covering all Competitive Bid Loans made by such Lender, or if any Lender so requests, the Borrower will issue one or more Competitive Bid Notes in specified denominations, as evidence of particular Competitive Bid Loans, in which case the form of Competitive Bid Note attached hereto as Exhibit A-2 shall be appropriately completed to reflect such information. (b) TERMS OF REVOLVING NOTES. The Revolving Note issued by the Borrower to a Lender with a Commitment shall: (i) be executed by the Borrower; (ii) be payable to the order of such Lender and be dated on or prior to the Closing Date (or if later, the date the of the first Loan which is outstanding thereunder); (iii) be payable in the principal amount of Loans evidenced thereby; (iv) mature on the Maturity Date; (v) bear interest as provided in section 2.7 in respect of the Prime Rate Loans or LIBOR Loans, as the case may be, evidenced thereby; (vi) be subject to mandatory prepayment as provided in section 5.2; and (vii) be entitled to the benefits of this Agreement and the other Credit Documents. 33 (c) TERMS OF COMPETITIVE BID NOTES. The Competitive Bid Note issued to a Lender which has made a Competitive Bid Loan shall: (i) be executed by the Borrower; (ii) be payable to the order of such Lender and be dated on or prior to the date the first Competitive Bid Loan is made by such Lender; (iii) be payable in the principal amount of the Competitive Bid Loans evidenced thereby; (iv) mature as to any Competitive Bid Loan evidenced thereby on the maturity date selected therefor in the applicable Notice of Competitive Bid Borrowing; (v) bear interest as to any such Competitive Bid Loan at the rate and payable on the dates provided therefor as contemplated by sections 2.3(e) and 2.7; (vi) be subject in the case of any Competitive Bid Loan evidenced thereby to optional or mandatory prepayment only as contemplated by section 2.3(d); and (vii) be entitled to the benefits of this Agreement and the other Credit Documents. (d) LOAN ACCOUNTS OF LENDERS. Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (e) LOAN ACCOUNTS OF ADMINISTRATIVE AGENT. The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Type thereof, and the Interest Period and applicable interest rate if such Loan is a LIBOR Loan, (ii) the amount of any principal 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 for the account of the Lenders and each Lender's share thereof. (f) EFFECT OF LOAN ACCOUNTS, ETC. The entries made in the accounts maintained pursuant to section 2.4(d) and (e) 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 affect the obligation of the Borrower to repay or prepay the Loans in accordance with the terms of this Agreement. (g) ENDORSEMENTS OF AMOUNTS ON NOTES PRIOR TO TRANSFER. Each Lender will, prior to any transfer of any of the Notes issued to it by the Borrower, endorse on the reverse side thereof or the grid attached thereto the outstanding principal amount of Loans evidenced thereby. Failure to make any such notation or any error in any such notation shall not affect the Borrower's obligations in respect of such Loans. 2.5 CONVERSIONS OF LOANS. The Borrower shall have the option to Convert on any Business Day all or a portion at least equal to the applicable Minimum Borrowing Amount of the outstanding principal amount of its Loans of one Type into a Borrowing or Borrowings of another Type of Loans; PROVIDED that: (i) no partial Conversion of a Borrowing of LIBOR Loans shall reduce the outstanding principal amount of the LIBOR Loans made pursuant to such Borrowing to less than the Minimum Borrowing Amount applicable thereto; (ii) any Conversion of LIBOR Loans into Prime Rate Loans shall be made on, and only on, the last day of an Interest 34 Period for such LIBOR Loans; (iii) Prime Rate Loans may only be Converted into LIBOR Loans if no Default under section 10.1(a) or Event of Default is in existence on the date of the Conversion unless the Required Lenders otherwise agree; and (iv) Borrowings of LIBOR Loans resulting from this section 2.5 shall conform to the requirements of section 2.2(c). Each such Conversion shall be effected by the Borrower giving the Administrative Agent at its Notice Office, prior to 11:00 A.M. (local time at such Notice Office), at least three Business Days' in the case of a conversion into LIBOR Loans (or prior to 11:00 A.M. (local time at such Notice Office) on the same Business Day, in the case of a Conversion into Prime Rate Loans) prior written notice (or telephonic notice promptly confirmed in writing if so requested by the Administrative Agent) (each a "NOTICE OF CONVERSION"), substantially in the form of Exhibit B-3, specifying the Loans to be so Converted, the Type of Loans to be Converted into and, if to be Converted into a Borrowing of LIBOR Loans, the Interest Period to be initially applicable thereto. The Administrative Agent shall give each Lender prompt notice of any such proposed Conversion affecting any of its Loans. For the avoidance of doubt, the prepayment or repayment of any Loans out of the proceeds of other Loans by the Borrower is not considered a Conversion of Loans into other Loans. 2.6 INTENTIONALLY OMITTED. 2.7 INTEREST. (a) INTEREST RATE FOR PRIME RATE LOANS. During such periods as a Loan is a Prime Rate Loan, the unpaid principal amount thereof shall bear interest at a fluctuating rate per annum which shall at all times be equal to the Applicable Prime Rate Margin (defined below) for such Prime Rate Loan PLUS the Prime Rate in effect from time to time. (b) INTEREST RATE FOR LIBOR LOANS. During such periods as a Loan is a LIBOR Loan, the unpaid principal amount thereof shall bear interest at a rate per annum which shall at all times during any Interest Period applicable thereto be the Applicable LIBOR Margin (as defined below) for such LIBOR Loan PLUS the relevant Adjusted LIBO Rate for such Interest Period. (c) INTEREST RATE FOR COMPETITIVE BID LOANS. The Borrower shall pay interest on each Competitive Bid Loan in accordance with the provisions of section 2.3(e). (d) DEFAULT INTEREST. Notwithstanding the above provisions, if a Default under section 10.1(a) or Event of Default is in existence, all outstanding amounts of principal and, to the extent permitted by law, all overdue interest, in respect of each Loan shall bear interest, payable on demand, at a fluctuating rate per annum equal to 2% per annum above the interest rate which would be applicable under section 2.7(a) to Prime Rate Loans in effect from time to time. If any amount (other than the principal of and interest on the Loans) payable by the Borrower under the Credit Documents is not paid when due, such amount shall bear interest, payable on demand, at a fluctuating rate per annum equal to 2% per annum above the interest rate which would be applicable under section 2.7(a) to Prime Rate Loans in effect from time to time. 35 (e) ACCRUAL AND PAYMENT OF INTEREST. Interest shall accrue from and including the date of any Borrowing to but excluding the date of any prepayment or repayment thereof and shall be payable: (i) in the case of any Loan, (A) which is a Prime Rate Loan, monthly in arrears on the first Business Day of the succeeding calendar month, (B) which is a LIBOR Loan, on the last day of each Interest Period applicable thereto and, in the case of an Interest Period in excess of three months, on the dates which are successively three months after the commencement of such Interest Period, and (C) on any repayment, prepayment or Conversion (on the amount repaid, prepaid or Converted), at maturity (whether by acceleration or otherwise) and, after such maturity, on demand; and (ii) in the case of any Competitive Bid Loan, (A) on the interest payment date or dates contemplated by section 2.3(e), at the maturity date thereof, which shall in any event be no more than six months, (B) on any prepayment (on the amount prepaid), and (C) after maturity (whether by acceleration or otherwise), on demand. (f) COMPUTATIONS OF INTEREST. All computations of interest hereunder shall be made in accordance with section 12.7(b). (g) INTEREST MARGINS. As used herein, the terms "APPLICABLE LIBOR MARGIN", as applied to any LIBOR Loan, and "APPLICABLE PRIME RATE MARGIN" as applied to any Prime Rate Loan, mean for any date the particular rate per annum determined by the Administrative Agent in accordance with the pricing grid table (the "PRICING GRID") which appears below under the heading "Applicable LIBOR Margin" or "Applicable Prime Rate Margin", as applicable, based upon the Index Debt Rating, applicable on such date, and the following provisions: (i) initially, until changed hereunder in accordance with the following provisions, the Applicable LIBOR Margin will be 125.0 basis points per annum and the Applicable Prime Rate Margin will be 25.0 basis points per annum; PROVIDED that, during the six month period following the Closing Date, the Applicable LIBOR Margin and the Applicable Prime Rate Margin shall be subject to increases and not to decreases based on a decline in the Index Debt Rating, in accordance with the Pricing Grid. (ii) notwithstanding the above provisions, during any period when a Default under section 10.1(a) or an Event of Default has occurred and is continuing, the Applicable LIBOR Margin and the Applicable Prime Rate Margin shall be the highest rate per annum indicated therefor in the Pricing Grid, regardless of the then Index Debt Rating. (iii) for purposes of determination of the Applicable LIBOR Margin and the Applicable Prime Rate Margin, (1) if either Moody's or S&P shall not have in effect an Index Debt Rating (other than by reason of the circumstances referred to in the last sentence of this paragraph), then such Rating Agency shall be deemed to have established 36 a rating in Category 5; (2) if the Index Debt Rating shall fall within different Categories, the Applicable Rate shall be based on the lower of the two ratings; and (3) if the Index Debt Rating shall be changed (other than as a result of a change in the rating system of Moody's or S&P), such change shall be effective as of the date on which it is first announced by the applicable Rating Agency. Each change in the Applicable LIBOR Margin and the Applicable Prime Rate Margin shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If the rating system of Moody's or S&P shall change, or if either such Rating Agency shall cease to be in the business of rating corporate debt obligations, the Borrower and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such Rating Agency and, pending the effectiveness of any such amendment, the Applicable LIBOR Margin Rate and the Applicable Prime Rate Margin Rate shall be determined by reference to the rating most recently in effect prior to such change or cessation. (iv) any changes in the Applicable LIBOR Margin and the Applicable Prime Rate Margin shall be determined by the Administrative Agent in accordance with the above provisions and the Administrative Agent will promptly provide notice of such determinations to the Borrower and the Lenders. Any such determination by the Administrative Agent pursuant to this section 2.7(g) shall be conclusive and binding absent manifest error. (v) any time during which the Leverage Ratio is greater than or equal to 3.5 to 1.00, the Applicable LIBOR Margin and the Applicable Prime Rate Margin shall be increased by 25.0 basis points, and at any time during which the Leverage Ratio is greater than or equal to 4.0 to 1.00, the Applicable LIBOR Margin and the Applicable Prime Rate Margin shall be increased by an additional 12.5 basis points. PRICING GRID (EXPRESSED IN BASIS POINTS)
INDEX DEBT APPLICABLE APPLICABLE FACILITY RATINGS LIBOR MARGIN PRIME RATE MARGIN FEE RATE CATEGORY 1 87.5 00.0 12.5 BBB+ or better by S&P Baa1 or better by Moody's CATEGORY 2 107.5 7.5 17.5 BBB by S&P Baa2 by Moody's CATEGORY 3 125.0 25.0 25.0 BBB- by S&P Baa3 by Moody's CATEGORY 4 170.0 70.0 30.0
37
INDEX DEBT APPLICABLE APPLICABLE FACILITY RATINGS LIBOR MARGIN PRIME RATE MARGIN FEE RATE BB+ by S&P Ba1 by Moody's CATEGORY 5 212.5 112.5 37.5 BB or less by S&P Ba2 or less by Moody's
(h) INFORMATION AS TO INTEREST RATES. The Administrative Agent upon determining the interest rate for any Borrowing shall promptly notify the Borrower and the affected Lenders thereof. If the Administrative Agent is unable to determine the Adjusted LIBO Rate for any Borrowing of LIBOR Loans based on the quotation service referred to in clause (i) of the definition of the term Adjusted LIBO Rate, it will promptly so notify the Reference Banks and each Reference Bank will furnish the Administrative Agent timely information for the purpose of determining the Adjusted LIBO Rate for such Borrowing. If any one or more of the Reference Banks shall not timely furnish such information, the Administrative Agent shall determine the Adjusted LIBO Rate for such Borrowing on the basis of timely information furnished by the remaining Reference Banks. 2.8 SELECTION AND CONTINUATION OF INTEREST PERIODS. (a) The Borrower shall have the right (x) at the time it gives a Notice of Borrowing or Notice of Conversion in respect of the making of or Conversion into a Borrowing of Loans consisting of LIBOR Loans, to select in such Notice the Interest Period to be applicable to such Borrowing, and (y) prior to 12:00 noon (local time at the Notice Office) on the third Business Day prior to the expiration of an Interest Period applicable to a Borrowing of Loans consisting of LIBOR Loans, to elect by giving the Administrative Agent written or telephonic notice (in the case of telephonic notice, promptly confirmed in writing if so requested by the Administrative Agent) to Continue all or the Minimum Borrowing Amount of the principal amount of such Loans as one or more Borrowings of LIBOR Loans and to select the Interest Period to be applicable to any such Borrowing (any such notice, a "NOTICE OF CONTINUATION"), which Interest Period shall, at the option of the Borrower, be a one, two, three or six month period; PROVIDED that notwithstanding anything to the contrary contained above, the Borrower's right to select an Interest Period or to effect any Continuation shall be subject to the applicable provisions of section 2.10 and to the following: (i) the initial Interest Period for any Borrowing of LIBOR Loans shall commence on the date of such Borrowing (the date of a Borrowing resulting from a Conversion or Continuation shall be the date of such Conversion or Continuation) and 38 each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period expires; (ii) if any Interest Period begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of such calendar month; (iii) if any Interest Period would otherwise expire on a day which is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; PROVIDED that if any Interest Period would otherwise expire on a day which is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; (iv) no Interest Period for any LIBOR Loan may be selected which would end after the Maturity Date; (v) each Borrowing of LIBOR Loans resulting from any Continuation shall be in at least the Minimum Borrowing Amount applicable thereto; and (vi) no Interest Period may be elected at any time when a Default under section 10.1(a) or an Event of Default is then in existence unless the Required Lenders otherwise agree. (b) If upon the expiration of any Interest Period the Borrower has failed to (or may not) elect a new Interest Period to be applicable to the respective Borrowing of LIBOR Loans as provided above, the Borrower shall be deemed to have elected to Convert such Borrowing to Prime Rate Loans effective as of the expiration date of such current Interest Period. 2.9 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in the case of clause (i) below, the Administrative Agent or (y) in the case of clauses (ii) and (iii) below, any Lender, shall have determined on a reasonable basis (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto): (i) on any date for determining the Adjusted LIBO Rate for any Interest Period that, by reason of any changes arising after the Effective Date affecting the interbank Eurodollar market, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of Adjusted LIBO Rate; or (ii) at any time, that such Lender shall incur increased costs or reductions in the amounts received or receivable hereunder in an amount which such Lender deems material with respect to any LIBOR Loans (other than any increased cost or reduction in the amount received or receivable resulting from the imposition of or a change in the rate of taxes or similar charges) because of (x) any change since the Effective Date in any 39 applicable law, governmental rule, regulation, guideline, order or request (whether or not having the force of law), or in the interpretation or administration thereof and including the introduction of any new law or governmental rule, regulation, guideline, order or request (such as, for example, but not limited to, a change in official reserve requirements, but, in all events, excluding reserves includable in the Adjusted LIBO Rate pursuant to the definition thereof) and/or (y) other circumstances adversely affecting the interbank Eurodollar market or the position of such Lender in such market; or (iii) at any time, that the making or continuance of any LIBOR Loan has become unlawful by compliance by such Lender in good faith with any change since the Effective Date in any law, governmental rule, regulation, guideline or order, or the interpretation or application thereof, or would conflict with any thereof not having the force of law but with which such Lender customarily complies or has become impracticable as a result of a contingency occurring after the Effective Date which materially adversely affects the interbank Eurodollar market; THEN, and in any such event, such Lender (or the Administrative Agent in the case of clause (i) above) shall (x) on or promptly following such date or time and (y) within 10 Business Days of the date on which such event no longer exists give notice (by telephone confirmed in writing) to the Borrower and to the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in the case of clause (i) above, LIBOR Loans shall no longer be available until such time as the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice by the Administrative Agent no longer exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower with respect to LIBOR Loans which have not yet been incurred or Converted shall be deemed rescinded by the Borrower or, in the case of a Notice of Borrowing, shall, at the option of the Borrower, be deemed converted into a Notice of Borrowing for Prime Rate Loans to be made on the date of Borrowing contained in such Notice of Borrowing, (y) in the case of clause (ii) above, the Borrower shall pay to such Lender, upon written demand therefor, such additional amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender shall determine) as shall be required to compensate such Lender, for such increased costs or reductions in amounts receivable hereunder (a written notice as to the additional amounts owed to such Lender, showing the basis for the calculation thereof, which basis must be reasonable, submitted to the Borrower by such Lender shall, absent manifest error, be final and conclusive and binding upon all parties hereto) and (z) in the case of clause (iii) above, the Borrower shall take one of the actions specified in section 2.9(b) as promptly as possible and, in any event, within the time period required by law. (b) At any time that any LIBOR Loan is affected by the circumstances described in section 2.9(a)(ii) or (iii), the Borrower may (and in the case of a LIBOR Loan affected pursuant to section 2.9(a)(iii) the Borrower shall) either if the affected LIBOR Loan is then being made pursuant to a Borrowing, by giving the Administrative Agent telephonic notice (confirmed 40 promptly in writing) thereof on the same date that the Borrower was notified by a Lender pursuant to section 2.9(a)(ii) or (iii), cancel said Borrowing, convert the related Notice of Borrowing into one requesting a Borrowing of Prime Rate Loans or require the affected Lender to make its requested Loan as a Prime Rate Loan, or if the affected LIBOR Loan is then outstanding, upon at least one Business Day's notice to the Administrative Agent, require the affected Lender to Convert each such LIBOR Loan into a Prime Rate Loan; PROVIDED that if more than one Lender is affected at any time, then all affected Lenders must be treated the same pursuant to this section 2.9(b). (c) If any Lender shall have determined that after the Effective Date, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged by law with the interpretation or administration thereof, or compliance by such Lender or its parent corporation with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank, or comparable agency, in each case made subsequent to the Effective Date, has or would have the effect of reducing by an amount reasonably deemed by such Lender to be material the rate of return on such Lender's or its parent corporation's capital or assets as a consequence of such Lender's commitments or obligations hereunder to a level below that which such Lender or its parent corporation could have achieved but for such adoption, effectiveness, change or compliance (taking into consideration such Lender's or its parent corporation's policies with respect to capital adequacy), then from time to time, within 15 days after demand by such Lender (with a copy to the Administrative Agent), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or its parent corporation for such reduction. Each Lender, upon determining in good faith that any additional amounts will be payable pursuant to this section 2.9(c), will give prompt written notice thereof to the Borrower, which notice shall set forth, in reasonable detail, the basis of the calculation of such additional amounts, which basis must be reasonable, although the failure to give any such notice shall not release or diminish any of the Borrower's obligations to pay additional amounts pursuant to this section 2.9(c) upon the subsequent receipt of such notice. (d) Notwithstanding anything in this Agreement to the contrary, no Lender shall be entitled to compensation or payment or reimbursement of other amounts under section 2.9 or 3.5 for any amounts incurred or accruing more than 180 days prior to the giving of notice to the Borrower of additional costs or other amounts of the nature described in such sections; PROVIDED that if a change in applicable law, rule, regulation, guideline or order, or in the interpretation or application thereof, becomes effective during such 180 day period but is retroactive to an earlier date, such 180 day period shall be extended to include the period of retroactive effect thereof, and no Lender shall demand compensation for any reduction referred to in section 2.9(c) or payment or reimbursement of other amounts under section 3.5 if it shall not at the time be the general policy or practice of such Lender to demand such compensation, payment or reimbursement in similar circumstances under comparable provisions of other credit agreements. 41 2.10 COMPENSATION. The Borrower shall compensate each applicable Lender, upon its written request (which request shall set forth the detailed basis for requesting and the method of calculating such compensation), for all reasonable losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its LIBOR Loans) which such Lender may sustain: if for any reason (other than a default by such Lender or the Administrative Agent) a Borrowing of LIBOR Loans does not occur on a date specified therefor in a Notice of Borrowing, Notice of Conversion or Notice of Continuation (whether or not rescinded or withdrawn by or on behalf of such Borrower or deemed rescinded or withdrawn pursuant to section 2.9(a)); if any repayment, prepayment, Conversion or Continuation of any of its LIBOR Loans occurs on a date which is not the last day of an Interest Period applicable thereto; if any prepayment of any LIBOR Loans is not made on any date specified in a notice of prepayment given by or on behalf of the Borrower; if the Borrower, pursuant to section 2.11(b) hereof, requires any Lender (other than a Defaulting Lender) to transfer its LIBOR Loans on any date other than the last day of the Interest Period or maturity date thereof; or as a consequence of (x) any other default by the Borrower to repay its LIBOR Loans when required by the terms of this Agreement or (y) an election made pursuant to section 2.9(b). Such loss, cost, expense and liability to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the interest rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to effect a Borrowing, Conversion or Continuation, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for Dollar deposits of a comparable amount and period from other banks in the London interbank market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this section shall be delivered to the Borrower and shall be conclusive absent convincing evidence of error. The Borrower shall pay such Lender the amount shown as due on any such request within 30 days after receipt by the Borrower thereof. 2.11 CHANGE OF LENDING OFFICE; REPLACEMENT OF LENDERS. (a) Each Lender agrees that, upon the occurrence of any event giving rise to the operation of section 2.9(a)(ii) or (iii) or 2.9(c) with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another Applicable Lending Office for any Loans or Commitment affected by such event; PROVIDED that such designation is made on such terms that such Lender and its Applicable Lending Office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of any such section. (b) If any Lender requests any compensation, reimbursement or other payment under section 2.9(a)(ii) or (iii) or 2.9(c) with respect to such Lender, or if any Lender is a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and 42 the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with the restrictions contained in section 12.4(b)), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); PROVIDED that the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not be unreasonably withheld or delayed, such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts), and in the case of any such assignment resulting from a claim for compensation, reimbursement or other payments required to be made under section 2.9(a)(ii) or (iii) or 2.9(c) with respect to such Lender, such assignment will result in a reduction in such compensation, reimbursement or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. (c) Nothing in this section 2.11 shall affect or postpone any of the obligations of the Borrower or the right of any Lender provided in section 2.9. SECTION 3. INTENTIONALLY OMITTED. SECTION 4. FEES; COMMITMENTS. 4.1 FEES. (a) FACILITY FEES. (i) The Borrower agrees to pay to the Administrative Agent a Facility Fee ("FACILITY FEE") for the account of each Non-Defaulting Lender which has a Commitment, for the period from and including the Effective Date to but not including the date the Total Commitment has been terminated and no Loans are outstanding. In the case of any such Lender, the portion of the Facility Fee to which it shall be entitled shall be computed for each day at a rate per annum equal to the Applicable Facility Fee Rate for such day, on the amount of its Facility Percentage of the Total Commitment on such day, whether used or unused. Accrued Facility Fees shall be payable in arrears on the first Business Day of each April, July, October and January and on the date when the Total Commitment has been terminated and no Loans are outstanding. (ii) As used herein the term "APPLICABLE FACILITY FEE RATE" shall mean the particular rate per annum determined by the Administrative Agent in accordance with the Pricing Grid which appears in section 2.7(g), based upon the Index Debt Rating, applicable on any date, and the following provisions: (A) Initially, until changed hereunder in accordance with the following provisions, the Applicable Facility Fee Rate will be 25.0 basis points per annum; provided that any time during which the Leverage Ratio is greater than or equal to 43 4.0 to 1.0, the Applicable Facility Fee Rate will be increased by 12.5 basis points per annum. (B) Effective on the effective date of any change in the Applicable LIBOR Margin and the Applicable Prime Rate Margin pursuant to section 2.7(g)(ii), the Applicable Facility Fee Rate shall change on the same date to the Applicable Facility Fee Rate which corresponds to the changed Applicable LIBOR Margin and the Applicable Prime Rate Margin, as indicated in the Pricing Grid which appears in section 2.7(g) hereof. (C) Notwithstanding the above provisions, during any period when a Default under section 10.1(a) or an Event of Default has occurred and is continuing, the Applicable Facility Fee Rate shall be the highest rate per annum indicated therefor in the Pricing Grid, regardless of the then Index Debt Rating. (D) Any changes in the Applicable Facility Fee Rate shall be determined by the Administrative Agent in accordance with the above provisions and the Administrative Agent will promptly provide notice of such determinations to the Borrower and the Lenders. Any such determination by the Administrative Agent pursuant to this section 4.1(a)(ii) shall be conclusive and binding absent manifest error. (b) OTHER FEES. The Borrower shall pay to the Agents and/or the Joint Lead Arrangers, on the Closing Date and thereafter, for its or their own account and/or for distribution to the Lenders, such fees as heretofore agreed in writing by the Borrower, the Joint Lead Arrangers and the Agents. (c) COMPUTATIONS OF FEES. All computations of Fees shall be made in accordance with section 12.7(b). 4.2 VOLUNTARY TERMINATION/REDUCTION OF COMMITMENTS. Upon at least three Business Days' prior written notice (or telephonic notice confirmed in writing) to the Administrative Agent at its Notice Office (which notice the Administrative Agent shall promptly transmit to each of the Lenders), the Borrower shall have the right to: (a) TERMINATION OF TOTAL COMMITMENT: terminate the Total Commitment; PROVIDED that all outstanding Loans are contemporaneously prepaid in accordance with section 5.1 and all outstanding Competitive Bid Loans are contemporaneously prepaid in accordance with section 2.3(d); (b) PARTIAL REDUCTIONS OF UNUTILIZED TOTAL COMMITMENT: partially and permanently reduce the Unutilized Total Commitment; PROVIDED that (i) any such reduction shall apply to proportionately and permanently reduce the Commitment of each of the Lenders; and (ii) any partial reduction of the Unutilized Total Commitment 44 pursuant to this section 4.2(b) shall be in the amount of at least $5,000,000 (or, if greater, in integral multiples of $1,000,000). 4.3 MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC. (a) The Total Commitment (and the Commitment of each Lender) shall terminate on September 30, 2001, UNLESS the Closing Date has occurred on or prior to such date. (b) The Total Commitment shall terminate (and the Commitment of each Lender shall terminate) on the earlier of (x) the Maturity Date and (y) the date on which a Change of Control occurs. (c) To the extent that, pursuant to section 5.2(c) or section 5.2(d), any Loans are or would be required to be mandatorily prepaid with (or as a result of the receipt of) Net Debt Proceeds, Net Equity Proceeds or Net Disposition Proceeds, the Commitment Amount shall be permanently reduced, on a dollar-for-dollar basis, by an amount equal to the amount of such prepayment; provided, that any term or provision hereof to the contrary notwithstanding, such reduction to the Commitment Amount shall be made whether or not any prepayment of the Loans is actually made pursuant to section 5.2(c) or section 5.2(d), as the case may be. 4.4 EXTENSION OF MATURITY DATE. Upon 30 days prior written notice to the Administrative Agent, the Borrower may, in its sole discretion, so long as no Default or Event of Default has occurred or is continuing on the Maturity Date, extend the Maturity Date for one year, in which case the Loans outstanding on the Maturity Date shall be converted into term Loans maturing on such extended Maturity Date and upon which time the Commitment shall be terminated. If the Borrower so decides, the Administrative Agent will so advise the Lenders, and the Borrower, the Administrative Agent and all of the Lenders shall execute and deliver a definitive written instrument so extending the Maturity Date and setting forth the terms and conditions satisfactory to the Borrower, the Administrative Agent and the Lenders. No such extension of the Maturity Date shall be valid or effective for any purpose unless such definitive written instrument is so signed and delivered within 30 days following the giving by the Administrative Agent of notice to the Lenders that the Borrower has decided on such an extension. SECTION 5. PAYMENTS. 5.1 VOLUNTARY PREPAYMENTS OF LOANS. The Borrower may not voluntarily prepay any Competitive Bid Loan, in whole or in part, unless such prepayment is permitted and made as contemplated by section 2.3(d). The Borrower shall have the right to prepay any of its Loans, in whole or in part, without premium or penalty, from time to time on the following terms and conditions: (a) NOTICES: the Borrower shall give the Administrative Agent at the Notice Office written or telephonic notice (in the case of telephonic notice, promptly confirmed 45 in writing if so requested by the Administrative Agent) of its intent to prepay the Loans, the amount of such prepayment and (in the case of LIBOR Loans) the specific Borrowing(s) pursuant to which made, which notice shall be received by the Administrative Agent by (i) 12:00 noon (local time at the Notice Office) three Business Days prior to the date of such prepayment, in the case of any prepayment of LIBOR Loans, or (ii) 12:00 noon (local time at the Notice Office) on the date of such prepayment, in the case of any prepayment of Prime Rate Loans, and which notice shall promptly be transmitted by the Administrative Agent to each of the affected Lenders; (b) PARTIAL PREPAYMENTS UNDER THE FACILITY: in the case any partial prepayment of any Borrowing under the Facility, such partial prepayment shall be in an aggregate principal of at least $1,000,000 or an integral multiple of $100,000 in excess thereof, in the case of any Borrowing comprised of Prime Rate Loans and at least $5,000,000 or an integral multiple of $1,000,000 in excess thereof, in the case of any Borrowing comprised of LIBOR Loans; (c) MINIMUM BORROWING AMOUNT REMAINING AFTER PARTIAL PREPAYMENTS: no partial prepayment of any Loans made pursuant to a Borrowing shall reduce the aggregate principal amount of such Loans outstanding pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount applicable thereto; (d) PREPAYMENTS TO BE APPLIED PRO RATA: each prepayment in respect of any Loans made pursuant to a Borrowing shall be applied PRO RATA among such Loans; and (e) BREAKAGE COMPENSATION: each prepayment of LIBOR Loans pursuant to this section 5.1 on any date other than the last day of the Interest Period applicable thereto, in the case of a LIBOR Loan shall be accompanied by any amounts payable in respect thereof under section 2.10. 5.2 MANDATORY PREPAYMENTS. The Loans shall be subject to mandatory prepayment in accordance with the following provisions: (a) IF OUTSTANDING LOANS EXCEED COMMITMENT AMOUNT. If on any date (after giving effect to any other payments on such date) the aggregate outstanding principal amount of Loans, EXCEEDS the Commitment Amount as then in effect, THEN the Borrower shall prepay on such date that principal amount of Loans, in an aggregate amount at least equal to such excess and conforming in the case of partial prepayments of 46 any Loans to the applicable requirements as to the amounts of partial prepayments which are contained in section 5.1. (b) MANDATORY PREPAYMENT -- CHANGE OF CONTROL. On the date a Change of Control occurs, notwithstanding anything to the contrary contained in this Agreement, no further Borrowings shall be made and the then outstanding principal amount of all Loans, if any, and other Obligations, shall become due and payable and shall be prepaid in full, together with accrued interest and Fees. (c) MANDATORY PREPAYMENT -- NET DEBT PROCEEDS AND NET EQUITY PROCEEDS. No later than one Business Day following the receipt of any Net Debt Proceeds or Net Equity Proceeds by the Borrower or any Subsidiary, the Borrower shall deliver to the Administrative Agent a calculation of the amount of such Net Debt Proceeds or Net Equity Proceeds and, to the extent the amount of such Net Debt Proceeds or Net Equity Proceeds, with respect to any single transaction or series of related transactions, exceeds $2,000,000, the Borrower shall make a mandatory prepayment of the Loans in an amount equal to 100% of such Net Debt Proceeds or Net Equity Proceeds, as the case may be, to be applied (i) FIRST, to the prepayment of outstanding Five Year Credit Facility Term Loans pursuant to the terms of the Five Year Credit Facility Agreement, until all Five Year Credit Facility Term Loans shall have been repaid in full, and (ii) SECOND, to the prepayment of outstanding Loans until all Loans have been repaid in full and the Commitment Amount has been reduced to zero. (d) MANDATORY PREPAYMENT -- NET DISPOSITION PROCEEDS. No later than 30 days following the receipt of any Net Disposition Proceeds by the Borrower or any Subsidiary, the Borrower shall deliver to the Administrative Agent a calculation of the amount of such Net Disposition Proceeds, and, to the extent the amount of such Net Disposition Proceeds, with respect to any single transaction or series of related transactions, exceeds $5,000,000, the Borrower shall make a mandatory prepayment of the Loans in an amount equal to100% of such Net Disposition Proceeds to be applied to the prepayment of outstanding Loans until all Loans have been repaid in full and the Commitment Amount has been reduced to zero. (e) PARTICULAR LOANS TO BE PREPAID. With respect to each repayment or prepayment of Loans required by this section 5.2, the Borrower shall designate the Types of Loans which are to be repaid or prepaid and the specific Borrowing(s) pursuant to which such repayment or prepayment is to be made; PROVIDED that (i) the Borrower shall first so designate all Loans that are Prime Rate Loans and LIBOR Loans with Interest Periods ending on the date of repayment or prepayment prior to designating any other LIBOR Loans for repayment or prepayment, (ii) if the outstanding principal amount of LIBOR Loans made pursuant to a Borrowing is reduced below the applicable Minimum Borrowing Amount as a result of any such repayment or prepayment, then all the Loans outstanding pursuant to such Borrowing shall be converted into Prime Rate Loans, and 47 (iii) each repayment and prepayment of any Loans made pursuant to a Borrowing shall be applied PRO RATA among such Loans. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall, subject to the above, make such designation in its sole discretion with a view, but no obligation, to minimize breakage costs owing under section 2.10. Any repayment or prepayment of LIBOR Loans pursuant to this section 5.2 shall in all events be accompanied by such compensation as is required by section 2.10. 5.3 REPAYMENT OF LOANS. The Borrower shall repay in full the unpaid principal amount of the Loans made to it on the Maturity Date. 5.4 METHOD AND PLACE OF PAYMENT. (a) Except as otherwise specifically provided herein, all payments under this Agreement shall be made to the Administrative Agent for the ratable (based on its PRO RATA share) account of the Lenders entitled thereto, not later than 12:00 noon (local time at the Payment Office) on the date when due and shall be made at the Payment Office in immediately available funds and in lawful money of the United States of America, it being understood that written notice by the Borrower to the Administrative Agent to make a payment from the funds in the Borrower's account at the Payment Office shall constitute the making of such payment to the extent of such funds held in such account. Any payments under this Agreement which are made later than 12:00 noon (local time at the Payment Office) shall be deemed to have been made on the next succeeding Business Day. Whenever any payment to be made hereunder shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable during such extension at the applicable rate in effect immediately prior to such extension. (b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and Fees then due hereunder and an Event of Default is not then in existence, such funds shall be applied (i) FIRST, towards payment of interest and Fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and Fees then due to such parties, and (ii) SECOND, towards payment of principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties. 5.5 NET PAYMENTS. (a) All payments made by the Borrower hereunder, under any Note or any other Credit Document, will be made without setoff, counterclaim or other defense. Except as otherwise provided for in section 5.5(d), all such payments will be made free and clear of, and without deduction or withholding for, any Taxes. In the event that any Taxes are imposed and required by law to be deducted or withheld from any payment required to made by the Borrower under any Note or any other Credit Document, then: (i) subject to clause (d) below, the amount of such payment shall be increased as may be necessary such that such payment is made, after withholding or deduction for or on account of such Taxes, in an amount that is not less than the amount provided for in such Note or other Credit Document and (ii) the Borrower 48 shall withhold the full amount of such Taxes from such payment (as increased pursuant to clause (a)(i)) and shall pay such amount to the authority imposed such Taxes in accordance with applicable law. The Borrower will furnish to the Administrative Agent within 45 days after the date of any withholding or deduction on account of United States withholding taxes certified copies of tax receipts, or other evidence satisfactory to the Lender, evidencing payment thereof by the Borrower. (b) Subject to clause (d), the Borrower shall indemnify the Administrative Agent and each Lender for any Taxes levied, imposed or assessed on (and whether or not paid directly by) the Administrative Agent or such Lender (and whether or not such Taxes are correctly or legally asserted by the relevant taxing authority). Promptly upon having knowledge that any such Taxes have been levied, imposed or assessed, and promptly upon notice thereof by the Administrative Agent or any Lender, the Borrower shall pay such Taxes directly to the relevant taxing authority (PROVIDED that neither the Administrative Agent nor any Lender shall be under any obligation to provide any such notice to the Borrower). In addition, the Borrower shall indemnify the Administrative Agent and each Lender for any incremental Taxes that may become payable by the Administrative Agent or any Lender as a result of any failure of the Borrower to pay any Taxes when due to the appropriate taxing authority or to deliver to the Administrative Agent, pursuant to clause (a), documentation evidencing the payment of Taxes. With respect to indemnification for Taxes actually paid by the Administrative Agent or any Lender or the indemnification provided in the immediately preceding sentence, such indemnification shall be made within 30 days after the date the Administrative Agent or such Lender, as the case may be, makes written demand therefor. The Borrower acknowledges that any payment made to the Administrative Agent or any Lender or to any taxing authority in respect of the indemnification obligations of the Borrower provided in this clause shall constitute a payment in respect of which the provisions of clause (a) and this clause shall apply. (c) Each Lender that is not a United States person (as such term is defined in section 7701(a)(30) of the Code) for Federal income tax purposes agrees to provide to the Borrower and the Administrative Agent on or prior to the Effective Date, or in the cases of a Lender that is an assignee or transferee of an interest under this Agreement pursuant to section 12.4 (unless the respective Lender was already a Lender hereunder immediately prior to such assignment or transfer and such Lender is in compliance with the provisions of this section 5.5(c)), on the date of such assignment or transfer to such Lender, (i) two accurate and complete original signed copies of Internal Revenue Service Form W-8BEN, claiming eligibility of such Lender for benefits of an income tax treaty to which the United States is a party, or W-8ECI (or successor forms), or (ii) if the Lender is not a "bank" within the meaning of section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue Service Form W-8BEN or W-8ECI pursuant to clause (i) above, (x) a certificate substantially in the form of Exhibit F (any such certificate, a "LENDER TAX CERTIFICATE") and (y) two accurate and complete original signed copies of Internal Revenue Service Form W-8BEN (or successor form). In addition, each Lender agrees that from time to time after the Effective Date, when a lapse in time or change in circumstances renders the previous certification obsolete or inaccurate in any material respect, it will deliver to the 49 Borrower and the Administrative Agent two new accurate and complete original signed copies of Internal Revenue Service Form W-8BEN or W-8ECI, or Form W-8BEN and a Lender Tax Certificate, as the case may be, and such other forms as may be required in order to confirm or establish the entitlement of such Lender to a continued exemption from or reduction in United States withholding tax with respect to payments under this Agreement, any Note or any other Credit Document, or it shall immediately notify the Borrower and the Administrative Agent of its inability to deliver any such Form or Certificate, in which case such Lender shall not be required to deliver any such Form or Certificate pursuant to this section 5.5(c). (d) The Borrower shall not be obligated to pay any additional amounts pursuant to clause (a), in respect of United States federal withholding taxes to the extent imposed as a result of the failure of such Lender to deliver to the Borrower the Internal Revenue Service forms and/or Lender Tax Certificate, as applicable to such Lender, required to be provided to the Borrower pursuant to section 5.5(c); PROVIDED that the Borrower shall be obligated to pay additional amounts to any such Lender pursuant to clause (a), in respect United States federal withholding taxes if any such failure to deliver the Internal Revenue Service forms and/or Lender Tax Certificate, as applicable, resulted from a change in any applicable statute, treaty, regulation or other applicable law or any interpretation of any of the foregoing occurring after the date hereof, which change rendered such Lender no longer legally entitled to deliver such forms and/or Lender Tax Certificate, as applicable. SECTION 6. CONDITIONS PRECEDENT. 6.1 CONDITIONS PRECEDENT AT CLOSING DATE. The obligation of the Lenders to make Loans is subject to the satisfaction of each of the following conditions on the Closing Date: (a) EFFECTIVENESS; NOTES. On or prior to the Closing Date, (i) the Effective Date shall have occurred and (ii) there shall have been delivered to the Administrative Agent for the account of each Lender each appropriate Note executed by the Borrower, in each case, in the amount, maturity and as otherwise provided herein. (b) FEES, ETC. The Borrower shall have paid or caused to be paid all fees required to be paid by it on or prior to such date pursuant to section 4.1 hereof and all reasonable fees and expenses of the Administrative Agent and of special counsel to the Administrative Agent which have been invoiced on or prior to such date in connection with the preparation, execution and delivery of this Agreement and the other Credit Documents and the consummation of the transactions contemplated hereby and thereby. (c) FIVE YEAR CREDIT FACILITY AGREEMENT. The Administrative Agent shall have received evidence satisfactory to it that all conditions precedent set forth in Article 6 of the Five Year Credit Facility Agreement shall have been consummated to the satisfaction of the Administrative Agent. 50 (d) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings and all documents incidental to the transactions contemplated hereby shall be satisfactory in substance and form to the Administrative Agent and the Lenders and the Administrative Agent and its special counsel and the Lenders shall have received all such counterpart originals or certified or other copies of such documents as the Administrative Agent or its special counsel or any Lender may reasonably request. 6.2 CONDITIONS PRECEDENT TO ALL CREDIT EVENTS (OTHER THAN ANY COMPETITIVE BID BORROWING). The obligations of the Lenders to make each Loan is subject, at the time thereof, to the satisfaction of the following conditions: (a) NOTICE OF BORROWING, ETC. The Administrative Agent shall have received a Notice of Borrowing meeting the requirements of section 2.2 with respect to the incurrence of Loans. (b) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of each such Credit Event and also after giving effect thereto, (i) there shall exist no Default or Event of Default and (ii) all representations and warranties of the Credit Parties contained herein or in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Credit Event, except to the extent that such representations and warranties expressly relate to an earlier specified date, in which case such representations and warranties shall have been true and correct in all material respects as of the date when made. The acceptance of the benefits of each such Credit Event shall constitute a representation and warranty by the Borrower to each of the Lenders that all of the applicable conditions specified in section 6.1 and/or 6.2, as the case may be, have been satisfied as of the times referred to in sections 6.1 and 6.2. All of the certificates, legal opinions and other documents and papers referred to in this section 6, unless otherwise specified, shall be delivered to the Administrative Agent for the account of each of the Administrative Agent and the Lenders and, except for the Notes, in sufficient counterparts for the Administrative Agent and the Lenders, and the Administrative Agent will promptly distribute to the Lenders their respective Notes and the copies of such other certificates, legal opinions and documents. 6.3 CONDITIONS PRECEDENT TO EACH COMPETITIVE BID BORROWING. The obligation of each Lender which is to make a Competitive Bid Loan on the occasion of a Competitive Bid Borrowing (including the initial Competitive Bid Borrowing) to make such Competitive Bid Loan as part of such Competitive Bid Borrowing is subject to satisfaction of each of the following conditions; (a) NOTICE OF COMPETITIVE BID BORROWING. The Administrative Agent shall have received the written confirmatory Notice of Competitive Bid Borrowing with respect thereto. 51 (b) COMPETITIVE BID NOTE. Prior to the time such Competitive Bid Borrowing is to be made by any applicable Lender, the Administrative Agent shall have received a Competitive Bid Note payable to the order of such Lender. (c) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time thereof and also after giving effect thereto, (i) there shall exist no Default or Event of Default and (ii) all representations and warranties of the Credit Parties contained herein or in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Credit Event, except to the extent that such representations and warranties expressly relate to an earlier specified date, in which case such representations and warranties shall have been true and correct in all material respects as of the date when made. The acceptance of the benefits of each Competitive Bid Loan shall constitute a representation and warranty by the Borrower to each of the Lenders that all of the applicable conditions specified in this section 6.3 exist as of that time. The Administrative Agent will promptly distribute to the Lenders participating in such Competitive Bid Borrowing their respective Competitive Bid Notes (to the extent not previously delivered). SECTION 7. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders to enter into this Agreement and to make the Loans provided for herein, the Borrower makes the following representations and warranties to, and agreements with, the Lenders, all of which shall survive the execution and delivery of this Agreement and each Credit Event: 7.1 CORPORATE STATUS, ETC. Each of the Borrower and its Subsidiaries (i) is a duly organized or formed and validly existing corporation, partnership or limited liability company, as the case may be, in good standing under the laws of the jurisdiction of its formation and has the corporate, partnership or limited liability company power and authority, as applicable, to own its property and assets and to transact the business in which it is engaged and presently proposes to engage, and (ii) has duly qualified and is authorized to do business in all jurisdictions where it is required to be so qualified except where the failure to be so qualified would not have a Material Adverse Effect. 7.2 SUBSIDIARIES. Annex II hereto sets forth, as of the date hereof, each Subsidiary of the Borrower (and the direct and indirect ownership interest of the Borrower therein). 7.3 CORPORATE POWER AND AUTHORITY, ETC. Each Credit Party has the corporate or other organizational power and authority to execute, deliver and carry out the terms and provisions of the Credit Documents to which it is party and has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of the Credit Documents to which it is party. Each Credit Party has duly executed and delivered each Credit 52 Document to which it is party and each Credit Document to which it is party constitutes the legal, valid and binding agreement or obligation of such Credit Party enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law). 7.4 NO VIOLATION. Neither the execution, delivery and performance by any Credit Party of the Credit Documents to which it is party nor compliance with the terms and provisions thereof (i) will contravene any provision of any law, statute, rule, regulation, order, writ, injunction or decree of any court or governmental instrumentality applicable to such Credit Party or its properties and assets, (ii) will conflict with, or result in any breach of, any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of such Credit Party pursuant to, the terms of any promissory note, bond, debenture, indenture, mortgage, deed of trust, credit or loan agreement, or any other material agreement or other instrument, to which such Credit Party is a party or by which it or any of its property or assets are bound or to which it may be subject, or (iii) will violate any provision of the certificate or articles of incorporation, code of regulations or by-laws, or other charter documents of such Credit Party. 7.5 GOVERNMENTAL APPROVALS. No order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, any foreign or domestic governmental or public body or authority, or any subdivision thereof, is required to authorize or is required as a condition to (i) the execution, delivery and performance by any Credit Party of any Credit Document to which it is a party, or (ii) the legality, validity, binding effect or enforceability of any Credit Document to which any Credit Party is a party. 7.6 LITIGATION. There are no actions, suits, investigations, or proceedings pending or, to, the knowledge of the Borrower, threatened with respect to the Borrower or any of its Subsidiaries (i) that have, or could reasonably be expected to have, a Material Adverse Effect, or (ii) which question the validity or enforceability of any of the Credit Documents, the consummation of the Transaction or of any action to be taken by the Borrower or any of the other Credit Parties pursuant to any of the Credit Documents. 7.7 USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of all Loans and Credit Events shall be used (i) to finance the Acquisition, (ii) for the Refinancing, (iii) to make the Expense Payments and (iv) for post-closing working capital and general corporate purposes of the Borrower and its Subsidiaries following the consummation of the Acquisition. (b) No part of the proceeds of any Credit Event will be used directly or indirectly to purchase or carry Margin Stock, or to extend credit to others for the purpose of purchasing or carrying any Margin Stock, in violation of any of the provisions of Regulation T, U or X of the 53 Board of Governors of the Federal Reserve System. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. At no time would more than 25% of the value of the assets of the Borrower or of the Borrower and its consolidated Subsidiaries that are subject to any "arrangement" (as such term is used in section 221.2(g) of such Regulation U) hereunder be represented by Margin Stock. 7.8 FINANCIAL STATEMENTS, ETC. (a) The Borrower has furnished to the Lenders and the Administrative Agent complete and correct copies of (i) the audited consolidated balance sheets of the Borrower and its consolidated subsidiaries as of December 31, 1998, December 31, 1999 and December 31, 2000 and the related audited consolidated statements of income, shareholders' equity, and cash flows of the Borrower and its consolidated subsidiaries for the fiscal years then ended (the "BORROWER FINANCIAL STATEMENTS"), accompanied by the report thereon of KPMG LLP, (ii) to the extent available, the unaudited consolidated balance sheets and consolidated statements of income of the Ferro Divisions for the years ended September 30, 1998, September 30, 1999 and December 31, 2000, and for the three months ended December 31, 1999, (iii) to the extent available, the audited consolidated balance sheet and related consolidated statement of income of DMC2 for the fiscal year ended December 31, 2000, (iv) the unaudited consolidated financial statements of the Borrower and its consolidated subsidiaries, DMC2 and the Ferro Divisions for the six months ended June 30, 2001, and (v) the pro forma consolidated balance sheets and statements of income of the Borrower and its consolidated subsidiaries and the Ferro Divisions for December 31, 2000 and for the six months ended June 30, 2001, in each case giving effect to the Transaction and reflecting the proposed legal and capital structures of the Borrower and its consolidated subsidiaries. All Borrower Financial Statements have been prepared in accordance with GAAP, consistently applied (except as stated therein), fairly present the financial position of the Borrower and its consolidated subsidiaries as of the respective dates indicated and the consolidated results of their operations and cash flows for the respective periods indicated, and have been certified by the chief financial officer of the Borrower. (b) The Borrower has received consideration which is the reasonable equivalent value of the obligations and liabilities that the Borrower has incurred to the Administrative Agent and the Lenders. The Borrower now has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage and is now solvent and able to pay its debts as they mature and the Borrower, as of the Closing Date, owns property having a value, both at fair valuation and at present fair salable value, greater than the amount required to pay the Borrower's debts; and the Borrower is not entering into the Credit Documents with the intent to hinder, delay or defraud its creditors. For purposes of this section 7.8(b), "DEBT" means any liability on a claim, and "CLAIM" means (x) right to payment whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (y) right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. 54 (c) The Borrower has delivered or caused to be delivered to the Lenders prior to the execution and delivery of this Agreement (i) a copy of the Borrower's Report on Form 10-K as filed (without Exhibits) with the SEC for its fiscal year ended December 31, 2000, which contains a general description of the business and affairs of the Borrower and its Subsidiaries, (ii) a confidential information brochure dated July 2001 prepared by the Administrative Agent (with assistance from the Borrower) which contains information with respect to the business, properties and operations of the Borrower and its Subsidiaries (the "CONFIDENTIAL INFORMATION MEMORANDUM"). 7.9 NO MATERIAL ADVERSE CHANGE. Since December 31, 2000, there has been no change in the business, performance, operations, projections, prospects, liabilities or condition (financial or other) of the Borrower, the Ferro Divisions or the Borrower and its Subsidiaries taken as a whole, or their properties and assets considered as an entirety, EXCEPT FOR any changes none of which, individually or in the aggregate, has had or could reasonably be expected to have, a Material Adverse Effect. 7.10 TAX RETURNS AND PAYMENTS. Each of the Borrower and each of its Subsidiaries has filed all federal income tax returns and all other material tax returns, domestic and foreign, required to be filed by it and has paid all material taxes and assessments payable by it which have become due, other than those not yet delinquent and except for those contested in good faith. The Borrower and each of its Subsidiaries has established on its books such charges, accruals and reserves in respect of taxes, assessments, fees and other governmental charges for all fiscal periods as are required by GAAP. The Borrower knows of no proposed assessment for additional federal, foreign or state taxes for any period, or of any basis therefor, which, individually or in the aggregate, taking into account such charges, accruals and reserves in respect thereof as the Borrower and its Subsidiaries have made, could reasonably be expected to have a Material Adverse Effect. 7.11 TITLE TO PROPERTIES, ETC. The Borrower and each of its Subsidiaries has good and marketable title, in the case of real property, and good title (or valid Leaseholds, in the case of any leased property), in the case of all other property, to all of its properties and assets free and clear of Liens other than Permitted Liens. The interests of the Borrower and each of its Subsidiaries in the properties reflected in the most recent consolidated balance sheet of the Borrower referred to in section 7.8, taken as a whole, were sufficient, in the judgment of the Borrower, as of the date of such balance sheet for purposes of the ownership and operation of the businesses conducted by the Borrower and such Subsidiaries. 7.12 LAWFUL OPERATIONS, ETC. Except for known situations or incidents which are reserved for on the most recent consolidated balance sheet of the Borrower referred to in section 7.8 or which, if not so reserved, could not reasonably be expected to have a Material Adverse Effect, the Borrower and each of its Subsidiaries is in full compliance with all material requirements imposed by law, whether federal or state, including (without limitation) Environmental Laws and zoning ordinances. 55 7.13 ENVIRONMENTAL MATTERS. (a) The Borrower and each of its Subsidiaries is in compliance with all Environmental Laws governing its business, except to the extent that any such failure to comply (together with any resulting penalties, fines or forfeitures) would not reasonably be expected to have a Material Adverse Effect. All licenses, permits, registrations or approvals required for the business of the Borrower and each of its Subsidiaries under any Environmental Law have been secured and the Borrower and each of its Subsidiaries is in substantial compliance therewith, except for such licenses, permits, registrations or approvals the failure to secure or to comply therewith is not reasonably likely to have a Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries has received written notice, or otherwise knows, that it is in any respect in noncompliance with, breach of or default under any Environmental Laws, and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute noncompliance, breach of or default thereunder, except in each such case, such noncompliance, breaches or defaults as would not reasonably be expected to, in the aggregate, have a Material Adverse Effect. There are no Environmental Claims pending or, to the best knowledge of the Borrower, threatened wherein an unfavorable decision, ruling or finding would reasonably be expected to have a Material Adverse Effect. (b) Hazardous Materials have not at any time been (i) generated, used, treated or stored on, or transported to or from, any Real Property of the Borrower or any of its Subsidiaries or (ii) released on any such Real Property, in each case where such occurrence or event is not in compliance with Environmental Laws and is reasonably likely to have a Material Adverse Effect. 7.14 COMPLIANCE WITH ERISA. Compliance by the Borrower with the provisions hereof and Credit Events contemplated hereby will not involve any prohibited transaction within the meaning of ERISA or section 4975 of the Code. The Borrower and each of its Subsidiaries, (i) has fulfilled all obligations under minimum funding standards of ERISA and the Code with respect to each Plan that is not a Multiemployer Plan or a Multiple Employer Plan, (ii) has satisfied all respective contribution obligations in respect of each Multiemployer Plan and each Multiple Employer Plan, (iii) is in compliance in all material respects with all other applicable provisions of ERISA and the Code with respect to each Plan, each Multiemployer Plan and each Multiple Employer Plan, and (iv) has not incurred any liability under the Title IV of ERISA to the PBGC (except for annual premiums payable to the PBGC) with respect to any Plan, any Multiemployer Plan, any Multiple Employer Plan, or any trust established thereunder. No Plan or trust created thereunder has been terminated, and there have been no Reportable Events, with respect to any Plan or trust created thereunder or with respect to any Multiemployer Plan or Multiple Employer Plan, which termination or Reportable Event will or could result in the termination of such Plan, Multiemployer Plan or Multiple Employer Plan and give rise to a material liability of the Borrower or any ERISA Affiliate in respect thereof. Except as set forth on Annex III, neither the Borrower nor any ERISA Affiliate is at the date hereof, or has been at any time within the two years preceding the date hereof, an employer required to contribute to any Multiemployer Plan or Multiple Employer Plan, or a "contributing sponsor" (as such term is defined in section 4001 of ERISA) in any Multiemployer Plan or Multiple Employer Plan. 56 Neither the Borrower nor any ERISA Affiliate has any contingent liability with respect to any post-retirement "welfare benefit plan" (as such term is defined in ERISA) except as has been disclosed to the Lenders in writing. 7.15 INTELLECTUAL PROPERTY, ETC. The Borrower and each of its Subsidiaries has obtained or has the right to use all material patents, trademarks, service marks, trade names, copyrights, licenses and other rights with respect to the foregoing necessary for the present and planned future conduct of its business, without any known conflict with the rights of others, EXCEPT for such patents, trademarks, service marks, trade names, copyrights, licenses and rights, the loss of which, and such conflicts, which in any such case individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. 7.16 INVESTMENT COMPANY ACT, ETC. Neither the Borrower nor any of its Subsidiaries is subject to regulation with respect to the creation or incurrence of Indebtedness under the Investment Company Act of 1940, as amended, the ICC Termination Act of 1995, as amended, the Federal Power Act, as amended, the Public Utility Holding Company Act of 1935, as amended, or any applicable state public utility law. 7.17 BURDENSOME CONTRACTS; LABOR RELATIONS. Neither the Borrower nor any of its Subsidiaries (i) is subject to any burdensome contract, agreement, corporate restriction, judgment, decree or order, (ii) is a party to any labor dispute affecting any bargaining unit or other group of employees generally, (iii) is subject to any material strike, slow down, workout or other concerted interruptions of operations by employees of the Borrower or any Subsidiary, whether or not relating to any labor contracts, (iv) is subject to any significant pending or, to the knowledge of the Borrower, threatened, unfair labor practice complaint, before the National Labor Relations Board, and (v) is subject to any significant pending or, to the knowledge of the Borrower, threatened, grievance or significant arbitration proceeding arising out of or under any collective bargaining agreement, (vi) is subject to any significant pending or, to the knowledge of the Borrower, threatened, significant strike, labor dispute, slowdown or stoppage, or (vii) is, to the knowledge of the Borrower, involved or subject to any union representation organizing or certification matter with respect to the employees of the Borrower or any of its Subsidiaries, EXCEPT (with respect to any matter specified in any of the above clauses), for such matters as, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 7.18 EXISTING INDEBTEDNESS. Annex IV sets forth a true and complete list, as of the date or dates set forth therein, of all Indebtedness of the Borrower and each of its Subsidiaries, on a consolidated basis, which (i) has an outstanding principal amount of at least $5,000,000, or may be incurred pursuant to existing commitments or lines of credit, or (ii) is secured by any Lien on any property of the Borrower or any Subsidiary, and which will be outstanding on the Closing Date after giving effect to any Borrowing hereunder which is expected to be made on the Closing Date, other than the Indebtedness created under the Credit Documents (all such Indebtedness, whether or not in a principal amount meeting such threshold and required to be so 57 set forth on Annex IV, herein the "EXISTING INDEBTEDNESS"). The Borrower has provided to the Administrative Agent prior to the date of execution hereof true and complete copies (or summary descriptions) of all agreements and instruments governing the Indebtedness set forth on Annex IV (the "EXISTING INDEBTEDNESS AGREEMENTS"). 7.19 TRUE AND COMPLETE DISCLOSURE. All factual information (taken as a whole) heretofore or contemporaneously furnished by or on behalf of the Borrower or any of its Subsidiaries in writing to the Administrative Agent or any Lender for purposes of or in connection with this Agreement or any transaction contemplated herein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of such person in writing to any Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any material fact necessary to make such information (taken as a whole) not misleading at such time in light of the circumstances under which such information was provided, except that any such future information which may consist of financial projections prepared by the Borrower is only represented herein as being based on good faith estimates and assumptions believed by such persons to be reasonable at the time made, it being recognized by the Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ materially from the projected results. SECTION 8. AFFIRMATIVE COVENANTS. The Borrower hereby covenants and agrees that on the Effective Date and thereafter so long as this Agreement is in effect and until such time as the Total Commitment has been terminated, no Notes remain outstanding and the Loans, together with interest, Fees and all other Obligations incurred hereunder and under the other Credit Documents, have been paid in full: 8.1 REPORTING REQUIREMENTS. The Borrower will furnish to each Lender and the Administrative Agent: (a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any event within 95 days after the close of each fiscal year of the Borrower, the consolidated balance sheets of the Borrower and its consolidated Subsidiaries as at the end of such fiscal year and the related consolidated statements of income, of stockholders' equity and of cash flows for such fiscal year, in each case setting forth comparative figures for the preceding fiscal year, all in reasonable detail and accompanied by the opinion with respect to such consolidated financial statements of independent public accountants of recognized national standing selected by the Borrower, which opinion shall be unqualified and shall (i) state that such accountants audited such consolidated financial statements in accordance with generally accepted auditing standards, that such accountants believe that such audit provides a reasonable basis for their opinion, and that in their opinion such consolidated financial statements present fairly, in all material 58 respects, the consolidated financial position of the Borrower and its consolidated subsidiaries as at the end of such fiscal year and the consolidated results of their operations and cash flows for such fiscal year in conformity with generally accepted accounting principles, or (ii) contain such statements as are customarily included in unqualified reports of independent accountants in conformity with the recommendations and requirements of the American Institute of Certified Public Accountants (or any successor organization). Such financial statements and opinion shall be accompanied by a certificate of such accountants stating that during the course of their examination no Default or Event of Default existing at the end of such fiscal year came to their attention, or if any did come to their attention, briefly describing the same. (b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any event within 50 days after the close of each of the first three fiscal quarters in each fiscal year of the Borrower, the unaudited consolidated balance sheets of the Borrower and its consolidated Subsidiaries as at the end of such fiscal quarter and the related unaudited consolidated statements of income and of cash flows for such fiscal quarter and/or for the fiscal year to date, and setting forth, in the case of such unaudited consolidated statements of income and of cash flows, comparative figures for the related periods in the prior fiscal year, and which shall be certified on behalf of the Borrower by the Chief Financial Officer or other Authorized Officer of the Borrower, subject to changes resulting from normal year-end audit adjustments. (c) OFFICER'S COMPLIANCE CERTIFICATES. At the time of the delivery of the financial statements provided for in sections 8.1(a) and (b), a certificate on behalf of the Borrower of the Chief Financial Officer or other Authorized Officer of the Borrower to the effect that, to the best knowledge of the Borrower, no Default or Event of Default exists or, if any Default or Event of Default does exist, specifying the nature and extent thereof and the actions the Borrower proposes to take with respect thereto, which certificate shall set forth the calculations required to establish compliance with the provisions of sections 9.6 and 9.7 of this Agreement. (d) NOTICE OF DEFAULT. Promptly, and in any event within 3 Business Days after the Borrower or any of its Subsidiaries obtains knowledge thereof, notice of the occurrence of any event which constitutes a Default or Event of Default, which notice shall specify the nature thereof, the period of existence thereof and what action the Borrower proposes to take with respect thereto. (e) ERISA. Promptly, and in any event within 10 Business Days after the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate knows of the occurrence of any of the following, the Borrower will deliver to each of the Lenders a certificate on behalf of the Borrower of an Authorized Officer of the Borrower setting forth the full details as to such occurrence and the action, if any, that the Borrower, such Subsidiary or such ERISA Affiliate is required or proposes to take, together with any 59 notices required or proposed to be given to or filed with or by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator with respect thereto: (i) that a Reportable Event has occurred with respect to any Plan; (ii) the institution of any steps by the Borrower, any ERISA Affiliate, the PBGC or any other person to terminate any Plan; (iii) the institution of any steps by the Borrower or any ERISA Affiliate to withdraw from any Plan; (iv) the institution of any steps by the Borrower or any Subsidiary to withdraw from any Multiemployer Plan or Multiple Employer Plan, if such withdrawal could result in withdrawal liability (as described in Part 1 of Subtitle E of Title IV of ERISA) in excess of $5,000,000; (v) a non-exempt "prohibited transaction" within the meaning of section 406 of ERISA in connection with any Plan; (vi) that a Plan has an Unfunded Current Liability exceeding $5,000,000; (vii) any material increase exceeding $5,000,000 in the contingent liability of the Borrower or any Subsidiary with respect to any post-retirement welfare liability; or (viii) the taking of any action by, or the threatening of the taking of any action by, the Internal Revenue Service, the Department of Labor or the PBGC with respect to any of the foregoing. (f) ENVIRONMENTAL MATTERS. Promptly upon, and in any event within 10 Business Days after, an officer of the Borrower or any of its Subsidiaries obtains knowledge thereof, notice of one or more of the following environmental matters: (i) any pending or overtly threatened in writing material Environmental Claim against the Borrower or any of its Subsidiaries or any Real Property owned or operated by the Borrower or any of its Subsidiaries; (ii) any condition or occurrence on or arising from any Real Property owned or operated by the Borrower or any of its Subsidiaries that (A) results in material noncompliance by the Borrower or any of its Subsidiaries with any applicable Environmental Law or (B) would reasonably be expected to form the basis of a material Environmental Claim against the Borrower or any of its Subsidiaries or any such Real Property; (iii) any condition or occurrence on any Real Property owned, leased or operated by the Borrower or any of its Subsidiaries that would reasonably be expected to cause such Real Property to be subject to any material restrictions on the ownership, occupancy, use or transferability by the Borrower or any of its Subsidiaries of such Real 60 Property under any Environmental Law; and (iv) the taking of any material removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Real Property owned, leased or operated by the Borrower or any of its Subsidiaries as required by any Environmental Law or any governmental or other administrative agency. All such notices shall describe in reasonable detail the nature of the Environmental Claim, the Borrower's or such Subsidiary's response thereto and the potential exposure in dollars, if known or reasonably quantifiable, of the Borrower and its Subsidiaries with respect thereto. (g) SEC REPORTS AND REGISTRATION STATEMENTS. Promptly after transmission thereof or other filing with the SEC, copies of all registration statements (other than the exhibits thereto and any registration statement on Form S-8 or its equivalent) and all annual, quarterly or current reports that the Borrower or any of its Subsidiaries files with the SEC on Form 10-K, 10-Q or 8-K (or any successor forms). (h) ANNUAL AND QUARTERLY REPORTS, PROXY STATEMENTS AND OTHER REPORTS DELIVERED TO STOCKHOLDERS GENERALLY. Promptly after transmission thereof to its stockholders, copies of all annual, quarterly and other reports and all proxy statements that the Borrower furnishes to its stockholders generally. (i) OTHER INFORMATION. With reasonable promptness, such other information or documents (financial or otherwise) relating to the Borrower or any of its Subsidiaries as any Lender may reasonably request from time to time. 8.2 BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will cause each of its Subsidiaries to, (i) keep proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower or such Subsidiaries, as the case may be, in accordance with GAAP; and (ii) permit, upon reasonable notice to the Chief Financial Officer of the Borrower, officers and designated representatives of the Administrative Agent or any of the Lenders to visit and inspect any of the properties or assets of the Borrower and any of its Subsidiaries in whomsoever's possession (but only to the extent the Borrower or such Subsidiary has the right to do so to the extent in the possession of another person), to examine the books of account of the Borrower and any of its Subsidiaries, and make copies thereof and take extracts therefrom, and to discuss the affairs, finances and accounts of the Borrower and of any of its Subsidiaries with, and be advised as to the same by, its and their officers and independent accountants and independent actuaries, if any, all at such reasonable times and intervals and to such reasonable extent as the Administrative Agent or any of the Lenders may request. 8.3 INSURANCE. The Borrower will, and will cause each of its Subsidiaries to, (i) maintain insurance coverage by such insurers and in such forms and amounts and against such risks as are generally consistent with the insurance coverage maintained by the Borrower and its Subsidiaries at the date hereof, and (ii) forthwith upon any Lender's written request, furnish to 61 such Lender (with a copy to the Administrative Agent) such information about such insurance as such Lender may from time to time reasonably request, which information shall be prepared in form and detail satisfactory to such Lender and certified by an Authorized Officer of the Borrower. 8.4 PAYMENT OF TAXES AND CLAIMS. The Borrower will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid, could become a Lien or charge upon any properties of the Borrower or any of its Subsidiaries; PROVIDED that neither the Borrower nor any of its Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP; and PROVIDED, FURTHER, that the Borrower will not be considered to be in default of any of the provisions of this sentence if the Borrower or any Subsidiary fails to pay any such amount which, individually or in the aggregate, is immaterial and such nonpayment could not reasonably be expected to result in a Material Adverse Effect. 8.5 CORPORATE FRANCHISES. The Borrower will do, and will cause each of its Subsidiaries to do, or cause to be done, all things necessary to preserve and keep in full force and effect its corporate existence, rights and authority; PROVIDED that nothing in this section 8.5 shall be deemed to prohibit (i) any transaction permitted by section 9.2; (ii) the termination of existence of any Subsidiary if (A) the Borrower determines that such termination is in its best interest and (B) such termination is not adverse in any material respect to the Lenders; or (iii) the loss of any rights, authorities or franchises if the loss thereof, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 8.6 GOOD REPAIR. The Borrower will, and will cause each of its Subsidiaries to, ensure that its material properties and equipment used or useful in its business in whomsoever's possession they may be, are kept in good repair, working order and condition, normal wear and tear excepted, and that from time to time there are made in such properties and equipment all needful and proper repairs, renewals, replacements, extensions, additions, betterments and improvements, thereto, to the extent and in the manner customary for companies in similar businesses. 8.7 COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will cause each of its Subsidiaries to, comply, in all material respects, with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property, other than those (i) the noncompliance with which would not have, and which would not be reasonably expected to have, a Material Adverse Effect; and/or (ii) imposed by Environmental Laws, as to which section 8.8 shall be applicable. 62 8.8 COMPLIANCE WITH ENVIRONMENTAL LAWS. Without limitation of the covenants contained in section 8.7 hereof, the Borrower will comply, and will cause each of its Subsidiaries to comply, in all material respects, with all Environmental Laws applicable to the ownership, lease or use of all Real Property now or hereafter owned, leased or operated by the Borrower or any of its Subsidiaries, and will promptly pay or cause to be paid all costs and expenses incurred in connection with such compliance, EXCEPT to the extent that such compliance with Environmental Laws is being contested in good faith and by appropriate proceedings and for which adequate reserves have been established to the extent required by GAAP, and an adverse outcome in such proceedings is not reasonably expected to have a Material Adverse Effect. 8.9 FISCAL YEARS, FISCAL QUARTERS. If the Borrower shall change any of its or any of its Subsidiaries' fiscal years or fiscal quarters (other than the fiscal year or fiscal quarters of a person which becomes a Subsidiary, made at the time such person becomes a Subsidiary to conform to the Borrower's fiscal year and fiscal quarters), the Borrower will promptly, and in any event within 30 days following any such change, deliver a notice to the Administrative Agent and the Lenders describing such change and any material accounting entries made in connection therewith and stating whether such change will have any impact upon any financial computations to be made hereunder, and if any such impact is foreseen, describing in reasonable detail the nature and extent of such impact. If the Required Lenders determine that any such change will have any impact upon any financial computations to be made hereunder which is adverse to the Lenders, the Borrower will, if so requested by the Administrative Agent, enter into an amendment to this Agreement, in form and substance reasonably satisfactory to the Administrative Agent and the Required Lenders, modifying any of the financial covenants or related provisions hereof in such manner as the Required Lenders determine is necessary to eliminate such adverse effect. 8.10 HEDGE AGREEMENTS, ETC. If the Borrower determines to enter into any Hedge Agreement, it may do so, and if any Subsidiary of the Borrower determines to enter into any Hedge Agreement, the Borrower will ensure that it does so, but only if such Hedge Agreement is entered into in compliance with the following requirements: (i) the principal purpose of such Hedge Agreement, insofar as the Borrower or any Subsidiary is concerned, is to provide protection to the Borrower or any such Subsidiary from fluctuations and other changes in interest rates, currency exchange rates and/or raw material or commodity prices, as and to the extent considered reasonably necessary by the Borrower; and (ii) such Hedge Agreement does not expose the Borrower or its Subsidiaries to predominantly speculative risks unrelated to the amount of assets, Indebtedness or other liabilities intended to be subject to coverage on a notional basis under such Hedge Agreement and any other Hedge Agreements related thereto. 8.11 CERTAIN SUBSIDIARIES TO JOIN IN SUBSIDIARY GUARANTY. (a) In the event that at any time after the Closing Date (x) the Borrower has any Material Subsidiary (other than a Foreign Subsidiary as to which section 8.11(b) applies) which is not a party to the Subsidiary Guaranty, or 63 (y) an Event of Default shall have occurred and be continuing and the Borrower has any Subsidiary which is not a party to the Subsidiary Guaranty, THEN the Borrower will notify the Administrative Agent in writing of such event, identifying the Subsidiary in question and referring specifically to the rights of the Administrative Agent and the Lenders under this section. The Borrower will, within 30 days following request therefor from the Administrative Agent (who may give such request on its own initiative and who shall so give such request if so instructed by the Required Lenders), cause such Subsidiary to deliver to the Administrative Agent, in sufficient quantities for the Lenders, (i) a Subsidiary Guaranty (as modified, amended or supplemented from time to time in accordance with the terms thereof and hereof, the "SUBSIDIARY GUARANTY"), substantially in the form attached hereto as Exhibit C, if the Subsidiary Guaranty has not previously been executed and delivered, (ii) if the Subsidiary Guaranty has previously been executed and delivered, a joinder supplement, reasonably satisfactory in form and substance to the Administrative Agent and the Required Lenders, duly executed by such Subsidiary, pursuant to which such Subsidiary joins in the Subsidiary Guaranty as a guarantor thereunder, and (ii) if such Subsidiary is a corporation, resolutions of the Board of Directors of such Subsidiary, certified by the Secretary or an Assistant Secretary of such Subsidiary as duly adopted and in full force and effect, authorizing the execution and delivery of such joinder supplement, or if such Subsidiary is not a corporation, such other evidence of the authority of such Subsidiary to execute such joinder supplement as the Administrative Agent may reasonably request. (b) Notwithstanding the foregoing provisions of this section 8.11, the Borrower shall not, unless an Event of Default shall have occurred and be continuing, be required to cause a Foreign Subsidiary to join in the Subsidiary Guaranty if to do so would subject the Borrower to liability for additional United States income taxes by virtue of section 956 of the Code in an amount the Borrower considers material. 8.12 MOST FAVORED COVENANT STATUS. Should the Borrower at any time after the Effective Date, issue or guarantee any unsecured Indebtedness for money borrowed or represented by bonds, notes, debentures or similar securities in an aggregate amount exceeding $50,000,000, to any lender or group of lenders acting in concert with one another, or one or more institutional investors, pursuant to a loan agreement, credit agreement, note purchase agreement, indenture, guaranty or other similar instrument, which agreement, indenture, guaranty or instrument, includes affirmative or negative business or financial covenants (or any events of default or other type of restriction which would have the practical effect of any affirmative or negative business or financial covenant, including, without limitation, any "put" or mandatory prepayment of such Indebtedness upon the occurrence of a "change of control") which are applicable to the Borrower, other than those set forth herein or in any of the other Credit Documents, the Borrower shall promptly so notify the Administrative Agent and the Lenders and, if the Administrative Agent shall so request by written notice to the Borrower (after a determination has been made by the Required Lenders that any of the above-referenced documents or instruments contain any such provisions, which either individually or in the 64 aggregate, are more favorable to the holders of such unsecured Indebtedness than any of the provisions set forth herein), the Borrower, the Administrative Agent and the Lenders shall promptly amend this Agreement to incorporate some or all of such provisions, in the discretion of the Administrative Agent and the Required Lenders, into this Agreement and, to the extent necessary and reasonably desirable to the Administrative Agent and the Required Lenders, into any of the other Credit Documents, all at the election of the Administrative Agent and the Required Lenders. 8.13 SENIOR DEBT. The Borrower will at all times ensure that (i) the claims of the Lenders in respect of the Obligations of the Borrower will in all respects rank prior to or on a parity with the claims of every senior unsecured creditor of the Borrower, and (ii) any Indebtedness of the Borrower which is subordinated in any manner to the claims of any other creditor of the Borrower will be subordinated in like manner to such claims of the Lenders. 8.14 DEBT RATING DOWNGRADE. If the Borrower's Index Debt Rating ceases to be Investment Grade by both Rating Agencies at any time following the Closing Date, the Borrower will, and will cause each of its Domestic Subsidiaries that are Material Subsidiaries to, within 30 days following the date of such downgrade, pledge to the Administrative Agent, for the benefit of the Lenders and the obligees of the Additional Secured Obligations, pursuant to pledge agreements (in form and substance satisfactory to the Administrative Agent), (i) 100%, in the case of each Domestic Subsidiary that is a Material Subsidiary, and 65%, in the case of each Foreign Subsidiary that is a Material Subsidiary, of the issued and outstanding Capital Stock of each of its Material Subsidiaries and (ii) all of the tangible and intangible assets (other than trade receivables and related collateral, credit support and similar rights sold pursuant to the Permitted Receivables Programs) of the Borrower and each of its Domestic Subsidiaries that are Material Subsidiaries, in each case as security for the Obligations and the Additional Secured Obligations. The Borrower will, and will cause each such Material Subsidiary to, take all such actions as requested by the Administrative Agent to ensure that the Administrative Agent has a first priority perfected Lien (subject to Permitted Liens) on and security interest in all Capital Stock and all tangible and intangible assets of the Borrower and its Material Subsidiaries pledged in favor of the Administrative Agent and to deliver legal opinions addressed to all Lenders, the obligees of the Additional Secured Obligations and the Administrative Agent, in form and substance and from counsel, reasonably acceptable to the Administrative Agent, relating to the actions described in this section. The Administrative Agent and the applicable obligees of the Additional Secured Obligations, or agents on their behalf, will enter into an intercreditor agreement in form and substance satisfactory to each of them with respect to the collateral pledged pursuant to this section. SECTION 9. NEGATIVE COVENANTS. The Borrower hereby covenants and agrees that on the Effective Date and thereafter for so long as this Agreement is in effect and until such time as the Total Commitment has been 65 terminated, no Notes remain outstanding and the Loans, together with interest, Fees and all other Obligations incurred hereunder and under the other Credit Documents, have been paid in full: 9.1 CHANGES IN BUSINESS. Neither the Borrower nor any of its Subsidiaries will engage in any business if, as a result, the general nature of the business, taken on a consolidated basis, which would then be engaged in by the Borrower and its Subsidiaries, would be substantially changed from the general nature of the business engaged in by the Borrower and its Subsidiaries on the Effective Date. 9.2 CONSOLIDATION, MERGER, ASSET SALES, ETC. The Borrower will not, and will not permit any Subsidiary to, (i) enter into any transaction of merger or consolidation, (ii) sell all or substantially all of its Property and business, (iii) otherwise make or effect any Asset Sale, or (iv) agree to do any of the foregoing at any future time, EXCEPT that the following shall be permitted: (a) CERTAIN INTERCOMPANY MERGERS, ETC. If no Default or Event of Default shall have occurred and be continuing or would result therefrom, (i) the merger, consolidation or amalgamation of any Subsidiary of the Borrower with or into the Borrower; PROVIDED that the Borrower is the surviving or continuing or resulting corporation; (ii) the merger, consolidation or amalgamation of any Subsidiary of the Borrower with or into another Subsidiary of the Borrower; PROVIDED that the surviving or continuing or resulting corporation is a Wholly-Owned Subsidiary of the Borrower; and PROVIDED, FURTHER, that if any such Subsidiary is a guarantor under the Subsidiary Guaranty, the surviving or continuing or resulting corporation is or contemporaneously therewith becomes a guarantor under the Subsidiary Guaranty; (iii) the liquidation, winding up or dissolution of any Subsidiary of the Borrower; (iv) the making of any Asset Sale by the Borrower to any Wholly-Owned Subsidiary; (v) the making of any Asset Sale by any Subsidiary to the Borrower; and (vi) the making of any Asset Sale by any Subsidiary of the Borrower to any Wholly-Owned Subsidiary of the Borrower; PROVIDED that if the selling Subsidiary is a guarantor under the Subsidiary Guaranty the purchasing Subsidiary must be, or contemporaneously become, a guarantor under the Subsidiary Guaranty. 66 (b) ASSET SALES IN PERMITTED RECEIVABLES PROGRAMS. The Borrower or any of its Subsidiaries may make any Asset Sale consisting of trade receivables and related collateral, credit support and similar rights, pursuant to one or more receivables programs, to a person who is not a Subsidiary of the Borrower; PROVIDED that (i) the consideration to be received by the Borrower and its Subsidiaries for any such Asset Sale consists of cash; (ii) no Default or Event of Default shall have occurred and be continuing or would result therefrom; and (iii) the aggregate outstanding balance of the trade receivables subject to all such programs at any point in time is not in excess of $300,000,000; PROVIDED that if at any time the Leverage Ratio is greater than 3.00 to 1.00 after giving pro forma effect to such receivables programs or the Index Debt Rating is not Investment Grade, the aggregate outstanding balance of the trade receivables subject to all such programs at such time may not exceed $200,000,000 (collectively, the "PERMITTED RECEIVABLES PROGRAMS"). (c) OTHER PERMITTED ASSET SALES. In addition to the Asset Sales permitted in sections 9.2(a) and 9.2(b) above, if no Default or Event of Default shall have occurred and be continuing or would result therefrom, the Borrower or any of its Subsidiaries may make any other Asset Sale to a person who is not a Subsidiary of the Borrower; PROVIDED that: (i) in the case of any such Asset Sale or related series of Asset Sales where the fair value (as determined by management of the Borrower) of the Property covered thereby exceeds $50,000,000 in the aggregate, at least 75% of the consideration to be received by the Borrower and its Subsidiaries consists of cash; (ii) the cumulative aggregate consideration for all such Asset Sales completed during the calendar year ended December 31, 2001, or any subsequent calendar year, does not exceed $140,000,000 in the case of any such calendar year; and (iii) in the case of any such transaction involving consideration in excess of $50,000,000, at least five Business Days prior to the date of completion of such transaction the Borrower shall have delivered to the Administrative Agent an officer's certificate executed on behalf of the Borrower by an Authorized Officer of the Borrower, which certificate shall contain (1) a description of the proposed transaction, the date such transaction is scheduled to be consummated, the estimated purchase price or other consideration for such transaction, (2) a certification that no Default or Event of Default has occurred and is continuing, or would result from consummation of such transaction, and (3) which shall (if requested by the Administrative Agent) include a certified copy of the draft or definitive documentation pertaining thereto; 67 For the avoidance of doubt, no amounts in respect of Asset Sales made in Permitted Receivables Programs pursuant to section 9.2(b) shall be included in any dollar computations pursuant to this section 9.2(c). 9.3 RESTRICTIONS ON ACQUISITIONS. The Borrower will not, and will not permit any Subsidiary to, consummate (a) Acquisitions for an aggregate consideration in excess of $50,000,000 in any fiscal year if, at the time of any such Acquisition, the Leverage Ratio would be greater than or equal to 3.00 to 1.00 after giving pro forma effect to such Acquisition, or (b) any single Acquisition for an aggregate consideration in excess of $75,000,000 for such Acquisition (PROVIDED that the aggregate amount of all Acquisitions consummated during the term of this Agreement does not exceed $300,000,000) if, at the time of such Acquisition, the Leverage Ratio would be less than 3.00 to 1.00 after giving pro forma effect to such Acquisition. Without limitation of the foregoing, the Borrower will not directly or indirectly use any proceeds of a Credit Event hereunder to finance an Acquisition which is actively opposed by the Board of Directors (or similar governing body) of the selling person or the person whose equity interests are to be acquired, UNLESS all of the Lenders specifically approve or consent to such Acquisition in writing. 9.4 LIMITATION ON SALES AND LEASEBACKS. The Borrower will not itself, and it will not permit any Domestic Subsidiary to, enter into any arrangement with any bank, insurance company or other lender or investor (not including the Borrower or any Subsidiary) or to which any such lender or investor is a party, providing for the leasing by the Borrower or any Domestic Subsidiary for a period, including renewals, in excess of three years of any Principal Domestic Manufacturing Property which has been or is to be sold or transferred, more than 120 days after the acquisition thereof or the completion of construction and commencement of full operation thereof, by the Borrower or any Domestic Subsidiary to such lender or investor or to any person to whom funds have been or are to be advanced by such lender or investor on the security of such Principal Domestic Manufacturing Property (herein referred to as a "SALE AND LEASEBACK TRANSACTION") unless either: (a) the Borrower or such Domestic Subsidiary could create Debt secured by a Mortgage on the Principal Domestic Manufacturing Property to be leased back in an amount equal to the Attributable Debt with respect to such sale and leaseback transaction without equally and ratably securing the Obligations, or (b) the Borrower within 120 days after the sale or transfer shall have been made by the Borrower or by any such Domestic Subsidiary, applies an amount equal to the greater of (i) the net proceeds of the sale of the Principal Domestic Manufacturing Property sold and leased back pursuant to such arrangement or (ii) the fair market value of the Principal Domestic Manufacturing Property so sold and leased back at the time of entering into such arrangements (as determined by any two of the following: the Chairman of the Board of the Borrower, its President, any Vice President, Finance of the Borrower, its Treasurer and its Controller) to the retirement of Funded Debt of the 68 Borrower which is PARI PASSU with the Obligations; PROVIDED that the amount to be applied to the retirement of Funded Debt of the Borrower shall be reduced by (a) the amount by which the Commitment Amount was permanently reduced during the 120 days after such sale, if any such reduction in fact occurred, and (b) the principal amount of such Funded Debt, other than Obligations, voluntarily retired by the Borrower within 120 days after such sale. Notwithstanding the foregoing, no retirement referred to in this clause (2) may be effected by payment at maturity or pursuant to any mandatory sinking fund payment or any mandatory prepayment provision. 9.5 INDEBTEDNESS. The Borrower will not, and will not permit any of its Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness of the Borrower or any of its Subsidiaries, EXCEPT: (a) CREDIT DOCUMENTS: Indebtedness incurred under this Agreement and the other Credit Documents; (b) EXISTING INDEBTEDNESS: Existing Indebtedness and any refinancing, extension, renewal or refunding of any such Existing Indebtedness not involving an increase in the principal amount thereof or a reduction of more than 10% in the remaining weighted average life to maturity thereof (computed in accordance with standard financial practice); PROVIDED that any Existing Indebtedness set forth on Annex IV or otherwise referred to in section 6.1 as being intended to be refinanced by Loans incurred hereunder or otherwise retired, may not be otherwise refinanced; (c) INTERCOMPANY DEBT: unsecured Indebtedness of (i) the Borrower owed to any of its Subsidiaries and (ii) any of the Borrower's Subsidiaries owed to the Borrower or to another Subsidiary of the Borrower; (d) HEDGE AGREEMENTS: Indebtedness of the Borrower and its Subsidiaries under Hedge Agreements; (e) FIVE YEAR CREDIT FACILITY AGREEMENT: Indebtedness incurred under the Five Year Credit Facility Agreement; (f) ADDITIONAL UNSECURED INDEBTEDNESS: additional unsecured Indebtedness of the Borrower and its Subsidiaries in an aggregate principal amount not to exceed $25,000,000 at any time outstanding; (g) PERMITTED RECEIVABLES PROGRAMS: Indebtedness incurred under the Permitted Receivables Programs; provided that, until the Five Year Credit Facility Term Loans have been repaid in full, any increase in the amount of such Indebtedness over the amount existing on the Closing Date shall be applied to a prepayment of the Loans pursuant to section 5.2(c); 69 (h) BOND ISSUANCES: Indebtedness incurred in connection with the issuance by the Borrower of public or private debt securities; and (i) ADDITIONAL INDEBTEDNESS AND GUARANTY OBLIGATIONS: additional Indebtedness and Guaranty Obligations of the Borrower and/or any of its Subsidiaries not otherwise permitted pursuant to the foregoing clauses, without limitation as to aggregate amount; PROVIDED that at the time of incurrence thereof and after giving effect thereto, (i) no Event of Default shall have occurred and be continuing or shall result therefrom, (ii) if such Indebtedness or Guaranty Obligation is secured by any collateral, such Indebtedness is permitted by this Agreement, and (iii) the Borrower would have been in compliance with the covenants contained in sections 9.6 and 9.7 hereof if such Indebtedness had been incurred at the beginning of the most recent Testing Period for which financial information has been furnished to the Lenders hereunder, and such Indebtedness remained outstanding throughout such Testing Period; PROVIDED, FURTHER, that if, at the time of incurrence of such Indebtedness and after giving pro forma effect thereto, the Leverage Ratio is greater than 3.00 to 1.00 or the Index Debt Rating is not Investment Grade, the Borrower and its Subsidiaries may only incur and suffer to exist up to $50,000,000 in aggregate principal amount of such additional Indebtedness and Guaranty Obligations; PROVIDED, FURTHER, that, in any event, the amount of secured Indebtedness permitted hereunder, other than in connection with any Permitted Receivables Program, shall not exceed $20,000,000 at any time outstanding. 9.6 LEVERAGE RATIO. The Borrower will not permit the Leverage Ratio during any period set forth below to exceed the amount set forth opposite such period: PERIOD LEVERAGE RATIO 12/31/01 to 06/29/02 4.75:1 06/30/02 to 09/29/02 4.50:1 09/30/02 to 12/30/02 4.00:1 12/31/02 to 06/29/03 3.75:1 06/30/03 to 12/30/03 3.25:1 12/31/03 and thereafter 3.00:1 9.7 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the Fixed Charge Coverage Ratio for any Testing Period ending on a date set forth below to be less than the amount set forth opposite such date: DATE FIXED CHARGE COVERAGE RATIO 12/31/01 1.25:1 70 03/31/02 1.35:1 06/30/02 1.50:1 09/30/02 1.75:1 12/31/02 1.75:1 03/31/03 2.00:1 06/30/03 2.15:1 09/30/03 2.25:1 12/31/03 2.50:1 03/31/04 2.50:1 06/30/04 2.75:1 09/30/04 2.75:1 12/31/04 3.00:1 03/31/05 3.50:1 and thereafter 9.8 NO STOCK REPURCHASES WHILE INDEX DEBT RATING IS NOT INVESTMENT GRADE, ETC. The Borrower will not, at any time when its Index Debt Rating is not Investment Grade, directly or indirectly make, or permit any of its Subsidiaries to directly or indirectly make, any purchase, redemption, retirement or other acquisition of (i) any shares of Capital Stock (other than the Series A ESOP Convertible Preferred Stock of the Borrower) of any class of the Borrower (other than for a consideration consisting solely of Capital Stock of the same class of the Borrower), or (ii) any warrants, rights or options to acquire, or any securities convertible into or exchangeable for, any Capital Stock (other than the Series A ESOP Convertible Preferred Stock of the Borrower) of the Borrower. 9.9 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not permit any Subsidiary to, enter into any transaction or series of transactions with any Affiliate (other than, in the case of the Borrower, any Subsidiary, and in the case of a Subsidiary, the Borrower or another Subsidiary) other than in the ordinary course of business of and pursuant to the reasonable requirements of the Borrower's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than would obtain in a comparable arm's-length transaction with a person other than an Affiliate, EXCEPT agreements and transactions with and payments to employees, officers, directors, shareholders and other Affiliates which are either (i) entered into in the ordinary course of business and not prohibited by any of the provisions of this Agreement, or (ii) entered into outside the ordinary course of business, approved by the directors or shareholders of the Borrower, and not prohibited by any of the provisions of this Agreement. 71 9.10 PLAN TERMINATIONS, MINIMUM FUNDING, ETC. The Borrower will not, and will not permit any ERISA Affiliate to, (i) terminate any Plan or Plans so as to result in liability of the Borrower or any ERISA Affiliate to the PBGC in excess of, in the aggregate, $5,000,000, (ii) permit to exist one or more events or conditions which reasonably present a material risk of the termination by the PBGC of any Plan or Plans with respect to which the Borrower or any ERISA Affiliate would, in the event of such termination, incur liability to the PBGC in excess of such amount in the aggregate, or (iii) fail to comply with the minimum funding standards of ERISA and the Code with respect to any Plan. 9.11 RESTRICTED PAYMENTS. The Borrower will not declare, pay or make any payment, dividend, distribution or exchange (in cash, property or obligations) on or in respect of any class of Capital Stock (now or hereafter outstanding) of the Borrower or on any warrants, options or other rights with respect to any class of Capital Stock (now or hereafter outstanding) of the Borrower (other than (i) dividends or distributions payable in its Capital Stock or warrants to purchase its Capital Stock and (ii) splits or reclassifications of its Capital Stock into additional or other shares of its Capital Stock) or apply any of its funds, property or assets to the purchase, redemption, exchange, sinking fund or other retirement of any shares of any class of Capital Stock (now or hereafter outstanding, other than the Series A ESOP Convertible Preferred Stock) of the Borrower, or warrants, options or other rights with respect to any class of Capital Stock (now or hereafter outstanding, other than the Series A ESOP Convertible Preferred Stock) of the Borrower (the foregoing prohibited acts being herein collectively referred to as "RESTRICTED PAYMENTS") in an amount in excess of $30,000,000 in the aggregate in any fiscal year if, at any time during such fiscal year, the Leverage Ratio is greater than 3.00 to 1.00 after giving pro forma effect to such Restricted Payments. 9.12 RESTRICTIVE AGREEMENTS. The Borrower will not, and will not permit any of its Subsidiaries to, enter into any agreement prohibiting (a) the creation or assumption of any Lien upon its properties, revenues or assets, whether now owned or hereafter acquired, (b) its ability to amend or otherwise modify any Credit Document or (c) the ability of any Subsidiary to make any payments, directly or indirectly, to the Borrower, including by way of dividends, advances, repayments of loans, reimbursements of management and other intercompany charges, expenses and accruals or other returns on investments. The foregoing prohibitions shall not apply to restrictions contained (i) in any Credit Document or (ii) in the case of clause (a), any agreement governing any Indebtedness permitted by section 9.5 as to the assets financed with the proceeds of such Indebtedness. SECTION 10. EVENTS OF DEFAULT. 10.1 EVENTS OF DEFAULT. Any of the following specified events shall constitute an Event of Default (each an "EVENT OF DEFAULT"): (a) PAYMENTS: the Borrower shall (i) default in the payment when due of any principal of the Loans; or (ii) default, and such default shall continue for five or more 72 Business Days, in the payment when due of any interest on the Loans or any Fees or any other amounts owing hereunder or under any other Credit Document; or (b) REPRESENTATIONS, ETC.: any representation, warranty or statement made by the Borrower or any other Credit Party herein or in any other Credit Document or in any statement or certificate delivered or required to be delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made; or (c) CERTAIN NEGATIVE COVENANTS: the Borrower shall default in the due performance or observance by it of any term, covenant or agreement contained in sections 9.2 through 9.8, inclusive, of this Agreement, or sections 9.10 through 9.12, inclusive, of this Agreement; or (d) OTHER COVENANTS: the Borrower shall default in the due performance or observance by it of any term, covenant or agreement contained in this Agreement or any other Credit Document, other than those referred to in section 10.1(a) or (b) or (c) above, and such default is not remedied within 30 days after the earlier of (i) an officer of the Borrower obtaining actual knowledge of such default and (ii) the Borrower receiving written notice of such default from the Administrative Agent or the Required Lenders (any such notice to be identified as a "notice of default" and to refer specifically to this paragraph); or (e) CROSS DEFAULT UNDER OTHER AGREEMENTS: the Borrower or any of its Subsidiaries shall (i) default in any payment when due with respect to the Five Year Credit Facility Agreement, (ii) default in any payment with respect to any other Indebtedness (other than the Obligations) owed to any Lender, or having an aggregate unpaid principal amount (or Capitalized Lease Obligation, in the case of a Capital Lease, or present value, based on the implicit interest rate, in the case of a Synthetic Lease) of $25,000,000 or greater, and such default shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness, or (iii) default in the observance or performance of any agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto (and all grace periods applicable to such observance, performance or condition shall have expired), or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause any such Indebtedness to become due prior to its stated maturity; or any such Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be due and payable, or shall be required to be prepaid (other than by a regularly scheduled required prepayment or redemption, prior to the stated maturity thereof), or 73 (f) OTHER CREDIT DOCUMENTS: any Credit Document shall cease for any reason (other than termination in accordance with its terms) to be in full force and effect; or any Credit Party shall default in any payment obligation thereunder; or any Credit Party shall default in any material respect in the due performance and observance of any other obligation thereunder and such default shall continue unremedied for a period of at least 30 days after notice by the Administrative Agent or the Required Lenders; or any Credit Party shall (or seek to) disaffirm or otherwise limit its obligations thereunder otherwise than in strict compliance with the terms thereof; or (g) JUDGMENTS: one or more judgments, orders or decrees shall be entered against the Borrower and/or any of its Subsidiaries involving a liability (other than a liability covered by insurance, as to which the carrier has adequate claims paying ability and has not effectively reserved its rights) of $10,000,000 or more in the aggregate for all such judgments, orders and decrees for the Borrower and its Subsidiaries, and any such judgments or orders or decrees shall not have been vacated, discharged or stayed or bonded pending appeal within 30 days (or such longer period, not in excess of 60 days, during which enforcement thereof, and the filing of any judgment lien, is effectively stayed or prohibited) from the entry thereof; or (h) BANKRUPTCY, ETC.: any of the following shall occur: (i) the Borrower or any of its Material Subsidiaries (the Borrower and each of such other persons, each a "PRINCIPAL PARTY") shall commence a voluntary case concerning itself under Title 11 of the United States Code entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto (the "BANKRUPTCY CODE"); or (ii) an involuntary case is commenced against any Principal Party under the Bankruptcy Code and the petition is not controverted within 10 days, or is not dismissed within 60 days, after commencement of the case; or (iii) a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of any Principal Party; or (iv) any Principal Party commences (including by way of applying for or consenting to the appointment of, or the taking of possession by, a rehabilitator, receiver, custodian, trustee, conservator or liquidator (collectively, a "CONSERVATOR") of itself or all or any substantial portion of its property) any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency, liquidation, rehabilitation, conservatorship or similar law of any jurisdiction whether now or hereafter in effect relating to such Principal Party; or 74 (v) any such proceeding is commenced against any Principal Party to the extent such proceeding is consented to by such person or remains undismissed for a period of 60 days; or (vi) any Principal Party is adjudicated insolvent or bankrupt; or (vii) any order of relief or other order approving any such case or proceeding is entered; or (viii) any Principal Party suffers any appointment of any conservator or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of 60 days; or (ix) any Principal Party makes a general assignment for the benefit of creditors; or (x) any corporate (or similar organizational) action is taken by any Principal Party for the purpose of effecting any of the foregoing; or (i) ERISA: (i) any of the events described in clauses (i) through (viii) of section 8.1(e) shall have occurred; or (ii) there shall result from any such event or events the imposition of a lien, the granting of a security interest, or a liability or a material risk of incurring a liability; and (iii) any such event or events or any such lien, security interest or liability, individually, and/or in the aggregate, in the opinion of the Required Lenders, has had, or could reasonably be expected to have, a Material Adverse Effect. 10.2 ACCELERATION, ETC. Upon the occurrence of any Event of Default, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent shall, upon the written request of the Required Lenders, by written notice to the Borrower, take any or all of the following actions, without prejudice to the rights of the Administrative Agent or any Lender to enforce its claims against the Borrower or any other Credit Party in any manner permitted under applicable law: (a) declare the Total Commitment terminated, whereupon the Commitment of each Lender shall forthwith terminate immediately without any other notice of any kind; (b) declare the principal of and any accrued interest in respect of all Loans and all other Obligations owing hereunder and under the other Credit Documents to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; (c) exercise any other right or remedy available under any of the Credit Documents or applicable law; 75 PROVIDED that, if an Event of Default specified in section 10.1(h) shall occur with respect to the Borrower, the result which would occur upon the giving of written notice by the Administrative Agent as specified in clauses (a) and/or (b) above shall occur automatically without the giving of any such notice; and PROVIDED, FURTHER, that any declaration pursuant to clause (b) above, or any other acceleration of the maturity of the Loans or any other Obligations, shall automatically and simultaneously terminate the Total Commitment, whereupon the Commitment of each Lender shall forthwith terminate immediately without any other notice of any kind. 10.3 APPLICATION OF LIQUIDATION PROCEEDS. All monies received by the Administrative Agent or any Lender from the exercise of remedies hereunder or under the other Credit Documents or under any other documents relating to this Agreement shall, unless otherwise required by the terms of the other Credit Documents or by applicable law, be applied as follows: (i) FIRST, to the payment of all expenses (to the extent not otherwise paid by the Borrower or any of the other Credit Parties) incurred by the Agents and the Lenders in connection with the exercise of such remedies, including, without limitation, all reasonable costs and expenses of collection, reasonable documented attorneys' fees, court costs and any foreclosure expenses; (ii) SECOND, to the payment PRO RATA of interest then accrued on the outstanding Loans; (iii) THIRD, to the payment PRO RATA of any fees then accrued and payable to the Agents or any Lender under this Agreement in respect of the Loans; (iv) FOURTH, to the payment PRO RATA of the principal balance then owing on the outstanding Loans; (v) FIFTH, to the payment to the Lenders of any amounts then accrued and unpaid under sections 2.9, 2.10 and 5.5 hereof, and if such proceeds are insufficient to pay such amounts in full, to the payment of such amounts PRO RATA; (vi) SIXTH, to the payment PRO RATA of all other amounts owed by the Borrower to the Agents or any Lender under this Agreement or any other Credit Document, and if such proceeds are insufficient to pay such amounts in full, to the payment of such amounts PRO RATA; and (vii) FINALLY, any remaining surplus after all of the Obligations have been paid in full, to the Borrower or to whomsoever shall be lawfully entitled thereto. 76 SECTION 11. THE ADMINISTRATIVE AGENT. 11.1 APPOINTMENT. Each Lender hereby irrevocably designates and appoints NCB as Administrative Agent to act as specified herein and in the other Credit Documents, and each such Lender hereby irrevocably authorizes NCB as the Administrative Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. The Administrative Agent agrees to act as such upon the express conditions contained in this section 11. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein or in the other Credit Documents, nor any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent. The provisions of this section 11 are solely for the benefit of the Administrative Agent, and the Lenders, and the Borrower and its Subsidiaries shall not have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement, the Administrative Agent shall act solely as agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation or relationship of agency or trust with or for the Borrower or any of its Subsidiaries. 11.2 DELEGATION OF DUTIES. The Administrative Agent may execute any of its duties under this Agreement or any other Credit Document by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care except to the extent otherwise required by section 11.3. 11.3 EXCULPATORY PROVISIONS. Neither the Administrative Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such person under or in connection with this Agreement (except for its or such person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or of its Subsidiaries or any of their respective officers contained in this Agreement, any other Credit Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Credit Document or for any failure of the Borrower or any Subsidiary of the Borrower or any of their respective officers to perform its obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement, or to inspect the properties, books or records of the Borrower or any of its Subsidiaries. The Administrative Agent shall not be responsible to any Lender for the effectiveness, genuineness, 77 validity, enforceability, collectibility or sufficiency of this Agreement or any Credit Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statement or in any financial or other statements, instruments, reports, certificates or any other documents in connection herewith or therewith furnished or made by the Administrative Agent to the Lenders or by or on behalf of the Borrower or any of its Subsidiaries to the Administrative Agent or any Lender or be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained herein or therein or as to the use of the proceeds of the Loans or of the existence or possible existence of any Default or Event of Default. 11.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, facsimile transmission, telex or teletype message, statement, order or other document or conversation believed by it, in good faith, to be genuine and correct and to have been signed, sent or made by the proper person or persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower or any of its Subsidiaries), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Credit Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Credit Documents in accordance with a request of the Required Lenders (or all of the Lenders, or all of the Lenders (other than any Defaulting Lender), as applicable, as to any matter which, pursuant to section 12.12, can only be effectuated with the consent of all Lenders, or all Lenders (other than any Defaulting Lender), as the case may be), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders. 11.5 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required 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 or Event of Default as it shall deem advisable in the best interests of the Lenders. 78 11.6 NON-RELIANCE. Each Lender expressly acknowledges that neither of the Agents nor any of their officers, directors, employees, agents, attorneys-in-fact or Affiliates have made any representations or warranties to it and that no act by the Agents hereinafter taken, including any review of the affairs of the Borrower or any of its Subsidiaries, shall be deemed to constitute any representation or warranty by the Agents to any Lender. Each Lender represents to each Agent that it has, independently and without reliance upon the Agents, or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower and its Subsidiaries and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Agents, or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower and its Subsidiaries. The Agents shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, assets, property, financial and other conditions, prospects or creditworthiness of the Borrower or any of its Subsidiaries which may come into the possession of the Agents or any of their officers, directors, employees, agents, attorneys-in-fact or Affiliates. 11.7 INDEMNIFICATION. The Lenders agree to indemnify each Agent in its capacity as such ratably according to their respective Loans and Unutilized Commitments, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, reasonable expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Obligations) be imposed on, incurred by or asserted against each Agent in its capacity as such in any way relating to or arising out of this Agreement or any other Credit Document, or any documents contemplated by or referred to herein or the transactions contemplated hereby or any action taken or omitted to be taken by the Agents under or in connection with any of the foregoing, but only to the extent that any of the foregoing is not paid by the Borrower; PROVIDED that no Lender shall be liable to the Agents for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements to the extent resulting from either Agent's gross negligence or willful misconduct. If any indemnity furnished to the Agents for any purpose shall, in the opinion of either Agent, be insufficient or become impaired, the Agents may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. The agreements in this section 11.7 shall survive the payment of all Obligations. 11.8 THE AGENTS IN INDIVIDUAL CAPACITY. The Agents and their Affiliates may make Loans to, accept deposits from and generally engage in any kind of business with the Borrower, its Subsidiaries and their Affiliates as though not acting as an Agent hereunder. With respect to the Loans made by it and all Obligations owing to it, each Agent shall have the same rights and 79 powers under this Agreement as any Lender and may exercise the same as though it were not an Agent, and the terms "Lender" and "Lenders" shall include either Agent in its individual capacity. 11.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign as the Administrative Agent upon not less than 20 Business Days' notice to the Lenders and the Borrower, with such registration to be effective only upon the appointment and acceptance of a successor Administrative Agent as provided below. The Administrative Agent may be removed as the Administrative Agent for cause upon not less than 20 Business Days' notice to the Administrative Agent and the Borrower from the Required Lenders. The Required Lenders shall appoint from among the Lenders a successor Administrative Agent for the Lenders, subject to prior approval by the Borrower if no Event of Default has occurred and is continuing (such approval not to be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term "Administrative Agent" shall include such successor agent effective upon its appointment, and the resigning or removed Administrative Agent's rights, powers and duties as the Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement. After the retiring or removed Administrative Agent's resignation or removal hereunder as the Administrative Agent, the provisions of this section 11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. 11.10 OTHER AGENTS. Any Lender identified herein as the Syndication Agent, a Joint Lead Arranger, a Co-Documentation Agent, a Managing Agent, a Co-Agent or any other corresponding title, other than "Administrative Agent", shall have no right, power, obligation, liability, responsibility or duty under this Agreement or any other Credit Document except those applicable to all Lenders as such. Each Lender acknowledges that it has not relied, and will not rely, on any Lender so identified in deciding to enter into this Agreement or in taking or not taking any action hereunder. SECTION 12. MISCELLANEOUS. 12.1 PAYMENT OF EXPENSES ETC. (a) Whether or not the transactions contemplated hereby are consummated, the Borrower agrees to pay (or reimburse the Agents for) all reasonable out-of-pocket costs and expenses of the Agents in connection with the negotiation, preparation, execution and delivery of the Credit Documents and the documents and instruments referred to therein, including, without limitation, the reasonable fees and disbursements of Mayer, Brown & Platt, special counsel to the Agents. (b) The Borrower agrees to pay (or reimburse the Agents, the Lenders and their Affiliates for) all reasonable out-of-pocket costs and expenses of the Agents, the Lenders and their Affiliates in connection with any amendment, waiver or consent relating to any of the 80 Credit Documents which is requested by any Credit Party, including, without limitation, the reasonable fees and disbursements of Mayer, Brown & Platt, special counsel to the Agents. (c) The Borrower agrees to pay (or reimburse the Agents, the Lenders and their Affiliates for) all reasonable out-of-pocket costs and expenses of the Agents, the Lenders and their Affiliates in connection with the enforcement of any of the Credit Documents or the other documents and instruments referred to therein, including, without limitation, (i) the reasonable fees and disbursements of Mayer, Brown & Platt, special counsel to the Agents, and (ii) the reasonable fees and disbursements of any individual counsel to any Lender (including allocated costs of internal counsel). (d) Without limitation of the preceding section 12.1(c), in the event of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of the Borrower or any of its Subsidiaries, the Borrower agrees to pay all costs of collection and defense, including reasonable attorneys' fees in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, which shall be due and payable together with all required service or use taxes. (e) The Borrower agrees to pay and hold the Agents, each of the Lenders harmless from and against any and all present and future stamp and other similar taxes with respect to the foregoing matters and save each such Agent and each of the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to any such indemnified person) to pay such taxes. (f) The Borrower agrees to indemnify the Agents, each Lender, and their respective officers, directors, trustees, employees, representatives, agents and Affiliates (collectively, the "INDEMNITEES") from and hold each of them harmless against any and all losses, liabilities, claims, damages or expenses reasonably incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of (i) any investigation, litigation or other proceeding (whether or not any Lender is a party thereto) related to the entering into and/or performance of any Credit Document or the use of the proceeds of any Loans hereunder or the consummation of any transactions contemplated in any Credit Document, other than any such investigation, litigation or proceeding arising out of transactions solely between any of the Lenders or the Agents, transactions solely involving the assignment by a Lender of all or a portion of its Loans and Commitments, or the granting of participations therein, as provided in this Agreement, or arising solely out of any examination of a Lender by any regulatory or other governmental authority having jurisdiction over it, or (ii) the actual or alleged presence of Hazardous Materials in the air, surface water or groundwater or on the surface or subsurface of any Real Property owned, leased or at any time operated by the Borrower or any of its Subsidiaries, the release, generation, storage, transportation, handling or disposal of Hazardous Materials at any location, 81 whether or not owned or operated by the Borrower or any of its Subsidiaries, if the Borrower or any such Subsidiary could have or is alleged to have any responsibility in respect thereof, the non-compliance of any such Real Property with foreign, federal, state and local laws, regulations and ordinances (including applicable permits thereunder) applicable thereto, or any Environmental Claim asserted against the Borrower or any of its Subsidiaries, in respect of any such Real Property, including, in each case, without limitation, the reasonable documented fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding (but excluding any such losses, liabilities, claims, damages or expenses to the extent incurred by reason of the gross negligence or willful misconduct of the person to be indemnified or of any other Indemnitee who is such person or an Affiliate of such person). To the extent that the undertaking to indemnify, pay or hold harmless any person set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the Borrower shall make the maximum contribution to the payment and satisfaction of each of the indemnified liabilities which is permissible under applicable law. 12.2 RIGHT OF SETOFF. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default, each Lender is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to the Borrower or to any other person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other Indebtedness at any time held or owing by such Lender (including, without limitation, by branches, agencies and Affiliates of such Lender wherever located) to or for the credit or the account of the Borrower against and on account of the Obligations and liabilities of the Borrower to such Lender under this Agreement or under any of the other Credit Documents, including, without limitation, all interests in Obligations the Borrower purchased by such Lender pursuant to section 12.4(c), and all other claims of any nature or description arising out of or connected with this Agreement or any other Credit Document, irrespective of whether or not such Lender shall have made any demand hereunder and although said Obligations, liabilities or claims, or any of them, shall be contingent or unmatured. Each Lender agrees to promptly notify the Borrower after any such set off and application; PROVIDED that the failure to give such notice shall not affect the validity of such set off and application. 12.3 NOTICES. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telegraphic, telex, facsimile or electronic e-mail transmission or cable communication) and mailed, telegraphed, telexed, transmitted, cabled or delivered, if to the Borrower, at 1000 Lakeside Avenue, Cleveland, Ohio 44114, attention: D. Thomas George, Vice President and Treasurer (facsimile: (216) 875-7237); if to any Lender at its address specified for such Lender on Annex I hereto or the Assignment Agreement or Designation Agreement pursuant to which it became a Lender hereunder; if to the Administrative Agent, at its Notice Office; or at such other address as shall 82 be designated by any party in a written notice to the other parties hereto. All such notices and communications shall be mailed, telegraphed, telexed, telecopied, transmitted or cabled or sent by overnight courier, and shall be effective when received. 12.4 BENEFIT OF AGREEMENT. (a) SUCCESSORS AND ASSIGNS GENERALLY. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns; PROVIDED that the Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of all the Lenders (other than any Defaulting Lender); and PROVIDED, FURTHER, that any assignment by a Lender of its rights and obligations hereunder shall be effected in accordance with section 12.4(c). (b) GRANT OF PARTICIPATIONS BY LENDERS. Notwithstanding the foregoing, each Lender may, without notice to or the consent of the Borrower or the Administrative Agent, at any time grant participations in any of its rights hereunder or under any of the Notes to (x) an Affiliate of such Lender which is a commercial bank, financial institution or other "accredited investor" (as defined in SEC Regulation D), (y) another Lender which is not a Defaulting Lender, or (z) one or more Eligible Transferees; PROVIDED that in the case of any such participation, (i) except as provided below, the participant shall not have any rights under this Agreement or any of the other Credit Documents, including rights of consent, approval or waiver (the participant's rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the participant relating thereto), (ii) such Lender's obligations under this Agreement (including, without limitation, its Commitment hereunder) shall remain unchanged, (iii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iv) such Lender shall remain the holder of any Note for all purposes of this Agreement and (v) the Borrower, the Administrative Agent, and the other Lenders shall continue to deal solely and directly with the selling Lender in connection with such Lender's rights and obligations under this Agreement, and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation, except that the participant shall be entitled to the benefits of sections 2.9, 2.10 and 5.5 of this Agreement to the extent that such Lender would be entitled to such benefits if the participation had not been entered into or sold, and 83 PROVIDED, FURTHER, that no Lender shall transfer, grant or sell any participation under which the participant shall have rights to approve any amendment to or waiver of this Agreement or any other Credit Document except to the extent such amendment or waiver would (1) change any date upon which a mandatory and automatic reduction in any Commitment in which such Participant is participating is scheduled to be made, or change the amount thereof, (2) change any date upon which an installment payment of any Loans in which such Participant is participating is scheduled to be made, or change the amount thereof, (3) extend the final scheduled maturity of the Loans in which such participant is participating (it being understood that any waiver of the making of, or the application of, any mandatory prepayment to such Loans shall not constitute an extension of the final maturity date thereof), (4) reduce the rate or extend the time of payment of interest or Fees on any such Loan or Commitment (except in connection with a waiver of the applicability of any post-default increase in interest rates), (5) reduce the principal amount of any such Loan, (6) increase such participant's participating interest in any Commitment over the amount thereof then in effect, (7) release any Credit Party from its obligations under the Subsidiary Guaranty, except strictly in accordance with the provisions of the Credit Documents, or (8) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement. Each Lender that sells a participation in any of its rights hereunder or under any of the Notes shall, as agent of the Borrower solely for the purpose of this section 12.4(b), record in book entries maintained by such Lender the name and the amount of the participation of each participant entitled to receive payments in respect of such participations. (c) ASSIGNMENTS BY LENDERS. Notwithstanding the foregoing, (x) any Lender may assign all or a fixed portion of its Loans and/or Commitment, and its rights and obligations hereunder to another Lender that is not a Defaulting Lender, or to an Affiliate of any Lender (including itself) and which is not a Defaulting Lender and which is a commercial bank, financial institution or other "accredited investor" (as defined in SEC Regulation D), and (y) any Lender may assign all, or if less than all, a fixed portion, equal to at least $5,000,000 in the aggregate for the assigning Lender or assigning Lenders, of its Loans and/or Commitment and its rights and obligations hereunder to one or more Eligible Transferees, each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment Agreement; PROVIDED that, (i) in the case of any assignment of a portion of any Loans and/or Commitment of a Lender, such Lender shall retain a minimum fixed portion of all Loans and Commitments equal to at least $5,000,000; (ii) at the time of any such assignment, Annex I shall be deemed modified to reflect the Commitments of such new Lender and of the existing Lenders; (iii) upon surrender of the old Notes, new Notes will be issued, at the Borrower's expense, to such new Lender and to the assigning Lender, such new Notes to be in conformity with the requirements of section 2.4 (with appropriate modifications) to the extent needed to reflect the revised Commitments; 84 (iv) in the case of clause (y) only, the consent of the Administrative Agent and, so long as no Default or Event of Default shall have occurred or be continuing, the Borrower shall be required in connection with any such assignment (which consent, in each case, shall not be unreasonably withheld or delayed); (v) the Administrative Agent shall receive at the time of each such assignment, from the assigning or assignee Lender, the payment of a non-refundable assignment fee of $3,500; PROVIDED, that no such assignment fee shall be payable in the case of an assignee which is already a Lender or an Affiliate of a Lender; PROVIDED, FURTHER, that such transfer or assignment will not be effective until the Assignment Agreement in respect thereof is recorded by the Administrative Agent on the Lender Register maintained by it as provided herein. To the extent of any assignment pursuant to this section 12.4(c), the assigning Lender shall be relieved of its obligations hereunder with respect to its assigned Commitments. At the time of each assignment pursuant to this section 12.4(c) to a person which is not already a Lender hereunder and which is not a United States person (as such term is defined in section 7701(a)(30) of the Code) for Federal income tax purposes, the respective assignee Lender shall provide to the Borrower and the Administrative Agent the appropriate Internal Revenue Service Forms (and, if applicable a Lender Tax Certificate) described in section 5.5(c). To the extent that an assignment of all or any portion of a Lender's Commitment and related outstanding Obligations pursuant to this section 12.4(c) would, at the time of such assignment, result in increased costs under section 2.9 from those being charged by the respective assigning Lender prior to such assignment, then the Borrower shall not be obligated to pay such increased costs (although the Borrower shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective assignment). Nothing in this section 12.4(c) shall prevent or prohibit (i) any Lender which is a bank, trust company or other financial institution from pledging its Notes or Loans to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank, or (ii) any Lender which is a trust, limited liability company, mutual fund, partnership or other investment company from pledging its Notes or Loans to a trustee or agent for the benefit of holders of certificates or debt securities issued by it. No such pledge, or any assignment pursuant to or in lieu of an enforcement of such a pledge, shall relieve the transferor Lender from its obligations hereunder. (d) DESIGNATED BIDDER PROVISIONS. (i) Notwithstanding the foregoing, each Lender may assign to one or more banks or other entities any Competitive Bid Note or Notes held by it. In addition, each Lender (other than the Designated Bidders) may designate one or more banks or other entities to have a right to make Competitive Bid Loans as a Lender pursuant to section 2.3; PROVIDED that (a) no such Lender shall be entitled to make more than three such designations, (b) each such Lender making one or more of such designations shall retain the 85 right to make Competitive Bid Loans as a Lender pursuant to section 2.3, (C) each such designation shall be to a Designated Bidder, and (D) the parties to each such designation shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Lender Register, a Designation Agreement. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Designation Agreement, the designee thereunder shall be a party hereto with a right to make Competitive Bid Loans as a Lender pursuant to section 2.3 and the obligations related thereto. (ii) By executing and delivering a Designation Agreement, the Lender making the designation thereunder and its designee thereunder confirm and agree with each other and the other parties hereto as follows: (A) such Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (B) such Lender 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 or any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (C) such designee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in section 7.8(a) and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into the Designation Agreement; (D) such designee will, independently and without reliance upon the Administrative Agent, such designating Lender or any other Lender 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; (E) such designee confirms that it is a Designated Bidder; (F) such designee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (G) such designee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (iii) Upon its receipt of a Designation Agreement executed by a designating Lender and a designee representing that it is a Designated Bidder, the Administrative Agent shall, if such Designation Agreement has been properly completed, (A) accept such Designation Agreement, (B) record the information contained therein in the Lender Register and (C) give prompt notice thereof to the Borrower. (e) NO SEC REGISTRATION OR BLUE SKY COMPLIANCE. Notwithstanding any other provisions of this section 12.4, no transfer or assignment of the interests or obligations of any Lender hereunder or any grant of participation therein shall be permitted if such transfer, assignment or grant would require the Borrower to file a registration statement with the SEC or to qualify the Loans under the "Blue Sky" laws of any State. 86 (f) REPRESENTATIONS OF LENDERS. Each Lender initially party to this Agreement hereby represents, and each person that became a Lender pursuant to an assignment permitted by this section 12.4 will, upon its becoming party to this Agreement, represent that it is a commercial bank, financial institution or other "accredited investor" (as defined in SEC Regulation D) which makes or acquires loans in the ordinary course of its business and that it will make or acquire loans for its own account in the ordinary course of such business; PROVIDED that subject to the preceding sections 12.4(b), (c) and (d), the disposition of any promissory notes or other evidences of or interests in Indebtedness held by such Lender shall at all times be within its exclusive control. (g) GRANTS BY LENDERS TO SPVS. (i) Notwithstanding anything to the contrary contained herein, any Lender (a "DESIGNATING LENDER") may grant to a special purpose funding vehicle (an "SPV"), identified as such in writing from time to time by the Designating Lender to the Administrative Agent, the Borrower and the other Lenders, the option to provide to the Borrower all or any part of any Loan that such Designating Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; PROVIDED that (i) nothing herein shall constitute a commitment by any SPV to make any Loan, (ii) if an SPV elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Designating Lender shall be obligated to make such Loan pursuant to the terms hereof, and (iii) the Designating Lender shall remain liable for any indemnity or other payment obligation with respect to its Commitment hereunder. The making of a Loan by an SPV hereunder shall utilize the Commitment of the Designating Lender to the same extent, and as if, such Loan were made by such Designating Lender. (ii) As to any Loans or portion thereof made by it, each SPV shall have all the rights that a Lender making such Loans or portion thereof would have had under this Agreement; PROVIDED that each SPV shall have granted to its Designating Lender an irrevocable power of attorney, to deliver and receive all communications and notices under this Agreement (and any other Credit Documents) and to exercise on such SPV's behalf, all of such SPV's voting rights under this Agreement. No additional Note shall be required to evidence the Loans or portion thereof made by an SPV; and the related Designating Lender shall be deemed to hold its Note as agent for such SPV to the extent of the Loans or portion thereof funded by such SPV. In addition, any payments for the account of any SPV shall be paid to its Designating Lender as agent for such SPV. (iii) Each party hereto hereby agrees that no SPV shall be liable for any indemnity or payment under this Agreement for which a Lender would otherwise be liable. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPV, it will not institute against, or join any other person in instituting against, such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. 87 (iv) In addition, notwithstanding anything to the contrary contained in this section 12.4, any SPV may (A) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Designating Lender or to any financial institutions providing liquidity and/or credit support to or for the account of such SPV to support the funding or maintenance of Loans and (B) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancements to such SPV. This section 12.4(g) may not be amended without the written consent of any Designating Lender affected thereby. 12.5 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of the Administrative Agent or any Lender in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Borrower and the Administrative Agent or any Lender shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Administrative Agent or the Lenders to any other or further action in any circumstances without notice or demand. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default or Event of Default, regardless of whether the Administrative Agent may have had notice or knowledge of such Default or Event of Default at the time. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which the Administrative Agent or any Lender would otherwise have. 12.6 PAYMENTS PRO RATA; SHARING OF SETOFFS, ETC. (a) The Administrative Agent agrees that promptly after its receipt of each payment from or on behalf of the Borrower in respect of any Obligations, it shall distribute such payment to the Lenders (other than any Lender that has expressly waived in writing its right to receive its PRO RATA share thereof) PRO RATA based upon their respective shares, if any, of the Obligations with respect to which such payment was received. As to any such payment received by the Administrative Agent prior to 1:00 P.M. (local time at the Payment Office) in funds which are immediately available on such day, the Administrative Agent will use all reasonable efforts to distribute such payment in immediately available funds on the same day to the Lenders as aforesaid. (b) Each of the Lenders agrees that, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker's lien, by counterclaim or cross action, by the enforcement of any right under the Credit Documents, or otherwise) which is applicable to the payment of the principal of, or interest on, the Loans or Fees, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such Obligation then owed and due to such Lender bears to the total of such Obligation then owed and due to all of the Lenders 88 immediately prior to such receipt, THEN such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in the Obligations to such Lenders in such amount as shall result in a proportional participation by all of the Lenders in such amount; PROVIDED that (i) if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest, and (ii) the provisions of this section 12.6(b) shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement, or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant pursuant to section 12.4, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this section 12.6(b) shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation. (c) Notwithstanding anything to the contrary contained herein, the provisions of the preceding sections 12.6(a) and (b) shall be subject to the express provisions of this Agreement which require, or permit, differing payments to be made to Lenders which are not Defaulting Lenders, as opposed to Defaulting Lenders. 12.7 CALCULATIONS; COMPUTATIONS. (a) The financial statements to be furnished to the Lenders pursuant hereto shall be made and prepared in accordance with GAAP consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by the Borrower to the Lenders); PROVIDED that if at any time the computations determining compliance with section 9 utilize accounting principles different from those utilized in the financial statements furnished to the Lenders, such computations shall set forth in reasonable detail a description of the differences and the effect upon such computations. (b) All computations of interest on Loans hereunder and all computations of Facility Fees and other Fees hereunder shall be made on the actual number of days elapsed over a year of 360 days. 12.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL. (a) HIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. TO THE FULLEST EXTENT PERMITTED BY LAW, THE BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK GOVERNS THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS. Any legal action or proceeding with respect to this Agreement or any other Credit Document may be brought in the courts of the State of New York, 89 New York County, and of the United States District Court for the Southern District of New York, and, by execution and delivery of this Agreement, the Borrower hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The Borrower hereby further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Borrower at its address for notices pursuant to section 12.3, such service to become effective 30 days after such mailing or at such earlier time as may be provided under applicable law. Nothing herein shall affect the right of the Administrative Agent or any Lender to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Borrower in any other jurisdiction. (b) The Borrower hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or any other Credit Document brought in the courts referred to in section 12.8(a) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. (c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH. 12.9 COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same agreement. A set of counterparts executed by all the parties hereto shall be lodged with the Borrower and the Administrative Agent. 12.10 EFFECTIVENESS; INTEGRATION. This Agreement shall become effective on the date (the "EFFECTIVE DATE") on which the Borrower and each of the Lenders shall have signed a copy hereof (whether the same or different copies) and shall have delivered the same to the Administrative Agent at the Notice Office of the Administrative Agent or, in the case of the Lenders, shall have given to the Administrative Agent telephonic (confirmed in writing), written 90 telex or facsimile transmission notice (actually received) at such office that the same has been signed and mailed to it. This Agreement, the other Credit Documents and any separate letter agreements with respect to fees payable to the Administrative Agent, for its own account and benefit and/or for the account, benefit of, and distribution to, the Lenders, constitute the entire contract among the parties relating to the subject matter hereof and thereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof or thereof. 12.11 HEADINGS DESCRIPTIVE. The headings of the several sections and other portions of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. 12.12 AMENDMENT OR WAIVER. Neither this Agreement nor any terms hereof or thereof may be changed, waived, discharged or terminated UNLESS such change, waiver, discharge or termination is in writing signed by the Borrower and the Required Lenders; PROVIDED that no such change, waiver, discharge or termination shall, without the consent of each Lender affected thereby, (a) change any date upon which a mandatory and automatic reduction in any Commitment of such Lender is scheduled to be made, or change the amount thereof, (b) change any date upon which an installment payment of any Loans made by such Lender is scheduled to be made, or change the amount thereof, (c) extend the final scheduled maturity of any Commitment or Loan of such Lender (it being understood that any waiver of the making of, or the application of, any mandatory prepayment to such Loans shall not constitute an extension of the final maturity date thereof), (d) reduce the rate or extend the time of payment of interest or Fees on any Loan or Commitment of such Lender (except in connection with a waiver of the applicability of any post-default increase in interest rates), (e) reduce the principal amount of any Loan of any Lender, (f) increase such Lender's Commitment over the amount thereof then in effect, (g) release the Borrower from any obligations as a guarantor of its Subsidiaries' obligations under any Credit Document, (h) release (i) any Credit Party from the Subsidiary Guaranty or any pledge or security agreement, or (ii) all or substantially all of the collateral pledged pursuant to the 91 terms of this Agreement, in each case except strictly in accordance with the provisions of the Credit Documents, (i) change the definition of the term "Change of Control" or any of the provisions of section 4.3 or 5.2 which are applicable upon a Change of Control, (j) amend, modify or waive any provision of this section 12.12, or section 8.14, 11.7, 12.1, 12.4, 12.6 or 12.7(b), or any other provision of any of the Credit Documents pursuant to which the consent or approval of all Lenders is by the terms of such provision explicitly required, (k) reduce the percentage specified in, or otherwise modify, the definition of Required Lenders, or (l) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement; and PROVIDED, FURTHER, that no change, waiver or other modification affecting the rights and benefits of a Lender and not all Lenders in a like or similar manner, shall be made without the written consent of such Lender. No provision of section 11 may be amended without the consent of the Administrative Agent. 12.13 SURVIVAL OF INDEMNITIES. All indemnities set forth herein including, without limitation, in section 2.9, 2.10, 11.7 or 12.1 shall survive the execution and delivery of this Agreement and the making and repayment of Loans. 12.14 DOMICILE OF LOANS. Each Lender may transfer and carry its Loans at, to or for the account of any branch office, subsidiary or affiliate of such Lender; PROVIDED that the Borrower shall not be responsible for costs arising under section 2.9 resulting from any such transfer (other than a transfer pursuant to section 2.11) to the extent not otherwise applicable to such Lender prior to such transfer. 12.15 CONFIDENTIALITY. (a) Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Confidential Information (as defined below), EXCEPT that Confidential Information may be disclosed (1) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of such Confidential Information and instructed to keep such Confidential Information confidential), (2) to any direct or indirect contractual counterparty in any swap, hedge or similar agreement (or to any such contractual counterparty's professional advisor), so long as such contractual counterparty (or such professional advisor) agrees to be bound by the provisions of this section 12.15, (3) to the extent requested by any regulatory authority, (4) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, it being understood and agreed that unless prohibited by law or court order any such person will use 92 reasonable efforts to advise the Borrower reasonably in advance of any required disclosure to be made pursuant to subpoena, discovery proceedings in any litigation or governmental investigation or any court order, (5) to any other party to this Agreement, (6) to any other creditor of the Borrower or any other Credit Party which is a direct or intended beneficiary of any of the Credit Documents, (7) in connection with the exercise of any remedies hereunder or under any of the other Credit Documents, or any suit, action or proceeding relating to this Agreement or any of the other Credit Documents or the enforcement of rights hereunder or thereunder, (8) subject to an agreement containing provisions substantially the same as those of this section 12.15, to any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement, (9) with the consent of the Borrower, or (10) to the extent such Confidential Information (i) becomes publicly available other than as a result of a breach of this section 12.15, or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower without a duty of confidentiality to the Borrower being violated. (b) For the purposes of this section 12.15, "CONFIDENTIAL INFORMATION" means all information received from or on behalf of the Borrower and/or its Subsidiaries, or obtained by the Administrative Agent or any Lender based on an inspection or review of the books and records of the Borrower and/or its Subsidiaries, relating to the Borrower, its Subsidiaries or their business, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower; PROVIDED that, in the case of information received or obtained from or on behalf of the Borrower and/or any of its Subsidiaries after the date hereof, such information is clearly identified at the time of delivery or the time obtained as confidential. (c) Any person required to maintain the confidentiality of Confidential Information as provided in this section 12.15 shall be considered to have complied with its obligation to do so if such person has exercised the same degree of care to maintain the confidentiality of such Confidential Information as such person would accord to its own confidential information. The Borrower hereby agrees that the failure of the Administrative Agent or any Lender to comply with the provisions of this section 12.15 shall not relieve the Borrower, or any other Credit Party, of any of its obligations under this Agreement or any of the other Credit Documents. 12.16 LENDER REGISTER. The Borrower hereby designates the Administrative Agent to serve as its agent, solely for purposes of this section 12.16, to maintain a register (the "LENDER REGISTER") on or in which it will record the names and addresses of the Lenders, and the Commitments from time to time of each of the Lenders, the Loans made to the Borrower by each of the Lenders and each repayment and prepayment in respect of the principal amount of such Loans of each such Lender. Failure to make any such recordation, or (absent manifest error) any error in such recordation, shall not affect the Borrower's obligations in respect of such Loans. With respect to any Lender, the transfer of the Commitment of such Lender and the rights to the principal of, and interest on, any Loan made pursuant to such Commitment shall not be effective until such transfer is recorded on the Lender Register maintained by the Administrative Agent 93 with respect to ownership of such Commitment and Loans and prior to such recordation all amounts owing to the transferor with respect to such Commitment and Loans shall remain owing to the transferor. The registration of assignment or transfer of all or part of any Commitments and Loans shall be recorded by the Administrative Agent on the Lender Register only upon the acceptance by the Administrative Agent of a properly executed and delivered Assignment Agreement pursuant to section 12.4(c). The Borrower agrees to indemnify the Administrative Agent from and against any and all losses, claims, damages and liabilities of whatsoever nature which may be imposed on, asserted against or incurred by the Administrative Agent in performing its duties under this section 12.16, except to the extent attributable to the gross negligence or wilful misconduct of the Administrative Agent. The Lender Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. 12.17 INTENTIONALLY OMITTED. 12.18 GENERAL LIMITATION OF LIABILITY. No claim may be made by the Borrower, any Lender, the Administrative Agent or any other person against the Administrative Agent or any other Lender or the Affiliates, directors, officers, employees, attorneys or agents of any of them for any damages other than actual compensatory damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement or any of the other Credit Documents, or any act, omission or event occurring in connection therewith; and each of the Borrower, each Lender and the Administrative Agent hereby, to the fullest extent permitted under applicable law, waives, releases and agrees not to sue or counterclaim upon any such claim for any special, consequential or punitive damages, whether or not accrued and whether or not known or suspected to exist in its favor. 12.19 NO DUTY. All attorneys, accountants, appraisers, consultants and other professional persons (including the firms or other entities on behalf of which any such person may act) retained by the Administrative Agent or any Lender with respect to the transactions contemplated by the Credit Documents shall have the right to act exclusively in the interest of the Administrative Agent or such Lender, as the case may be, and shall have no duty of disclosure, duty of loyalty, duty of care, or other duty or obligation of any type or nature whatsoever to the Borrower, to any of its Subsidiaries, or to any other person, with respect to any matters within the scope of such representation or related to their activities in connection with such representation. The Borrower agrees, on behalf of itself and its Subsidiaries, not to assert any claim or counterclaim against any such persons with regard to such matters, all such claims and counterclaims, now existing or hereafter arising, whether known or unknown, foreseen or unforeseeable, being hereby waived, released and forever discharged. 12.20 LENDERS AND AGENT NOT FIDUCIARY TO BORROWER, ETC. The relationship among the Borrower and its Subsidiaries, on the one hand, and the Administrative Agent and the Lenders, on the other hand, is solely that of debtor and creditor, and the Administrative Agent and the Lenders have no fiduciary or other special relationship with the Borrower and its 94 Subsidiaries, and no term or provision of any Credit Document, no course of dealing, no written or oral communication, or other action, shall be construed so as to deem such relationship to be other than that of debtor and creditor. 12.21 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties herein shall survive the making of Loans, the execution and delivery of this Agreement, the Notes and the other documents the forms of which are attached as Exhibits hereto, the issue and delivery of the Notes, any disposition thereof by any holder thereof, and any investigation made by the Administrative Agent or any Lender or any other holder of any of the Notes or on its behalf. All statements contained in any certificate or other document delivered to the Administrative Agent or any Lender or any holder of any Notes by or on behalf of the Borrower or of its Subsidiaries pursuant hereto or otherwise specifically for use in connection with the transactions contemplated hereby shall constitute representations and warranties by the Borrower hereunder, made as of the respective dates specified therein or, if no date is specified, as of the respective dates furnished to the Administrative Agent or any Lender. 12.22 SEVERABILITY. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. 12.23 INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given independent effect so that if a particular action, event, condition or circumstance is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations or restrictions of, another covenant, shall not avoid the occurrence of a Default or an Event of Default if such action is taken or event, condition or circumstance exists. 12.24 NO RELIANCE ON MARGIN STOCK. Each Lender represents to the Administrative Agent and each of the other Lenders that it in good faith is not relying upon any "margin stock" (as defined in Regulation U) as collateral in the extension or maintenance of the credit provided for in this Agreement. 12.25 INTEREST RATE LIMITATION. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the "CHARGES"), shall exceed the maximum lawful rate (the "MAXIMUM RATE") which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this section shall be cumulated and the 95 interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Prime Rate to the date of repayment, shall have been received by such Lender. 96 IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written. FERRO CORPORATION BY:________________________ TITLE: CREDIT SUISSE FIRST BOSTON, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITIES AS A JOINT LEAD ARRANGER AND THE SYNDICATION AGENT BY:________________________ TITLE: BY:________________________ TITLE: NATIONAL CITY BANK, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITIES AS A JOINT LEAD ARRANGER AND THE ADMINISTRATIVE AGENT BY:________________________ TITLE: BANCA NAZIONALE DEL LAVORO S.P.A., NEW YORK BRANCH, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-AGENT BY:____________________________________ TITLE: BY:____________________________________ TITLE: BANK HAPOALIM B.M, AS A LENDER BY:________________________ TITLE: THE BANK OF NEW YORK, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-AGENT BY:________________________ TITLE: THE BANK OF TOKYO-MITSUBISHI, LTD. CHICAGO BRANCH, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A MANAGING AGENT BY:________________________ TITLE: CITICORP USA, INC., INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-DOCUMENTATION AGENT BY:________________________ TITLE: FIFTH THIRD BANK, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-AGENT BY:________________________ TITLE: BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-AGENT BY:________________________ TITLE: BY:________________________ TITLE: KEYBANK NATIONAL ASSOCIATION, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-DOCUMENTATION AGENT BY:________________________ TITLE: MELLON BANK, N.A., INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-AGENT BY:________________________ TITLE: NATIONAL AUSTRALIA BANK LIMITED, A.C.N. 004044937, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A MANAGING AGENT BY:________________________ TITLE: THE NORINCHUKIN BANK, AS A LENDER BY:________________________ TITLE: THE NORTHERN TRUST COMPANY, AS A LENDER BY:________________________ TITLE: SUNTRUST BANK, INDIVIDUALLY AS A LENDER AND IN ITS CAPACITY AS A CO-AGENT BY:________________________ TITLE: EX-10.D 5 l91036aex10-d.txt EXHIBIT 10(D) Exhibit 10(d) AMENDMENT NO. 1 TO AMENDED AND RESTATED --------------------------------------- PARTICIPATION AGREEMENT ----------------------- AMENDMENT NO. 1 TO AMENDED AND RESTATED PARTICIPATION AGREEMENT dated as of August 31, 2001 (this "AMENDMENT"). Reference is made to the Amended and Restated Participation Agreement dated as of October 31, 1995 and amended and restated as of November 30, 2000 (as may be further amended from time to time, the "PARTICIPATION AGREEMENT"), by and among Ferro Corporation, an Ohio corporation (the "COMPANY"); State Street Bank and Trust Company, a Massachusetts trust company ("SSBTC"), not in its individual capacity except as expressly stated herein, but solely as Trustee under the Declaration (herein, together with any successor trustee under the Declaration, the "Trustee"); the financial institutions named as purchasers on Schedule I thereto, and/or any assignee thereof who may, from time to time, become a party to the Participation Agreement pursuant to the terms thereof (collectively, the "Purchasers"); and Citibank, N.A. ("CITIBANK"), in its capacity as agent for the Purchasers thereunder. PRELIMINARY STATEMENT A. The Company plans to purchase the electronic materials, performance pigments and colors, glass systems and cerdec ceramics divisions of dmc(2) Degussa Metals Catalysts Cerdec A.G. from OM Group, Inc., a Delaware corporation (the "DMC(2) ACQUISITION"); B. In connection with the financing of the DMC(2) Acquisition, the Company will replace its existing credit facility and execute and deliver a new credit facility to be dated on or about August 31, 2001; C. The Company has requested that the Purchasers, the Trustee and the Agent agree to amend the Participation Agreement; and D. In connection therewith, the parties hereto desire to amend the Participation Agreement as set forth below. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned hereby agree as follows: 1. DEFINITIONS. Except as otherwise expressly provided herein, capitalized terms used herein shall have the meanings set forth in Appendix A to the Participation Agreement and the rules of construction set forth therein shall apply to this Amendment. 2. AMENDMENTS TO SECTION 5 OF THE PARTICIPATION AGREEMENT. Section 5 of the Participation Agreement shall be amended as follows: (a) Section 5.01(a) of the Participation Agreement is hereby amended by: (i) deleting each reference to "60 days" therein and inserting "50 days" in lieu thereof; (ii) deleting each reference to "120 days" therein and inserting "95 days" in lieu thereof, (iii) deleting each reference to "five days" therein and inserting "3 Business Days" in lieu thereof; and (iv) by deleting each reference to "15 days" therein and inserting "10 Business Days" in lieu thereof. (b) Section 5.01(i) of the Participation Agreement is hereby amended by deleting such Section in its entirety and inserting the following in lieu thereof: "(i)(i) LEVERAGE RATIO. The Company will not permit the Leverage Ratio during any period set forth below to exceed the amount set forth opposite such period: PERIOD LEVERAGE RATIO 12/31/01 to 06/29/02 4.75:1 06/30/02 to 09/29/02 4.50:1 09/30/02 to 12/30/02 4.00:1 12/31/02 to 06/29/03 3.75:1 06/30/03 to 12/30/03 3.25:1 12/31/03 and thereafter 3.00:1 "(ii) FIXED CHARGE COVERAGE RATIO. The Company will not permit the Fixed Charge Coverage Ratio for any Testing Period ending on a date set forth below to be less than the amount set forth opposite such date: 2 DATE FIXED CHARGE COVERAGE RATIO 12/31/01 1.25:1 03/31/02 1.35:1 06/30/02 1.50:1 09/30/02 1.75:1 12/31/02 1.75:1 03/31/03 2.00:1 06/30/03 2.15:1 09/30/03 2.25:1 12/31/03 2.50:1 03/31/04 2.50:1 06/30/04 2.75:1 09/30/04 2.75:1 12/31/04 3.00:1 03/31/05 and thereafter 3.50:1 "(c) Clauses (B), (C), and (D) of Section 5.01(j) of the Participation Agreement are hereby amended by deleting such clauses in their entirety and inserting the following clauses in lieu thereof. "(B) ASSET SALES IN PERMITTED RECEIVABLES PROGRAMS. The Company or any of its Subsidiaries may make any Asset Sale consisting of trade receivables and related collateral, credit support and similar rights, pursuant to one or more receivables programs, to a person who is not a Subsidiary of the Company; PROVIDED that (1) the consideration to be received by the Company and its Subsidiaries for any such Asset Sale consists of cash; (2) no Default or Event of Default shall have occurred and be continuing 3 or would result therefrom; and (3) the aggregate outstanding balance of the trade receivables subject to all such programs at any point in time is not in excess of $300,000,000; PROVIDED that if at any time the Leverage Ratio is greater than 3.00 to 1.00 after giving pro forma effect to such receivables programs or the Index Debt Rating is not Investment Grade, the aggregate outstanding balance of the trade receivables subject to all such programs at such time may not exceed $200,000,000 (collectively, the "Permitted Receivables Programs"). "(C) OTHER PERMITTED ASSET SALES. In addition to the Asset Sales permitted in clauses (A) and (B) above, if no Default or Event of Default shall have occurred and be continuing or would result therefrom, the Company or any of its Subsidiaries may make any other Asset Sale to a person who is not a Subsidiary of the Company; PROVIDED that: (1) in the case of any such Asset Sale or related series of Asset Sales where the fair value (as determined by management of the Company) of the property covered thereby exceeds $50,000,000 in the aggregate, at least 75% of the consideration to be received by the Company and its Subsidiaries consists of cash; (2) the cumulative aggregate consideration for all such Asset Sales completed during the calendar year ended December 31, 2001, or any subsequent calendar year, does not exceed $125,000,000 in the case of any such calendar year; and (3) in the case of any such transaction involving consideration in excess of $50,000,000, at least five Business Days prior to the date of completion of such transaction the Company shall have delivered to the Agent an officer's certificate executed on behalf of the Company by an Authorized Officer of the Company, which certificate shall contain (a) a description of the proposed transaction, the date such transaction is scheduled to be consummated, the estimated purchase price or other consideration for such transaction, (b) a certification that no Default or Event of Default has occurred and is continuing, or would result from consummation of such transaction, and (c) which shall (if requested by the Agent) include a certified copy of the draft or definitive documentation pertaining thereto; For the avoidance of doubt, no amounts in respect of Asset Sales made in Permitted Receivables Programs pursuant to Section 5.01(j)(B) shall be included in any dollar computations pursuant to this section 5.01(j)(C)." (d) Section 5.01(p) of the Participation Agreement is hereby amended by deleting such Section in its entirety and inserting the following in lieu thereof: 4 "RESTRICTIONS ON ACQUISITIONS. The Company will not, and will not permit any Subsidiary to, consummate (a) Acquisitions for an aggregate consideration in excess of $50,000,000 in any fiscal year if, at the time of any such Acquisition, the Leverage Ratio would be greater than or equal to 3.00 to 1.00 after giving pro forma effect to such Acquisition, or (b) any single Acquisition for an aggregate consideration in excess of $75,000,000 for such Acquisition (PROVIDED that the aggregate amount of all Acquisitions consummated during the term of this Agreement does not exceed $300,000,000) if, at the time of such Acquisition, the Leverage Ratio would be less than 3.00 to 1.00 after giving pro forma effect to such Acquisition." (e) Section 5.01(q)(i) of the Participation Agreement is hereby amended by deleting the phrase "pursuant to Section 5.01(p)" therein. (f) Section 5.01(r) of the Participation Agreement is hereby amended by deleting such Section in its entirety and inserting the following in lieu thereof: "(r) INDEBTEDNESS. The Company will not, and will not permit any of its Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness of the Company or any of its Subsidiaries, EXCEPT: "(i) CREDIT DOCUMENTS. Indebtedness incurred under (i) the Company's Credit Agreement or (ii) the Company's 364-Day Credit Agreement dated on or about August 31, 2001 among the Company, the lenders named therein, Credit Suisse First Boston and National City Bank (the "Company's 364-Day Credit Agreement"); "(ii) EXISTING INDEBTEDNESS. Existing Indebtedness and any refinancing, extension, renewal or refunding of any such Existing Indebtedness not involving an increase in the principal amount thereof or a reduction of more than 10% in the remaining weighted average life to maturity thereof (computed in accordance with standard financial practice); PROVIDED that any Existing Indebtedness set forth on Annex IV to the Company's Credit Agreement or Annex IV to the Company's 364-Day Credit Agreement otherwise referred to in section 6.1 therein as being intended to be refinanced by Indebtedness incurred under the Company's Credit Agreement and the Company's 364-Day Credit Agreement or otherwise retired, may not be otherwise refinanced; "(iii) INTERCOMPANY DEBT. Unsecured Indebtedness of (A) the Company owed to any of its Subsidiaries and (B) any of the Company's Subsidiaries owed to the Company or to another Subsidiary of the Company; "(iv) HEDGE AGREEMENTS. Indebtedness of the Company and its Subsidiaries under Hedge Agreements; 5 "(v) ADDITIONAL UNSECURED INDEBTEDNESS. Additional unsecured Indebtedness of the Company and its Subsidiaries in an aggregate principal amount not to exceed $25,000,000 at any time outstanding; "(vi) PERMITTED RECEIVABLES PROGRAMS. Indebtedness incurred under the Permitted Receivables Programs; "(vii) BOND ISSUANCES. Indebtedness incurred in connection with the issuance by the Company of public or private debt securities; and "(viii) ADDITIONAL INDEBTEDNESS AND GUARANTY OBLIGATIONS. Additional Indebtedness and Guaranty Obligations of the Company and/or any of its Subsidiaries not otherwise permitted pursuant to the foregoing clauses, without limitation as to aggregate amount; PROVIDED that at the time of incurrence thereof and after giving effect thereto, (A) no Event of Default shall have occurred and be continuing or shall result therefrom, (B) if such Indebtedness or Guaranty Obligation is secured by any collateral, such Indebtedness is permitted by Section 5.01(p), and (C) the Company would have been in compliance with the covenants contained in Section 5.01(i)(i) and Section 5.01(i)(ii) if such Indebtedness had been incurred at the beginning of the most recent Testing Period for which financial information has been furnished to the Purchasers hereunder, and such Indebtedness remained outstanding throughout such Testing Period; PROVIDED, FURTHER, that if, at the time of incurrence of such Indebtedness and after giving pro forma effect thereto, the Leverage Ratio is greater than 3.00 to 1.00 or the Index Debt Rating is not Investment Grade, the Company and its Subsidiaries may only incur and suffer to exist up to $50,000,000 in aggregate principal amount of such additional Indebtedness and Guaranty Obligations; PROVIDED, FURTHER, that, in any event, the amount of secured Indebtedness permitted hereunder, other than in connection with any Permitted Receivables Program, shall not exceed $20,000,000 at any time outstanding." (g) Section 5.01(s) of the Participation Agreement is hereby amended by deleting such Section in its entirety and inserting the following in lieu thereof: "NO STOCK REPURCHASES WHILE INDEX DEBT RATING IS NOT INVESTMENT GRADE, ETC. The Company will not, at any time when its Index Debt Rating is not Investment Grade, directly or indirectly make, or permit any of its Subsidiaries to directly or indirectly make, any purchase, redemption, retirement or other acquisition of (i) any shares of Capital Stock (other than the Series A ESOP Convertible Preferred Stock of the Company) of any class of the Company (other than for a consideration consisting solely of Capital Stock of the same class of the Company), or (ii) any warrants, rights or options to acquire, or any securities convertible into or exchangeable for, any Capital Stock 6 (other than the Series A ESOP Convertible Preferred Stock of the Company) of the Company." (h) Section 5.01 of the Participation Agreement is hereby amended by adding the following clauses immediately after Section 5.01(u): "(v) RESTRICTED PAYMENTS. The Company will not declare, pay or make any payment, dividend, distribution or exchange (in cash, property or obligations) on or in respect of any class of Capital Stock (now or hereafter outstanding) of the Company or on any warrants, options or other rights with respect to any class of Capital Stock (now or hereafter outstanding) of the Company (other than (i) dividends or distributions payable in its Capital Stock or warrants to purchase its Capital Stock and (ii) splits or reclassifications of its Capital Stock into additional or other shares of its Capital Stock) or apply any of its funds, property or assets to the purchase, redemption, exchange, sinking fund or other retirement of any shares of any class of Capital Stock (now or hereafter outstanding, other than the Series A ESOP Convertible Preferred Stock of the Company) of the Company, or warrants, options or other rights with respect to any class of Capital Stock (now or hereafter outstanding, other than the Series A ESOP Convertible Preferred Stock of the Company) of the Company (the foregoing prohibited acts being herein collectively referred to as "Restricted Payments") in an amount in excess of $30,000,000 in the aggregate in any fiscal year if, at any time during such fiscal year, the Leverage Ratio is greater than 3.00 to 1.00 after giving pro forma effect to such Restricted Payments. "(w) RESTRICTIVE AGREEMENTS. The Company will not, and will not permit any of its Subsidiaries to, enter into any agreement prohibiting (i) the creation or assumption of any Lien upon its properties, revenues or assets, whether now owned or hereafter acquired, (ii) its ability to amend or otherwise modify any Credit Document or (ii) the ability of any Subsidiary to make any payments, directly or indirectly, to the Company, including by way of dividends, advances, repayments of loans, reimbursements of management and other intercompany charges, expenses and accruals or other returns on investments. The foregoing prohibitions shall not apply to restrictions contained (A) in any Credit Document or (ii) in the case of clause (i), any agreement governing any Indebtedness permitted by this Section 5.1 as to the assets financed with the proceeds of such Indebtedness." "(x) CONTINGENT SECURED OBLIGATIONS. The Company will enter into any agreements contemplated by Section 8.14 of the Company's Credit Agreement and Section 8.14 of the Company's 364-Day Credit Agreement in the event that the Company's Index Debt Rating is not Investment Grade. Such agreements shall provide National City Bank (as administrative agent under the Company's Credit Agreement) with a first priority perfected Lien (subject to Permitted Liens) in the (i) Principal 7 Domestic Manufacturing Properties of each of the Company and any Subsidiary and (ii) the Capital Stock of the Company's Domestic Subsidiaries (collectively, the "CONTINGENT SECURED OBLIGATIONS"). In connection therewith, each of the Purchasers, the Trustee and the Agent hereby appoint National City Bank (in its capacity as administrative agent under the Company's Credit Agreement and the Company's 364-Day Credit Agreement) as its collateral agent in connection with the Contingent Secured Obligations. Citibank shall act as administrative agent for the Purchasers and in such role is hereby authorized to enter into any intercreditor agreements in connection with the sharing by the Purchasers of the Contingent Secured Obligations as contemplated by Section 8.14 of the Company's Credit Agreement and Section 8.14 of the Company's 364-Day Credit Agreement." 3. AMENDMENTS TO SECTION 7 OF THE PARTICIPATION AGREEMENT. (a) Section 7.01(a) of the Participation Agreement is hereby amended by deleting such Section in its entirety and inserting the following in lieu thereof: "(a) The Company shall (i) fail to observe or perform any covenant contained in Sections 5.01(a)(iii), 5.01(d)(ii), 5.01(i), 5.01(j), 5.01(p), 5.01(q), 5.01(u), 5.01(v) or 5.01(w) hereof, (ii) not comply with any of its payment obligations under Section 9.15(c) hereof within five Business Days after its receipt of a written demand by an Indemnified Party, (iii) not comply with any of its other obligations under Section 9.15 hereof in a timely manner or (iv) shall fail to satisfy any obligation subsequent contained in Section 2.03 within the time periods therein provided." 4. AMENDMENT TO SCHEDULE II TO THE PARTICIPATION AGREEMENT. (a) Schedule II to the Participation Agreement is hereby amended by deleting such schedule in its entirety and inserting the schedule set forth on EXHIBIT A hereto in lieu thereof. 5. AMENDMENTS TO APPENDIX A TO THE PARTICIPATION AGREEMENT. (a) Appendix A to the Participation Agreement is hereby amended by deleting the definition of "Acquisition" in its entirety and inserting the following in lieu thereof: "'ACQUISITION' shall mean shall mean and include (i) any acquisition on a going concern basis (whether by purchase, lease or otherwise) of any assets, facilities and/or businesses operated by any person who is not a Subsidiary of the Company, and (ii) acquisitions of a majority of the outstanding equity or other similar interests in any such Person (whether by merger, stock purchase or otherwise)." 8 (b) Appendix A to the Participation Agreement is hereby amended by deleting the definition of "Applicable Margin" in its entirety and inserting the following in lieu thereof: "'Applicable Margin' means (i) with respect to the A-Notes: (a) on each date that the Applicable Rate is determined by reference to the LIBO Rate, the rate per annum set forth opposite the heading "A Notes" and under the subheading "LIBO Rate" on the Pricing Grid, based upon the Index Debt Rating applicable on such date; and (b) on each date that the Applicable Rate is determined by reference to the Base Rate, the rate per annum set forth opposite the heading "A Notes" and under the subheading "Base Rate" on the Pricing Grid, based upon the Index Debt Rating applicable on such date; (ii) with respect to the B-Notes: (a) on each date that the Applicable Rate is determined by reference to the LIBO Rate, the rate per annum set forth opposite the heading "B Notes" and under the subheading "LIBO Rate" on the Pricing Grid, based upon the Index Debt Rating applicable on such date; and (b) on each date that the Applicable Rate is determined by reference to the Base Rate, the rate per annum set forth opposite the heading "B Notes" and under the subheading "Base Rate" on the Pricing Grid, based upon the Index Debt Rating applicable on such date; and (iii) with respect to the Certificates: (a) on each date that the Applicable Rate is determined by reference to the LIBO Rate, the rate per annum set forth opposite the heading "Certificates" and under the subheading "LIBO Rate" on the Pricing Grid, based upon the Index Debt Rating applicable on such date; and (b) on each date that the Applicable Rate is determined by reference to the Base Rate, the rate per annum opposite the heading "Certificates" and under the subheading "Base Rate" on the Pricing Grid, the Index Debt Rating applicable on such date; provided that: 9 (A) as of the effective date of the Company's Credit Agreement (herein, the "Effective Date"), until changed hereunder in accordance with the following provisions, the Applicable Margin will be determined by reference to Level 3 (as set forth on the Pricing Grid); provided that, during the six month period following the Effective Date, the Applicable Margin shall be subject to increases and not to decreases based on a decline in the Index Debt Rating, in accordance with the Pricing Grid; (B) notwithstanding the above provisions, during any period when a Default under Section 7.01 or an Event of Default has occurred and is continuing, the Applicable Margin shall be the highest rate per annum indicated therefor in the Pricing Grid, regardless of the then Index Debt Rating; (C) for purposes of determination of the Applicable Margin, (1) if either Moody's or S&P shall not have in effect an Index Debt Rating (other than by reason of the circumstances referred to in the last sentence of this paragraph), then such rating agency shall be deemed to have established a rating in Level 5 (as set forth on the Pricing Grid); (2) if the Index Debt Rating shall fall within different Levels (as set forth on the Pricing Grid), the Applicable Margin shall be based on the lower of the two ratings; and (3) if the Index Debt Rating shall be changed (other than as a result of a change in the rating system of Moody's or S&P), such change shall be effective as of the date on which it is first announced by the applicable rating agency. Each change in the Applicable Margin shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If the rating system of Moody's or S&P shall change, or if either such rating agency shall cease to be in the business of rating corporate debt obligations, the Company and the Purchasers shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and, pending the effectiveness of any such amendment, the Applicable Margin shall be determined by reference to the rating most recently in effect prior to such change or cessation; (D) any changes in the Applicable Margin shall be determined by the Agent in accordance with the above provisions and the Agent will promptly provide notice of such determinations to the Company and the Purchasers. Any such determination by the Agent shall be conclusive and binding absent manifest error; and (E) any time during which the Leverage Ratio is greater than or equal to 3.5 to 1.00, the Applicable Margin shall be increased by 25.0 basis points, and at any time during which the Leverage Ratio is greater than or equal to 4.0 to 1.00, the Applicable Margin shall be increased by an additional 25.0 basis points." 10 (c) Appendix A to the Participation Agreement is hereby amended by adding the following definition after the definition of "Capitalized Lease Obligations." "'Capital Stock' means, (a) in the case of a corporation, any and all capital or corporate stock, including shares of preferred or preference stock of such corporation, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) in respect of corporate or capital stock, (c) in the case of a partnership or limited liability company, any and all partnership or membership interests (whether general or limited) and (d) any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing person." (d) Appendix A to the Participation Agreement is hereby amended by deleting the definition of "Change of Control" in its entirety and inserting the following in lieu thereof: "'Change of Control' shall mean and include any of the following: (i) during any period of two consecutive calendar years, individuals who at the beginning of such period constituted the Company's Board of Directors (together with any new directors (x) whose election by the Company's Board of Directors was, or (y) whose nomination for election by the Company's shareholders was (prior to the date of the proxy or consent solicitation relating to such nomination), approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved), shall cease for any reason to constitute a majority of the directors then in office; (ii) any person or group (as such term is defined in section 13(d)(3) of the Securities and Exchange Act of 1934, as amended (the "1934 Act"), other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company and the Current Holder Group, shall acquire, directly or indirectly, beneficial ownership (within the meaning of Rule 13d-3 and 13d-5 of the 1934 Act) of more than 50%, on a fully diluted basis, of the economic or voting interest in the Company's capital stock; and/or (iii) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement or agreements for the sale or disposition by the Company of all or substantially all of the Company's assets." 11 (e) Appendix A to the Participation Agreement is hereby amended by deleting the definition of "Company's Credit Agreement" in its entirety and inserting the following in lieu thereof: "'COMPANY'S CREDIT AGREEMENT' means that certain Five Year Credit Agreement dated on or about August 31, 2001 among the Company the lenders named therein; Credit Suisse First Boston, as syndication agent, joint lead arranger and sole book running manager; and National City Bank as administrative agent, swing line lender, letter of credit issuer and joint lead arranger." (f) Appendix A to the Participation Agreement is hereby amended by deleting the definition of "Consolidated EBITDA" in its entirety and inserting the following in lieu thereof: "'CONSOLIDATED EBITDA' shall mean, for any period, Consolidated Net Income for such period; PLUS (A) the sum, without duplication, of the amounts for such period included in determining such Consolidated Net Income of (i) Consolidated Fixed Charges (other than dividends), (ii) Consolidated Income Tax Expense, (iii) Consolidated Depreciation Expense, (iv) Consolidated Amortization Expense, (v) non-cash losses and charges which are properly classified as extraordinary or nonrecurring (including any charges relating to the Company's 2001 severance program in an aggregate amount not to exceed $7,000,000 and any restructuring and integration charges arising out of the DMC(2) Acquisition in an aggregate amount not to exceed $30,000,000), and (vi) Expense Payments; LESS (B) gains on sales of assets (excluding sales in the ordinary course of business) and other gains which are properly classified as extraordinary or nonrecurring; all as determined for the Company and its Subsidiaries on a consolidated basis in accordance with GAAP. Notwithstanding the foregoing, in determining Consolidated Net Income for purposes of this definition there shall be excluded therefrom (i) the income (or loss) of any entity (other than Subsidiaries of the Company) in which the Company or any of its Subsidiaries has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to the Company or any of its Subsidiaries during such period, and (ii) the income of any Subsidiary of the Company to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary. In addition and notwithstanding the foregoing, the Company's Consolidated EBITDA for any Testing Period shall (x) include the appropriate financial items for any person or business unit which has been acquired by the Company for any 12 portion of such Testing Period prior to the date of acquisition, and (y) exclude the appropriate financial items for any person or business unit which has been disposed of by the Company, for the portion of such Testing Period prior to the date of disposition; PROVIDED that, with respect to the appropriate financial items for the Ferro Divisions, in computing Consolidated EBITDA for the period ending on the last day of (i) the fourth fiscal quarter of the 2001 fiscal year, such financial items shall be those for the fourth fiscal quarter of the 2001 fiscal year MULTIPLIED by four, (ii) the first fiscal quarter of the 2002 fiscal year, such financial items shall be those for the fourth fiscal quarter of the 2001 fiscal year and the first fiscal quarter of the 2002 fiscal year MULTIPLIED by two, (iii) the second fiscal quarter of the 2002 fiscal year, such financial items shall be those for the fourth fiscal quarter of the 2001 fiscal year, the first fiscal quarter of the 2002 fiscal year and the second fiscal quarter of the 2002 fiscal year MULTIPLIED by 1.333." (g) Appendix A to the Participation Agreement is hereby amended by adding the following definition after the definition of "Consolidated EBITDA": "'CONSOLIDATED FIXED CHARGES' shall mean, for any period, the sum of (a) Consolidated Interest Expense during such period, PLUS (b) financing expenses paid in connection with Permitted Receivables Programs during such period, PLUS (c) all Capital Lease and Synthetic Lease expenses paid during such period, PLUS (d) dividends paid by the Company during such period." (h) Appendix A to the Participation Agreement is hereby amended by deleting the definition of "Consolidated Interest Expense" in its entirety and inserting the following in lieu thereof: "'CONSOLIDATED INTEREST EXPENSE' shall mean, for any period, total interest expense (including that which is capitalized, that which is in connection with Capital Leases or Synthetic Leases and the pre-tax equivalent of dividends payable on Redeemable Stock) of the Company and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of the Company and its Subsidiaries, but EXCLUDING, HOWEVER, any amortization or write-off of deferred financing costs and any charges for prepayment penalties on prepayment of Indebtedness." (i) Appendix A to the Participation Agreement is hereby amended by deleting the definition of "Consolidated Total Debt" in its entirety. (j) Appendix A to the Participation Agreement is hereby amended by deleting the definition of "Credit Documents" in its entirety and inserting the following in lieu thereof: 13 "'CREDIT DOCUMENTS' shall have the meanings set forth in each of the Company's Credit Agreement and the Company's 364-Day Credit Agreement. (k) Appendix A to the Participation Agreement is hereby amended by adding the following definition after the definition of "Construction Schedule": "'CONTINGENT SECURED OBLIGATIONS' has the meaning set forth in Section 5.01(x) of the Participation Agreement." (l) Appendix A to the Participation Agreement is hereby amended by deleting the definition of "Debt" in its entirety and inserting the following in lieu thereof: "'DEBT' shall mean, on any date, without duplication, the outstanding principal amount of all Indebtedness of the Company and its Subsidiaries of the type referred to in clause (i) (which, in the case of the Loans (as defined in the Company's Credit Agreement), shall be deemed to equal the average daily outstanding amount of such Loans for the fiscal quarter ending on the date of determination LESS the amount of any such Loans prepaid during such fiscal quarter pursuant to section 5.2 of the Company's Credit Agreement), clause (ii), clause (iii), clause (iv) (which shall include only the face amount of letters of credit that have been drawn), clause (v), clause (vi), clause (vii), clause (viii) and clause (xii), in each case of the definition of Indebtedness (exclusive of intercompany Indebtedness between the Company and any of its Subsidiaries or between any Subsidiaries of the Company) and, without duplication, any Guaranty Obligation in respect of any of the foregoing." (m) Appendix A to the Participation Agreement is hereby amended by deleting the definition of "Existing Indebtedness" in its entirety and inserting the following in lieu thereof: "'EXISTING INDEBTEDNESS' shall mean all Indebtedness of the Company and each of its Subsidiaries, on a consolidated basis, listed on Annex IV to the Company's Credit Agreement and Annex IV to the Company's 364-Day Credit Agreement, which (i) has an outstanding principal amount of at least $5,000,000, or may be incurred pursuant to existing commitments or lines of credit, or (ii) is secured by any Lien on any property of the Company or any Subsidiary, and which will be outstanding on the closing date of either of the Company's Credit Agreement or the Company's 364-Day Credit Agreement (the "Credit Agreement Closing Date") after giving effect to any borrowing thereunder which is expected to be made on the Credit Agreement Closing Date, other than the Indebtedness created under the Credit Documents (all such Indebtedness, whether or not in a principal amount meeting such threshold and required to be so listed on any such Annex IV, the "Existing Indebtedness"). 14 (n) Appendix A to the Participation Agreement is hereby amended by adding the following definition after the definition of "Fee Parcels": "'FERRO DIVISIONS' means the electronic materials, performance pigments and colors, glass systems and cerdec ceramics divisions of dmc(2) Degussa Metals Catalysts Cerdec A.G. purchased by the Company from OM Group, Inc., a Delaware corporation on or about August 31, 2001." (o) Appendix A to the Participation Agreement is hereby amended by adding the following definition after the definition of "First Amendment to Lease": "'FIXED CHARGE COVERAGE RATIO' shall mean, on any date, the ratio of (i) Consolidated EBITDA for the then most recent Testing Period, LESS capital expenditures determined in accordance with GAAP made during such Testing Period to (b) Consolidated Fixed Charges for the then most recent Testing Period." (p) Appendix A to the Participation Agreement is hereby amended deleting clauses (xi), (xii) and (xiii) within the definition of "Indebtedness" and inserting the following clauses in lieu thereof: "(xi) the full outstanding balance of trade receivables, notes or other instruments sold with full recourse (and the portion thereof subject to potential recourse, if sold with limited recourse), other than in any such case any thereof sold solely for purposes of collection of delinquent accounts and other than in connection with any Permitted Receivables Program; (xii) all obligations (other than intercompany obligations) of such Person pursuant to any Permitted Receivables Program; (xiii) the stated value, or liquidation value if higher, of all Redeemable Stock of such Person; and (xiv) all Guaranty Obligations of such Person." (q) Appendix A to the Participation Agreement is hereby amended by adding the following definition after the definition of "Index Debt": "'INDEX DEBT RATING' shall mean, as of any date, the rating of the Company's Index Debt, as given by S&P or Moody's in their regular rating reports." (r) Appendix A to the Participation Agreement is hereby amended by deleting the definition of "Investment Grade" in its entirety and inserting the following in lieu thereof: 15 "'INVESTMENT GRADE' shall mean, with respect to Index Debt at any date of determination, that such Index Debt is rated by both Moody's and S&P and that the Index Debt Rating is not lower than Baa3 from Moody's and not lower than BBB- from S&P." (s) Appendix A to the Participation Agreement is hereby amended by adding the following definition after the definition of "Lessor Termination Notice": "'LEVERAGE RATIO' shall mean, on any date, the ratio of (a) total Debt outstanding on such date to (b) Consolidated EBITDA for the then most recent Testing Period." (t) Appendix A to the Participation Agreement is hereby amended by deleting clause (a) within the definition of "Material Adverse Effect" and inserting the following in lieu thereof thereof: "(a) the business, operations, property, assets, liabilities, or condition (financial or otherwise) or prospects of the Company and the Ferro Divisions or the Company and its Subsidiaries taken as a whole;". (u) Appendix A to the Participation Agreement is hereby amended by deleting the definition of "Permitted Liens" in its entirety and inserting the following in lieu thereof: "'PERMITTED LIENS' shall mean: (i) any Liens for current taxes, assessments and other governmental charges not yet due and payable or being contested in good faith by the Company or one or more of its Subsidiaries by appropriate proceedings; (ii) any mechanic's, materialman's, carrier's, warehousemen's or similar Liens for sums not yet due or being contested in good faith by the Company or one or more of its Subsidiaries by appropriate proceedings; (iii) Liens in favor of Purchasers under this Agreement and the Lenders under the Company's Credit Agreement; (iv) easements, rights-of-way, restrictions and other similar encumbrances on the Real Property of the Company or one or more of its Subsidiaries incurred in the ordinary course of business that individually or in the aggregate are not substantial in amount and that 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 Company or any of its Subsidiaries; 16 (v) Liens incurred or deposits made in the ordinary course of business, including Liens in connection with workers' compensation, unemployment insurance and other types of social security and Liens to secure performance of tenders, statutory obligations, trade contracts (other than for Debt), surety and appeal bonds (in the case of appeal bonds such Lien shall not secure any reimbursement or indemnity obligation in an amount greater than $500,000), bids, leases that are not Capital Leases, performance bonds, sales contracts and other similar obligations, deposits securing liability to insurance carriers under insurance or self-insurance arrangements, in each case, not incurred in connection with the obtaining of credit or the payment of a deferred purchase price, and which do not, in the aggregate, result in a Material Adverse Effect; (vi) Liens existing upon the date hereof; (vii) Liens securing obligations incurred to finance the deferred purchase price of property; PROVIDED that (i) such Liens shall be created within 120 days after the acquisition of such property, (ii) such Liens do not at any time encumber any property other than the property financed by such obligations, (iii) the amount of the obligation secured thereby is not increased, and (iv) the principal amount of an obligation secured by any such Lien shall at no time exceed the lesser of (A) 100% of the original purchase price of such property and (B) the fair value (as determined in good faith by the Board of Directors of the Company) of such property at the time it was acquired; (viii) Liens securing obligations assumed in connection with acquisitions made in accordance with 5.01(p); PROVIDED that (i) such Liens exist at the time of the acquisition and were not created in anticipation thereof, (ii) any such Lien is not spread to cover any additional property or assets after the time of such acquisition, and (iii) the amount of the obligation secured by any such Lien is not increased; (ix) judgment Liens to the extent the entry of such judgment does not constitute a Default or Event of Default under the terms of this Agreement; (x) Liens created in connection with the Permitted Receivables Programs; and (xi) Liens (not otherwise permitted hereunder) that secure obligations not exceeding (as to the Company and its Subsidiaries) $5,000,000 in the aggregate at any time outstanding; PROVIDED that such Liens are limited to assets other than accounts." (v) Appendix A to the Participation Agreement is hereby amended by deleting the definition of "Permitted Receivables Program" in its entirety and inserting the following in lieu thereof: 17 "'PERMITTED RECEIVABLES PROGRAM' shall have the meaning provided in Section 5.01(j)(B)." (w) Appendix A to the Participation Agreement is hereby amended by adding the following definition after the definition of "Prescribed Forms": "'PRICING GRID' means the pricing grid attached as Schedule II to the Participation Agreement." (x) Appendix A to the Participation Agreement is hereby amended by adding the following to the end of the definition of "Redeemable Stock": "; provided that Redeemable Stock shall not include the Series A ESOP Convertible Preferred Stock of the Company." (y) Appendix A to the Participation Agreement is hereby amended by adding the following definitions after the definition of "Qualified Sale": "'REAL PROPERTY' of any person shall mean all of the right, title and interest of such person in and to land, improvements and fixtures, including leaseholds." (z) Appendix A to the Participation Agreement is hereby amended by adding the following definitions after the definition of "Residual Guaranty": "'RESTRICTED PAYMENTS' has the meaning set forth in Section 5.01(v) of the Participation Agreement." and "'RESTRICTIVE AGREEMENTS' has the meaning set forth in Section 5.01(w) of the Participation Agreement." 6. AUTHORIZATION AND DIRECTION. Each of the Purchasers hereby authorizes and directs the Trustee to execute and deliver this Amendment and all other documents and instruments to be executed by the Trustee in connection with this Amendment. 7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to the Purchasers, the Trustee, and the Agent that as of the date hereof: (a) all of the representations and warranties of the Company set forth in the Operative Documents, as amended by this Amendment, are true and correct in all material respects; and 18 (b) no Default, Event of Default, or Environmental Event has occurred and is continuing. 8. RATIFICATION AND CONFIRMATION; Full Force and Effect. (a) Except as specifically amended hereby, the Participation Agreement and the other Operative Documents are hereby ratified and confirmed in all respects and shall remain in full force and effect in accordance with their terms. Each reference in the Operative Documents or in any other documents delivered in connection therewith to the Participation Agreement shall (unless otherwise specifically provided) mean the Participation Agreement as amended by this Amendment, and as hereafter amended or restated. 9. EFFECTIVENESS. This Amendment shall be effective upon the execution and delivery of this Amendment by the parties hereto and at such time as all conditions to the making of loans pursuant to each of (i) the Company's Credit Agreement and (ii) the Company's 364-Day Credit Agreement have been satisfied or waived in accordance with the terms of each such agreement. 10. GOVERNING LAW. This Amendment shall be governed by and interpreted in accordance with the laws of the State of New York, including section 5-1401 of the New York general obligations law (or any similar successor provision thereto) but excluding all other conflict-of-laws rules. 11. COUNTERPARTS. This Amendment may be executed in any number of counterparts, each of which shall, when executed, be deemed to be an original and all of which taken together shall be deemed to be one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment. [SIGNATURE PAGES FOLLOW] 19 SIGNATURE PAGE TO AMENDMENT NO. 1 TO AMENDED AND RESTATED PARTICIPATION AGREEMENT IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their officers thereunto duly authorized as of the day and year first above written. FERRO CORPORATION By: --------------------------------- Name: Title: SIGNATURE PAGE TO AMENDMENT NO. 1 TO AMENDED AND RESTATED PARTICIPATION AGREEMENT STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as expressly stated herein, but solely as Trustee By: ---------------------------------------- Name: Title: SIGNATURE PAGE TO AMENDMENT NO. 1 TO AMENDED AND RESTATED PARTICIPATION AGREEMENT CITICORP USA, Inc., as Note Purchaser and Certificate Purchaser By: ---------------------------------------- Name: Title: CITIBANK, N.A., as Agent By: ---------------------------------------- Name: Title: SIGNATURE PAGE TO AMENDMENT NO. 1 TO AMENDED AND RESTATED PARTICIPATION AGREEMENT BANK HAPOALIM B.M., as Note Purchaser and Certificate Purchaser By: ---------------------------------------- Name: Title: By: ---------------------------------------- Name: Title: SIGNATURE PAGE TO AMENDMENT NO. 1 TO AMENDED AND RESTATED PARTICIPATION AGREEMENT BANK ONE, N.A., as Note Purchaser By: ---------------------------------------- Name: Title: SIGNATURE PAGE TO AMENDMENT NO. 1 TO AMENDED AND RESTATED PARTICIPATION AGREEMENT NATIONAL CITY BANK, as Note Purchaser By: ---------------------------------------- Name: Title: SIGNATURE PAGE TO AMENDMENT NO. 1 TO AMENDED AND RESTATED PARTICIPATION AGREEMENT KEY BANK NATIONAL ASSOCIATION, as Note Purchaser By: ---------------------------------------- Name: Title: EXHIBIT A SCHEDULE II to Amended and Restated Participation Agreement, dated as of November 30, 2000
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5 Index Debt Rating(*) Company's long Company's long Company's long Company's long Company's long term senior term senior term senior term senior term senior unsecured debt is unsecured debt is unsecured debt is unsecured debt unsecured debt rated at least rated at least rated at least is rated at least is rated less BBB+ by S&P OR BBB by S&P OR BBB- by S&P OR BB+ by S&P OR than Level 4 Baa1 by Moody's Baa2 by Moody's Baa3 by Moody's Ba1 by Moody's or unrated APPLICABLE MARGIN (basis points per annum) A-Notes LIBO Rate LIBO Rate LIBO Rate LIBO Rate LIBO Rate --------- --------- --------- --------- --------- 110.0 135.0 160.0 210.0 260.0 Base Rate Base Rate Base Rate Base Rate Base Rate --------- --------- --------- --------- --------- 0. 0. 12.5 57.0 100.0 B-Notes LIBO Rate LIBO Rate LIBO Rate LIBO Rate LIBO Rate --------- --------- --------- --------- --------- 120.0 145.0 170.0 220.0 270.0 Base Rate Base Rate Base Rate Base Rate Base Rate --------- --------- --------- --------- --------- 0. 0. 12.5 57.0 100.0 Certificates LIBO Rate LIBO Rate LIBO Rate LIBO Rate LIBO Rate --------- --------- --------- --------- --------- 300.0 300.0 325.0 375.0 425.0 Base Rate Base Rate Base Rate Base Rate Base Rate --------- --------- --------- --------- --------- 225 225 245.0 280.0 320.0
- ---------- (*) see definition of "Applicable Margin". EX-11 6 l91036aex11.txt EXHIBIT 11 EXHIBIT 11 FERRO CORPORATION AND SUBSIDIARIES STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
SEPTEMBER SEPTEMBER --------- --------- 2001 2000 ---- ---- 3 MONTHS 9 MONTHS 3 MONTHS 9 MONTHS -------- -------- -------- -------- Basic: Weighted Average Common Shares Outstanding........ 34,249,361 34,216,688 34,495,234 34,681,555 Net Income........................................ 12,252 33,230 18,190 56,742 Less Preferred Stock Dividend, Net of Tax......... (763) (2,333) (846) (2,626) ------------- ------------- -------------- -------------- Net Income Available to Common Shareholders....... $ 11,489 $ 30,897 $ 17,344 $ 54,116 Basic Earnings Per Common Share...................... $ 0.34 $ 0.90 $ 0.50 $ 1.49 Diluted: Weighted Average Common Shares Outstanding........ 34,249,361 34,216,688 34,495,234 34,681,555 Adjustments for assumed conversion of convertible preferred stock and common stock options.......... 2,822,438 2,864,593 3,098,682 3,116,745 ------------ ------------ ------------- ------------- 37,071,799 37,081,281 37,593,916 37,848,300 Net Income ....................................... $ 12,252 $ 33,230 $ 18,190 $ 56,742 Tax effect on assumed conversion of convertible preferred stock................................ (143) (437) (158) (492) ------------- ------------- ------------- -------------- Adjusted Net Income............................... $ 12,109 $ 32,793 $ 18,032 $ 56,250 Diluted Earnings Per Share........................... $ 0.33 $ 0.88 $ 0.48 $ 1.49
EX-12 7 l91036aex12.txt EXHIBIT 12 EXHIBIT 12 FERRO CORPORATION AND SUBSIDIARIES RATIO OF EARNINGS TO FIXED CHARGES
NINE MONTHS ENDED SEPTEMBER 30, ------------------------------- (DOLLARS IN THOUSANDS) 2001 2000 ---- ---- Earnings: Pre-Tax Income........................................................................ 52,381 91,204 Add: Fixed Charges.................................................................... 26,574 18,717 Less: Interest Capitalization......................................................... (613) (340) ----------- ----------- Total Earnings...................................................................... 78,342 109,581 =========== =========== Fixed Charges: Interest Expense...................................................................... 24,016 17,885 Interest Capitalization............................................................... 613 340 Interest Portion of Rental Expense.................................................... 1,945 492 ----------- ----------- Total Fixed Charges................................................................. 26,574 18,717 =========== =========== Total Earnings.................................................................. 78,342 109,581 Divided By: Total Fixed Charges................................................................. 26,574 18,717 ----------- ----------- Ratio........................................................................... 2.95 5.85
Note: Preferred dividends are excluded. Amortization of debt expense and discounts and premiums were deemed immaterial to the above calculation. -----END PRIVACY-ENHANCED MESSAGE-----