-----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, W2Fm9GwdOIpEIjLLsLOSsmpUBRizpZnTWIdsbS2vj/U6Ltl32kp4N+iBMCXml/lA 98CPoB6Zy+5pBQPOVzvZrA== 0000950152-02-006581.txt : 20020821 0000950152-02-006581.hdr.sgml : 20020821 20020821165222 ACCESSION NUMBER: 0000950152-02-006581 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 19 CONFORMED PERIOD OF REPORT: 20020531 FILED AS OF DATE: 20020821 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORTHINGTON INDUSTRIES INC CENTRAL INDEX KEY: 0000108516 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES & ROLLING & FINISHING MILLS [3310] IRS NUMBER: 311189815 STATE OF INCORPORATION: OH FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08399 FILM NUMBER: 02745030 BUSINESS ADDRESS: STREET 1: 1205 DEARBORN DR CITY: COLUMBUS STATE: OH ZIP: 43085 BUSINESS PHONE: 6144383210 MAIL ADDRESS: STREET 1: 1205 DEARBORN DR CITY: COLUMBUS STATE: OH ZIP: 43085 FORMER COMPANY: FORMER CONFORMED NAME: WORTHINGTON STEEL CO DATE OF NAME CHANGE: 19720123 10-K 1 l95946ae10vk.txt WORTHINGTON INDUSTRIES, INC. FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended May 31, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to _____________ Commission File No. 1-8399 WORTHINGTON INDUSTRIES, INC. ---------------------------- (Exact name of Registrant as specified in its Charter) Ohio 31-1189815 - ------------------------------------------------------------------------- ------------------------------------ (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 1205 Dearborn Drive, Columbus, Ohio 43085 - ------------------------------------------------------------------------- ------------------------------------ (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (614) 438-3210 --------------------------------------------------------------
Securities Registered Pursuant to Section 12(b) of the Act: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED Common Shares, Without Par Value New York Stock Exchange Securities Registered Pursuant to Section 12(g) of the Act: NONE 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 [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Based upon the closing price of the Common Shares on August 1, 2002, as reported on the New York Stock Exchange composite tape (as reported by The Wall Street Journal), the aggregate market value of the Common Shares held by non-affiliates of the Registrant as of such date was approximately $1,198,743,875. The number of Common Shares issued and outstanding as of August 1, 2002, was 85,596,365. DOCUMENTS INCORPORATED BY REFERENCE Selected portions of the Registrant's 2002 Proxy Statement, to be furnished to shareholders of the Registrant in connection with the Annual Meeting of Shareholders to be held on September 26, 2002, are incorporated by reference into Part III of this Form 10-K to the extent provided herein. TABLE OF CONTENTS Safe Harbor Statement............................................................................................ii Part I. Item 1. Business........................................................................................1 Item 2. Properties......................................................................................6 Item 3. Legal Proceedings...............................................................................7 Item 4. Submission of Matters to a Vote of Security Holders.............................................7 Supplemental Item. Executive Officers of the Registrant............................................................8 Part II. Item 5. Market For Registrant's Common Equity and Related Shareholder Matters..........................10 Item 6. Selected Financial Data........................................................................11 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......................................................................12 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.....................................20 Item 8. Financial Statements and Supplementary Data....................................................21 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure...........................................................................42 Part III. Item 10. Directors and Executive Officers of the Registrant.............................................42 Item 11. Executive Compensation.........................................................................42 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters............................................................................42 Item 13. Certain Relationships and Related Transactions.................................................43 Part IV. Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K...............................43 Signatures ...........................................................................................44 Index to Exhibits ..........................................................................................E-1
i SAFE HARBOR STATEMENT Selected statements contained in this Annual Report on Form 10-K constitute "forward-looking statements" as used in Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based, in whole or in part, on management's beliefs, estimates, assumptions and currently available information and can be identified by the words "will", "may", "designed to", "outlook", "believes", "should", "plans", "expects", intends", "estimates" and similar expressions. These forward-looking statements include, without limitation, statements relating to: - future sales, operating results and earnings per share; - projected capacity levels and operating locations; - pricing trends for raw materials and finished goods; - anticipated capital expenditures; - projected timing, results, costs, charges and expenditures related to plant shutdowns & consolidations; - new products and markets; and - other non-historical trends. Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, - product demand, changes in product mix and market acceptance of products; - fluctuations in pricing, quality or availability of raw materials, particularly steel; - effects of plant closures and the consolidation of operations and our ability to realize expected cost savings and operational efficiencies on a timely basis; - our ability to integrate newly acquired businesses with current businesses; - capacity restraints and efficiencies within our facilities and within the industry as a whole; - financial difficulties of customers, suppliers and others with whom we do business; - the effect of national, regional and worldwide economic conditions within our major product markets as well as generally; - risks associated with doing business internationally, including economical, political and social instability and foreign currency exposure; - acts of war and terrorist activities; - the ability to improve processes and business practices to keep pace with the economic, competitive and technological environment; - the impact of governmental regulations, both in the United States and abroad; and - other risks described from time to time in our filings with the Securities and Exchange Commission. ii PART I ITEM 1. - BUSINESS GENERAL OVERVIEW Worthington Industries, Inc., an Ohio corporation (individually the "Registrant" or "Worthington Industries" or, together with its subsidiaries, "Worthington"), headquartered in Columbus, Ohio, is a leading diversified metal processing company. We focus on value-added steel processing and manufactured metal products such as automotive past model service stampings, pressure cylinders and metal framing and, through joint ventures, metal ceiling grid systems and laser welded blanks. Worthington was founded in 1955 and has grown from a single steel slitting line into a diversified metal processor, which as of May 31, 2002, operated 43 facilities worldwide and held equity positions in seven joint ventures, which operated 16 facilities worldwide. For the fiscal year ended May 31, 2002 ("fiscal 2002"), our operations are reported principally in three business segments: Processed Steel Products, Metal Framing and Pressure Cylinders. The Processed Steel Products segment includes the Worthington Steel business unit ("Worthington Steel") and the Gerstenslager business unit ("Gerstenslager"). The Metal Framing segment is comprised of the Dietrich Metal Framing business unit ("Dietrich") and the Pressure Cylinders segment consists of the Worthington Cylinder business unit ("Worthington Cylinders"). In addition, we hold an equity position in seven joint ventures, which are described below, two of which are consolidated into our consolidated financial statements included in "Item 8. - Financial Statements and Supplementary Data." During fiscal 2002, our Processed Steel Products, Metal Framing and Pressure Cylinders segments served over 1,200, 3,700 and 2,400 customers, respectively, located primarily in the United States. Foreign sales account for less than 10% of consolidated net sales and are comprised primarily of sales to customers in Canada and Europe. No single customer accounts for over 10% of our consolidated net sales. In January 2002, we announced a consolidation plan (the "Consolidation Plan") that impacts eight operating facilities across our three business segments. The Consolidation Plan calls for the closure of the Malvern, Pennsylvania, and Jackson, Michigan, Processed Steel Products locations, the Fredericksburg, Virginia, Metal Framing operation and the Claremore, Oklahoma, and two Itu, Brazil, Pressure Cylinders locations. We will move the Fredericksburg Metal Framing operations into the Worthington Steel Rock Hill facility. Finally, operations at the Worthington Steel Louisville, Kentucky, facility will be restructured to reduce overhead costs. A more detailed discussion of the Consolidation Plan is contained in "Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations" within this Form 10-K. In February 2002, Dietrich joined with MiTek Industries, Inc. ("MiTek") to form Aegis Metal Framing, LLC ("Aegis"), an unconsolidated joint venture in which we have a 60% interest and MiTek has a 40% interest. Aegis combines the manufacturing and distribution capabilities of our Metal Framing segment with the software, engineering and marketing functions of MiTek's Metal Framing Systems division. A more detailed discussion of our Aegis joint venture is contained below in "Item 1. - Business - Metal Framing" and "Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations." On July 31, 2002, Worthington acquired all of the outstanding capital stock of Unimast Incorporated ("Unimast") from WHX Corporation for approximately $113 million in cash plus the assumption of approximately $9 million of debt. Our acquisition of Unimast adds capacity for our existing products, broadens our current product line to include Unimast's complementary products and introduces new products to the Metal Framing segment, including metal corner bead and trim and vinyl construction accessories. Together with its subsidiaries, Unimast operates 10 facilities and, for the calendar year ended December 31, 2001, produced revenue of approximately $230 million. The operations of Unimast and its subsidiaries will be reported in our Metal Framing segment. See "Item - 1. - Business - Metal Framing." See also, "Item 8. - Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note Q - Subsequent Event." PROCESSED STEEL PRODUCTS Our Processed Steel Products segment consists of two business units, Worthington Steel and Gerstenslager. For fiscal 2002, the fiscal year ended May 31, 2001 ("fiscal 2001") and the fiscal year ended May 31, 2000 ("fiscal 2000"), the percentage of sales from continuing operations generated by our Processed Steel Products segment was 64.9%, 64.9% and 65.6%, respectively. Both Worthington Steel and Gerstenslager are intermediate processors of flat-rolled steel. Worthington Steel occupies a niche in the steel industry by focusing on products requiring exact specifications. These products typically cannot be supplied as efficiently by steel mills, metal service centers or steel end users. We believe that Worthington Steel is one of the largest independent flat-rolled steel processors in the United States. Gerstenslager is a leading independent supplier of automotive quality exterior body panels to the North American automotive original equipment and past model service markets. It is unique in its ability to handle a large number of low volume past model service automotive body parts. Our newest Processed Steel Products facility, a Gerstenslager facility, is located in Clyde, Ohio, and began production in October 2001. As of May 31, 2002, our Processed Steel Products segment operated 14 facilities, including Spartan Steel Coating, L.L.C., our consolidated joint venture with Rouge Steel Company. Giving effect to the Consolidation Plan, Processed Steel Products will operate 11 facilities, as the Malvern, Pennsylvania, and Jackson, Michigan, plants will be closed and the Rock Hill, South Carolina, facility will become a Metal Framing facility. A more detailed discussion of the Consolidation Plan is set forth below in "Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations." Our Processed Steel Products facilities are concentrated in the Michigan, Ohio and Indiana market. We serve over 1,200 customers from these facilities, principally in the automotive, construction, lawn and garden, hardware, furniture, office equipment, electrical control, tubing, leisure and recreation, appliance, farm implement, HVAC and container markets. Worthington Steel buys coils of wide, open-tolerance steel from major integrated steel mills and mini-mills and processes them to the precise type, thickness, length, width, shape, temper and surface quality required by customer specifications. Our computer-aided processing capabilities include, among others: - pickling, a chemical process using an acidic solution to remove surface oxide which develops on hot-rolled steel; - slitting, which cuts steel to specific widths; - cutting-to-length, which flattens steel and cuts it to exact lengths; - roller leveling, a method of applying pressure to achieve precise flatness tolerances for steel which is cut into exact lengths; - cold reduction, which achieves close tolerances of thickness and temper by rolling; - edge rolling, which conditions the edges of the steel by imparting round, smooth or knurled edges; - configured blanking, by which steel is cut into specific shapes; - CleanCoat(TM), a dry lubrication process; - hot-dipped galvanizing, which coats steel with zinc and zinc alloys through a hot-dipped process; and - annealing, a thermal process that changes the hardness and certain metallurgical characteristics of steel. Worthington Steel also "toll processes" steel for steel mills, large end users, service centers and other processors. Toll processing is different from our typical steel processing because the mill or end user retains title to the steel and has the responsibility for selling the end product. Toll processing enables Worthington to participate in the market for wide sheet steel and large standard orders, which is a market generally served by steel mills rather than by intermediate steel processors. Gerstenslager stamps, assembles, primes and packages exterior automotive body parts and panels. We primarily purchase the steel used in our Gerstenslager operations but occasionally process consigned material, similar to toll processing. Gerstenslager processes a large number of low volume past model service parts, managing over 3,000 finished good part numbers and over 25,000 die/fixture sets for component parts on past and current year automobile and truck production models. 2 The Processed Steel Products industry is fragmented and highly competitive. We compete with many other independent intermediate processors and, with respect to automotive stamping, captive processors owned by the automotive companies, independent tier one suppliers of current model components and a number of smaller competitors. We compete primarily on the basis of product quality, our ability to meet delivery requirements and price. The quality of our products is enhanced by our technical service and support for material testing and customer specific applications. However, we have not quantified the extent to which our technical service capability has improved our competitive position. See "Item 1 - Business - Technical Services." We believe that our ability to meet tight delivery schedules is, in part, based on the proximity of our facilities to customers and to one another. Again, we have not quantified the extent to which plant location has impacted our competitive position. Our processed steel products are priced competitively, primarily based on market factors including, among other things, the cost and availability of raw material, transportation and shipping costs and overall economic conditions in the United States and abroad. Other than our "Worthington Steel" trade name, the only other intellectual property of importance to the Processed Steel Products segment is the unregistered trademark "CleanCoat", which is used in connection with our dry lubrication process. While the CleanCoat mark is important to the Processed Steel Products segment, we do not consider it material. METAL FRAMING Our Metal Framing segment consists of one business unit, Dietrich, which designs and produces metal framing components and systems and related accessories for the commercial and residential construction markets within the United States. For fiscal 2002, fiscal 2001 and fiscal 2000, the percentage of sales from continuing operations generated by Dietrich was 17.5%, 18.9% and 17.9%, respectively. Our Metal Framing products include steel studs and track, floor and wall system components, roof trusses and other metal framing accessories. Some of our specific products include TradeReady(R) Floor Systems, Spazzer(R) bars and, through Aegis, SureSpan(R) and Ultra-Span(R) trusses. As of May 31, 2002, our Metal Framing segment had 19 operating facilities in 15 states. Pursuant to the Consolidation Plan, the Fredericksburg, Virginia, facility will be closed and its operations moved to Rock Hill, South Carolina. A more detailed discussion of the Consolidation Plan is set forth below in "Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations." Dietrich's production facilities are located throughout the country. We believe that Dietrich is the largest supplier on a national basis of metal framing products and supplies, supplying approximately 33% of the metal framing products sold in the United States. We have over 3,700 customers, primarily consisting of wholesale distributors and commercial and residential building contractors. During fiscal 2001, we expanded our Metal Framing segment by acquiring the assets of Studco of Hawaii, Inc. located in Kapolei, Hawaii and by starting up operations at our 63,000 square foot facility in Renton, Washington. In February 2002, Dietrich and MiTek joined to form Aegis. Aegis combines Dietrich's manufacturing and distribution capabilities with MiTek's software, engineering and marketing functions. Aegis offers light gauge metal component manufacturers and contractors design, estimating and management software, a full line of metal framing products and integrated engineering services. As part of the venture, we purchased MiTek's rollforming assets and contracted with Aegis as its exclusive manufacturer. Additional discussion of our Aegis joint venture is contained below in "Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations." In addition, our July 2002 acquisition of Unimast further expanded our Metal Framing segment. Incorporating Unimast into our Metal Framing segment adds capacity for our existing products, broadens our current product line to include Unimast's complementary products and introduces new products to the segment, including metal corner bead and trim and vinyl construction accessories. Currently, Unimast and its subsidiaries serve the construction industry from 10 facilities. See "Item 1. - Business - General," "Item 2. - Properties - Metal Framing" and "Item 8. - Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note Q - Subsequent Event." 3 The light gauge metal framing industry is very competitive. We compete with one other national competitor, five large regional competitors and numerous small, more localized competitors. We compete primarily on the basis of quality, service and price. Similar to our Processed Steel Products segment, the proximity of our facilities to our customers and their project sites provides us with a service advantage and impacts our freight and shipping costs. Our products are transported almost exclusively by common carrier. Again, we have not quantified the extent to which facility location has impacted our competitive position. In addition to our trade name, "Dietrich Metal Framing", we use the registered trademarks "Spazzer(R)" and "TradeReady(R)". The "Spazzer(R)" trademark is used in connection with wall component products that are the subject of two United States patents, three pending United States patent applications and several pending foreign applications. The trademark "TradeReady(R)" is used in connection with floor system products that are the subject of two United States patents, two foreign patents, two pending United States patent applications and four pending foreign patent applications. The Aegis joint venture uses the trademarks SureSpan(R) and Ultra-Span(R) in connection with certain patents for propriety roof trusses. Although the "Spazzer(R)" and "TradeReady(R)" trademarks are important to our Metal Framing segment, neither is considered material. PRESSURE CYLINDERS Our Pressure Cylinders segment consists of one business unit, Worthington Cylinders. For fiscal 2002, fiscal 2001 and fiscal 2000, the percentage of sales from continuing operations generated by Worthington Cylinders was 16.8%, 15.8% and 16.2%, respectively. Worthington Cylinders, as of May 31, 2002, operated eight manufacturing facilities located in Alabama, Ohio and Oklahoma domestically, and in Austria, Canada and Portugal and operated one joint venture, Worthington Cylinders, a.s., in the Czech Republic. As a result of the Consolidation Plan, we discontinued operations at two Pressure Cylinders joint venture plants in Itu, Brazil, and are closing our Claremore, Oklahoma, facility. Our Pressure Cylinders segment produces a diversified line of pressure cylinders, including portable low-pressure liquefied petroleum gas ("LPG") and refrigerant gas cylinders and high-pressure industrial/specialty gas cylinders. Our LPG cylinders are sold to manufacturers, distributors and/or mass merchandisers and are used for gas barbecue grills, camping equipment, residential heating systems, industrial forklifts and commercial/residential cooking (outside North America). Refrigerant cylinders are sold primarily to major refrigerant gas producers and distributors and are used to hold refrigerant gases for commercial and residential air conditioning and refrigeration systems and for automotive air conditioning systems. Industrial/specialty gas high-pressure cylinders are sold primarily to gas producers and distributors and are used as containers for gases for: cutting and welding metals; breathing (medical, diving and firefighting); semiconductor production; beverage delivery; and compressed natural gas systems. Worthington Cylinders also produces recovery tanks for refrigerant gases and non-refillable cylinders for helium balloon kits. While a large percentage of our cylinder sales are made to major accounts, Worthington Cylinders has over 3,000 customers. Worthington Cylinders' primary low-pressure cylinder products are steel cylinders with refrigerant gas capacities of 15 to 1,000 lbs. and steel and aluminum cylinders with liquid propane gas capacities of 4-1/4 to 420 lbs. In the United States, our high-pressure and low-pressure cylinders are manufactured in accordance with U. S. Department of Transportation safety requirements. Outside the United States, we manufacture cylinders according to European Union specifications, as well as various other international requirements and standards. Low-pressure cylinders are produced by precision stamping, drawing and welding component parts to customer specifications. They are then tested, painted and packaged as required. Our high-pressure cylinders are manufactured by several processes, including deep drawing, tube spinning and billet pierce technology. Worthington Cylinders has two principal domestic competitors and several smaller foreign competitors in its major low-pressure cylinder markets and we believe that we have the largest domestic market share. In our high-pressure cylinder market we compete against two principal domestic competitors, one of which has a larger domestic market share than ours. We believe that we have the leading market share of the European industrial gas cylinder business and the non-refillable refrigerant cylinder business. As with our other segments, we compete on the basis of service, price and quality. 4 Our Pressure Cylinders segment uses the trade name "Worthington Cylinders" to conduct business and the registered trademark "Balloon Time(R)" to market our low-pressure helium balloon kits. Although this intellectual property is important to the Pressure Cylinders segment, it is not considered material. SEGMENT FINANCIAL DATA Financial information for our segments is provided below in "Item 8. - Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note H - Industry Segment Data." FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS Foreign operations and exports represent less than 10% of our production and sales. Selected information about our foreign operations is set forth below in "Item 8. - Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note A - Summary of Significant Accounting Policies - Risks and Uncertainties." SUPPLIERS In fiscal 2002, we purchased over three million tons of steel for use as raw material for our Processed Steel Products, Pressure Cylinders and Metal Framing segments. We purchase steel in large quantities at regular intervals from major primary producers, both domestic and foreign. In our Processed Steel Products segment, we primarily purchase and process steel based on specific customer orders and do not typically purchase steel for inventory. Our Metal Framing and Pressure Cylinders segments purchase steel according to our production schedules. We purchase the majority of our raw materials in the open market on a negotiated spot market basis at prevailing market prices, but we also enter into long-term contracts, some of which have fixed or capped pricing. During fiscal 2002, Worthington's major suppliers of steel were, in alphabetical order, Bethlehem Steel Corporation, Gallatin Steel Company, Global Steel, Inland Steel Company, NorthStar BHP Steel, Nucor Corporation, Rouge Industries, Inc., Steel Dynamics, Inc., USX Corporation and WCI Steel, Inc. In addition, our primary aluminum supplier in fiscal 2002 for our Pressure Cylinders segment was Alcoa, Inc. We believe that our supplier relationships are good. TECHNICAL SERVICES We employ a staff of engineers and other technical personnel and maintain fully-equipped, modern laboratories to support our operations. The facilities enable us to verify, analyze and document the physical, chemical, metallurgical and mechanical properties of our raw materials and products. Technical service personnel also work in conjunction with our sales force to determine the types of flat-rolled steel required for our customers' particular needs. In order to provide these services, we maintain a continuing program of developmental engineering with respect to the characteristics and performance of our products under varying conditions. Laboratory facilities also perform metallurgical and chemical testing as dictated by the regulations of the U.S. Department of Transportation and other associated agencies, along with I.S.O. and customer requirements. EMPLOYEES As of May 31, 2002, Worthington employed approximately 6,600 employees in its operations, excluding unconsolidated joint ventures, approximately 16% of whom were covered by collective bargaining agreements. We believe that we have good relationships with our employees. JOINT VENTURES As part of our strategy to selectively develop new products, markets and technological capabilities and to expand our international presence while mitigating the risks and costs associated with those activities, we participate in two consolidated and five unconsolidated joint ventures. Consolidated - Spartan Steel Coating, L.L.C., a 52%-owned consolidated joint venture with Rouge Steel, operates a cold-rolled, hot-dipped galvanizing facility in Monroe, Michigan. 5 - Worthington Cylinders, a.s., a 51%-owned consolidated joint venture with a local Czech Republic entrepreneur, operates a pressure cylinder manufacturing facility in Hustopece, Czech Republic. Unconsolidated - Acerex S.A. de C.V., a 50%-owned joint venture with Hylsa S.A. de C.V., is a steel processing company located in Monterrey, Mexico. - Aegis Metal Framing, LLC, a 60%-owned joint venture with MiTek Industries, Inc., headquartered in Chesterfield, Missouri, offers light gauge metal component manufacturers and contractors design, estimating and management software, a full line of metal framing products and integrated professional engineering services. - TWB Company, L.L.C. ("TWB"), a 33.3%-owned joint venture with ThyssenKrupp Stahl, Rouge Steel, LTV Steel and Bethlehem Steel, produces laser welded blanks for use in the auto industry for products such as inner door frames. TWB operates facilities in Monroe, Michigan; North Vernon, Indiana; and Saltillo, Mexico. - Worthington Armstrong Venture ("WAVE"), a 50%-owned joint venture with Armstrong World Industries, is one of the three leading global manufacturers of suspended ceiling systems for concealed and lay-in panel ceilings. WAVE operates facilities in Sparrows Point, Maryland; Benton Harbor, Michigan; North Las Vegas, Nevada; Malvern, Pennsylvania; Shanghai, China; Team Valley, United Kingdom; Valenciennes, France; and Madrid, Spain. - Worthington Specialty Processing, a 50%-owned general partnership with USX Corporation in Jackson, Michigan, operates primarily as a toll processor for USX Corporation. See "Item 8. - Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note J - Investment in Unconsolidated Affiliates." ENVIRONMENTAL REGULATION Our manufacturing facilities, generally in common with those of similar industries making similar products, are subject to many federal, state and local requirements relating to the protection of the environment. We continually examine ways to reduce emissions and waste and to decrease costs related to environmental compliance. We do not anticipate that capital expenditures for environmental control facilities required in order to meet environmental requirements will be material when compared with our overall capital expenditures and, accordingly, will not have a material effect on our earnings or competitive position. ITEM 2. - PROPERTIES GENERAL Worthington's corporate offices occupy approximately 169,000 sq. ft. and are located at 1205 Dearborn Drive in Columbus, Ohio. In fiscal 2002, excluding our joint ventures, we held fee or leasehold interests in 52 manufacturing and warehouse facilities and three administrative/office locations, totaling in excess of 9,200,000 sq. ft. We owned 36 of those locations and maintained leases for the remaining 16. Leased premises accounted for more than 1,039,000 sq. ft. All of our facilities are well maintained and in good operating condition and we believe that they are sufficient to meet our current needs. In addition, at May 31, 2002, our joint ventures operated 16 manufacturing facilities, having, in the aggregate, approximately 2,081,129 sq. ft. These facilities are located in Indiana, Maryland, Michigan, Missouri, 6 Nevada and Pennsylvania domestically, as well as in China, the Czech Republic, France, Mexico, Spain and the United Kingdom. Of these locations, eight are owned and eight are leased. See "Item 1. - Business - Joint Ventures." PROCESSED STEEL PRODUCTS At May 31, 2002, including our consolidated joint ventures, the Processed Steel Products segment operated 14 manufacturing facilities, all of which were owned. These facilities occupy more than 5,100,000 sq. ft. and are located in Alabama, Indiana, Kentucky, Maryland, Michigan, Ohio, Pennsylvania and South Carolina. This segment also maintains approximately 667,000 sq. ft. of warehouse space, of which 305,000 sq. ft is leased. Pursuant to the Consolidation Plan, the Processed Steel Products segment will close the Malvern, Pennsylvania and Jackson, Michigan, locations and the Rock Hill facility will operate as a Metal Framing facility. See "Item 1. - Business - General" and "Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations." METAL FRAMING At May 31, 2002, our Metal Framing segment operated 19 metal framing and coil processing facilities in Arizona, California, Colorado, Florida, Georgia, Hawaii, Indiana, Kansas, Massachusetts, Maryland, New Jersey, Ohio, Texas, Virginia and Washington, occupying, in the aggregate, over 2,080,000 sq. ft. Nine of these facilities are leased and range in size from 25,339 sq. ft. to 78,517 sq. ft. This segment also leases two administrative office locations, one in Pittsburgh, Pennsylvania and one in Blairsville, Pennsylvania. Our recent acquisition of Unimast has increased the number of manufacturing facilities in this segment to 29. Unimast operates six metal framing facilities in Baytown, Texas; Boonton, New Jersey; Joliet, Illinois; Goodyear, Arizona; McDonough, Georgia; and Warren, Ohio; two steel corner bead and trim plants in Brooksville, Florida and New Brighton, Minnesota; a vinyl construction accessories facility in Miami, Florida; and a small steel processing facility in East Chicago, Indiana. See "Item - 1. - Business - General," "- Metal Framing" and "Item 8. - Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note Q - Subsequent Event." Pursuant to the Consolidation Plan, the Fredericksburg, Virginia facility will be closed and its business moved to Rock Hill, South Carolina. A more detailed discussion of the Consolidation Plan is set forth below in "Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations." PRESSURE CYLINDERS Together with our consolidated joint ventures, the Pressure Cylinders segment at May 31, 2002, operated nine manufacturing facilities. We own eight of those facilities, which occupy, in the aggregate, approximately 960,000 sq. ft. and are located in Alabama, Ohio and Oklahoma domestically, and in Austria, Canada and Portugal. We lease only one of those facilities, our 55,000 sq. ft. Citronelle, Alabama, facility, as well as a warehouse in each of Georgia, Portugal and Canada, measuring approximately 100,000 sq. ft., 44,600 sq. ft. and 13,750 sq. ft., respectively. Pursuant to the Consolidation Plan, the Claremore, Oklahoma, facility is being closed. A more detailed discussion of the Consolidation Plan is set forth below in "Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations." ITEM 3. - LEGAL PROCEEDINGS Various legal actions arising in the ordinary course of business are pending against Worthington. None of this pending litigation, individually or collectively, is expected to have a material adverse effect on Worthington. ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 7 SUPPLEMENTAL ITEM. - EXECUTIVE OFFICERS OF THE REGISTRANT The following table lists the names, positions held and ages of the Registrant's executive officers:
PRESENT OFFICE NAME AGE POSITION(S) WITH THE REGISTRANT HELD SINCE ---- --- ------------------------------- ---------- John H. McConnell 79 Chairman Emeritus & Founder 1996 John P. McConnell 48 Chairman & Chief Executive Officer 1996 John S. Christie 52 President & Chief Operating Officer 1999 John T. Baldwin 45 Vice President & Chief Financial Officer 1998 Edward A. Ferkany 65 President-The Worthington Steel Company 2001 Dale T. Brinkman 49 Vice President-Administration, General Counsel & 2000 Secretary Ralph V. Roberts 55 Sr. Vice President-Marketing 2001 Virgil L. Winland 54 Sr. Vice President-Manufacturing 2001 Richard G. Welch 44 Controller 2000
John H. McConnell founded Worthington in 1955 and served as its Chief Executive Officer until he retired in May 1993. Mr. McConnell also served as Chairman of the Board of Directors from 1955 until September 1996, when he assumed the role of Chairman Emeritus and Founder. John P. McConnell has served as Worthington Industries' Chief Executive Officer since June 1993. Mr. McConnell has served as a Director continuously since 1990 and Chairman of the Board of Directors since September 1996. John S. Christie has served as President and Chief Operating Officer and a Director of Worthington Industries since June 1999. Prior to that time, Mr. Christie served as President of JMAC, Inc., a private investment company, from 1995 through 1999. John T. Baldwin has served as Vice President and Chief Financial Officer of Worthington Industries since December 1998 and as its Treasurer from August 1997 through December 1998. Before joining Worthington Industries, Mr. Baldwin served as Assistant Treasurer of Tenneco, Inc. from 1994 through August 1997. Edward A. Ferkany has served as President, The Worthington Steel Company since January 2001. From June 1998 to January 2001, Mr. Ferkany served as Executive Vice President of Worthington Industries and, prior to that time, from 1985 through 1998, Mr. Ferkany served as Group President-Processed Steel for Worthington Industries. Dale T. Brinkman has served as Vice President-Administration, General Counsel and Secretary of Worthington Industries since September 2000. From December 1998 through September 2000, he served as Vice President-Administration, General Counsel and Assistant Secretary for Worthington Industries. Prior to that time, Mr. Brinkman served as Worthington Industries' General Counsel and Assistant Secretary from 1982 through 1998. Ralph V. Roberts has served as Senior Vice President-Marketing of Worthington Industries since January 2001. From June 1998 through January 2001, he served as President, The Worthington Steel Company. Prior to that time, Mr. Roberts served as Worthington Industries' Vice President-Corporate Development from June 1997 through May 1998 and as President of WAVE from its formation in June 1992 through June 1997. Virgil L. Winland has served as Senior Vice President-Manufacturing of Worthington Industries since January 2001 and, prior to that time, from June 1996 through January 2001 as President, Worthington Cylinder Corporation. 8 Richard G. Welch has served as Controller of Worthington Industries since March 2000 and as its Assistant Controller from September 1999 to March 2000. Before joining Worthington Industries, Mr. Welch served in various accounting and financial reporting capacities with Time Warner Cable, a distributor of cable programming, including as Assistant Controller from March 1999 through September 1999 and as an accounting director from September 1990 through March 1999. Executive officers serve at the pleasure of the directors. John H. McConnell is the father of John P. McConnell. There are no other family relationships among the Registrant's executive officers or directors. No arrangements or understandings exist pursuant to which any individual has been, or is to be, selected as an executive officer. 9 PART II ITEM 5. - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS The common shares of Worthington Industries, Inc. ("Worthington Industries") trade on the New York Stock Exchange ("NYSE") under the symbol "WOR" and are listed in most newspapers as "WorthgtnInd". As of June 30, 2002, Worthington Industries had 10,717 registered shareholders. The following table sets forth (i) the low, high and closing prices for Worthington Industries' common shares for each quarter of fiscal 2001 and 2002, and (ii) the cash dividends per share paid on Worthington Industries' common shares during each quarter of fiscal 2001 and fiscal 2002.
MARKET PRICE FISCAL 2001 -------------------------------- CASH QUARTER ENDED LOW HIGH CLOSING DIVIDENDS ------------- --------- ----------- ---------- ------------ August 31, 2000 $10.00 $12.75 $10.46 $0.16 November 30, 2000 $ 8.44 $10.50 $ 9.19 $0.16 February 28, 2001 $ 6.44 $10.45 $ 9.85 $0.16 May 31, 2001 $ 9.00 $12.85 $11.50 $0.16 FISCAL 2002 QUARTER ENDED ------------- August 31, 2001 $11.55 $14.77 $14.00 $0.16 November 30, 2001 $10.30 $14.80 $14.80 $0.16 February 28, 2002 $13.40 $15.20 $14.71 $0.16 May 31, 2002 $14.41 $16.20 $15.25 $0.16
10 ITEM 6. - SELECTED FINANCIAL DATA
YEAR ENDED MAY 31, ---------------------------------------------------------------------------------------------- IN THOUSANDS, EXCEPT PER SHARE 2002 2001 2000 1999 1998 1997 -------------- -------------- -------------- -------------- -------------- -------------- FINANCIAL RESULTS Net sales $ 1,744,961 $ 1,826,100 $ 1,962,606 $ 1,763,072 $ 1,624,449 $ 1,428,346 Cost of goods sold 1,480,184 1,581,178 1,629,455 1,468,886 1,371,841 1,221,078 ------------- ------------- ------------- ------------- ------------ ------------- Gross margin 264,777 244,922 333,151 294,186 252,608 207,268 Selling, general & administrative expense 165,885 173,264 163,662 147,990 117,101 96,252 Restructuring expense 64,575 6,474 -- -- -- -- ------------- ------------- ------------- ------------- ------------ ------------- Operating income 34,317 65,184 169,489 146,196 135,507 111,016 Miscellaneous income (expense) (3,224) (928) 2,653 5,210 1,396 906 Nonrecurring loss (21,223) -- (8,553) -- -- -- Interest expense (22,740) (33,449) (39,779) (43,126) (25,577) (18,427) Equity in net income of unconsolidated affiliates 23,110 25,201 26,832 24,471 19,316 13,959 ------------- ------------- ------------- ------------- ------------ ------------- Earnings from continuing operations before income taxes 10,240 56,008 150,642 132,751 130,642 107,454 Income tax expense 3,738 20,443 56,491 49,118 48,338 40,844 ------------- ------------- ------------- ------------- ------------ ------------- Earnings from continuing operations 6,502 35,565 94,151 83,633 82,304 66,610 Discontinued operations, net of taxes -- -- -- (20,885) 17,337 26,708 Extraordinary item, net of taxes -- -- -- -- 18,771 -- Cumulative effect of accounting change, net of taxes -- -- -- (7,836) -- -- ------------- ------------- ------------- ------------- ------------ ------------- Net earnings 6,502 35,565 94,151 54,912 118,412 93,318 Earnings per share (diluted): Continuing operations 0.08 0.42 1.06 0.90 0.85 0.69 Discontinued operations, net of taxes -- -- -- (0.23) 0.18 0.27 Extraordinary item, net of taxes -- -- -- -- 0.19 -- Cumulative effect of accounting change, net of taxes -- -- -- (0.08) -- -- ------------- ------------- ------------- ------------- ------------ ------------- Net earnings 0.08 0.42 1.06 0.59 1.22 0.96 Continuing operations: Depreciation and amortization 68,887 70,582 70,997 64,087 41,602 34,150 Capital expenditures (including acquisitions and investments)* 60,100 64,943 72,649 132,458 297,516 287,658 Cash dividends declared 54,677 54,762 53,391 52,343 51,271 45,965 Per share $ 0.64 $ 0.64 $ 0.61 $ 0.57 $ 0.53 $ 0.49 Average shares outstanding (diluted) 85,929 85,623 88,598 93,106 96,949 96,841 FINANCIAL POSITION Current assets $ 490,340 $ 449,719 $ 624,229 $ 624,255 $ 642,995 $ 594,128 Current liabilities 339,351 306,619 433,270 427,725 410,031 246,794 ------------- ------------- ------------- ------------- ------------ ------------- Working capital 150,989 143,100 190,959 196,530 232,964 347,334 Net fixed assets 766,596 836,749 862,512 871,347 933,158 691,027 Total assets 1,457,314 1,475,862 1,673,873 1,686,951 1,842,342 1,561,186 Total debt** 295,613 324,750 525,072 493,313 501,950 417,883 Shareholders' equity 606,256 649,665 673,354 689,649 780,273 715,518 Per share 7.09 7.61 7.85 7.67 8.07 7.40 Total committed capital** $ 901,869 $ 974,415 $ 1,198,426 $ 1,182,962 $ 1,282,223 $ 1,133,401 Shares outstanding 85,512 85,375 85,755 89,949 96,657 96,711
- ------------------------------ All financial data include the results of The Gerstenslager Company, which was acquired in February 1997 through a pooling of interests. * Includes $113,000 of Worthington Industries, Inc. common shares exchanged for shares of The Gerstenslager Company during the fiscal year ended May 31, 1997. ** Excludes Debt Exchangeable for Common Stock of Rouge Industries, Inc. of $52,497, $75,745 and $88,494 at May 31, 1999, 1998 and 1997, respectively. 11 ITEM 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Selected statements contained in this Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations constitute "forward-looking statements" as used in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based, in whole or in part, on management's beliefs, estimates, assumptions and currently available information. For a more detailed discussion of what constitutes a forward-looking statement and of some of the factors that could cause actual results to differ materially from such forward-looking statements, please refer to "Safe Harbor Statement" in the beginning of this Annual Report on Form 10-K. OVERVIEW Worthington Industries, Inc. is a diversified steel processor that focuses on value-added steel processing and metals-related businesses. As of May 31, 2002, we operated 43 facilities worldwide, principally in three reportable business segments: Processed Steel Products, Metal Framing and Pressure Cylinders. We also hold equity positions in seven joint ventures, which as of May 31, 2002, operated 16 facilities worldwide. The following discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated financial statements included in Item 8. CRITICAL ACCOUNTING POLICIES The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates, including those related to our allowance for doubtful accounts, intangible assets, accrued liabilities, income and other tax accruals, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Critical accounting policies are defined as those that are reflective of our significant judgments and uncertainties that could potentially result in materially different results under different assumptions and conditions. Although actual results historically have not deviated significantly from those determined using our estimates, as discussed below, our financial position or results of operations could be materially different if we were to report under different conditions or to use different assumptions in the application of such policies. We believe the following accounting policies are the most critical to us, in that they are the primary areas where financial information is subject to the use of our estimates and assumptions, and the application of our judgment in the preparation of our consolidated financial statements. Allowance for Doubtful Accounts Receivable: Our allowance for doubtful accounts is estimated to cover the risk of loss related to our accounts receivable, including the risk associated with our retained interest in the pool of receivables sold through our accounts receivable securitization ("AR securitization") facility. This allowance is maintained at a level that we consider appropriate based on historical and other factors that affect collectibility. These factors include historical trends of charge-offs, recoveries and credit losses; the careful monitoring of portfolio credit quality; and current and projected economic and market conditions. General weakness in the economy over the last few years has led to bankruptcy filings by many of our customers. As mentioned above, we specifically monitor our credit portfolio quality, which includes identification of customers that have or may potentially file for bankruptcy, and make allowance adjustments accordingly. The allowance for doubtful accounts receivable totaled $8.2 million and $9.2 million at May 31, 2002 and 2001, respectively. While we believe our allowance for doubtful accounts receivable is adequate, changes in economic conditions or any weakness in the economy could adversely impact our future earnings. Impairment of Long-Lived Assets: We review the carrying value of our long-lived assets held and used and assets to be disposed of, including other intangible assets, for impairment whenever events or changes in 12 circumstances indicate that the carrying amount may not be realizable. If an evaluation is required, accounting standards require that if the sum of the undiscounted future cash flows expected to result from a company's asset is less than the reported value of the asset, an impairment charge must be recognized in the financial statements. We recognized a $21.2 million loss during the year ended May 31, 2002 ("fiscal 2002"), for the impairment of certain preferred stock and subordinated debt described later in the document. Effective June 1, 2001, we adopted Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets, which requires that we review goodwill at least annually for impairment based on the fair value method. Prior to June 1, 2001, we amortized goodwill over 40 years using the straight-line method. Under SFAS No. 142, goodwill and identifiable intangible assets deemed to have indefinite lives are no longer amortized but are subject to impairment tests annually or more frequently if impairment indicators arise. Other intangible assets continue to be amortized over their estimated useful lives. We use the present value technique in determining the estimated fair value of the goodwill associated with each reporting entity. There are three significant sets of values used to determine the fair value: estimated future discounted cash flows, capitalization rate and tax rates. The estimated future discounted cash flows used in the model are based on planned growth with an assumed perpetual growth rate. The capitalization rate is based on our current cost of capital for equity and debt. Tax rates are maintained at current levels. Our impairment testing for fiscal 2002 resulted in an impairment write-off of $0.6 million. We feel our assumptions are reasonable and our goodwill carrying amounts of $75.4 million and $76.4 million at May 31, 2002 and 2001, respectively, are properly valued. Accounting for Derivatives and Other Contracts at Fair Value: We use derivatives in the normal course of business to manage our exposure to fluctuations in commodity prices and foreign currency rates. Significant judgments and estimates are required to determine fair values in the absence of quoted market values. These estimates are based upon valuation methodologies deemed appropriate in the circumstances; however, the use of different assumptions could affect the estimated fair values. Restructuring Reserves: During fiscal 2002, we announced a consolidation plan to improve profitability. This plan affects each of our business segments as six facilities will be closed and two others will be restructured. As part of the consolidation plan, we recorded a pre-tax restructuring charge of $64.6 million, comprised of $48.2 million for the write-down of idled assets to net realizable value, $11.8 million for severance and employee related costs, and $4.6 million for other restructuring related items. As of May 31, 2002, 230 employee positions had been eliminated (205 through termination and 25 through retirement and attrition), and cash payments totaling $1.4 million had been made against the severance reserve. The estimated net realizable value of the plant and equipment being idled of $6.7 million was reclassified to other current assets as assets held for sale. We anticipate that the termination of employees and the sale of the idled plant and equipment will be substantially complete by February 2003. We periodically evaluate a number of factors to determine the appropriateness and reasonableness of our restructuring reserves. These estimates involve a number of risks and uncertainties, some of which may be beyond our control. Actual results may differ from our estimates and may require adjustments to our restructuring reserves and operating results in future periods. The critical accounting policies discussed herein are not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for our judgment in their application. There are also areas in which our judgment in selecting an available alternative would not produce a materially different result. Other accounting policies also have a significant effect on our financial statements, and some of these policies require the use of estimates and assumptions. Our significant accounting policies are discussed in Note A of the Notes to Consolidated Financial Statements included in Item 8. 13 RESULTS OF OPERATIONS The following table sets forth, for the fiscal years indicated, consolidated net sales and operating income by segment and other financial information:
2002 2001 2000 ----------------------------------- ---------------------------------- ---------------------- % OF % % OF % % OF IN MILLIONS, EXCEPT PER SHARE ACTUAL NET SALES CHANGE ACTUAL NET SALES CHANGE ACTUAL NET SALES ---------- ----------- ---------- --------- ----------- ----------- ---------- ---------- Net sales: Processed Steel Products $1,132.7 64.9% -4% $1,184.9 64.9% -8% $1,287.9 65.6% Metal Framing 306.0 17.5% -12% 346.0 18.9% -1% 350.6 17.9% Pressure Cylinders 292.8 16.8% 1% 289.1 15.8% -9% 318.8 16.2% Other 13.5 0.8% 6.1 0.4% 5.3 0.3% -------- -------- -------- Total net sales 1,745.0 100.0% -4% 1,826.1 100.0% -7% 1,962.6 100.0% Cost of goods sold 1,480.2 84.8% -6% 1,581.2 86.6% -3% 1,629.4 83.0% -------- -------- -------- Gross margin 264.8 15.2% 8% 244.9 13.4% -27% 333.2 17.0% Selling, general & administrative expense 165.9 9.5% -4% 173.2 9.5% 6% 163.7 8.4% Restructuring expense 64.6 3.7% 6.5 0.4% -- -- -------- -------- -------- Operating income*: Processed Steel Products 13.6 1.2% -54% 29.3 2.5% -70% 96.8 7.5% Metal Framing 19.1 6.2% -19% 23.7 6.9% -45% 43.2 12.3% Pressure Cylinders 11.0 3.8% -43% 19.3 6.7% -44% 34.2 10.7% Other (9.4) (7.1) (4.7) -------- -------- -------- Total operating income 34.3 2.0% -47% 65.2 3.5% -62% 169.5 8.6% Other income (expense): Miscellaneous income (expense) (3.3) (0.9) 2.7 Nonrecurring loss (21.2) -- (8.6) Interest expense (22.7) -1.3% -32% (33.5) -1.8% -16% (39.8) -2.0% Equity in net income of unconsolidated affiliates 23.1 1.3% -8% 25.2 1.4% -6% 26.8 1.4% -------- -------- -------- Earnings before taxes 10.2 0.6% -82% 56.0 3.0% -63% 150.6 7.7% Income tax expense 3.7 0.2% -82% 20.4 1.1% -64% 56.4 2.9% -------- -------- -------- Net earnings $ 6.5 0.4% -82% $ 35.6 1.9% -62% $ 94.2 4.8% ======== ======== ======== Average common shares outstanding - diluted 85.9 85.6 88.6 -------- -------- -------- Earnings per share - diluted $ 0.08 $ 0.42 $ 1.06 ======== ======== ========
- ------------------------------ * Fiscal 2002 includes restructuring charges of $64.6 million. Of that total, amounts that relate to the operating segments are as follows: Processed Steel Products - $52.1 million, Metal Framing - $0.9 million and Pressure Cylinders - $10.7 million. Fiscal 2001 includes restructuring charges of $6.5 million, all relating to the Processed Steel Products segment. 14 Our earnings for fiscal 2002 were impacted by two one-time charges: a $64.6 million pre-tax restructuring expense and a $21.2 million pre-tax charge to establish a reserve for the impairment of certain assets. In addition, fiscal 2001 was impacted by a $6.5 million pre-tax restructuring charge for the partial shutdown of the Malvern, Pennsylvania, facility. In January 2002, we announced a consolidation plan that included the closing of six of our facilities, the restructuring of two others and a workforce reduction of 542 employees. The eight facilities impacted by the consolidation plan are included in our business segments as follows: Processed Steel Products (4), Metal Framing (1) and Pressure Cylinders (3). In our Processed Steel Products segment, we are closing our Malvern, Pennsylvania, and Jackson, Michigan, facilities, and we are reducing overhead costs at our facility in Louisville, Kentucky. The Rock Hill, South Carolina, facility will become a Metal Framing location. The current Metal Framing facility in Fredericksburg, Virginia, will be closed and its operations moved to Rock Hill. In our Pressure Cylinders segment, we have discontinued the operations of two partnerships in Itu, Brazil, and we are closing a production facility in Claremore, Oklahoma. This consolidation plan resulted in a pre-tax restructuring charge of $64.6 million or $41.0 million after tax. Of this pre-tax charge, $11.8 million represents a cash outlay for severance and employee related payments, and the remainder represents the write-down of assets to their fair market value. Going forward, we estimate this plan will improve our annual operating income by at least $10 million, despite reducing sales by approximately $75 million. Headcount reductions and reduced depreciation will account for annual savings of approximately $6 million and approximately $4 million, respectively. See Note N of the Notes to Consolidated Financial Statements in Item 8 for more information. In addition to the restructuring charge, we recognized a $21.2 million pre-tax loss for the impairment of certain preferred stock and subordinated debt we received as partial payment from four acquirers when we sold the assets of our Custom Products and Cast Products business segments during the fiscal year ended May 31, 1999. As economic conditions have deteriorated, each of the issuers has encountered difficulty making scheduled payments under the terms of the preferred stock and subordinated debt. The after-tax impact of the impairment charge reduced net income for fiscal 2002 by $13.5 million. In February 2002, we formed Aegis Metal Framing, LLC ("Aegis"), a joint venture with MiTek Industries, Inc. ("MiTek"). Aegis combines the manufacturing and distribution capabilities of our Metal Framing segment with the software, engineering and marketing functions of MiTek's Metal Framing Systems division. We invested $21.0 million plus certain of our assets for a 60% interest in the joint venture and purchased the rollforming assets of MiTek for $1.1 million. The equity method is used to account for the joint venture, as control of the critical business decisions is equally shared with Mitek. Manufacturing is contracted to our Metal Framing segment, which manufactures and sells the product to Aegis. Effective June 1, 2001, we adopted Statement of Financial Accounting Standards ("SFAS") No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 eliminates the pooling method of business combinations while SFAS No. 142 eliminates the requirement to amortize goodwill and indefinite-lived intangible assets. While there was no impact from adopting SAFS No. 141, SFAS No. 142 increased after-tax income by approximately $1.6 million for fiscal 2002. See Note O of the Notes to Consolidated Financial Statements in Item 8 for more information. We recorded a $6.5 million pre-tax restructuring charge during the third quarter of fiscal 2001 when we closed a portion of our Malvern facility. The result of this partial closure was a reduction in the workforce of 160 employees and the write-down to fair market value of the affected assets. The after-tax impact of this charge reduced our fiscal 2001 income by $4.1 million. This partial closure was completed by December 31, 2001. 15 FISCAL 2002 COMPARED TO FISCAL 2001 Net sales decreased 4% or $81.1 million to $1,745.0 million in fiscal 2002 from $1,826.1 million in fiscal 2001. This decline was due to weaker demand within our Processed Steel Products and Pressure Cylinders segments and lower selling prices in Metal Framing and Processed Steel Products. Gross margin increased 8% or $19.9 million to $264.8 million in fiscal 2002 from $244.9 million in fiscal 2001. Much of the increase was due to higher volumes during the fourth quarter, which improved gross margin by $8.1 million. In addition, direct labor and manufacturing expenses declined $15.7 million, including a $7.5 million reduction in utilities mainly from lower natural gas cost, a $5.2 million decrease in compensation and benefits from headcount reductions, and a $2.8 million decrease in repairs and maintenance expenses. These factors increased gross margin as a percentage of net sales to 15.2% in fiscal 2002 from 13.4% in fiscal 2001. Selling, general and administrative costs ("SG&A") decreased 4% or $7.3 million to $165.9 million in fiscal 2002 from $173.2 million in fiscal 2001. The reduction was due to numerous factors including a $5.8 million decrease in professional expenses, a $2.5 million decrease in depreciation and amortization due to lower capital spending and the elimination of goodwill amortization, a $1.9 million gain on the sale of an airplane, a $3.7 million gain related to legal settlements, and lower travel and entertainment expenses of $1.2 million. The decrease was partly offset by a $6.2 million increase in bad debt expense which, in anticipation of a settlement, included the write-down of a note received from the sale of discontinued operations. Operating income decreased 47% or $30.9 million to $34.3 million in fiscal 2002 from $65.2 million in fiscal 2001. Excluding the effects of the previously mentioned restructuring expense, operating income increased 38% or $27.2 million to $98.9 million in fiscal 2002 from $71.7 million in fiscal 2001. Interest expense decreased 32% or $10.8 million to $22.7 million in fiscal 2002 from $33.5 million in fiscal 2001. This decline primarily was attributable to lower average debt levels (due to increased use of our A/R securitization facility and lower working capital requirements) and lower average short-term interest rates. A/R securitization facility fees, which began in November 2000 and were recorded as miscellaneous expense, increased $1.0 million to $4.1 million in fiscal 2002 from $3.1 million in fiscal 2001. Equity in net income of unconsolidated affiliates decreased 8% or $2.1 million to $23.1 million in fiscal 2002 from $25.2 million in fiscal 2001. The primary contributors to the decline were reduced sales and higher manufacturing expenses at WSP and increased operating expenses at Acerex which led to lower margins for those joint ventures. Our effective tax rate of 36.5% in fiscal 2002 was unchanged from fiscal 2001. The following provides further information on net sales and operating income by segment: - Processed Steel Products. Net sales decreased 4% or $52.2 million to $1,132.7 million in fiscal 2002 from $1,184.9 million in fiscal 2001. Stronger demand during the third and fourth quarters was not enough to overcome the weakness in the market early in the year, resulting in reduced volumes. In addition, selling prices declined due to lower raw material costs and a shift from direct to toll processing. Direct shipments include sales of material with a value-added processing charge, while toll shipments contain only a value-added processing charge on customer-owned material. Excluding the restructuring expense for fiscal 2002 and fiscal 2001 of $52.1 million and $6.5 million, respectively, operating income increased 84% or $29.9 million to $65.7 million in fiscal 2002 from $35.8 million in fiscal 2001. Improvement in the spread between direct selling prices and raw material costs increased operating income by $12.4 million. Further savings were achieved through a $7.5 million decrease in compensation and benefits expense mainly due to a reduction in the number of employees, a $6.5 million decrease in utilities costs primarily due to lower natural gas expenses, a $2.8 million reduction in professional fees, a $1.7 million gain related to a legal settlement, and a $1.5 million reduction in repairs and maintenance expenses. Lower volumes and higher bad debt expense partially offset these savings and reduced 16 operating income by $5.5 million and $2.4 million, respectively. The net impact of these factors was an increase in operating income as a percentage of net sales to 5.8% in fiscal 2002 from 3.0% in fiscal 2001. - Metal Framing. Net sales decreased 12% or $40.0 million to $306.0 million in fiscal 2002 from $346.0 million in fiscal 2001. The decrease was due to the erosion of sales prices for core building products combined with the elimination of the stainless product line in December 2000. However, price increases instituted in the fourth quarter have begun to restore pricing. Excluding the restructuring expense for fiscal 2002 of $0.9 million, operating income decreased 16% or $3.7 million to $20.0 million in fiscal 2002 from $23.7 million in fiscal 2001. The net impact of lower average selling prices and lower raw materials cost was a $14.4 million reduction in operating income. Furthermore, increased costs related to the new Hawaii and Washington facilities contributed to a $1.8 million increase in manufacturing expense. Higher volumes partially offset these decreases by $8.6 million. As a result, operating income as a percentage of net sales decreased to 6.6% in fiscal 2002 from 6.9% in fiscal 2001. - Pressure Cylinders. Net sales increased 1% or $3.7 million to $292.8 million in fiscal 2002 from $289.1 million in fiscal 2001. The increase primarily was due to strong fourth quarter sales of liquefied petroleum gas cylinders driven by new regulations in many states requiring overfill protection devices on propane tanks. Excluding the restructuring expense for fiscal 2002 of $10.7 million, operating income increased 12% or $2.4 million to $21.7 million in fiscal 2002 from $19.3 million in fiscal 2001. Reduced utilities expense, lower supplies expense and higher sales volumes improved operating income by $1.2 million, $1.0 million and $0.9 million, respectively. Consequently, operating income as a percentage of net sales increased to 7.4% in fiscal 2002 from 6.7% in fiscal 2001. FISCAL 2001 COMPARED TO FISCAL 2000 Net sales decreased 7% or $136.5 million to $1,826.1 million in fiscal 2001 from $1,962.6 million in the fiscal year ended May 31, 2000 ("fiscal 2000") due to lower demand within our Processed Steel Products and Pressure Cylinders segments and reduced selling prices in Processed Steel Products and Metal Framing. Higher volumes in Metal Framing partially offset these factors. Gross margin decreased 27% or $88.3 million to $244.9 million in fiscal 2001 from $333.2 million in fiscal 2000. The majority of the decline occurred in our Processed Steel Products segment due to lower volumes and the smaller spread between direct average selling prices and raw material costs. These factors decreased gross margin as a percentage of net sales to 13.4% in fiscal 2001 from 17.0% in fiscal 2000. SG&A expense increased 6% or $9.5 million to $173.2 million in fiscal 2001 from $163.7 million in fiscal 2000 due to higher compensation, bad debt and health care expenses. Operating income decreased 62% or $104.3 million in fiscal 2001 to $65.2 million from $169.5 million in fiscal 2001. Excluding the effects of the previously mentioned restructuring expenses, operating income decreased 58% or $97.8 million to $71.7 million in fiscal 2001 from $169.5 million in fiscal 2000. Interest expense decreased 16% or $6.3 million to $33.5 million in fiscal 2001 from $39.8 million in fiscal 2000. Since we paid off the DECS liability during the fourth quarter of fiscal 2000, there was no comparable interest expense during fiscal 2001. In addition, we reduced short-term debt (see description in "Liquidity and Capital Resources"). However, higher average short-term interest rates partially offset these factors. A/R securitization facility fees of $3.1 million in fiscal 2001 were recorded as miscellaneous expense. Equity in net income of unconsolidated affiliates decreased 6% or $1.6 million to $25.2 million in fiscal 2001 from $26.8 million in fiscal 2000. Higher raw material costs at TWB and lower sales at WSP led to lower margins at those joint ventures. Increases in sales and operating income at the Acerex and WAVE joint ventures partly negated the overall decline. 17 Our effective tax rate decreased to 36.5% in fiscal 2001 from 37.5% in fiscal 2000 primarily due to ongoing state and local tax planning initiatives. The following provides further information on net sales and operating income by segment: - Processed Steel Products. Net sales decreased 8% or $103.0 million to $1,184.9 million in fiscal 2001 from $1,287.9 million in fiscal 2000 primarily due to the general economic slowdown, especially in the domestic automotive industry. The decrease in net sales was principally attributable to declining direct shipments from most plants and a decrease in toll processing volume. However, our Monroe, Ohio, and Decatur, Alabama, plants continued to increase direct volumes due to the new dry lube line and market penetration, respectively. Excluding the restructuring expense for fiscal 2001 of $6.5 million, operating income decreased 63% or $61.0 million to $35.8 million in fiscal 2001 from $96.8 million in fiscal 2000 due to higher average raw material prices, changes in sales mix to lower margin products, and declining direct and toll processing volumes. Higher manufacturing expenses and SG&A costs as a percentage of net sales resulted in operating income as a percentage of net sales of 3.0% in fiscal 2001 compared to 7.5 % in fiscal 2000. - Metal Framing. Net sales decreased 1% or $4.6 million to $346.0 million in fiscal 2001 from $350.6 million in fiscal 2000 due to erosion of selling prices throughout the year brought on by intense competition. Nevertheless, strong demand for building products led to higher volumes, thus offsetting much of the negative impact due to pricing. Operating income decreased 45% or $19.5 million to $23.7 million in fiscal 2001 from $43.2 million in fiscal 2000. Sales volume increases were overshadowed by price competition and higher raw material costs, decreasing operating income as a percentage of net sales to 6.9% in fiscal 2001 from 12.3% in fiscal 2000. - Pressure Cylinders. Net sales decreased 9% or $29.7 million to $289.1 million in fiscal 2001 from $318.8 million in fiscal 2000. The primary reason for the decrease was the weakening demand in all product lines due to the slowing economy and stiff competition in the European market. A strong United States dollar also resulted in lower reported sales from our international operations. Operating income decreased 44% or $14.9 million to $19.3 million in fiscal 2001 from $34.2 million in fiscal 2000. Reductions in sales volumes and the start-up of a new non-refillable refrigerant production line in Portugal were the major factors leading to the decrease in operating income as a percentage of net sales to 6.7% in fiscal 2001 from 10.7% in fiscal 2000. LIQUIDITY AND CAPITAL RESOURCES In fiscal 2002, we generated $135.3 million in cash from operating activities, representing a $186.2 million decrease from fiscal 2001. The decrease primarily was due to the initial sale of accounts receivable as part of the A/R securitization facility in November 2000 (see description below) and the prior year reduction in inventory levels. Our significant investing and financing activities during fiscal 2002 included disbursing $54.7 million in dividends to shareholders, spending $39.1 million on capital additions, investing $21.0 million in the Aegis joint venture, and retiring $20.9 million in long-term debt. These transactions were funded by the cash flows from our operations and $10.5 million in proceeds from the sale of assets (including $7.5 million for an airplane and $2.4 million for certain Malvern assets). Capital spending during fiscal 2002 included the following: $17.8 million in our Processed Steel Products segment primarily to complete the construction of the Clyde, Ohio, facility; $13.8 million in our Metal Framing segment which included spending for rollforming machinery, the Washington facility, and engineering software development; $4.8 million in the Pressure Cylinders segment partly for a new hydraulic press in Westerville; and $2.7 million in Other, mainly in our steel pallet business, to complete the installation of welding equipment. 18 In November 2000, we entered into a $120.0 million revolving A/R securitization facility which was expanded to $190.0 million in May 2001. Pursuant to the terms of the facility, certain of our subsidiaries sell their accounts receivable, on a revolving basis, to Worthington Receivables Corporation ("WRC"), a wholly-owned, bankruptcy-remote subsidiary which is consolidated for financial reporting purposes. In turn, WRC sells, on a revolving basis, undivided ownership interests in this pool of accounts receivable to independent third parties. We retain an undivided interest in this pool and are subject to risk of loss based on the collectibility of the receivables from this retained interest. Because the amount eligible to be sold excludes receivables past due, balances with foreign customers, concentrations over limits with specific customers, and certain reserve amounts, we believe additional risk of loss is minimal. Also because of these exclusions, no discount occurs on the sale and no gain or loss is recorded; however, facility fees of $4.1 million and $3.1 million were incurred for fiscal 2002 and 2001, respectively. The book value of the retained portion approximates fair value. We continue to service the accounts receivable. No servicing asset or liability has been recognized, as our cost to service the accounts receivable is expected to approximate the servicing income. As of May 31, 2002, a $100.0 million undivided interest in this pool had been sold. The proceeds from these sales have been used to reduce short-term borrowings. Consolidated net working capital increased $7.9 million from May 31, 2001 to $151.0 million at May 31, 2002. The primary contributors to the increase were higher accounts receivable due to strong sales during the fourth quarter of fiscal 2002 and an increase in other current assets related to an increased current deferred tax asset, partially offset by an increase in accounts payable and other current liabilities due to restructuring related accruals. During May 2002, we replaced our $190.0 million revolving credit facility maturing May 2003 with $310.0 million in new facilities syndicated with various banks. The new facilities, which will be used to finance the cash requirements of our business operations, consist of a $155.0 million 364-day revolving credit agreement maturing May 2003 and a $155.0 million five-year revolving credit agreement maturing May 2007. There were no outstanding balances under the facilities as of May 31, 2002. On May 31, 2002, our total debt was $295.6 million compared to $324.8 million at the end of fiscal 2001. Our debt to capital ratio of 32.8% at May 31, 2002, was slightly improved from the 33.3% ratio at the end of fiscal 2001. On July 31, 2002, we acquired the stock of Unimast Incorporated and its subsidiaries ("Unimast") for approximately $113 million in cash and approximately $9 million of assumed indebtedness. We anticipate the majority of this acquisition will be funded by proceeds from assets available for sale with the remaining portion funded through our A/R securitization facility. We expect to continue to assess acquisition opportunities as they arise. Additional financing may be required if we decide to make additional acquisitions. There can be no assurance, however, that any such opportunities will arise, that any such acquisitions will be consummated, or that any needed additional financing will be available on satisfactory terms when required. Absent any other acquisitions, we anticipate that cash flows from operations and unused short-term borrowing capacity should be more than sufficient to fund expected normal operating costs, dividends, working capital, and capital expenditures for our existing businesses. RECENTLY ISSUED ACCOUNTING STANDARDS In October 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This Statement establishes a single accounting model for the impairment or disposal of long-lived assets. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. We do not expect the adoption of this Statement to have a material impact on our financial position or results of operations. In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. This Statement rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of that Statement, SFAS No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements; rescinds SFAS No. 44, Accounting for 19 Intangible Assets of Motor Carriers; amends SFAS No. 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions; and amends other existing authoritative pronouncements to make various technical corrections, clarify meanings or describe their applicability under changed conditions. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002. We do not expect the adoption of this Statement to have a material impact on our financial position or results of operations. In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31, 2002. We do not expect the adoption of this Statement to have a material impact on our financial position or results of operations. ENVIRONMENTAL We believe environmental issues will not have a material effect on capital expenditures, future results of operations or financial position. INFLATION The effects of inflation on our operations were not significant during the periods presented in the Consolidated Financial Statements. ITEM 7A. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In the normal course of business, we are exposed to various market risks. We continually monitor these risks and regularly develop appropriate strategies to manage them. Accordingly, from time to time, we may enter into certain derivative financial and commodity instruments. These instruments are used to mitigate market exposure and are not used for trading or speculative purposes. INTEREST RATE RISK At May 31, 2002, our long-term debt was comprised primarily of fixed-rate instruments. Therefore, the fair value of this debt is sensitive to fluctuations in interest rates. We would not expect that a 1% increase in interest rates would materially impact the fair value of our long-term debt, our results of operations or cash flows absent an election to repurchase or retire all or a portion of the fixed-rate debt at prices above carrying value. FOREIGN CURRENCY RISK The translation of our foreign operations from their local currencies to the U.S. dollar subjects us to exposure related to fluctuating exchange rates. We do not use derivative instruments to manage this risk. However, we do make limited use of forward contracts to manage our exposure to certain intercompany loans with our foreign affiliates. At May 31, 2002, the difference between the contract and book value was not material to our financial position, results of operations or cash flows. We do not expect that a 10% change in the exchange rate to the U.S. dollar forward rate would materially impact our financial position, results of operations or cash flows. COMMODITY PRICE RISK We are exposed to market risk for price fluctuations on purchases of steel, natural gas, zinc, nickel, and other raw materials and utility requirements. To limit this exposure, we negotiate the best prices for our commodities and competitively price our products and services to reflect the fluctuations in commodity market prices. To a limited extent, we have entered into commodity derivative instruments (cash flow hedges) to hedge purchases of steel, natural gas and zinc. At May 31, 2002, these positions were not material to our financial position, results of operations or cash flows. 20 ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CONSOLIDATED BALANCE SHEETS
MAY 31, --------------------------- DOLLARS IN THOUSANDS 2002 2001 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 496 $ 194 Accounts receivable, less allowances of $8,215 and $9,166 at May 31, 2002 and 2001 197,240 169,330 Inventories Raw materials 103,763 102,051 Work in process 60,566 59,735 Finished products 55,621 65,720 ----------- ----------- 219,950 227,506 Deferred income taxes 43,538 21,407 Prepaid expenses and other current assets 29,116 31,282 ----------- ----------- Total current assets 490,340 449,719 Investments in unconsolidated affiliates 91,759 58,638 Goodwill 75,400 76,439 Other assets 33,219 54,317 Property, plant and equipment Land 24,933 25,085 Buildings and improvements 259,054 244,834 Machinery and equipment 921,600 883,160 Construction in progress 19,821 48,111 ----------- ----------- 1,225,408 1,201,190 Less accumulated depreciation 458,812 364,441 ----------- ----------- 766,596 836,749 ----------- ----------- Total assets $ 1,457,314 $ 1,475,862 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 233,181 $ 207,568 Notes payable 5,281 13,794 Accrued compensation, contributions to employee benefit plans and related taxes 37,202 39,329 Dividends payable 13,683 13,660 Other accrued items 45,428 28,560 Income taxes 3,494 1,960 Current maturities of long-term debt 1,082 1,748 ----------- ----------- Total current liabilities 339,351 306,619 Other liabilities 32,514 19,860 Long-term debt 289,250 309,208 Deferred income taxes 148,726 140,974 Contingent liabilities and commitments - Note G -- -- Minority interest 41,217 49,536 Shareholders' equity: Preferred shares, without par value; authorized - 1,000,000 shares; issued and outstanding - none -- -- Common shares, without par value; authorized - 150,000,000 shares; issued and outstanding, 2002 - 85,512,225 shares, 2001 - 85,375,425 shares -- -- Additional paid-in capital 111,484 109,685 Cumulative other comprehensive loss, net of taxes of $2,214 and $4,349 at May 31, 2002 and 2001 (5,055) (8,024) Retained earnings 499,827 548,004 ----------- ----------- 606,256 649,665 ----------- ----------- Total liabilities and shareholders' equity $ 1,457,314 $ 1,475,862 =========== ===========
See notes to consolidated financial statements. 21 CONSOLIDATED STATEMENTS OF EARNINGS
YEAR ENDED MAY 31, -------------------------------------------------- IN THOUSANDS, EXCEPT PER SHARE 2002 2001 2000 -------------- -------------- -------------- Net sales $ 1,744,961 $ 1,826,100 $ 1,962,606 Cost of goods sold 1,480,184 1,581,178 1,629,455 ----------- ----------- ----------- Gross margin 264,777 244,922 333,151 Selling, general & administrative expense 165,885 173,264 163,662 Restructuring expense 64,575 6,474 -- ----------- ----------- ----------- Operating income 34,317 65,184 169,489 Other income (expense): Miscellaneous income (expense) (3,224) (928) 2,653 Nonrecurring loss (21,223) -- (8,553) Interest expense (22,740) (33,449) (39,779) Equity in net income of unconsolidated affiliates 23,110 25,201 26,832 ----------- ----------- ----------- Earnings before income taxes 10,240 56,008 150,642 Income tax expense 3,738 20,443 56,491 ----------- ----------- ----------- Net earnings $ 6,502 $ 35,565 $ 94,151 =========== =========== =========== Average common shares outstanding (basic) 85,408 85,590 88,411 Average common shares outstanding (diluted) 85,929 85,623 88,598 ----------- ----------- ----------- Earnings per share - basic & diluted $ 0.08 $ 0.42 $ 1.06 =========== =========== ===========
See notes to consolidated financial statements. 22 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY THREE YEARS ENDED MAY 31
CUMULATIVE OTHER COMMON STOCK ADDITIONAL COMPREHENSIVE ------------------------------ PAID-IN LOSS, NET OF RETAINED DOLLARS IN THOUSANDS, EXCEPT SHARES AMOUNT CAPITAL TAX EARNINGS TOTAL PER SHARE -------------- -------------- -------------- ------------------ -------------- -------------- Balance at June 1, 1999 89,949,274 $ -- $ 111,474 $ (8,484) $ 586,659 $ 689,649 Comprehensive income: Net income -- -- -- -- 94,151 94,151 Unrealized gain on investment 5,616 5,616 Foreign currency translation -- -- -- (2,938) -- (2,938) ------------ Total comprehensive income 96,829 ------------ Common shares issued 358,203 -- 4,018 -- -- 4,018 Purchase and retirement of common shares (4,552,952) -- (5,720) -- (58,020) (63,740) Cash dividends declared ($0.61 per share) -- -- -- -- (53,391) (53,391) Other -- -- 4 -- (15) (11) ------------- ------------- ------------- --------------- ------------- ------------ Balance at May 31, 2000 85,754,525 -- 109,776 (5,806) 569,384 673,354 Comprehensive income: Net income -- -- -- -- 35,565 35,565 Unrealized gain on investment -- -- -- 1 -- 1 Foreign currency translation -- -- -- (2,219) -- (2,219) ------------ Total comprehensive income 33,347 ------------ Purchase and retirement of common shares (379,100) -- (485) -- (2,184) (2,669) Cash dividends declared ($0.64 per share) -- -- -- -- (54,762) (54,762) Other -- -- 394 -- 1 395 ------------- ------------- ------------- --------------- ------------- ------------ Balance at May 31, 2001 85,375,425 -- 109,685 (8,024) 548,004 649,665 Comprehensive income: Net income -- -- -- -- 6,502 6,502 Unrealized loss on investment -- -- -- (45) -- (45) Foreign currency translation -- -- -- 3,967 -- 3,967 Minimum pension liability -- -- -- (32) -- (32) Cash flow hedges -- -- -- (921) -- (921) ------------ Total comprehensive income 9,471 ------------ Common shares issued 136,800 -- 1,799 -- -- 1,799 Cash dividends declared ($0.64 per share) -- -- -- -- (54,677) (54,677) Other -- -- -- -- (2) (2) ------------- ------------- ------------- --------------- ------------- ------------ Balance at May 31, 2002 85,512,225 $ -- $ 111,484 $ (5,055) $ 499,827 $ 606,256 ============= ============= ============= =============== ============= ============
See notes to consolidated financial statements. 23 CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED MAY 31, ------------------------------------------------- DOLLARS IN THOUSANDS 2002 2001 2000 -------------- -------------- -------------- OPERATING ACTIVITIES: Net earnings $ 6,502 $ 35,565 $ 94,151 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 68,887 70,582 70,997 Restructuring expense 64,575 6,474 -- Provision for deferred income taxes (16,721) 9,077 (16,345) Nonrecurring loss 21,223 -- 8,553 Equity in undistributed net income (loss) of unconsolidated (8,929) (10,119) 13,262 affiliates Minority interest in net income (loss) of consolidated (332) 1,464 2,699 subsidiaries Net loss on sale of assets 1,002 84 -- Changes in assets and liabilities: Accounts receivable (32,276) 132,497 (17,413) Inventories 7,556 63,886 (29,106) Prepaid expenses and other current assets (6,521) 4,314 1,264 Other assets 1,171 (449) (15,957) Accounts payable and accrued expenses 24,946 14,804 30,631 Other liabilities 4,174 (6,725) (3,826) --------- --------- --------- Net cash provided by operating activities 135,257 321,454 138,910 INVESTING ACTIVITIES: Investment in property, plant and equipment, net (39,100) (62,900) (71,541) Acquisitions, net of cash acquired -- (2,043) (1,108) Investment in unconsolidated affiliate (21,000) -- -- Proceeds from sale of assets 10,459 1,030 2,672 --------- --------- --------- Net cash used by investing activities (49,641) (63,913) (69,977) FINANCING ACTIVITIES: Proceeds from (payments on) short-term borrowings (8,513) (146,401) 37,917 Proceeds from long-term debt -- 2,064 -- Principal payments on long-term debt (20,872) (50,643) (5,597) Proceeds from issuance of common shares 1,628 -- 4,018 Proceeds from (payments to) minority interest (2,902) (4,677) 3,790 Repurchase of common shares -- (3,406) (63,003) Dividends paid (54,655) (54,822) (53,161) --------- --------- --------- Net cash used by financing activities (85,314) (257,885) (76,036) --------- --------- --------- Increase (decrease) in cash and cash equivalents 302 (344) (7,103) Cash and cash equivalents at beginning of year 194 538 7,641 --------- --------- --------- Cash and cash equivalents at end of year $ 496 $ 194 $ 538 ========= ========= =========
See notes to consolidated financial statements. 24 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation: The consolidated financial statements include the accounts of Worthington Industries, Inc. and subsidiaries (the "Company"). Spartan Steel Coating, L.L.C. (owned 52%), Worthington S.A. (owned 52%), Worthington Tank, Ltda. (owned 65%), and Worthington Gastec, a.s. (owned 51%) are fully consolidated with the equity owned by the respective partners shown as minority interest on the balance sheet and their portion of net income or loss included in miscellaneous income or expense. Investments in unconsolidated affiliates are accounted for using the equity method. Significant intercompany accounts and transactions are eliminated. Certain reclassifications were made to prior year amounts to conform to the 2002 presentation. Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents: The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Inventories: Inventories are valued at the lower of cost or market. With the exception of steel coil inventories, which are accounted for using the specific identification method, cost is determined using the first-in, first-out method or standard costing which approximates the first-in, first out method for all inventories. Derivative Financial Instruments: The Company does not engage in currency or commodity speculation and generally enters into forward contracts and swaps only to hedge specific foreign currency or commodity transactions. Gains or losses from these contracts offset gains or losses of the assets, liabilities or transactions being hedged. The amount of these contracts outstanding and the adjustments marked-to-market are not material. In June 2001, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities. The Statement requires derivatives to be carried on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The change in a derivative's fair value related to the ineffective portion of a hedge, if any, will be immediately recognized in earnings. Adoption of SFAS No. 133 resulted in an immaterial cumulative effect adjustment to miscellaneous expense and an unfavorable adjustment to other comprehensive income of $1,928,000, net of tax. Fair Value of Financial Instruments: The non-derivative financial instruments included in the carrying amounts of cash and cash equivalents, receivables, other assets, and payables approximate fair values. The fair value of long-term debt based upon quoted market prices was $280,573,000 and $280,543,000 at May 31, 2002 and 2001, respectively. Risks and Uncertainties: The Company, including unconsolidated affiliates, operates 59 production facilities in 22 states and 10 countries. The Company's largest markets are the automotive and automotive supply markets, which comprise approximately one-third of the Company's sales. Foreign operations and exports represent less than 10% of the Company's production and sales. Approximately 16% of the Company's labor force is covered by collective bargaining agreements. All significant labor contracts expire over one year from May 31, 2002. The concentration of credit risks from financial instruments related to the markets served by the Company is not expected to have a material adverse effect on the Company's consolidated financial position, cash flows or future results of operations. 25 Property and Depreciation: Property, plant and equipment are carried at cost and depreciated using the straight-line method. Depreciation expense was $68,734,000 for the fiscal year ended May 31, 2002 ("fiscal 2002"), $66,386,000 for the fiscal year ended May 31, 2001 ("fiscal 2001"), and $66,847,000 for the fiscal year ended May 31, 2000 ("fiscal 2000"). Accelerated depreciation methods are used for income tax purposes. Capitalized Interest: Interest is capitalized in connection with construction of qualified assets. Under this policy, the Company capitalized interest of $358,000 in fiscal 2002, $1,905,000 in fiscal 2001 and $750,000 in fiscal 2000. Stock-Based Compensation: The Company has elected to follow the accounting provisions of Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees, for stock-based compensation and to furnish the pro forma disclosures required under SFAS No. 123, Accounting for Stock-Based Compensation. See Note F for pro forma disclosures required by SFAS No. 123 and for additional information on the Company's stock options. Revenue Recognition: Revenue is recognized upon shipment of goods if evidence of an arrangement exists, pricing is fixed and determinable, and collectibility is probable. In circumstances where the collection of payment is highly questionable at the time of shipment, recognition of revenue is deferred until payment is collected. The Company provides for expected returns based on experience and current customer activities. Advertising Expense: The Company expenses advertising costs as incurred. Advertising expense was $2,095,000, $2,314,000 and $2,059,000 for fiscal 2002, fiscal 2001 and fiscal 2000, respectively. Environmental Costs: Environmental costs are capitalized if the costs extend the life of the property, increase its capacity, and/or mitigate or prevent contamination from future operations. Costs related to environmental contamination treatment and clean-up are charged to expense. Statements of Cash Flows: Supplemental cash flow information for the years ended May 31 is as follows:
IN THOUSANDS 2002 2001 2000 -------------- -------------- -------------- Interest paid $23,485 $34,887 $41,634 Income taxes paid, net of refunds 14,371 42,069 22,821
Nonrecurring Loss: During January 2002, the Company recognized a $21,223,000 loss for the impairment of assets received in connection with the fiscal 1999 sale of certain discontinued operations. During fiscal 1999, the Company sold all of the assets of its Custom Products and Cast Products business segments for aggregate proceeds of $194,000,000 in cash and $30,000,000 in preferred stock and subordinated debt issued by four acquirers. As economic conditions have deteriorated, each of the issuers has encountered difficulty making scheduled payments under the terms of the preferred stock and subordinated debt. The Company will continue to review these assets for impairment indicators and potential write-downs in value. During March 1997, the Company issued $92,994,000 of three-year notes exchangeable into Class A Common Stock of Rouge Industries, Inc. ("Rouge") (the "DECS"). On March 1, 2000, the Company retired the DECS notes in exchange for the Rouge shares held by the Company. Prior to the exchange, the Company's investment in Rouge was classified as an "available-for-sale" security with adjustments to market value being recorded, net of tax, to shareholders' equity. While it was outstanding, the DECS liability fluctuated in proportion to the market value of the Rouge shares. Because it was the Company's intention to settle the DECS using the Rouge shares, a net of tax adjustment to shareholder's equity was made for the net change both in stock value and the carrying amount of the DECS liability while it was outstanding. The previously unrealized loss on the investment in Rouge was realized when the Company exchanged the Rouge shares for the DECS, resulting in an $8,553,000 pre-tax loss in fiscal 2000. 26 Recently Issued Accounting Standards: In October 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This Statement establishes a single accounting model for the impairment or disposal of long-lived assets. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. Management does not expect the adoption of this Statement to have a material impact on the Company's financial position or results of operations. In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. This Statement rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of that Statement, SFAS No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements; rescinds SFAS No. 44, Accounting for Intangible Assets of Motor Carriers; amends SFAS No. 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions; and amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002. Management does not expect the adoption of this Statement to have a material impact on the Company's financial position or results of operations. In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31, 2002. Management does not expect the adoption of this Statement to have a material impact on the Company's financial position or results of operations. NOTE B - SHAREHOLDERS' EQUITY Preferred Shares: The Company's Amended Articles of Incorporation authorize two classes of preferred shares and their relative voting rights. The Board of Directors is empowered to determine the issue prices, dividend rates, amounts payable upon liquidation, and other terms of the preferred shares when issued. No preferred shares are issued or outstanding. Comprehensive Income: The components of other comprehensive income (loss) and related tax effects for the years ended May 31 were as follows:
IN THOUSANDS 2002 2001 2000 -------------- -------------- -------------- Other comprehensive income (loss): Unrealized gain (loss) on investment, net of tax of $0, $0 and $(3,024) in 2002, 2001 and 2000 $ (45) $ 1 $ 5,616 Foreign currency translation, net of tax of $(2,136), $1,195 and $1,582 in 2002, 2001 and 2000 3,967 (2,219) (2,938) Minimum pension liability, net of tax of $0 in 2002 (32) -- -- Cash flow hedges, net of tax of $495 in 2002 (921) -- -- ------- ------- ------- Other comprehensive income (loss) $ 2,969 $(2,218) $ 2,678 ======= ======= =======
The components of cumulative other comprehensive loss, net of tax, at May 31 were as follows: IN THOUSANDS 2002 2001 --------- ---------- Unrealized gain on investment $ 9 $ 54 Foreign currency translation (4,111) (8,078) Minimum pension liability (32) -- Cash flow hedges (921) -- ------- ------- Cumulative other comprehensive loss $(5,055) $(8,024) ======= ======= 27 NOTE C - DEBT Debt at May 31 is summarized as follows:
IN THOUSANDS 2002 2001 --------- --------- Short-term notes payable $ 5,281 $ 13,794 7.125% senior notes due May 15, 2006 142,409 158,500 6.700% senior notes due December 1, 2009 145,000 145,000 Other 2,923 7,456 -------- -------- Total debt 295,613 324,750 Less current maturities and short-term notes payable 6,363 15,542 -------- -------- Total long-term debt $289,250 $309,208 ======== ========
Short-term notes payable represent notes payable to banks. Bank notes with Brazilian banks were $2,909,000 and $956,000 at May 31, 2002 and 2001, respectively, with a weighted average interest rate of 21.98% for fiscal 2002 and 23.86% for fiscal 2001. The weighted average interest rate for all other bank notes was 4.78% for fiscal 2002 and 5.96% for fiscal 2001. During May 2002, the Company replaced its $190,000,000 revolving credit facility maturing May 2003 with $310,000,000 in new facilities syndicated with various banks. The full $310,000,000 is available to the Company. The new facilities consist of a $155,000,000 364-day revolving credit agreement maturing May 2003 and a $155,000,000 five-year revolving credit agreement maturing May 2007. The Company pays commitment fees on the unused credit amount under the facilities. Interest rates on borrowings under the facilities and related fees are determined by the Company's senior unsecured long-term debt ratings as assigned by Standard & Poor's Ratings Services and Moody's Investors Service. There were no outstanding balances under the facilities at May 31, 2002. The covenants in the facilities include, among others, maintenance of a debt-to-total capitalization ratio of not more than 55% and maintenance of a debt-to-EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) ratio of not more than 3.75 times through February 2003, declining periodically thereafter to 3.00 times in May 2005. The Company was in compliance with all covenants under the facilities at May 31, 2002. During fiscal 2002 and 2001, the Company entered into open-market transactions to repurchase portions of the 7.125% Notes due 2006 and the 6.700% Notes due 2009. The total amounts of each issue repurchased through May 31, 2002 were $57,591,000 and $5,000,000, respectively. During fiscal 2002, the Company retired "Other" debt of $4,030,000 representing various industrial development revenue bonds. At May 31, 2002, the Company's remaining "Other" debt represented debt from foreign operations with a weighted average interest rate of 3.49%. During fiscal 2001, the Company prepaid $7,305,000 of floating rate notes due 2011. In conjunction with the prepayment, the Company terminated certain interest rate swap agreements that effectively converted the interest rate on the floating rate notes to a 5.91% fixed rate. The Company recorded a $392,000 loss during fiscal 2001 to reflect the termination of the interest rate swap agreements. At May 31, 2002, the Company was not a party to any interest rate swap agreements or other interest rate derivatives. Principal payments due on long-term debt in the next five fiscal years and the remaining years thereafter are as follows (in thousands): 2003 $ 1,082 2004 1,003 2005 757 2006 142,490 2007 -- Thereafter 145,000 ----------- Total $ 290,332 =========== 28 NOTE D - INCOME TAXES Income taxes for the years ended May 31 were as follows:
IN THOUSANDS 2002 2001 2000 ---------- --------- --------- Current: Federal $ 19,142 $ 6,740 $ 66,070 State and local 2,051 1,126 4,078 Foreign (734) 3,500 2,688 Deferred: Federal (14,570) 8,998 (16,514) State (2,151) 79 169 -------- -------- -------- $ 3,738 $ 20,443 $ 56,491 ======== ======== ========
The components of the Company's deferred tax assets and liabilities as of May 31 were as follows:
IN THOUSANDS 2002 2001 --------- --------- Deferred tax assets: Accounts receivable $ 8,104 $ 4,078 Inventory 4,671 4,551 Accrued expenses 6,698 8,337 Restructuring expenses 18,502 -- Income taxes 4,746 4,094 Other 817 347 --------- --------- 43,538 21,407 Deferred tax liabilities: Property, plant, and equipment 135,238 129,688 Undistributed earnings of unconsolidated affiliates 14,597 13,512 Other (1,109) (2,226) --------- --------- 148,726 140,974 --------- --------- Net deferred tax liability $ 105,188 $ 119,567 ========= =========
The reasons for the difference between the effective income tax rate and the statutory federal income tax rate were as follows:
2002 2001 2000 -------------- -------------- -------------- Federal statutory rate 35.0% 35.0% 35.0% State and local income taxes, net of federal tax benefit (0.6) 1.4 1.8 Foreign and other 2.1 0.1 0.7 -------------- -------------- -------------- Effective tax rate 36.5% 36.5% 37.5% ============== ============== ==============
NOTE E - EMPLOYEE BENEFIT PLANS The Company provides pension benefits to employees through deferred profit sharing or defined benefit plans. Most employees are covered by contributory deferred profit sharing plans. Company contributions to the defined contribution plans generally are determined as a percentage of the Company's pre-tax income before profit sharing. The defined benefit plans are non-contributory pension plans which cover certain employees based on age and length of service. Company contributions to these plans exceeded ERISA's minimum funding requirements for fiscal 2002. 29 The following table summarizes the components of net periodic pension cost for the defined benefit and contribution plans for the years ended May 31:
IN THOUSANDS 2002 2001 2000 --------- -------- -------- Defined benefit plans: Service cost $ 934 $ 922 $ 827 Interest cost 1,333 1,242 1,051 Actual loss (return) on plan assets 287 1,092 (1,109) Net amortization and deferral (1,218) (2,135) 177 ------- ------- ------- Net pension cost on defined benefit plans 1,336 1,121 946 Defined contribution plans 6,735 5,676 6,418 ------- ------- ------- Total pension cost $ 8,071 $ 6,797 $ 7,364 ======= ======= =======
The following actuarial assumptions were used for the Company's defined benefit pension plans:
2002 2001 2000 -------------- -------------- -------------- Weighted average discount rate 7.00% 7.43% 7.47% Weighted average expected long-term rate of return 8.36% 8.32% 8.31%
In addition to and as part of its consolidation plan, the Company recognized a $4,242,000 net curtailment loss in fiscal 2002 (see Note N). The loss primarily resulted from the recognition of prior service cost related to employees to be terminated. The following table summarizes amounts recognized in the Company's consolidated balance sheets and the funded status for defined benefit pension plans at May 31:
IN THOUSANDS 2002 2001 ---------- -------- Change in benefit obligation Benefit obligation, beginning of year $ 17,605 $ 14,891 Service cost 934 922 Interest cost 1,333 1,242 Amendments -- 1,108 Curtailment (325) -- Actuarial loss 922 114 Benefits paid (714) (672) -------- -------- Benefit obligation, end of year 19,755 17,605 -------- -------- Change in plan assets Fair value, beginning of year 14,520 14,767 Actual loss on plan assets (287) (1,092) Company contributions 6,338 1,425 Benefits paid (714) (580) -------- -------- Fair value, end of year 19,857 14,520 -------- -------- Funded (underfunded) status 102 (3,085) Unrecognized net actuarial loss (gain) 1,618 (1,385) Unrecognized prior service cost 1,709 3,161 Unrecognized transition obligation (asset) (11) 65 Minimum pension liability -- (1,857) -------- -------- Prepaid (accrued) benefit cost $ 3,418 $ (3,101) ======== ========
30 Plans with benefit obligations in excess of fair value of plan assets: Projected benefit obligation $ -- $ 16,816 Fair value of plan assets -- 13,469 ----------- --------- Funded status $ -- $ (3,347) =========== =========
Plan assets consist principally of listed equity securities and fixed income instruments. NOTE F - STOCK OPTIONS Under its employee stock option plan, the Company may grant incentive stock options to purchase common shares at not less than 100% of market value at date of grant. Under its non-employee director stock option plan, the Company may grant non-qualified stock options at a price determined by the Compensation and Stock Option Committee. Generally, stock options vest and become exercisable at the rate of 20% per year beginning one year from date of grant and expire ten years thereafter. The following table summarizes the stock option plans' activities for the years ended May 31:
2002 2001 2000 ----------------------- ----------------------- ----------------------- WEIGHTED WEIGHTED WEIGHTED STOCK AVERAGE STOCK AVERAGE STOCK AVERAGE IN THOUSANDS, EXCEPT PER SHARE OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE ---------- ----------- ----------- ---------- ----------- ----------- Outstanding, beginning of year 5,839 $13.07 4,336 $14.90 3,907 $15.04 Granted 12 11.05 1,851 9.30 1,006 12.75 Exercised (137) 12.10 -- -- (358) 9.25 Forfeited (297) 13.90 (348) 15.77 (219) 17.29 --------- --------- --------- Outstanding, end of year 5,417 13.05 5,839 13.07 4,336 14.90 ========= ========= ========= Exercisable at end of year 2,735 14.92 2,005 16.34 1,474 17.68 ========= ========= =========
The following table summarizes information for stock options outstanding and exercisable at May 31, 2002:
OUTSTANDING EXERCISABLE ------------------------------------------- -------------------------- WEIGHTED WEIGHTED AVERAGE WEIGHTED AVERAGE REMAINING AVERAGE EXERCISE CONTRACTUAL EXERCISE IN THOUSANDS, EXCEPT PER SHARE NUMBER PRICE LIFE NUMBER PRICE ------------- ------------- --------------- ------------ ------------ Exercise prices between $ 9.00 and $13.00 4,169 $11.32 5.0 1,653 $12.06 $14.38 and $21.38 1,248 18.82 4.1 1,082 19.28
Under APB 25, the Company does not recognize compensation expense related to stock options, as no stock options are granted at a price below the market price on the day of grant. 31 Pro Forma Information: Pro forma information regarding net income and earnings per share is required by SFAS No. 123. This information is required to be determined as if the Company had accounted for its stock options granted after December 31, 1994 under the fair value method prescribed by that Statement. The weighted average fair value of stock options granted in fiscal 2002, 2001 and 2000 was $2.89, $2.27 and $2.84, respectively, based on the Black-Scholes option-pricing model with the following weighted average assumptions:
2002 2001 2000 -------------- --------------- -------------- Assumptions used: Dividend yield 4.55% 6.38% 4.25% Expected volatility 23.00% 23.00% 23.00% Risk-free interest rate 4.38% 3.61% 5.96% Expected lives (years) 5 5 5
Had compensation cost for the Company's stock option plans been determined based on the fair value at the grant date for awards in 2002, 2001 and 2000 consistent with the provisions of SFAS No. 123, the Company's net earnings and earnings per share would have been as presented in the following table:
IN THOUSANDS, EXCEPT PER SHARE 2002 2001 2000 -------------- --------------- -------------- Pro forma net earnings $ 5,072 $ 34,199 $ 92,708 Pro forma earnings per share (basic) 0.06 0.40 1.05 Pro forma earnings per share (diluted) 0.06 0.40 1.05
The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the above weighted average assumptions used for grants. Because the Company's stock options have characteristics significantly different from those of traded stock options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in the Company's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its stock options. NOTE G - CONTINGENT LIABILITIES AND COMMITMENTS The Company is a defendant in certain legal actions. In the opinion of management, the outcome of these actions, which is not clearly determinable at the present time, would not significantly affect the Company's consolidated financial position or future results of operations. The Company believes that environmental issues will not have a material effect on capital expenditures, consolidated financial position or future results of operations. To secure access to facilities used to regenerate acid used in certain steel processing locations, the Company has entered into unconditional purchase obligations with a third party which require the Company to deliver certain quantities of acid for processing annually through the year 2019. In addition, the Company is required to pay for freight and utilities used in processing its acid. The aggregate amount of required future payments at May 31, 2002 is as follows (in thousands): 2003 $ 4,395 2004 4,395 2005 4,395 2006 4,395 2007 4,395 Thereafter 52,745 ------- Total $74,720 ======= The Company may not terminate the unconditional purchase obligations without assuming or otherwise repaying certain debt of the supplier, based on the fair market value of the facility. At May 31, 2002, $32,456,000 of such debt was outstanding. 32 NOTE H - INDUSTRY SEGMENT DATA The Company's operations include three reportable segments (Processed Steel Products, Metal Framing and Pressure Cylinders). Factors used to identify these segments include the products and services provided by each segment as well as the management reporting structure used by the Company. A discussion of each segment is outlined below. Processed Steel Products: This segment consists of two business units, The Worthington Steel Company ("Worthington Steel") and The Gerstenslager Company ("Gerstenslager"). Both are intermediate processors of flat-rolled steel. This segment's processing capabilities include blanking, cold-rolling, dry lubricating, configured blanking, cutting-to-length, edging, hot-dipped galvanizing, hydrogen annealing, nickel plating, painting, pickling, slitting, stamping, tension leveling, and zinc/nickel coating. Worthington Steel sells to customers principally in the automotive, lawn and garden, construction, hardware, furniture, office equipment, electrical control, leisure and recreation, appliance, farm implement, HVAC, and aerospace markets. Gerstenslager supplies automotive aftermarket body panels within the United States primarily to domestic and transplant automotive and heavy duty truck manufacturers. Metal Framing: This segment consists of one business unit, Dietrich Industries, Inc. ("Dietrich"), which produces metal framing products for the commercial and residential construction markets in the United States. Dietrich's customers primarily consist of wholesale distributors and commercial and residential building contractors. Pressure Cylinders: This segment consists of one business unit, Worthington Cylinder Corporation ("Worthington Cylinders"). Worthington Cylinders produces a diversified line of pressure cylinder vessels, including liquefied petroleum gas ("LPG") cylinders, refrigerant cylinders, and industrial/specialty gas cylinders. LPG cylinders are used for gas barbecue grills, camping equipment, residential heating systems, industrial forklifts, and commercial/residential cooking (outside North America). Refrigerant cylinders are used to hold refrigerant gases for commercial and residential air conditioning and refrigeration systems and for automotive air conditioning systems. Industrial/specialty gas cylinders are used as containers for gases for the following: cutting and welding metals; breathing (medical, diving and firefighting); semiconductor production; beverage delivery; and compressed natural gas systems. Worthington Cylinders also produces recycle and recovery tanks for refrigerant gases and non-refillable cylinders for helium balloon kits. The accounting policies of the operating segments are described in Note A. The Company evaluates segment performance based on operating income. Inter-segment sales are not material. 33 Summarized financial information for the Company's reportable segments is shown in the following table. The "Other" category includes corporate related items, results of immaterial operations, and income and expense not allocable to the reportable segments.
IN MILLIONS 2002 2001 2000 ---------- ---------- ---------- NET SALES Processed Steel Products $ 1,132.7 $ 1,184.9 $ 1,287.9 Metal Framing 306.0 346.0 350.6 Pressure Cylinders 292.8 289.1 318.8 Other 13.5 6.1 5.3 ---------- ---------- ---------- Total $ 1,745.0 $ 1,826.1 $ 1,962.6 ========== ========== ========== OPERATING INCOME Processed Steel Products $ 13.6 $ 29.3 $ 96.8 Metal Framing 19.1 23.7 43.2 Pressure Cylinders 11.0 19.3 34.2 Other (9.4) (7.1) (4.7) ---------- ---------- ---------- Total $ 34.3 $ 65.2 $ 169.5 ========== ========== ========== DEPRECIATION AND AMORTIZATION Processed Steel Products $ 45.3 $ 46.2 $ 48.0 Metal Framing 10.0 10.6 9.4 Pressure Cylinders 9.8 10.1 10.4 Other 3.8 3.7 3.2 ---------- ---------- ---------- Total $ 68.9 $ 70.6 $ 71.0 ========== ========== ========== TOTAL ASSETS Processed Steel Products $ 903.3 $ 908.1 $ 1,049.6 Metal Framing 244.3 239.9 256.5 Pressure Cylinders 154.0 178.9 215.9 Other 155.7 149.0 151.9 ---------- ---------- ---------- Total $ 1,457.3 $ 1,475.9 $ 1,673.9 ========== ========== ========== CAPITAL EXPENDITURES Processed Steel Products $ 17.8 $ 31.0 $ 31.2 Metal Framing 13.8 15.1 11.0 Pressure Cylinders 4.8 9.8 12.4 Other 2.7 7.0 16.9 ---------- ---------- ---------- Total $ 39.1 $ 62.9 $ 71.5 ========== ========== ==========
NOTE I - RELATED PARTY TRANSACTIONS The Company purchases from and sells to affiliated companies certain raw materials and services at prevailing market prices. Sales to affiliated companies for fiscal 2002, 2001 and 2000 totaled $25,321,000, $36,063,000 and $31,359,000, respectively. Accounts receivable related to these transactions were $681,000 and $3,671,000 at May 31, 2002 and 2001, respectively. Accounts payable to affiliated companies were $31,111,000 and $23,427,000 at May 31, 2002 and 2001, respectively. 34 NOTE J - INVESTMENTS IN UNCONSOLIDATED AFFILIATES The Company's investments in affiliated companies, which are not majority-owned and not controlled, are accounted for using the equity method. These equity investments and the percentage interest owned consist of Worthington Armstrong Venture (50%), TWB Company, L.L.C. (33%), Acerex S.A. de C.V. (50%), Worthington Specialty Processing (50%) and Aegis Metal Framing (60%). The Company received dividends from unconsolidated affiliates totaling $12,500,000 and $15,082,000 in 2002 and 2001, respectively. Financial information for affiliated companies accounted for using the equity method as of, and for, the years ended May 31 was as follows:
IN THOUSANDS 2002 2001 2000 -------------- --------------- -------------- Current assets $ 151,655 $ 125,938 $ 120,619 Noncurrent assets 156,730 124,263 129,699 Current liabilities 66,160 54,772 55,220 Noncurrent liabilities 54,672 66,156 85,568 Net sales 420,222 417,057 377,630 Gross margin 81,913 84,825 89,931 Net income 47,457 51,335 55,921
The Company's share of undistributed earnings of unconsolidated affiliates was $23,919,000 at May 31, 2002. NOTE K - EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share:
YEAR ENDED MAY 31, ---------------------------------------------- DOLLARS IN THOUSANDS, EXCEPT PER SHARE 2002 2001 2000 ----------- ----------- ----------- Numerator (basic & diluted): Net earnings - income available to common shareholders $ 6,502 $ 35,565 $ 94,151 Denominator: Denominator for basic earnings per share - weighted average shares 85,408,200 85,590,089 88,410,804 Effect of dilutive securities - stock options 520,541 33,288 187,009 ----------- ----------- ----------- Denominator for diluted earnings per share - adjusted weighted average shares 85,928,741 85,623,377 88,597,813 =========== =========== =========== Basic earnings per share $ 0.08 $ 0.42 $ 1.06 Diluted earnings per share 0.08 0.42 1.06
Stock options covering 1,298,094, 4,143,873 and 1,559,315 common shares for fiscal 2002, fiscal 2001 and fiscal 2000 have been excluded from the computation of diluted earnings per share because the effect would have been antidilutive for those periods. 35 NOTE L - OPERATING LEASES The Company leases certain property and equipment from third parties under non-cancelable operating lease agreements. Rent expense under operating leases was $7,732,000 in fiscal 2002, $4,969,000 in fiscal 2001 and $3,210,000 in fiscal 2000. Future minimum lease payments for non-cancelable operating leases having an initial or remaining term in excess of one year at May 31, 2002, are as follows (in thousands): 2003 $ 5,219 2004 4,241 2005 3,417 2006 1,421 2007 1,010 Thereafter 3,685 ------- Total $18,993 ======= NOTE M - SALE OF ACCOUNTS RECEIVABLE On November 30, 2000, the Company and certain of its subsidiaries entered into a $120,000,000 revolving trade receivables securitization facility. In May 2001, this facility was expanded to include other subsidiaries and was increased to $190,000,000. Pursuant to the terms of the facility, these subsidiaries sell their accounts receivable, on a revolving basis, to a wholly-owned, bankruptcy-remote subsidiary of the Company, Worthington Receivables Corporation ("WRC"), which is consolidated for financial reporting purposes. In turn, WRC sells, on a revolving basis, up to $190,000,000 undivided ownership interest in the purchased accounts receivable to independent third parties. The Company retains an undivided interest in this pool and is subject to risk of loss based on the collectibility of the receivables from this retained interest. Because the amount eligible to be sold excludes receivables past due, balances with foreign customers, concentrations over limits with specific customers, and certain reserve amounts, the Company believes additional risk of loss is minimal. Also because of these exclusions, no discount occurs on the sale and no gain or loss is recorded; however, facility fees of $4,082,000 and $3,110,000 were incurred during fiscal 2002 and 2001, respectively. The book value of the retained portion approximates fair value. The Company continues to service the accounts receivable. No servicing asset or liability has been recognized as the Company's cost to service the accounts receivable is expected to approximate the servicing income. As of May 31, 2002, WRC had sold $100,000,000 of undivided ownership interest in accounts receivable. The proceeds from the sale were reflected as a reduction of accounts receivable on the consolidated balance sheets and as operating cash flows in the consolidated statements of cash flows. The sale proceeds were used to pay down short-term debt. NOTE N - RESTRUCTURING EXPENSE During the quarter ended February 28, 2002, the Company announced a consolidation plan to improve profitability. This plan affects each of the Company's business segments as six facilities will be closed and two others will be restructured. As part of the consolidation plan, the Company recorded a $64,575,000 pre-tax restructuring expense. The restructuring expense includes a write-down to fair value of certain property and equipment, severance and employee related costs, and other items. Of this expense, all but $11,842,000 for severance and employee related costs are non-cash charges. The severance and employee related costs are due to the elimination of 542 administrative, production and other employee positions. As of May 31, 2002, 230 employee positions had been eliminated (205 through termination and 25 through retirement and attrition), and severance of $1,427,000 was paid. The consolidation process should be substantially completed by January 2003. 36 The components of the restructuring charge are summarized as follows:
AMOUNT BALANCE CHARGED OTHER MAY 31, IN THOUSANDS TO INCOME PAYMENTS CREDITS 2002 -------------- -------------- -------------- -------------- Property and equipment $48,245 $ (155) $ -- $48,090 Severance and employee related 11,842 (1,438) -- 10,404 Other items 4,488 (244) -- 4,244 ------- ------- ------ ------- Total $64,575 $(1,837) $ -- $62,738 ======= ======= ====== =======
The sales of the affected plants will be transferred to other Company locations except for the sales of the Itu, Brazil, facility and the painted and coated products of the Malvern, Pennsylvania, facility. Net sales for the products that will not be transferred were $42,363,000, $65,484,000 and $70,385,000 for fiscal 2002, 2001 and 2000, respectively. The related operating income (loss) for these products was $(5,314,000), $(14,528,000) and $643,000 for fiscal 2002, 2001 and 2000, respectively. During the quarter ended February 28, 2001, the Company recorded a pre-tax restructuring expense of $6,474,000 for the partial shutdown of the Malvern facility. The Company has sold all of the idled equipment and settled the termination liabilities for approximately the costs that were accrued. NOTE O - GOODWILL The Company adopted SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets, effective June 2001. SFAS No. 141 requires the use of the purchase method of accounting for any business combinations initiated after June 30, 2001, and further clarifies the criteria to recognize intangible assets separately from goodwill. Under SFAS No. 142, goodwill and indefinite-lived intangible assets are no longer amortized but are reviewed for impairment. During the six months ended November 30, 2001, the Company performed the required initial impairment tests of goodwill. No impairments were then indicated. The annual impairment test was performed during the fourth quarter of fiscal 2002, and goodwill of $566,000 was written off as a result. The impact of the adoption of SFAS No. 142 for the years ended May 31 is summarized as follows:
IN THOUSANDS, EXCEPT PER SHARE 2002 2001 2000 -------------- -------------- -------------- Net earnings as reported $ 6,502 $ 35,565 $ 94,151 Add back: goodwill amortization after-tax -- 1,581 1,429 ------------- ------------ --------- Adjusted net earnings $ 6,502 $ 37,146 $ 95,580 ============= ============ ========= Earnings per common share as reported - basic & diluted $ 0.08 $ 0.42 $ 1.06 Goodwill amortization after-tax -- 0.01 0.02 ------------- ------------ --------- Adjusted earnings per common share - basic & diluted $ 0.08 $ 0.43 $ 1.08 ============= ============ =========
37 Goodwill by segment is summarized as follows at May 31:
IN THOUSANDS 2002 2001 -------------- -------------- Processed Steel Products $ -- $ 17 Metal Framing 57,752 57,752 Pressure Cylinders 17,648 18,104 Other -- 566 ------------- ----------- $ 75,400 $ 76,439 ============= ===========
The goodwill related to Processed Steel Products was written off upon the adoption of SFAS No. 142. The change in the goodwill balance for Pressure Cylinders relates to foreign currency translation adjustments and the shutdown of the Brazil operations. The reduction in Other goodwill was a result of the annual impairment test. NOTE P - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The following is a summary of the unaudited quarterly results of operations for the years ended May 31:
THREE MONTHS ENDED --------------------------------------------------------------------- IN THOUSANDS, EXCEPT PER SHARE AUGUST 31 NOVEMBER 30 FEBRUARY 28 MAY 31 ---------------- ---------------- ---------------- ---------------- 2002 Net sales $ 409,558 $ 410,379 $ 405,740 $ 519,284 Gross margin 59,997 61,297 50,851 92,632 Net earnings 14,285 11,323 (45,865) 26,759 Earnings per share (diluted) $ 0.17 $ 0.13 $ (0.53) $ 0.31 2001 Net sales $ 484,224 $ 457,369 $ 418,717 $ 465,790 Gross margin 63,878 56,621 53,583 70,840 Net earnings 12,477 6,880 1,778 14,430 Earnings per share (diluted) $ 0.15 $ 0.08 $ 0.02 $ 0.17
Results for the quarter ended February 28, 2002 include a pre-tax restructuring expense of $64,575,000 ($0.48 per share, net of tax) and a pre-tax charge to establish a reserve for the impairment of certain assets of $21,223,000 ($0.15 per share, net of tax). Results for the quarter ended February 28, 2001 include a pre-tax restructuring expense of $6,474,000 ($0.04 per share, net of tax). NOTE Q - SUBSEQUENT EVENT On July 31, 2002, Worthington Industries, Inc. acquired the stock of Unimast Incorporated and its subsidiaries ("Unimast"), a wholly-owned subsidiary of WHX Corporation, for approximately $113,000,000 in cash and approximately $9,000,000 of assumed indebtedness. Unimast manufactures construction steel products, including light gauge steel framing, plastering steel and trim accessories, and serves the construction industry from ten locations. Their revenues for the year ended December 31, 2001 were approximately $230 million. Unimast will be included in the Company's Metal Framing segment. 38 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders Worthington Industries, Inc. We have audited the accompanying consolidated balance sheet of Worthington Industries, Inc. and subsidiaries as of May 31, 2002, and the related consolidated statements of earnings, shareholders' equity, and cash flows for the year then ended. In connection with our audit of the consolidated financial statements, we also have audited the financial statement schedule of valuation and qualifying accounts. These consolidated financial statements and the financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Worthington Industries, Inc. and subsidiaries as of May 31, 2002, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. /s/ KPMG LLP ----------------------------------- KPMG LLP Columbus, Ohio June 18, 2002 39 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders Worthington Industries, Inc. We have audited the accompanying consolidated balance sheet of Worthington Industries, Inc. and subsidiaries as of May 31, 2001, and the related consolidated statements of earnings, shareholders' equity, and cash flows for each of the two years in the period ended May 31, 2001. Our audits also included the financial statement schedule listed in Item 14(a)(2) and 14(d) as of and for the two years in the period ended May 31, 2001. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Worthington Industries, Inc. and subsidiaries at May 31, 2001, and the consolidated results of their operations and their cash flows for each of the two years in the period ended May 31, 2001 in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ ERNST & YOUNG LLP ------------------------------------- Ernst & Young LLP Columbus, Ohio June 15, 2001 40 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
- ------------------------------------------------------------------------------------------------------------------------------------ COL. A. COL. B. COL. C COL. D. COL. E. - ------------------------------------------------------------------------------------------------------------------------------------ DESCRIPTION Balance at Additions Deductions - Balance at End of Beginning of ------------------------------------- Describe Period Period Charged to Costs Charged to Other and Expenses Accounts - Describe - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended May 31, 2002: Deducted from asset accounts: Allowance for possible losses on trade accounts receivable $9,166,000 $10,287,000 $215,000 (A) $11,453,000 (B) $8,215,000 ============ ============ ============= ================ =========== Year Ended May 31, 2001: Deducted from asset accounts: Allowance for possible losses on trade accounts receivable $3,879,000 $5,431,000 $795,000 (A) $ 939,000 (B) $9,166,000 ============ ============ ============= ================ =========== Year Ended May 31, 2000: Deducted from asset accounts: Allowance for possible losses on trade accounts receivable $4,209,000 $1,842,000 ($409,000) (A) $ 1,763,000 (B) $3,879,000 ============ ============ ============= ================ ===========
Note A - Miscellaneous amounts. Note B - Uncollectible accounts charged to the allowance. 41 ITEM 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Required information reported in the Annual Report on Form 10-K for the fiscal year ended May 31, 2001. PART III ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT In accordance with General Instruction G(3) of Form 10-K, the information required by this Item 10 with respect to the identification of directors is incorporated herein by reference to the material under the heading "Election of Directors" contained in the Registrant's 2002 Proxy Statement for the September 26, 2002 Annual Meeting of Shareholders (the "Proxy Statement"). The information regarding executive officers required by Item 401 of Regulation S-K is included in Part I hereof under the heading "Supplemental Item. - Executive Officers of the Registrant." The information required by Item 405 of Regulation S-K is incorporated herein by reference to the material under the heading "Voting Securities and Principal Holders - Section 16(a) Beneficial Ownership Reporting Compliance" in the Proxy Statement. ITEM 11. - EXECUTIVE COMPENSATION In accordance with General Instruction G(3) of Form 10-K, the information required by this Item 11 is incorporated herein by reference to the information contained in the Proxy Statement under the headings "Election of Directors--Compensation of Directors" and "Executive Compensation." ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS In accordance with General Instruction G(3) of Form 10-K, the information required by this Item 12 with respect to the security ownership of certain beneficial owners and management is incorporated herein by reference to the material contained in the Proxy Statement under the headings "Voting Securities and Principal Holders -- Security Ownership of Certain Beneficial Owners and Management." EQUITY COMPENSATION PLAN INFORMATION The following table provides information as of May 31, 2002, with respect to compensation plans under which common shares of Worthington Industries are authorized for issuance. These compensation plans include: (i) the Worthington Industries, Inc. 1990 Stock Option Plan; (ii) the Worthington Industries, Inc. 1997 Long-Term Incentive Plan; and (iii) the Worthington Industries, Inc. 2000 Stock Option Plan for Non-Employee Directors. All of these plans were approved by our shareholders.
NUMBER OF SHARES REMAINING AVAILABLE FOR NUMBER OF SHARES TO BE WEIGHTED AVERAGE FUTURE ISSUANCE UNDER ISSUED UPON EXERCISE OF EXERCISE PRICE OF EQUITY COMPENSATION OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, PLANS (EXCLUDING SHARES PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (a)) - ------------------- ----------------------- --------------------- ------------------------- (a) (b) (c) ----------------------- --------------------- ------------------------- Equity compensation 5,417,000 $13.05 3,682,000 plans approved by shareholders
ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In accordance with General Instruction G(3) of Form 10-K, the information required by this Item 13 is incorporated herein by reference to the information for John H. McConnell and John P. McConnell under the 42 heading "Security Ownership of Certain Beneficial Owners and Management" in the Proxy Statement and by reference to the material set forth under the caption "Related Party Transactions" in the Proxy Statement. PART IV ITEM 14. - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this Form 10-K: (1) Consolidated Financial Statements: Consolidated Balance Sheets as of May 31, 2002 and 2001 Consolidated Statements of Earnings for the years ended May 31, 2002, 2001 and 2000 Consolidated Statements of Shareholders' Equity for the years ended May 31, 2002, 2001 and 2000 Consolidated Statements of Cash Flows for years ended May 31, 2002, 2001 and 2000 Notes to Consolidated Financial Statements Independent Auditors' Report (KPMG LLP) Independent Auditors' Report (Ernst & Young LLP) (2) Financial Statement Schedule Schedule II - Valuation and Qualifying Accounts All other financial statement schedules are omitted because they are not required or the information required has been presented in the aforementioned financial statements. (3) Listing of Exhibits: The exhibits listed on the "Index to Exhibits" beginning on page E-1 of this Form 10-K are filed with this Form 10-K or incorporated by reference noted in the "Index to Exhibits." The "Index to Exhibits" specifically identifies each management contract or compensatory plan required to be filed as an exhibit to this Form 10-K. (b) No reports on Form 8-K were filed during the last quarter of fiscal 2002. (c) The exhibits listed on the "Index to Exhibits" beginning on page E-1 of this report are filed with this Form 10-K or incorporated by reference as noted in the "Index to Exhibits." (d) The Financial Statement Schedule listed in Item 14(a)(2) is filed herewith. 43 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WORTHINGTON INDUSTRIES, INC. Date: August 21, 2002 By: /s/ John P. McConnell ------------------------------------ John P. McConnell Chairman & Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
SIGNATURE DATE TITLE --------- ---- ----- /s/ John P. McConnell August 21, 2002 Director, Chairman & - ------------------------------------ Chief Executive Officer John P. McConnell * * Director, Chairman Emeritus - ------------------------------------ & Founder John H. McConnell * * Director, President & - ------------------------------------ Chief Operating Officer John S. Christie /s/ John T. Baldwin August 21, 2002 Vice President & Chief - ------------------------------------ Financial Officer John T. Baldwin /s/ Richard G. Welch August 21, 2002 Controller - ------------------------------------ Richard G. Welch * * Director - ------------------------------------ John B. Blystone * * Director - ------------------------------------ William S. Dietrich, II * * Director - ------------------------------------ Michael J. Endres * * Director - ------------------------------------ Peter Karmanos, Jr. * * Director - ------------------------------------ John R. Kasich * * Director - ------------------------------------ Sidney A. Ribeau * * Director - ------------------------------------ Mary Fackler Schiavo *By: /s/ John P. McConnell Date: August 21, 2002 -------------------------------------------- John P. McConnell Attorney-In-Fact
44 INDEX TO EXHIBITS
Exhibit Description Location - ---------------- ---------------------------------------- ------------------------------------------------ 2 Stock Purchase Agreement, dated as of Filed herewith June 24, 2002, between Worthington Industries, Inc. and WHX Corporation (excluding exhibits and schedules) 3(a) Amended Articles of Incorporation of Incorporated by reference to Exhibit 3(a) of the Worthington Industries, Inc., as filed Registrant's Quarterly Report on Form 10-Q for with Ohio secretary of State on the quarter ended August 31, 1998 October 13, 1998 3(b) Code of Regulations of Worthington Incorporated by reference to Exhibit 3(b) of the Industries, Inc., as amended through Registrant's Quarterly Report on Form 10-Q for September 28, 2000 for SEC reporting the quarter ended August 31, 2000 compliance purposes only 4(a) Form of Indenture, dated as of May 15, Incorporated by reference to Exhibit 4(a) of the 1996, between Worthington Industries, Registrant's Annual Report on Form 10-K for Inc. and PNC Bank, Ohio, National fiscal year ended May 31, 1997 Association, as Trustee, relating to up to $450,000,000 of debt securities 4(b) Form of 7-1/8% Note due May 15, 2006 Incorporated by reference to Exhibit 4(b) of the Registrant's Annual Report on Form 10-K for fiscal year ended May 31, 1997 4(c) First Supplemental Indenture, dated as Incorporated by reference to Exhibit 4(c) of the of February 27, 1997, between Registrant's Annual Report on Form 10-K for Worthington Industries, Inc. and PNC fiscal year ended May 31, 1997 Bank, Ohio, National Association, as Trustee 4(d) Agreement to furnish instruments Filed herewith defining rights of holders of long-term debt 4(e) Form of 6.7% Note due December 1, 2009 Incorporated by reference to Exhibit 4(f) of the Registrant's Annual Report on Form 10-K for the fiscal year ended May 31, 1998 4(f) Second Supplemental Indenture, dated Incorporated by reference to Exhibit 4(g) of the as of December 12, 1997, between Registrant's Annual Report on Form 10-K for the Worthington Industries, Inc. and PNC fiscal year ended May 31, 1998 Bank, Ohio, National Association, as Trustee
E-1 4(g) Third Supplemental Indenture, dated as Incorporated by reference to Exhibit 4(h) of the of October 13, 1998, among Worthington Registrant's Annual Report on Form 10-K for Industries, Inc., a Delaware fiscal year ended May 31, 1999 corporation, Worthington Industries, Inc., an Ohio corporation, and PNC Bank, National Association (formerly known as PNC Bank, Ohio, National Association) 4(h) Fourth Supplemental Indenture, dated Filed herewith as of May 10, 2002, among Worthington Industries, Inc. and J.P. Morgan Trust Company, National Association, as successor trustee to Chase Manhattan Trust Company, National Association (successor Trustee to PNC Bank, National Association, formerly known as PNC Bank, Ohio, National Association) 4(i)(i) $155,000,000 364-Day Revolving Credit Filed herewith Agreement, dated as of May 10, 2002, among Worthington Industries, Inc., the Lenders from time to time party thereto, PNC Bank, National Association, as Swingline Lender and Administrative Agent and First Union Securities, Inc. and PNC Capital Markets, Inc. as Co-Syndication Agents and Co-Lead Arrangers 4(i)(ii) Form of Revolving Note issued by Filed herewith Worthington Industries, Inc. to the various Lenders from time to time party to that certain $155,000,000 364-Day Revolving Credit Agreement, dated as of May 10, 2002 4(i)(iii) Swingline Note, dated May 10, 2002, Filed herewith issued by Worthington Industries, Inc. to PNC Bank, National Association, as Administrative Agent and Swingline Lender under that certain $155,000,000 364-Day Revolving Credit Agreement, dated as of May 10, 2002
E-2 4(j)(i) $155,000,000 Five-Year Revolving Filed herewith Credit Agreement, dated as of May 10, 2002, among Worthington Industries, Inc., the Lenders from time to time party thereto, PNC Bank, National Association, as Issuing Lender, Swingline Lender and Administrative Agent and First Union Securities, Inc. and PNC Capital Markets, Inc. as Co-Syndication Agents and Co-Lead Arrangers 4(j)(ii) Form of Revolving Note issued by Filed herewith Worthington Industries, Inc. to the various Lenders from time to time party to that certain $155,000,000 Five-Year Revolving Credit Agreement, dated as of May 10, 2002 4(j)(iii) Swingline Note, dated May 10, 2002 Filed herewith issued by Worthington Industries, Inc. to PNC Bank, National Association, as Administrative Agent, Issuing Lender and Swingline Lender under that certain $155,000,000 Five-Year Revolving Credit Agreement, dated as of May 10, 2002 4(k) Pledge Agreement, dated as of May 10, Filed herewith 2002, by Worthington Industries, Inc. in favor of Wells Fargo Bank Minnesota, National Association, as Collateral Agent for the Secured Parties as defined in the Trust Agreement (See Exhibit 4(l) below) 4(l) Trust Agreement, dated as of May 10, Filed herewith 2002, among Worthington Industries, Inc., J.P. Morgan Trust Company, National Association (successor to Chase Manhattan Trust Company, N.A.), as Public Debt Trustee, Wells Fargo Bank Minnesota, National Association, as Collateral Agent, PNC Bank, National Association, as Administrative Agent, and Wells Fargo Bank Minnesota, National Association, as Trustee
E-3 10(a) 1990 Stock Option Plan, as Amended* Incorporated by reference to Exhibit 10(b) of the Registrant's Annual Report on Form 10-K for the fiscal year ended May 31, 1999 10(b) Executive Deferred Compensation Plan, Incorporated hereby by reference to Exhibit 10(c) as Amended and Restated effective June of the Registrant's Annual Report on Form 10-K 1, 2000* for fiscal year ended May 31, 2000 10(c) Deferred Compensation Plan for Incorporated hereby by reference to Exhibit 10(d) Directors, as Amended and Restated, of the Registrant's Annual Report on Form 10-K effective June 1, 2000* for fiscal year ended May 31, 2000 10(d) 1997 Long-Term Incentive Plan* Incorporated by reference to Exhibit 10(e) of the Registrant's Annual Report on Form 10-K for the fiscal year ended May 31, 1997 10(e) Non-Qualified Deferred Compensation Incorporated hereby by reference to Exhibit 10(f) Plan* of the Registrant's Annual Report on Form 10-K for fiscal year ended May 31, 2000 10(f) 2000 Stock Option Plan for Incorporated by reference to Exhibit 10(g) of the Non-Employee Directors* Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2001 10(g)(i) Receivables Purchase Agreement, dated Incorporated hereby by reference to Exhibit as of November 30, 2000, among 10(h)(i) of the Registrant's Annual Report on Worthington Receivables Corporation, Form 10-K for fiscal year ended May 31, 2001 Worthington Industries, Inc., as Servicer, members of various purchaser groups from time to time party thereto and PNC Bank, National Association, as Administrator 10(g)(ii) Amendment No. 1 to Receivables Incorporated hereby by reference to Exhibit Purchase Agreement, dated as of 10(h)(ii) of the Registrant's Annual Report on May 18, 2001, among Worthington Form 10-K for fiscal year ended May 31, 2001 Receivables Corporation, Worthington Industries, Inc., members of various purchaser groups from time to time party thereto and PNC Bank, National Association 10(g)(iii) Purchase and Sale Agreement, dated as Incorporated hereby by reference to Exhibit of November 30, 2000, between the 10(h)(iii) of the Registrant's Annual Report on various originators listed therein and Form 10-K for fiscal year ended May 31, 2001. Worthington Receivables Corporation 10(g)(iv) Amendment No. 1, dated as of May 18, Incorporated hereby by reference to Exhibit 2001, to Purchase and Sale Agreement, 10(h)(iv) of the Registrant's Annual Report on dated as of November 30, 2000 between Form 10-K for fiscal year ended May 31, 2001. the various originators listed therein and Worthington Receivables Corporation
E-4 10(g)(v) Assumption and Transfer Agreement, Filed herewith dated October 25, 2001, among Worthington Receivables Corporation, Fifth Third Bank as a purchaser, a related committed purchaser and an agent, Market Street Funding Corporation, as a purchaser and PNC Bank, National Association, as agent for Market Street and as administrator 10(g)(vi) Assumption and Transfer Agreement, Filed herewith dated April 24, 2002, among Worthington Receivables Corporation, Liberty Street Funding Corp., as a purchaser and a related committed purchaser, The Bank of Nova Scotia, as Agent for Liberty Street Purchasers, Market Street Funding Corporation, as a purchaser and PNC Bank, National Association, as agent for Market Street and as administrator 21 Subsidiaries of Worthington Filed herewith Industries, Inc. 23(a) Consent of Ernst & Young LLP Filed herewith 23(b) Consent of KPMG LLP Filed herewith 24 Powers of Attorney Filed herewith 99 Certifications of CEO & CFO under Filed herewith Section 906 of the Sarbanes-Oxley Act of 2002
*Management Compensation Plan E-5 EX-2 3 l95946aexv2.txt EX-2 EXHIBIT 2 STOCK PURCHASE AGREEMENT BETWEEN WORTHINGTON INDUSTRIES, INC. AND WHX CORPORATION DATED AS OF: JUNE 24, 2002 TABLE OF CONTENTS -----------------
PAGE ---- Section 1. Definitions.....................................................................................1 Section 2. Purchase and Sale of Shares....................................................................11 2.1. Transfer of Shares.............................................................................11 2.2. Purchase Price.................................................................................12 2.3. Delivery of Purchase Price.....................................................................12 Section 3. Closing........................................................................................12 Section 4. Deliveries at Closing..........................................................................12 4.1. Deliveries by Seller...........................................................................12 4.2. Deliveries by Buyer............................................................................14 Section 5. Representations and Warranties of Seller.......................................................15 5.1. Organization and Authority of Seller; No Conflict..............................................15 5.2. Organization and Qualification of Each Acquired Company........................................15 5.3. Capitalization of Each Acquired Company........................................................16 5.4. Books and Records..............................................................................17 5.5. Financial Statements...........................................................................17 5.6. Events Subsequent to Most Recent Fiscal Year End...............................................17 5.7. Undisclosed Liabilities........................................................................18 5.8. Compliance with Legal Requirements; Governmental Authorizations................................19 5.9. Legal Proceedings; Orders......................................................................19 5.10. Taxes..........................................................................................20 5.11. Real Property..................................................................................21 5.12. Intellectual Property..........................................................................23 5.13. Personal Property; Condition and Sufficiency of Assets.........................................25 5.14. Inventory......................................................................................26 5.15. Contracts; No Defaults.........................................................................26 5.16. Bank Accounts; Powers of Attorney..............................................................27 5.17. Insurance......................................................................................28 5.18. Product Warranty...............................................................................28 5.19. Product Liability..............................................................................29 5.20. Labor Relations and Compliance.................................................................29 5.21. Employee Benefits..............................................................................30 5.22. Guaranties.....................................................................................31 5.23. Environmental Matters..........................................................................31 5.24. Occupational Safety and Health Matters.........................................................33 5.25. Certain Payments...............................................................................33 5.26. Related Person Services........................................................................34 5.27. Brokers' Fees..................................................................................34 5.28. Disclosure.....................................................................................34
i Section 6. Representations and Warranties of Buyer........................................................34 6.1. Organization and Good Standing.................................................................34 6.2. Authority; No Conflict.........................................................................34 6.3. Certain Proceedings............................................................................35 6.4. Brokers' Fees..................................................................................35 6.5. Investment Intent..............................................................................35 6.6. Available Consideration........................................................................36 Section 7. Certain Agreements.............................................................................36 7.1. Investigation of the Acquired Companies by Buyer...............................................36 7.2. Preserve Accuracy of Representations and Warranties............................................36 7.3. Consents of Third Parties; Governmental Authorizations.........................................36 7.4. Operations Prior to the Closing Date...........................................................38 7.5. Notification by Seller of Certain Matters......................................................39 7.6. Title Abstracts and Surveys....................................................................39 7.7. Compliance with Environmental Property Transfer Acts...........................................39 7.8. Payment of Pittsburgh-Canfield Obligation......................................................40 7.9. ERISA Indemnity................................................................................40 Section 8. Additional Agreements..........................................................................40 8.1. Access to Records after Closing................................................................40 8.2. Employees and Employee Benefit Plans...........................................................40 8.3. Confidential Nature of Information.............................................................41 8.4. No Solicitation................................................................................41 8.5. Indebtedness to Acquired Companies.............................................................41 8.6. Intercompany Liabilities.......................................................................42 8.7. Covenant Not to Compete or Solicit Business....................................................42 Section 9. Conditions Precedent to Buyer's Obligation to Close............................................43 9.1. Representations and Warranties.................................................................43 9.2. Performance....................................................................................43 9.3. No Proceedings.................................................................................43 9.4. Opinion of Counsel for Seller..................................................................43 9.5. HSR Approval...................................................................................44 9.6. Consents.......................................................................................44 9.7. No Adverse Change..............................................................................44 9.8. Deliveries by Seller...........................................................................44 9.9. Level of Indebtedness..........................................................................44 9.10. No Claim Regarding Share Ownership or Sale Proceeds............................................44 9.11. Agreement with Garen W. Smith..................................................................44 Section 10. Conditions Precedent to Seller's Obligation to Close...........................................44 10.1. Representations and Warranties.................................................................45 10.2. Performance....................................................................................45 10.3. No Proceedings.................................................................................45 10.4. Opinion of Counsel for Buyer...................................................................45 10.5. HSR Approval...................................................................................45
ii 10.6. Consents.......................................................................................45 10.7. Deliveries by Buyer............................................................................45 Section 11. Certain Tax Matters............................................................................45 11.1. Tax Periods Ending On or Before the Closing Date; Tax Sharing Payment..........................45 11.2. Tax Periods Beginning Before and Ending After the Closing Date.................................46 11.3. Tax Periods Beginning After the Closing Date...................................................46 11.4. Tax Refunds and Credits........................................................................46 11.5. Proposed Tax Assessments; Contest..............................................................47 11.6. Transfer Taxes.................................................................................47 11.7. Section 338(h)(10) Election....................................................................48 11.8. Cooperation and Assistance.....................................................................49 11.9. Nonforeign Affidavit...........................................................................49 11.10. Tax Sharing Payments...........................................................................49 Section 12. Indemnification; Remedies......................................................................49 12.1. Survival of Representations and Warranties.....................................................49 12.2. Indemnification and Payment of Damages by Seller...............................................50 12.3. Indemnification and Payment of Damages by Buyer................................................51 12.4. Limitations on Indemnification.................................................................51 12.5. Procedure for Indemnification--Third Party Claims..............................................52 12.6. Procedure for Indemnification--Direct Claims...................................................53 12.7. Procedure for Indemnification--Direct Environmental Claims.....................................54 12.8. Escrow.........................................................................................56 Section 13. Termination....................................................................................56 13.1. Termination....................................................................................56 13.2. Notice of Termination..........................................................................57 13.3. Effect of Termination..........................................................................57 Section 14. General Provisions.............................................................................57 14.1. Expenses.......................................................................................57 14.2. Public Announcements...........................................................................57 14.3. Notices........................................................................................58 14.4. Further Assurances.............................................................................59 14.5. Waiver.........................................................................................59 14.6. Entire Agreement and Modification..............................................................59 14.7. Successors and Assigns; No Third-Party Rights..................................................59 14.8. Severability...................................................................................59 14.9. Section Headings; Construction.................................................................60 14.10. Time of Essence................................................................................60 14.11. Governing Law..................................................................................60 14.12. Counterparts...................................................................................60 14.13. Incorporation of Exhibits and Schedules........................................................60 14.14. No Effect on Insurance.........................................................................60 14.15. Financial Information..........................................................................61
iii
EXHIBITS: - -------- Exhibit 1 - Calculation of Pittsburgh-Canfield Obligation as of the Most Recent Fiscal Month End Exhibit 2.3.2 - Form of Escrow Agreement SCHEDULES: - --------- Schedule 2.1 - Encumbrances Created Pursuant to Collateral Documents under Credit Agreement Schedule 5.1.2 - Seller Conflicts Schedule 5.2 - Organization and Qualification of Each Acquired Company Schedule 5.3 - Capitalization of Each Acquired Company Schedule 5.5 - Consolidated Financial Statements Schedule 5.6 - Material Adverse Changes Schedule 5.7 - Undisclosed Liabilities of the Acquired Companies Schedule 5.8 - Compliance with Legal Requirements; Governmental Authorizations Schedule 5.9 - Legal Proceedings; Orders Schedule 5.10 - Taxes Schedule 5.11.1 - Owned Real Property Schedule 5.11.2 - Leases and Similar Agreements Schedule 5.11.3 - Real Property Subject to Proceedings Schedule 5.11.5 - Previously Owned or Leased Real Property Since the Acquisition Date of an Acquired Company Schedule 5.12 - Intellectual Property Schedule 5.13.1 - Personal Property Schedule 5.13.2 - Leases of Personal Property Schedule 5.13.3 - Condition and Sufficiency of Assets Schedule 5.14 - Inventory Schedule 5.15.1 - Contracts Schedule 5.15.2 - Notices Under Contracts Schedule 5.15.3 - Other Contracts Schedule 5.16.1 - Bank Accounts Schedule 5.16.2 - Powers of Attorney Schedule 5.17.1 - Insurance Schedule 5.17.2 - Self-Insurance Arrangements Schedule 5.17.3 - Refusal of Coverage, Notice of Cancellation or Notice of Premium Adjustment Schedule 5.17.5 - Outstanding Recommendations Made by Insurer Schedule 5.18 - Product Warranty Schedule 5.19 - Product Liability Schedule 5.20.2 - Management Employees Party to Certain Contracts Schedule 5.20.3 - Labor Relations Schedule 5.20.4 - Labor Compliance Schedule 5.21 - Employee Benefits
iv Schedule 5.22 - Guaranties Schedule 5.23 - Environmental Matters Schedule 5.24 - Occupational Safety and Health Law Matters Schedule 5.25 - Certain Payments Schedule 5.26 - Related Person Services Schedule 6.2.2 - Buyer Conflicts Schedule 7.4.2 - Operations Prior to Closing Date Schedule 8.6 - Intercompany Liabilities Schedule 9.9 - Level of Indebtedness Schedule 11.7.2 - Allocations Pursuant to Section 338(h)(10) Election Schedule 12.2(c) - Indemnification and Payment of Damages by Seller in Respect of Certain Proceedings
v STOCK PURCHASE AGREEMENT This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as of June 24, 2002, by and between WORTHINGTON INDUSTRIES, INC., an Ohio corporation, or its designated subsidiary ("Buyer"), and WHX CORPORATION, a Delaware corporation ("Seller"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Seller is the owner of all of the issued and outstanding shares of Unimast Incorporated, an Ohio corporation (the "Company"); and WHEREAS, the Company and its subsidiaries are engaged in the business of producing, manufacturing and selling certain construction building products for residential and commercial building construction, including steel framing products and related accessories, steel corner beads and trim and vinyl construction accessories (the "Business"); and WHEREAS, Seller desires to sell to Buyer, and Buyer wishes to purchase from Seller, all of the issued and outstanding shares (the "Shares") of capital stock of the Company for the consideration and on the terms set forth in this Agreement; NOW, THEREFORE, in consideration of the foregoing premises and the warranties, representations, covenants and agreements set forth herein, Buyer and Seller, intending to be legally bound, hereby agree as follows: SECTION 1. DEFINITIONS. For purposes of this Agreement, the following terms shall have the following meanings: "Acquired Companies" means the Company and its Subsidiaries, collectively. The Subsidiaries of the Company are Star Metal Products Incorporated, a Delaware corporation ("Star"); Clinch-On Products, Inc., a Delaware corporation ("COPI"); and Vinyl Corp., a Florida corporation ("Vinyl"). "Acquisition Date" means the date of acquisition of each of the Acquired Companies by Seller or the Company, as appropriate, which dates are: for the Company, March 31, 1995; for Star, September 20, 1996; for COPI, January 8, 1998; and for Vinyl, July 19, 1999. "Acquisition Proposal" has the meaning specified in Section 8.4. "Affiliate" has the meaning set forth in Rule 405 under the Securities Act. "Agreement" has the meaning specified in the first paragraph of this document. "Applicable Contract" means any Contract specified in Section 5.15. "Applicable Plan" has the meaning specified in Section 5.21.1. "Assets" means all right, title and interest in and to all of the assets of the Acquired Companies, including, without limitation, (a) all real property, leaseholds and subleaseholds therein, improvements, fixtures and fittings thereon, and easements, rights-of-way and other appurtenances thereto, (b) all tangible personal property (such as machinery, equipment, inventories of raw materials and supplies, manufactured and purchased parts, work-in-process and finished goods, furniture, motor vehicles, tractors, trailers, tools, jigs, dies and office equipment), (c) Intellectual Property of the Acquired Companies, the goodwill associated therewith, licenses and sublicenses granted and obtained with respect thereto, and rights thereunder, (d) accounts, accounts receivable, notes receivable and other receivables, (e) cash and cash equivalents, (f) prepaid assets, (g) marketable securities and (h) deposits. "Assumption Notice" has the meaning specified in Section 12.5. "Best Efforts" means the commercially reasonable efforts that a prudent Person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved as expeditiously as possible. "Business" has the meaning specified in the recitals of this Agreement. "Buyer" has the meaning specified in the first paragraph of this Agreement. "Buyer Ancillary Agreements" means all Contracts, instruments and documents being or to be executed and delivered by Buyer under this Agreement or in connection herewith. "Buyer Failure" means that the Closing shall not have occurred within the time period specified in clause (a) of Section 3 of this Agreement at a time when Seller has notified Buyer in writing that Seller is, and Seller is in fact, ready, willing and able to cause the Closing of the Contemplated Transactions; PROVIDED, HOWEVER, that a Buyer Failure shall not be deemed to have occurred if each of the conditions specified in Section 9 of this Agreement has not been satisfied or waived (for purposes hereof, Closing Date transactions set forth in Sections 4.1, 7.8, 9.4 and 9.8 shall be deemed satisfied in the event that Seller notifies Buyer in writing that Seller is, and Seller is in fact, ready, willing and able to perform such transactions at the Closing). "Buyer Indemnification Threshold" has the meaning specified in Section 12.4.1. "Buyer Indemnified Person" has the meaning specified in Section 12.2. "Buyer Opinion" has the meaning specified in Section 10.4. "Closing" has the meaning specified in Section 3. "Closing Date" means the date and time as of which the Closing actually takes place. "Commonly Controlled Entity" has the meaning specified in Section 5.21.4. 2 "Company Property" means any real or personal property, plant, building, facility, structure, underground storage tank, equipment or unit, or other asset currently or formerly owned, leased or operated by any of the Acquired Companies. "Consent" means any approval, consent, ratification, waiver or other authorization (including any Governmental Authorization). "Contaminant" means any waste, pollutant, hazardous or toxic substance, petroleum, petroleum-based substance or waste, asbestos, asbestos-containing or presumed asbestos-containing matter, urea formaldehyde, polychlorinated biphenyls or any other substance that is listed, defined, designated or classified as, or otherwise determined to be, hazardous, radioactive or toxic, or a pollutant or contaminant under or pursuant to, any Environmental Law. "Contemplated Transactions" means all of the transactions contemplated by this Agreement, including: (a) the sale of the Shares by Seller to Buyer; (b) the performance by Buyer and Seller of their respective covenants and obligations under this Agreement; and (c) Buyer's acquisition and ownership of the Shares and exercise of control over the Acquired Companies. "Contract" means for any Person, any evidence of Indebtedness or any agreement or instrument under or pursuant to which evidence of Indebtedness has been issued, or any other agreement, contract, obligation, promise or undertaking (whether written or oral and whether express or implied) to which such Person is a party or by which such Person or any of its assets or properties are bound. "Copyrights" means United States and foreign copyrights, copyrightable works, and mask work, whether registered or unregistered, and pending applications to register the same. "Covered Employees" has the meaning specified in Section 5.21.4. "Damages" has the meaning specified in Section 12.2. "Denial Notice" has the meaning specified in Section 12.7.2. "Direct Claim" has the meaning specified in Section 12.6. "Direct Environmental Claim" has the meaning specified in Section 12.7.1. "Encumbrance" means any lien, claim, charge, security interest, assessment, adverse claim, levy, mortgage, deed of trust, pledge, hypothecation, assignment, conditional sale or other title retention agreement, preference, prior or other security agreement or preferential arrangement of any kind or nature, and any easement, encroachment, covenant, restriction, right-of-way, defect in title, equitable interest, option, right of first refusal or first option, or other encumbrance of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership. 3 "Environment" means soil, land surface or subsurface strata, surface waters (including navigable waters, ocean waters, streams, ponds, drainage basins and wetlands), groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life, and any other environmental medium or natural resource. "Environmental Arbitrator" has the meaning specified in Section 12.7.7. "Environmental Claim Notice" has the meaning specified in Section 12.7.1. "Environmental Law" includes the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. section 9601 et seq., as amended; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. section 6901 et seq., as amended; the Clean Air Act ("CAA"), 42 U.S.C. section 7401 et seq., as amended; the Clean Water Act ("CWA"), 33 U.S.C. section 1251 et seq., as amended; the Occupational Safety and Health Act, 29 U.S.C. section 655 et seq., as amended (the "OSH Act"), to the extent the OSH Act provisions relate to protection of the Environment; and any international, national, provincial, regional, federal, state, municipal or local law, regulation, order, judgment, decree, permit, opinion, common or decisional law (including, without limitation, principles of negligence and strict liability), requirements of any Governmental Body, lessor or airport authority, or requirement of any agreement, contract or undertaking, any of which regulates established standards or requirements, or concerns liability (including, without limitation, by indemnification or contribution) with respect to the environment, natural resources, safety, or health of humans or other organisms, including the generation, transportation, Release, manufacture, distribution in commerce or use of Contaminants. "Environmental Liabilities" means any cost, Damages, expense, Liabilities, obligation, or other responsibility arising from or under Environmental Law or consisting of or relating to: (a) on-site or off-site presence of Contaminants, and regulation of chemical substances or products; (b) fines, penalties, judgments, awards, settlements, legal or administrative Proceedings, Damages, losses, claims, demands and response, investigative, remedial or inspection costs and expenses arising under Environmental Law; (c) financial responsibility under Environmental Law for cleanup costs or corrective action, including any investigation, cleanup, removal, containment, or other remediation or response actions required by applicable Environmental Law (whether or not such actions have been required or requested by any Governmental Body or any other Person) and for any natural resource Damages; or (d) any other compliance, corrective, investigative, or remedial measures required under Environmental Law. The terms "removal," "remedial," and "response action," include the types of activities covered by CERCLA. "Environmental Property Transfer Acts" means any applicable Legal Requirements that, for environmental reasons, conditions, restricts, prohibits or requires any notification or disclosure with respect to the direct or indirect transfer, sale, lease or closure of any property, including any so-called "Environmental Cleanup Responsibility Acts" or "Responsible Property Transfer Acts." 4 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor law, and regulations and rules issued pursuant to that Act or any successor law. "Escrow Agent" means such Person as Buyer and Seller shall mutually agree to appoint as escrow agent under the Escrow Agreement. "Escrow Agreement" means the escrow agreement dated the Closing Date among the Escrow Agent, Buyer and Seller described in Section 2.3.2. "Expenses" means any and all expenses incurred in connection with investigating, defending or asserting any claim or Proceeding incident to any matter indemnified against hereunder (including, without limitation, court filing fees, court costs, arbitration fees or costs, witness fees, and reasonable fees and disbursements of legal counsel, investigators, expert witnesses, consultants, accountants and other professionals). "Facilities" means any real property, leaseholds or other interests currently or formerly owned or operated by any Acquired Company and any buildings, plants, structures or equipment currently or formerly owned or operated by any Acquired Company; PROVIDED, HOWEVER, THAT, for purposes of the representations and warranties of Seller contained in Section 5.24 of this Agreement, "Facilities" means any real property, leaseholds or other interests currently owned or operated by any Acquired Company and any buildings, plants, structures or equipment currently owned or operated by any Acquired Company. "Financial Statements" has the meaning specified in Section 5.5. "FTC" means the Federal Trade Commission. "GAAP" means generally accepted United States accounting principles, applied on a basis consistent with the basis on which any balance sheet or other financial statements referred to in Section 5.5 were prepared, except as required by GAAP as described in SCHEDULE 5.5. "Governmental Authorization" means any approval, consent, license, permit, Order, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement. "Governmental Body" means any international, national, state, provincial, regional, federal, municipal or local government, agency, department, court or other judicial, administrative, executive, legislative, regulatory, governmental or quasi-governmental authority. "Guaranty" means, at any date, for any Person, all obligations of such Person guaranteeing or in effect guaranteeing any Indebtedness, lease, dividend or other obligation (including the performance) of any other Person (the "primary obligor") in any manner, whether directly or indirectly. "Hazardous Activity" means the distribution, generation, handling, importing, management, manufacturing, processing, production, refinement, Release, storage, transfer, 5 transportation, treatment, or use (including any withdrawal or other use of groundwater) of Contaminants in, on, under, about or from the Facilities or any part thereof or into the Environment. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or any successor law, and regulations and rules issued pursuant to that Act or any successor law. "Indebtedness" means all items which, in accordance with GAAP, would be included in determining total liabilities as shown on the liability side of a balance sheet as at the date Indebtedness is to be determined. "Indemnification Escrow Fund" has the meaning specified in Section 2.3.2. "Indemnification Escrow Period" has the meaning specified in Section 2.3.2. "Indemnitee" has the meaning specified in Section 12.5.1. "Indemnitor" has the meaning specified in Section 12.5.1. "Intellectual Property" means Copyrights, Patent Rights, Trademarks and Trade Secrets and all agreements, contracts, licenses, sublicenses, assignments and indemnities which relate or pertain to any of the foregoing. "IRC" means the Internal Revenue Code of 1986, as amended, or any successor law, and regulations issued by the IRS pursuant to the Internal Revenue Code of 1986, as amended, or any successor law. "IRS" means the United States Internal Revenue Service or any successor agency, and, to the extent relevant, the United States Department of the Treasury. "Justice Department" means the United States Justice Department. "Knowledge of Seller" means that any of the employees of Seller who have represented Seller in respect of any aspect of the Business or in connection with the Contemplated Transactions, Garen W. Smith or Arthur L. Whitman has actual knowledge of, or would reasonably be expected to discover or otherwise be aware of, such matter, after due inquiry. "Leased Real Property" has the meaning specified in Section 5.11.2. "Legal Requirement" means any federal, state, local, municipal, foreign, international, multinational, or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute, or treaty, or any requirement imposed by a Governmental Authorization or Order; PROVIDED, HOWEVER, THAT specifically excluded from the foregoing are any of the foregoing related to zoning. 6 "Liability" means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes. "Management Employees" means any employee of an Acquired Company who holds the position of plant manager or a more senior position or who serves in a corporate management position. "Material Adverse Change" means (a) any change since December 31, 2001 to the Assets, Business, financial condition or results of operations of the Acquired Companies, which change is materially adverse to the Assets, Business, financial condition or results of operations of the Acquired Companies, taken as a whole; or (b) any change since the date of this Agreement to the prospects of the Acquired Companies, which change is materially adverse to the prospects of the Acquired Companies, taken as a whole. "Material Adverse Effect" means any event, condition, circumstance, change or effect that is materially adverse to the Assets, Business, financial condition or results of operations of the Acquired Companies, taken as a whole. "Most Recent Financial Statements" has the meaning specified in Section 5.5 "Most Recent Fiscal Month End" has the meaning specified in Section 5.5. "Most Recent Fiscal Year End" has the meaning specified in Section 5.5. "Objection Notice" has the meaning specified in Section 12.6. "Occupational Safety and Health Law" means the OSH Act, and any rule or regulation promulgated thereunder (including any standard or limit set thereby), or any state statute, rule or regulation (including any standard or limit set thereby) governing occupational safety and health. "Occupational Safety and Health Liabilities" means any cost, Damages, expense, liability, obligation or other responsibility arising from or under Occupational Safety and Health Law and consisting of or relating to: (a) any violation of an Occupational Safety and Health Law; (b) fines, penalties, judgments, awards, settlements, legal or administrative Proceedings, Damages, losses, claims, demands and response, investigative, remedial, or inspection costs and expenses arising under Occupational Safety and Health Law; (c) financial responsibility under Occupational Safety and Health Law for corrective action, including any investigation, removal, or other remediation or response actions required by applicable Occupational Safety and Health Law (whether or not such action has been required or requested by any Governmental Body or any other Person); and (d) any other compliance, corrective, investigative, or remedial measures required under Occupational Safety and Health Law. "Order" means any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, commission, or other Governmental Body or by any arbitrator. 7 "Ordinary Course of Business" means the ordinary course of Business conducted on a basis consistent with past practice (including with respect to quantity, frequency and amount). "Organizational Documents" means: (a) the articles or certificate of incorporation and the bylaws or code of regulations of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) the articles or certificate of organization of a limited liability company and the operating agreement or limited liability company agreement of a limited liability company; (e) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person; and (f) any amendment to any of the foregoing. "Owned Real Property" has the meaning specified in Section 5.11.1. "Owned Software" has the meaning specified in Section 5.12.7. "Patent Rights" means United States and foreign patents, patent applications, continuations, continuations-in-part, divisions, reissues, patent disclosures, inventions (whether or not patentable or reduced to practice) and improvements thereto. "PBGC" has the meaning specified in Section 8.2.1. "Permitted Encumbrances" means, with respect to the Company Property or the Acquired Companies, (i) all zoning, use, building and occupancy laws, ordinances, resolutions, restrictions, orders and regulations of all Governmental Bodies, and all amendments or additions thereto, now in force and effect or that will be in force and effect, affecting the Company Property or the Acquired Companies; (ii) any Taxes, water charges, sewer rents or other governmental charges or assessments and any Encumbrances arising in connection therewith, affecting the Company Property or the Acquired Companies, which are not yet due and payable; (iii) utility easements of record and rights of any utility companies to construct and/or maintain lines, pipes, wires, ducts, cables, poles, conduits and distribution boxes and equipment in, over, through, under and/or upon the Company Property or any portion thereof for the use thereof or service thereto; (iv) Encumbrances of landlords and Encumbrances of carriers, warehousemen, mechanics and materialmen and other similar statutory liens arising in the Ordinary Course of Business for sums not yet due and payable; (v) the exceptions listed, and state of facts shown, in the title policies, reports, commitments and surveys described in Section 7.6 and received by Buyer prior to execution of this Agreement; (vi) matters filed of record after the execution of this Agreement by any action or inaction by Seller or any Acquired Company, taken or foregone without Buyer's prior written consent, and which matter does not materially impair the marketability of or materially detract from the value of or materially impair the existing or substantially similar use of, the Owned Real Property, or materially impair the legality, validity or enforceability of the lease or materially impair the existing or substantially similar use of, the Leased Real Property; (vii) the exceptions listed, and state of facts shown, in any title reports, commitments and surveys received after the execution of this Agreement which exceptions or state of facts shown do not materially impair the marketability of or materially detract from the value of or materially impair the existing or substantially similar use of, the Owned Real 8 Property, or materially impair the legality, validity or enforceability of the lease or materially impair the existing or substantially similar use of, the Leased Real Property; and (viii) any document referenced in SCHEDULE 5.11.1 or SCHEDULE 5.11.2. "Person" means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Body. "Personal Property" has the meaning specified in Section 5.13.1. "Pittsburgh-Canfield Obligation" shall mean the $15 million amount advanced by the Company (the "PCC Indebtedness") as of June 29, 2001, to purchase the assets of Pittsburgh-Canfield Corporation ("PCC") from WPC (i) PLUS any amounts advanced or loaned to, invested in or disbursed for the benefit of PCC by any of the Acquired Companies, and (ii) LESS cash receipts of PCC which were applied against the PCC Indebtedness or used to repay any amounts advanced or loaned to, invested in or disbursed for the benefit of PCC by any of the Acquired Companies, in each case from and after June 29, 2001 through the Closing Date. By way of example, the calculation of the Pittsburgh-Canfield Obligation as of the Most Recent Fiscal Month End is set forth on EXHIBIT 1. "Proceeding" means any action, arbitration, audit, hearing, formal investigation, litigation or suit (whether civil, criminal or administrative) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator. "Purchase Price" has the meaning specified in Section 2.2.1. "Related Person" means (i) any director, officer, stockholder or Affiliate of Seller or the Acquired Companies, (ii) any Relative (or Relative of the spouse) of such director, officer, stockholder or Affiliate of the Seller or the Acquired Companies or (iii) any Affiliate of any of the foregoing Persons. "Relative" shall mean any child, stepchild, parent, spouse, sibling, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive relationships. "Release" means any release, spill, emission, leaking, pumping, pouring, emptying, dumping, escaping, injection, deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant into the Environment or into or out of any Company Property, including the movement of Contaminants through or in the air, soil, surface water, ground water or Company Property. "Remedial Plan" has the meaning specified in Section 12.7.3. "Representative" means with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants and financial advisors. "Seller" has the meaning specified in the first paragraph of this Agreement. 9 "Seller Ancillary Agreements" means all Contracts, instruments and documents being or to be executed and delivered by Seller under this Agreement or in connection herewith. "Seller Failure" means that the Closing shall not have occurred within the time period specified in clause (a) of Section 3 of this Agreement at a time when Buyer has notified Seller in writing that Buyer is, and Buyer is in fact, ready, willing and able to cause the Closing of the Contemplated Transactions; PROVIDED, HOWEVER, THAT a Seller Failure shall not be deemed to have occurred if each of the conditions specified in Section 10 of this Agreement has not been satisfied or waived (for purposes hereof, Closing Date transactions set forth in Section 4.2, 10.4 and 10.7 shall be deemed satisfied in the event that Buyer notifies Seller in writing that Buyer is, and Buyer is in fact, ready, willing and able to perform such transactions at the Closing). "Seller" has the meaning specified in the recitals of this Agreement. "Seller Indemnification Threshold" has the meaning specified in Section 12.4.2. "Seller Indemnified Person" has the meaning specified in Section 12.3. "Seller Opinion" has the meaning specified in Section 9.4. "Shares" has the meaning specified in the recitals of this Agreement. "Software" means computer software programs and software systems, including all databases, compilations, tool sets, compilers, higher level or "proprietary" languages, related documentation and materials, whether in source code, object code or human readable form. "Subsidiary" means, with respect to any Person (the "Owner"), any corporation or other Person of which securities or other interests having a majority equity interest of such corporation or other Person, having the power to elect a majority of that corporation's or other Person's board of directors or similar governing body, are held by the Owner or one or more of its Subsidiaries; when used without reference to a particular Person, "Subsidiary" means a Subsidiary of the Company. "Tax" means any federal, state, local or foreign tax (including any income, gross receipts, capital gains, license, lease, service, service use, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under IRC ss. 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, ad valorem, transfer, registration, value added, alternative or add-on minimum, estimated or other tax of any kind whatsoever), levy, assessment, tariff, duty, deficiency or other fee, including any interest, fine, penalty or addition thereto, whether disputed or not, imposed, assessed or collected by or under the authority of any Governmental Body or payable pursuant to any Tax Sharing Arrangement or any other Contract relating to sharing or payment of such tax, levy, assessment, tariff, duty, deficiency or other fee or otherwise payable as a result of being a member of an affiliated, consolidated, combined or unitary group. "Tax Return" means any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or 10 required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Legal Requirement relating to any Tax. "Tax Sharing Agreement" means the tax sharing agreement between Seller and the Company dated November 24, 1998. "Tax Sharing Arrangement" means any written or unwritten agreement or arrangement for the allocation or payment of Tax liabilities or payment for Tax benefits with respect to a consolidated, combined or unitary Tax Return which Tax Return includes one or more of the Acquired Companies. "Terminating Party" has the meaning specified in Section 13.1. "Third Party Claim" has the meaning specified in Section 12.5.1. "Third Party Claim Notice" has the meaning specified in Section 12.5.1. "Trademarks" means United States, state and foreign trademarks, service marks, logos, trade dress and trade names (including all assumed or fictitious names under which any Acquired Company is conducting business or has within the previous five years conducted business), corporate names (including, with respect to each of the foregoing, all of the goodwill associated therewith), whether registered or unregistered, and pending applications to register the foregoing. "Trade Secrets" means confidential information, ideas, compositions, trade secrets, know-how, manufacturing and production processes and techniques, research information, drawings, specification, designs, plans, improvements, concepts, methods, processes, formulae, reports, data, customer and supplier lists, mailing lists, financial, business and marketing plans, or other proprietary information. "WHX Note" means that certain Promissory Note in the original principal amount of $8,204,000 issued by the Company to Seller on November 24, 1998. "WPC" means Wheeling-Pittsburgh Corporation and its Subsidiaries. "Zoning Legal Requirement" means any local, municipal or other administrative order, law, ordinance, rule, regulation, statute, or any requirement imposed by a Governmental Authorization or Order related to zoning. SECTION 2. PURCHASE AND SALE OF SHARES. 2.1. TRANSFER OF SHARES. Subject to the terms and conditions of this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell, transfer and convey to Buyer all of the Shares of the Company at the Closing, free and clear of all Encumbrances other than those described in SCHEDULE 2.1. 11 2.2. PURCHASE PRICE. 2.2.1. At the Closing, Buyer shall deliver cash in the amount of $95 million (the "Purchase Price"), subject to adjustment as provided in Section 2.2.2. 2.2.2. In the event that the Closing shall not have occurred on or prior to the time set forth in clause (a) of Section 3 of this Agreement, then (a) in the event of a Buyer Failure, the Purchase Price shall be increased by $5 million and (b) in the event of a Seller Failure, the Purchase Price shall be reduced by $5 million. 2.3. DELIVERY OF PURCHASE PRICE. The amount represented by the Purchase Price shall be delivered by Buyer as follows: 2.3.1. Buyer shall pay to Seller the amount of $92.5 million by wire transfer of immediately available funds in accordance with written instructions delivered to Buyer from Seller at least two business days prior to the Closing; and 2.3.2. Buyer shall deliver the amount of $2.5 million (the "Indemnification Escrow Fund") to the Escrow Agent by wire transfer of immediately available funds to be held by the Escrow Agent subject to the terms of an escrow agreement substantially in the form included as EXHIBIT 2.3.2 to this Agreement (the "Escrow Agreement"), as security to protect Buyer against any Damages which Buyer shall incur during the three years after the Closing (the "Indemnification Escrow Period") in respect of which Damages Seller is obliged to indemnify Buyer pursuant to the terms of this Agreement. Effective on the second anniversary of the Closing Date, the amount of the available Indemnification Escrow Fund in respect of the remainder of the Indemnification Escrow Period shall be reduced to $1.25 million, subject to the terms and conditions of the Escrow Agreement. SECTION 3. CLOSING. Subject to the terms and conditions hereof, the parties agree to cause the closing of the Contemplated Transactions (the "Closing") to take place at the offices of Buyer's counsel, Vorys, Sater, Seymour and Pease LLP, at 52 East Gay Street, Columbus, Ohio, or at such place as is mutually agreeable to the parties hereto, at 11:00 a.m. (local time) on the later of (a) the date that is five business days following the expiration or termination of all applicable waiting periods under the HSR Act and any other applicable antitrust laws; or (b) such other time and place as mutually agreed upon by the parties hereto. SECTION 4. DELIVERIES AT CLOSING. The following transactions shall occur at the Closing, all of which shall be deemed to occur simultaneously. 4.1. DELIVERIES BY SELLER. 4.1.1. Seller shall deliver to Buyer a certificate or certificates, duly endorsed in blank or with a separate stock power duly endorsed in blank attached, representing all of the issued and outstanding Shares; PROVIDED, HOWEVER, THAT if Encumbrances exist on the Closing 12 Date as described in SCHEDULE 2.1, the certificate(s) representing the Shares shall continue to be held by the agent of the lenders in accordance with the terms of the collateral documents under the credit agreement described in such SCHEDULE 2.1 and Seller shall deliver to Buyer evidence that such agent so holds such certificate(s) and a separate stock power in respect of the transfer of the Shares to Buyer duly endorsed in blank. The Shares shall be transferred free and clear of any Encumbrances other than those described in SCHEDULE 2.1. 4.1.2. Seller shall deliver to Buyer the original corporate minute books and stock records of each Acquired Company. Seller shall also deliver to Buyer the original share certificates evidencing that Star, COPI and Vinyl are wholly-owned Subsidiaries of the Company; PROVIDED, HOWEVER, THAT if Encumbrances exist on the Closing Date as described in SCHEDULE 2.1, such share certificates shall continue to be held by the agent of the lenders in accordance with the terms of the collateral documents under the credit agreement described in such SCHEDULE 2.1 and Seller shall deliver to Buyer evidence that such agent so holds such share certificates. 4.1.3. Seller shall deliver to Buyer the Seller Opinion. 4.1.4. Seller shall (a) deliver to Buyer a certificate, dated the Closing Date and signed by an authorized officer of Seller to the effect that all representations and warranties made by Seller to Buyer in this Agreement or any Seller Ancillary Agreement or certificate delivered to Buyer on the Closing Date shall be true and correct in all material respects at and as of the Closing Date (other than such representations and warranties as are made as of another date which shall be true and correct as of such date) and all of the agreements, covenants and obligations to be performed on the part of the Seller under this Agreement on or before the Closing Date have been duly performed and (b) cause to be delivered by the Company a certificate signed by an executive officer of the Company to the effect that no Material Adverse Change has occurred to the Assets, properties or Business of the Acquired Companies since the date of this Agreement, giving effect to the adjustments set forth in the Financial Statements. 4.1.5. Seller shall cause to be delivered to Buyer the resignations of, or evidence of the removal of, the officers and directors of the Company and of each of the other Acquired Companies designated by Buyer. 4.1.6. Seller shall deliver to Buyer a certificate of good standing of Seller, as of the most recent practicable date, from the Secretary of State of the State of Delaware. Seller shall also deliver to Buyer a certificate of good standing of each of the Acquired Companies from the Secretary of State of the state of incorporation for such Acquired Company and of each jurisdiction in which the character of the properties owned or leased by or the nature of the activities of such Acquired Company requires it to be qualified as a foreign corporation. 4.1.7. Seller shall deliver to Buyer the certificate of an officer of Seller certifying (a) the adoption and copies of resolutions of the Board of Directors of Seller approving the Contemplated Transactions and (b) the incumbency of the officers of Seller who are executing this Agreement or any of the Seller Ancillary Agreements or certificates contemplated hereunder. 13 4.1.8. Seller shall deliver to Buyer the certificate of an officer of each Acquired Company certifying and attaching thereto true and complete copies of the Organizational Documents of the Acquired Company (the articles or certificate of incorporation attached thereto shall be certified by the applicable Secretary of State). 4.1.9. Seller shall deliver to Buyer evidence of the receipt of the Consents, as described in Section 9.6. 4.1.10. Seller shall deliver to Buyer evidence of the payment of the Pittsburgh-Canfield Obligation as contemplated by Section 7.8 of this Agreement. 4.1.11. Seller shall deliver to Buyer a counterpart of the Escrow Agreement, duly executed on behalf of Seller. 4.2. DELIVERIES BY BUYER. 4.2.1. Buyer shall deliver the amount represented by the Purchase Price, in the manner described in Section 2.3. 4.2.2. Buyer shall deliver to Seller the Buyer Opinion. 4.2.3. Buyer shall deliver to Seller a certificate, dated the Closing Date and signed by an authorized officer of Buyer to the effect that all representations and warranties made by Buyer to Seller in this Agreement or any Buyer Ancillary Agreement or certificate delivered to Seller on the Closing Date shall be true and correct in all material respects at and as of the Closing Date (other than such representations and warranties as are made of another date which shall be true and correct as of such date) and all of the agreements, covenants and obligations to be performed on the part of Buyer under this Agreement on or before the Closing Date have been duly performed. 4.2.4. Buyer shall deliver to Seller a certificate of good standing of Buyer, as of the most recent practicable date, from the Secretary of State of the state of incorporation of Buyer. 4.2.5. Buyer shall deliver to Seller the certificate of an officer of Buyer certifying (a) the adoption and copies of resolutions of the Board of Directors of Buyer approving the Contemplated Transactions and (b) the incumbency of officers of Buyer who are executing this Agreement or any of the Buyer Ancillary Agreements or certificates contemplated hereunder. 4.2.6. Buyer shall deliver to Seller a counterpart of the Escrow Agreement, duly executed on behalf of Buyer and the Escrow Agent. 14 SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants to Buyer as follows: 5.1. ORGANIZATION AND AUTHORITY OF SELLER; NO CONFLICT. 5.1.1. Seller is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Seller has full corporate power and authority to conduct its business as it is now being conducted. Seller has full corporate power and authority to execute, deliver and perform this Agreement and each Seller Ancillary Agreement to which Seller is a party. This Agreement and each Seller Ancillary Agreement have been duly approved and authorized by all requisite corporate action. This Agreement constitutes the valid and legally binding obligation of Seller, enforceable against Seller in accordance with its terms. Upon the execution and delivery of the Seller Ancillary Agreements to which Seller is a party, such agreements will constitute the valid and legally binding obligations of Seller, enforceable against Seller in accordance with their respective terms. 5.1.2. Except as set forth in SCHEDULE 5.1.2, neither the execution and delivery of this Agreement or any of the Seller Ancillary Agreements nor the consummation or performance of this Agreement, any of the Seller Ancillary Agreements or any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time or both): (a) contravene, conflict with or result in a violation of (i) any provision of the Organizational Documents of Seller or any of the Acquired Companies or (ii) any resolution adopted by the board of directors (or committees thereof) or the stockholders of Seller or any of the Acquired Companies; (b) contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any material Legal Requirement or any material Order to which Seller, any of the Acquired Companies or any of the Assets owned or used by any of the Acquired Companies may be subject; (c) contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any material Governmental Authorization that is held by any of the Acquired Companies or that otherwise relates to the Business of, or the Assets owned or used by, any of the Acquired Companies; (d) contravene, conflict with, or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify, any material Applicable Contract; or (e) result in the imposition or creation of any Encumbrance upon or with respect to any of the Assets owned or used by any of the Acquired Companies. Except as provided under the HSR Act and except as set forth in SCHEDULE 5.1.2, neither Seller nor any of the Acquired Companies is or will be required to give any notice to or obtain any Consent from any Person (including from any Governmental Body) in connection with the execution and delivery of this Agreement, any of the Seller Ancillary Agreements or the consummation or performance of any of the Contemplated Transactions. 5.2. ORGANIZATION AND QUALIFICATION OF EACH ACQUIRED COMPANY. SCHEDULE 5.2 contains a complete and accurate list for each Acquired Company of its name, its jurisdiction of incorporation and other jurisdictions in which it is authorized to do business. Each Acquired Company is a corporation duly incorporated, validly existing and in good standing under the 15 laws of its jurisdiction of incorporation, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities makes such qualification necessary, except where such failure would not cause a Material Adverse Effect. No other jurisdiction has demanded or requested in writing that any such Acquired Company is required so to qualify. Each Acquired Company has full power and authority to conduct its Business as it is now being conducted, to own, use or lease the properties and Assets that it purports to own, use or lease, and to perform all its obligations under the Applicable Contracts. 5.3. CAPITALIZATION OF EACH ACQUIRED COMPANY. SCHEDULE 5.3 sets forth (a) the name of each Acquired Company, (b) the authorized capital stock of each Acquired Company and (c) the number of issued and outstanding shares of capital stock of each Acquired Company. All of the issued and outstanding shares of capital stock of each Acquired Company have been validly issued, and are fully paid and nonassessable. Except as set forth in SCHEDULE 5.3, Seller owns all of the outstanding shares of the Company, beneficially and of record, free and clear of all Encumbrances, and has the full right, power, legal capacity and authority to sell, transfer and deliver the Shares. Except as set forth in SCHEDULE 5.3, the delivery of the certificate(s) evidencing the Shares purchased hereunder by Buyer will transfer good and valid title to the Shares, free and clear of all Encumbrances. Except as set forth in SCHEDULE 5.3, the Company owns all of the outstanding shares of each of the Acquired Companies (other than the Company), beneficially and of record, free and clear of all Encumbrances. Other than in connection with the Contemplated Transactions, there are no outstanding subscriptions, options, warrants, calls, rights (including unsatisfied preemptive rights), convertible securities, obligations to make capital contributions or advances, or voting trust arrangements, proxies, stockholders' agreements or other agreements, commitments or understandings of any character relating to the issued or unissued capital stock of any Acquired Company or securities exchangeable for or evidencing the right to subscribe for any shares of such capital stock, or any other voting, equity or ownership interest in any Acquired Company or otherwise obligating Seller or any Acquired Company to issue, transfer or sell any of such capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or similar rights with respect to any Acquired Company or any of its securities. There are no outstanding obligations of the Company or any other Acquired Company to repurchase, redeem or otherwise acquire any of its securities. Except as set forth in SCHEDULE 5.3, no Acquired Company (a) owns, directly or indirectly, of record or beneficially, or has any Contract to acquire, any equity securities or other securities of any Person (other than equity securities of other Acquired Companies); (b) is a partner or a participant in any joint venture, limited liability company or partnership of any kind; (c) has any outstanding investment in or advance to any other Person otherwise than by credit extended in the Ordinary Course of Business; or (d) has any agreement or obligation to loan funds or provide capital to any partnership, joint venture, Subsidiary or other Person. 5.4. BOOKS AND RECORDS. 5.4.1. The books of account of each of the Acquired Companies for the period since the Most Recent Fiscal Year End are true and complete in all material respects in respect of such period and accurately present and reflect in all material respects all the transactions therein described. 16 5.4.2. The minute books of each of the Acquired Companies accurately present and reflect all of the transactions therein described. The minute books of each of the Acquired Companies contain accurate and complete records, in respect of the period beginning on the Acquisition Date of such Acquired Company, of all meetings held of, and actions by written consent taken by, the shareholders, the Board of Directors and the committees of the Board of Directors of such Acquired Company, and no meeting has been held or action by written consent taken by the shareholders, the Board of Directors or committees of the Board of Directors of such Acquired Company at any time which is not reflected in such minute books. 5.4.3. The stock record books of each of the Acquired Companies are true and complete in respect of the period beginning on the Acquisition Date of such Acquired Company, and accurately present and reflect the stock ownership in respect of such Acquired Company. 5.4.4. At the Closing, the existing books of account, minute books and stock record books of the Acquired Companies will be in the possession of the Acquired Companies or delivered to Buyer. 5.5. FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 5.5 are the following financial statements (collectively, the "Financial Statements"): (a) audited consolidated financial statements for the fiscal years ended December 31, 1999, 2000 and 2001 (with December 31, 2001 being referred to as the "Most Recent Fiscal Year End") for the Company and the other Acquired Companies; and (b) unaudited interim consolidated financial statements (the "Most Recent Financial Statements") as of and for the four months ended April 30, 2002 (the "Most Recent Fiscal Month End") for the Company and the other Acquired Companies. The audited Financial Statements (including the notes thereto) have been prepared in accordance with GAAP, present fairly the financial condition of the Acquired Companies on a consolidated basis as of such dates and the results of operations of the Acquired Companies on a consolidated basis for such periods. The unaudited Financial Statements have been prepared on a consistent basis with past practices for monthly statements, present fairly the consolidated financial condition of the Acquired Companies as of such date and the results of operations of the Acquired Companies for such period on a consolidated basis, subject to normal year end adjustments and accounting adjustments in connection with the presentation of a stand-alone financial statement as described in SCHEDULE 5.5. 5.6. EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since the Most Recent Fiscal Year End, there has not been any Material Adverse Change. Since the Most Recent Fiscal Year End, except as set forth in SCHEDULE 5.6 or as provided in this Agreement, each of the Acquired Companies has operated in the Ordinary Course of Business. Without limiting the generality of the foregoing, since the Most Recent Fiscal Year End, except as set forth in SCHEDULE 5.6 or as otherwise provided in this Agreement: (a) the Acquired Companies have not sold, leased, transferred or assigned any of their assets, tangible or intangible, with a fair market value in excess of $10,000 in respect of any individual asset and $50,000 in the aggregate in respect of all such individual assets, other than for a fair consideration in the Ordinary Course of Business and have not incurred any Liability other than in the Ordinary Course of Business; (b) the Acquired Companies have not entered into any Applicable Contract, the terms of which cause payments in excess of $10,000 in respect of any individual Applicable Contract and $50,000 in the aggregate in respect of all such individual Applicable Contracts, outside the 17 Ordinary Course of Business or capital expenditures identified in the capital expenditures budget set forth on SCHEDULE 5.13.3; (c) the Acquired Companies have not accelerated, delayed or postponed the payment of accounts payable and other Liabilities with a fair market value in excess of $10,000 in respect of any individual account payable or other Liability and $50,000 in the aggregate in respect of all such individual accounts payable or other Liabilities, outside the Ordinary Course of Business or the collection of notes or accounts receivable outside the Ordinary Course of Business; (d) the Acquired Companies have maintained inventory (including work-in-process) at levels consistent with their past practices in the Ordinary Course of Business; (e) the Acquired Companies have not accelerated, delayed or postponed the acquisition, repair or replacement of machinery, equipment and other assets used in connection with the business of the Acquired Companies in the Ordinary Course of Business; (f) the Acquired Companies have not canceled, compromised, waived or released any right or claim (or series of related rights and claims) outside the Ordinary Course of Business; (g) the Acquired Companies have not experienced any material damage, destruction or loss (whether or not covered by insurance) to the Assets; (h) the Acquired Companies have not entered into any employment Contract (other than as may be implied by law) or collective bargaining agreement or modified the terms of any existing employment Contract or collective bargaining agreement outside the Ordinary Course of Business; (i) the Acquired Companies have not made any other change in employment terms for any of their respective directors, officers or Management Employees or any class or group of other employees, in each case outside the Ordinary Course of Business; (j) the Acquired Companies have not made, or agreed to make, any payment of cash or distribution of assets or property of any kind to Seller or any Affiliate of Seller (other than an Acquired Company); (k) the Acquired Companies have not made any change in the accounting principles and practices used by the Acquired Companies from those applied in the preparation of the Financial Statements; (l) the Acquired Companies have not prepared or filed any Tax Return inconsistent with past practice or, on any such Tax Return, taken any position, made any election or adopted any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods (including, without limitation, positions, elections or methods which would have the effect of deferring income to periods for which Buyer is liable or accelerating deductions to periods for which Seller is liable); and (m) the Acquired Companies have not paid, agreed to pay or incurred any Liability for any payment for any contribution to any Applicable Plan other than in the Ordinary Course of Business or paid any bonus to any employees other than in the Ordinary Course of Business or granted any increase in compensation to any employee other than in the Ordinary Course of Business or made any increase or enhancement of benefits in any of the Applicable Plans other than in the Ordinary Course of Business. 5.7. UNDISCLOSED LIABILITIES. Except as set forth in SCHEDULE 5.7, the Acquired Companies do not have any Liabilities, except for (a) Liabilities set forth on the face of the balance sheet included in the Most Recent Financial Statements and (b) current Liabilities which have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business. 5.8. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS. 5.8.1. Except as set forth in SCHEDULE 5.8: (a) each Acquired Company is and has been in compliance in all material respects with each Legal Requirement that is or was applicable to it or to the conduct or operation of the Business or the ownership or use of any of 18 its Assets; and (b) no Acquired Company has received any written notice or other formal communication from any Governmental Body or any other Person regarding any actual or alleged violation of, or failure to comply with, any material Legal Requirement. 5.8.2. SCHEDULE 5.8 contains a complete and accurate list of each material Governmental Authorization that is held by an Acquired Company or that otherwise is required to be held by the Acquired Companies in connection with the Business or any of the Assets owned or used by the Acquired Companies. Each Governmental Authorization listed or required to be listed in SCHEDULE 5.8 is valid and in full force and effect. The Governmental Authorizations listed in SCHEDULE 5.8 collectively constitute all of the Governmental Authorizations necessary, as of the Closing Date, to permit the Acquired Companies to lawfully conduct and operate the Business in the manner they currently conduct and operate the Business and to permit the Acquired Companies to own and use the Assets in the manner in which they currently own and use the Assets, in each case in all material respects. Except as set forth on SCHEDULE 5.8, the purchase of the Shares by Buyer shall not invalidate any such Governmental Authorization or otherwise require any filing with or disclosure to any Governmental Body in order to maintain the validity of, or keep in full force and effect, the Governmental Authorizations. 5.9. LEGAL PROCEEDINGS; ORDERS. Except as set forth in SCHEDULE 5.9, there is no pending Proceeding: (a) that has been commenced by or against an Acquired Company or that otherwise directly relates to or affects any of the Assets owned or used by an Acquired Company; or (b) that challenges, or that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions. To the Knowledge of Seller, except as set forth in SCHEDULE 5.9, no such Proceeding has been threatened and there are no facts or circumstances reasonably likely to result in such a Proceeding. Except as set forth in SCHEDULE 5.9: (x) there is no Order to which an Acquired Company, or any of the Assets owned or used by an Acquired Company, is subject; and (y) no officer, director, agent or employee of any Acquired Company is subject to any Order that prohibits such officer, director, agent or employee from engaging in or continuing any conduct, activity, or practice relating to the Business. Seller has furnished to Buyer complete copies of all attorney representation letters provided to any of the Acquired Companies or their auditors with respect to the Financial Statements for the Most Recent Fiscal Year End and the Most Recent Fiscal Month End. 5.10. TAXES. 5.10.1. Except as set forth in SCHEDULE 5.10, (a) all Tax Returns required to be filed on or before the Closing Date (taking into account permitted extensions) by or on behalf of an Acquired Company have been or will be timely and duly filed; (b) all items of income, gain, loss, deduction and credit or other items required to be included in each such Tax Return have been so included and all information provided in each such Tax Return is true, correct and complete in all material respects; (c) all Taxes owed by or on behalf of an Acquired Company which have become due with respect to the period covered by each such Tax Return have been timely paid in full; (d) the Acquired Companies have made, or will make on or before the Closing Date, adequate provision in accordance with GAAP and the Tax Sharing Agreement for all Taxes payable by or on behalf of the Company for any period ending on or before the Closing Date for which no Tax Return has been filed and all payments due Seller under the Tax Sharing 19 Agreement; (e) all withholding Tax requirements imposed on or with respect to an Acquired Company or for which an Acquired Company may be liable have been satisfied in full; and (f) no penalty, interest or other charge is or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax. 5.10.2. None of the Tax Returns of or relating to an Acquired Company has been audited by a Governmental Body except as set forth in SCHEDULE 5.10 and except for Tax Returns for periods for which the statute of limitations has expired. 5.10.3. There is no claim against an Acquired Company for any Taxes, and no assessment, deficiency or adjustment has been asserted or proposed with respect to any Tax Return of or relating to an Acquired Company other than those disclosed in SCHEDULE 5.10. To the Knowledge of Seller, there are no facts or circumstances reasonably likely to result in any assessment, deficiency or adjustment with respect to any Tax Return of or relating to an Acquired Company. 5.10.4. Except as set forth in SCHEDULE 5.10, there is not in force any extension of time with respect to the due date for the filing of any Tax Return of or relating to an Acquired Company or any waiver or agreement for any extension of time for the assessment or payment of any Tax of or with respect to an Acquired Company. 5.10.5. Except as set forth in SCHEDULE 5.10, none of the Acquired Companies has any Liability for the Taxes of any Person as a transferee or successor, by Contract, pursuant to Section 1.1502-6 of the IRC (or any comparable state, local or foreign statute or regulation) or otherwise. 5.10.6. There are no liens for Taxes (other than for current Taxes not yet due and payable) upon the assets of any Acquired Company. 5.10.7. All Tax Sharing Arrangements and Tax indemnity arrangements relating to any Acquired Company (other than this Agreement) will terminate prior to the Closing Date, and no Acquired Company will have any Liability thereunder on or after the Closing Date, except as set forth in SCHEDULE 5.10. 5.10.8. None of the Acquired Companies is or has been a United States real property holding corporation (as defined in Section 897(c)(2) of the IRC) during the applicable period specified in Section 897(c)(1)(A)(ii) of the IRC. 5.10.9. None of the Assets is "tax-exempt use property" within the meaning of Section 168(h) of the IRC. Except as set forth in SCHEDULE 5.10, none of the Assets directly or indirectly secures any debt the interest on which is tax exempt under Section 103(a) of the IRC. 5.10.10. Seller has disclosed on its consolidated federal income Tax Returns all positions taken therein relating to an Acquired Company that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the IRC. 20 5.11. REAL PROPERTY. 5.11.1. SCHEDULE 5.11.1 contains a brief description of (a) each parcel of real property owned by an Acquired Company (the "Owned Real Property") (showing the record title holder, legal description and the street address commonly used when describing the Owned Real Property and such other information as is contained thereon) and (b) each option held by an Acquired Company to acquire any real property. Except as set forth in SCHEDULE 5.11.1, each Acquired Company has title in fee simple to all Owned Real Property held of record by such Acquired Company and to all buildings, structures and other improvements thereon, in each case free and clear of all Encumbrances, except for Permitted Encumbrances. Except as set forth on SCHEDULE 5.11.1, each Acquired Company has fulfilled and performed all its obligations in all material respects, and all obligations binding upon any Owned Real Property, under each of the Encumbrances to which any Owned Real Property is subject, and no Acquired Company is in breach or default under, or in violation of or noncompliance with, any such Encumbrances where such breach, default, violation or non-compliance would materially impair the marketability of or materially detract from the value of or materially impair the existing or substantially similar use of, the Owned Real Property affected thereby, and to the Knowledge of Seller, no event has occurred and no condition or state of facts exists which, with the passage of time or the giving of notice or both, would constitute such a breach, default, violation or noncompliance. Except as set forth on SCHEDULE 5.11.1, each Owned Real Property has received all material Governmental Authorizations required in connection with the operation thereof and has been operated and maintained in all material respects in accordance with all Legal Requirements and, to the Knowledge of Seller, all Zoning Legal Requirements. The consummation of the Contemplated Transactions will not result in any material breach or material violation of, material default under or noncompliance with, or any forfeiture or impairment of any material rights under, any Encumbrance to which any Owned Real Property is subject, or require any consent, approval or act of, or the making of any filing with, any Person party to or benefited by or possessing the power or authority to exercise rights or remedies under or with respect to any such Encumbrance. To the Knowledge of Seller, all public utilities currently utilized at each Owned Real Property give adequate service to the Owned Real Property, and, except as set forth in SCHEDULE 5.11.1, the Owned Real Property has unlimited access to and from publicly dedicated streets, the responsibility for maintenance of which has been accepted by the appropriate Governmental Body. Complete and correct copies of the following documents, to the extent in Seller's or any Acquired Company's possession, have heretofore been delivered by Seller to Buyer: deeds, instruments evidencing Encumbrances, commitments for the issuance of title insurance, title opinions, surveys, appraisals, and policies of title insurance currently in force. 5.11.2. SCHEDULE 5.11.2 sets forth a list and brief description of each lease or similar agreement (showing the parties thereto, and the location and the legal description (if a legal description was referenced as an exhibit to the respective lease or in any leasehold policy of title insurance) of the real property covered by, and the space occupied under, such lease or other agreement and such other information as is contained thereon) under which (a) an Acquired Company is lessee or sublessee of, or holds, uses or operates, any real property owned by any third Person (the "Leased Real Property") or (b) an Acquired Company is lessor of any of the Owned Real Property. Except as set forth in SCHEDULE 5.11.2, each Acquired Company has the right to quiet enjoyment of all the Leased Real Property described in such Schedule for the full term of each such lease or similar agreement (and any renewal option) relating thereto so long as 21 the Acquired Company is not in default thereunder. To the Knowledge of Seller, the leasehold or other interest of the Acquired Company in such Leased Real Property is not subject or subordinate to any Encumbrance, except for Permitted Encumbrances and except as set forth on SCHEDULE 5.11.2. To the Knowledge of Seller, except as set forth on SCHEDULE 5.11.2 and except for Permitted Encumbrances, there are no agreements or other documents governing or affecting the occupancy or tenancy of any of the Leased Real Property by an Acquired Company or of any of the Owned Real Property by any Person other than an Acquired Company. With respect to each lease and similar agreement listed in SCHEDULE 5.11.2, except as set forth on SCHEDULE 5.11.2: (a) the lease is legal, valid, binding, enforceable and is in full force and effect as against the respective Acquired Company, and to the Knowledge of Seller, as against all other parties thereto; (b) no Acquired Company, and to the Knowledge of Seller, no other party is in material breach or material default, and no event has occurred which, with notice or lapse of time, would constitute a material breach or material default or permit termination, modification or acceleration thereunder; (c) no Acquired Company, and to the Knowledge of Seller, no other party to the lease has repudiated any provision thereof; (d) there are no disputes or forbearance programs in effect as to the lease where such dispute or forbearance program would materially impair the legality, validity or enforceability of the lease or materially impair the existing or substantially similar use of, the Leased Real Property affected thereby; (e) no Acquired Company has assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold; (f) all facilities leased or subleased thereunder have received all material Governmental Authorizations required in connection with the operation thereof and have been operated and maintained in accordance with all material Legal Requirements and, to the Knowledge of Seller, all material Zoning Legal Requirements; (g) to the Knowledge of Seller, all facilities leased thereunder are supplied with public utilities that give adequate service to the Leased Real Property, and the Leased Real Property has unlimited access to and from publicly dedicated streets, the responsibility for maintenance of which has been accepted by the appropriate Governmental Body; (h) no rights or interests of any Acquired Company under the leases or subleases have been waived, released or subordinated by affirmative action other than by execution of a lease which by its terms is automatically subordinate to a Permitted Encumbrance; and (i) no consent of the lessor is required in connection with the Contemplated Transactions. Complete and correct copies of the following documents, to the extent in Seller's or any Acquired Company's possession, have heretofore been delivered by Seller to Buyer: deeds, instruments evidencing Encumbrances, commitments for the issuance of title insurance, title opinions, surveys, appraisals and any policies of title insurance currently in force. 5.11.3. Except as set forth on SCHEDULE 5.11.3, neither Seller nor any Acquired Company has received any written notice or other formal communication that either the whole or any part of the Owned Real Property or any Leased Real Property is subject to any Proceeding for condemnation, eminent domain or other taking by any public authority, and, to the Knowledge of Seller, no such condemnation or other taking is threatened. 5.11.4. Neither Seller nor any Acquired Company has received any written notice or other formal communication from any Governmental Body concerning any actual or contemplated public improvements made or to be made by any Governmental Body, the costs of which are or are to become special assessments and a lien upon any Owned Real Property or Leased Real Property, and, to the Knowledge of Seller, no such public improvement is threatened. 22 5.11.5. SCHEDULE 5.11.5 contains a complete list of any real property previously owned, leased or operated by an Acquired Company since the Acquisition Date for such Acquired Company, which is no longer owned, leased or operated by an Acquired Company. 5.12. INTELLECTUAL PROPERTY. 5.12.1. SCHEDULE 5.12 contains a list and description (showing in each case any product, device, process, service, business or publication covered thereby, the registered or other owner and number, if any) of all intellectual property including Copyrights, Patent Rights and Trademarks owned by, licensed to or used by any Acquired Company. 5.12.2. SCHEDULE 5.12 contains a list and description (showing in each case any owner, licensor or licensee) of all Software owned by, licensed to or used by any Acquired Company which is material to its business, except Software licensed to an Acquired Company that is available in consumer retail stores and subject to "shrink-wrap" license agreements. 5.12.3. SCHEDULE 5.12 contains a list and description (showing in each case the parties thereto and the material terms thereof) of all agreements, contracts, licenses, sublicenses, assignments and indemnities which relate to (a) any Copyrights, Patent Rights or Trademarks listed in SCHEDULE 5.12, (b) any Trade Secrets owned by, licensed to or used by any Acquired Company or (c) any Software listed in SCHEDULE 5.12. 5.12.4. Except as disclosed in SCHEDULE 5.12, an Acquired Company either (a) owns the entire right, title and interest in and to the Intellectual Property and Software included in its assets, free and clear of any Encumbrance or (b) has the perpetual, royalty-free right to use the same. 5.12.5. Except as disclosed in SCHEDULE 5.12, (a) all registrations for Copyrights, Patent Rights and Trademarks identified in SCHEDULE 5.12 as being owned by an Acquired Company are valid and in force, and all applications to register any unregistered Copyrights, Patent Rights and Trademarks so identified are pending and in good standing, all without challenge of any kind; (b) the Intellectual Property owned by an Acquired Company is valid and enforceable; (c) to the Knowledge of Seller, (i) an Acquired Company has the sole and exclusive right to bring actions for infringement or unauthorized use of the Intellectual Property and Software owned by the Acquired Company and (ii) there has been no infringement or unauthorized use of the Intellectual Property or Software owned by any Acquired Company; (d) each Acquired Company has taken all actions necessary to protect, and where necessary register, the Copyrights, Trademarks, Software, Patent Rights or Trade Secrets which are material to the Business; and (e) no Acquired Company is in breach of any material agreement affecting the Intellectual Property, and no Acquired Company has taken any action which would impair or otherwise adversely affect its rights in any material Intellectual Property. Correct and complete copies of (i) registrations for all registered Copyrights, Patent Rights and Trademarks identified in SCHEDULE 5.12 as being owned by an Acquired Company and (ii) all pending applications to register unregistered Copyrights, Patent Rights and Trademarks identified in SCHEDULE 5.12 as being owned by an Acquired Company (together with any subsequent correspondence, notices or filings relating to the foregoing) have heretofore been delivered by Seller to Buyer. 23 5.12.6. Except as set forth in SCHEDULE 5.12, (a) no infringement of any Intellectual Property of any other Person has occurred or results in any way from the operations, activities, products, Software, equipment, machinery or processes used in the Business of the Acquired Companies; (b) no claim of any infringement of any Intellectual Property of any other Person has been made or asserted against, or in respect of the operations of the Business of, the Acquired Companies; (c) no claim of invalidity of any Copyright, Trademark or Patent Right, Software or Trade Secret of the Acquired Companies has been made; and (d) no Proceedings are pending or, to the Knowledge of Seller, threatened which challenge the validity, ownership or use of any Intellectual Property of the Acquired Companies. 5.12.7. Except as disclosed in SCHEDULE 5.12, (a) the Software which is material to the business of the Acquired Companies is not subject to any transfer, assignment, reversion, site, equipment, or other limitations; (b) each Acquired Company has maintained and protected the Software which is material to the business of such Acquired Company that it owns (the "Owned Software") (including all source code and system specifications) with appropriate proprietary notices, confidentiality and non-disclosure agreements and such other measures as are necessary to protect the proprietary, trade secret or confidential information contained therein; (c) the Owned Software has been registered or is eligible for protection and registration under applicable copyright law and has not been forfeited to the public domain; (d) the Acquired Companies have copies of all prior releases or separate versions of the Owned Software so that the same may be subject to registration in the United States Copyright Office; (e) the Acquired Companies have complete and exclusive right, title and interest in and to the Owned Software; (f) the Owned Software does not infringe any Intellectual Property of any other Person; and (g) any Owned Software includes the source code, system documentation, statements of principles of operation and schematics, as well as any pertinent commentary, explanation, program (including compilers), workbenches, tools and higher level (or "proprietary") language used for the development, maintenance, implementation and use thereof, so that a trained computer programmer could develop, maintain, enhance, modify, support, compile and use all releases or separate versions of the same. 5.12.8. Except as disclosed in SCHEDULE 5.12, each employee, agent, consultant or contractor who has contributed to or participated in the creation or development of any Intellectual Property material to the Business or Software material to the Business on behalf of an Acquired Company or any predecessor in interest to any of them has executed an assignment or an agreement to assign in favor of the Acquired Company (or such predecessor in interest, as applicable) of all right, title and interest in such material. 5.12.9. The Acquired Companies have not permitted any third party access to the Intellectual Property material to the Business, except for Persons who have entered into, and who are in full compliance with, confidentiality and nondisclosure agreements with regard to the Intellectual Property material to the Business. The Acquired Companies have not permitted any third party to use, copy or otherwise exploit any of the Intellectual Property except pursuant to a valid and legally enforceable license agreement which protects the proprietary rights of the Acquired Companies in such Intellectual Property. 24 5.12.10. Except as disclosed in SCHEDULE 5.12, no Person has asserted against any Acquired Company any royalty claim or other claim whatsoever, including, but not limited to, claims of ownership, direct or indirect, in respect of the Intellectual Property. 5.13. PERSONAL PROPERTY; CONDITION AND SUFFICIENCY OF ASSETS. 5.13.1. Except as set forth in SCHEDULE 5.13.1, each of the Acquired Companies has good title to all of the machinery, equipment, furniture, leasehold improvements, fixtures, motor vehicles, tractors, trailers, tools, jigs, dies, structures, computer equipment, printers, any related capitalized items, inventory and other tangible property ("Personal Property") owned or used by an Acquired Company (other than leased Personal Property), free and clear of all Encumbrances, except for Permitted Encumbrances. Except as set forth in SCHEDULE 5.13.1 or with respect to the sales of inventory in the Ordinary Course of Business or the sale of obsolete Assets with a fair market value which does not exceed $50,000 in the aggregate, no Acquired Company is a party to a Contract whereby another Person has acquired the right or option to purchase, obtain or acquire rights in any of the Personal Property. 5.13.2. SCHEDULE 5.13.2 contains a brief description of each lease or other agreement under which an Acquired Company is lessee of, or holds or operates, any Personal Property owned by a third Person, except for any such lease, agreement or right that is terminable by the Acquired Company without penalty or payment on notice of 90 days or less, or which involves the payment by or to the Acquired Company of rentals of less than $50,000 per year and an aggregate of $100,000 over the remaining term of the lease, agreement or right. 5.13.3. To the Knowledge of Seller, the buildings, plants, structures, improvements, machinery and equipment of the Acquired Companies that are used in the operation of the Business as currently conducted are operational and are adequate for the uses to which they are being put, ordinary wear and tear excepted. Except as set forth on SCHEDULE 5.13.3, the buildings, plants, structures, improvements, machinery and equipment of the Acquired Companies that are used in the operation of the Business as currently conducted are not in need of maintenance or repairs which would cost more than $50,000 in the aggregate or would adversely affect the ability of Buyer to conduct the Business of the Acquired Companies as currently conducted from and after the Closing. 5.14. INVENTORY. All inventory of the Acquired Companies, as reflected in the Most Recent Financial Statements, is in good, merchantable and useable condition in the Ordinary Course of Business, except for obsolete items and items of below-standard quality, all of which have been written off or written down to net realizable value in the Most Recent Financial Statements. Except as set forth in SCHEDULE 5.14, the quantities of each item of inventory (whether raw materials, work-in-process, or finished goods) are consistent in all material respects with amounts of such inventory maintained by the Acquired Companies in the Ordinary Course of Business consistent with past practices. 5.15. CONTRACTS; NO DEFAULTS. 5.15.1. Except as set forth in SCHEDULE 5.15.1 or as disclosed in this Agreement, no Acquired Company is a party to or bound by: (a) any Contract for the purchase or sale of 25 Real Property; (b) any Contract (or group of related or similar Contracts) that involves the future performance of services or delivery of goods or materials by one or more Acquired Companies with a fair market value in excess of $50,000 to any one Person (except (i) any Contract entered into in the Ordinary Course of Business for the sale of goods or materials by the Acquired Company at market prices that is represented solely by a customer purchase order, an acknowledgment from the Acquired Company, or such other form documents as are ordinarily used to memorialize such a transaction or (ii) those Contracts that may be cancelled by the relevant Acquired Company within 30 days without significant penalty, payment or other expense or other significant impact on such Acquired Company); (c) any Contract that is an output, requirements or exclusive dealings contract (as such terms are used in Article 2 of the Uniform Commercial Code); (d) any Contract that requires or commits any Acquired Company to purchase services, goods, materials or inventory from any Person with a fair market value in excess of $50,000 (except any Contract entered into in the Ordinary Course of Business for the purchase of services, goods, materials or inventory by the Acquired Company at market prices that is represented solely by a purchase order, an acknowledgement from the Acquired Company, or such other form documents as are ordinarily used to memorialize such a transaction); (e) any Guaranty or similar undertaking of the obligations of customers, suppliers, officers, directors, employees, Seller, Affiliates of Seller or others; (f) any collective bargaining or other agreement with any labor union; (g) any joint venture, partnership or other Contract (however named) involving a sharing of profits, losses, costs or liabilities by any Acquired Company with any other Person; (h) any Contract containing covenants that in any way purport to restrict the business activity of any Acquired Company or limit the freedom of any Acquired Company to engage in any line of business or to compete with any Person; (i) any Contract providing for payments to or by any Person based on sales, purchases or profits, other than (x) direct payments for goods and (y) Contracts entered into in the Ordinary Course of Business with employees and other sales personnel paying commissions or bonuses; (j) any Contract which provides for, or relates to, the incurrence by an Acquired Company of Indebtedness; (k) any Contract that was not entered into in the Ordinary Course of Business or that was entered into at a price or prices materially in excess of, or materially lower than, those currently available; (l) any employment Contract regarding employees performing services for the Business which is not terminable without significant penalty, payment or other expense or other significant impact on the relevant Acquired Company, at any time after the Closing (except for amounts earned or accrued prior to termination); (m) any Contract that involves any agreement or commitment for capital expenditures in excess of $250,000 for a single project (it being warranted that the commitments for all undisclosed Contracts for such projects do not exceed $500,000 in the aggregate); (n) any sale and leaseback arrangements and installment purchase arrangements; (o) any management or operating agreements; (p) any Contracts containing in any case a specific clause or affected by a Legal Requirement giving any Person a party to such Contract the right to renegotiate or require a reduction or increase in prices or the repayment of any amount previously paid; (q) any agreement that restricts the maintenance or incurrence of Indebtedness, the sale or lease of property or distributions or transfers to shareholders (by dividend or otherwise); (r) any other Contract that materially and adversely affects the ownership or leasing of any of the Assets or any maintenance or service agreements relating to any of the Assets; (s) any Contract that involves an account receivable or note receivable of more than $100,000; and (t) any other Contract which is material to the Acquired Companies, as a whole. 26 5.15.2. Seller has furnished or made available to Buyer complete and correct copies of the Contracts listed in SCHEDULES 5.11.2, 5.12, 5.13.2 AND 5.15.1, as in effect on the date of this Agreement. Neither the Acquired Companies nor, to the Knowledge of Seller, any other party thereto, is in default under any Contract. Each Contract (i) constitutes a valid and binding obligation of the Acquired Company party thereto and, to the Knowledge of Seller, of each other party thereto; and (ii) is in full force and effect as to the Acquired Company party thereto, and, to the Knowledge of Seller, as to each other party thereto. Except as separately identified on SCHEDULE 5.15.2, no notice to, filing or registration with, or Consent of, any Person is needed in order that the Contracts set forth on SCHEDULES 5.11.2, 5.12, 5.13.2 AND 5.15.1 continue in full force and effect (without breach by the Acquired Companies of, or giving any contractual party a right to terminate or modify such Contract or require the payment of any penalty or other amount in respect of such Contract as a result of the consummation of the Contemplated Transactions) following the consummation of the Contemplated Transactions. No event has occurred or, to the Knowledge of Seller, fact or circumstance exists that (with or without notice or lapse of time) may contravene, conflict with, or result in a violation or breach of or give any Acquired Company or other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify, any Applicable Contract. 5.15.3. Except as set forth in SCHEDULE 5.15.3: (a) neither Seller nor any Related Person of Seller (excluding any of the Acquired Companies) has any rights or obligations under any Contract with an Acquired Company or that relates to the Business of, or any of the Assets owned or used by, an Acquired Company; and (b) to the Knowledge of Seller, no officer, director, agent, or employee of an Acquired Company is bound by any Contract that purports to limit the ability of such officer, director, agent or employee, to (i) engage in or continue any conduct, activity, or practice relating to the Business of the Acquired Company, or (ii) assign to an Acquired Company or to any other Person any rights to any invention, improvement, or discovery in connection with the Business. 5.16. BANK ACCOUNTS; POWERS OF ATTORNEY. 5.16.1. SCHEDULE 5.16.1 sets forth a complete and correct list of all bank accounts and safe deposit boxes of the Acquired Companies and the Persons authorized to sign or otherwise act with respect thereto. 5.16.2. Except as set forth on SCHEDULE 5.16.2, there are no outstanding powers of attorney executed on behalf of any Acquired Company. 5.17. INSURANCE. 5.17.1. SCHEDULE 5.17.1 sets forth a list and brief description (including name of insurer, nature of coverage, and the loss experience in respect of each of the Acquired Companies for the most recent five calendar years and the current year to date, with respect to each type of coverage) of all policies of insurance maintained, owned or held by or for the benefit of the Acquired Companies during the past five calendar years and the current year to date. Seller shall cause the Acquired Companies to keep or cause such insurance or comparable insurance to be kept in full force and effect through the Closing Date. Seller and each Acquired 27 Company have complied with each of such insurance policies and have not failed to give any notice or present any claim thereunder in a due and timely manner which failure would cause the applicable Acquired Company to lose coverage which would otherwise be available to such Acquired Company. All of such insurance policies are in such amounts and insure the Acquired Companies against such losses and risks as are generally maintained by a comparable business. Copies of all such policies have been made available to Buyer. Seller has provided to Buyer any statement by the auditor of the Financial Statements with regard to the adequacy of the reserve for claims. 5.17.2. SCHEDULE 5.17.2 sets forth a list and brief description (including the loss experience for the most recent three calendar years and the current year to date and the reserves established thereunder, including those reserves for claims incurred but not yet reported) of the self-insurance arrangements by or affecting the Acquired Companies. 5.17.3. Except as set forth in SCHEDULE 5.17.3, no Acquired Company has, since December 31, 1999, received (a) any refusal of coverage or any notice that a defense will be afforded with reservation of rights; (b) any notice of cancellation or any other indication that any insurance policy maintained, owned or held by or for the benefit of the Acquired Companies is no longer in full force or effect or will not be renewed or that the insurer of any policy is not willing or able to perform its obligations thereunder; or (c) any notice of any retrospective or prospective premium adjustment. 5.17.4. The Acquired Companies have paid all premiums due, and have otherwise performed all of their respective obligations, under each policy maintained, owned or held by or for the benefit of the Acquired Companies. 5.17.5. Except as set forth in SCHEDULE 5.17.5, to the Knowledge of Seller, there are no outstanding recommendations made by the insurer under any insurance policy maintained, owned or held by or for the benefit of the Acquired Companies or any insurance advisor for the Acquired Company which have not been taken or satisfied. 5.18. PRODUCT WARRANTY. Except as set forth in SCHEDULE 5.18, there are no facts or circumstances which would cause warranty claims in respect of products manufactured, sold, leased or delivered by the Acquired Companies prior to the Closing Date to exceed (in quantity, frequency or amount) the warranty claims experienced by the Acquired Companies in the Ordinary Course of Business. No product manufactured, sold, leased or delivered by an Acquired Company is subject to any guaranty, warranty or other indemnity beyond the applicable standard terms and conditions of sale or lease. SCHEDULE 5.18 includes copies of the standard terms and conditions of sale or lease for an Acquired Company (containing applicable guaranty, warranty and indemnity provisions). The current level of sales returns and allowances for each Acquired Company relating to warranty claims are generally consistent with historical levels. 5.19. PRODUCT LIABILITY. Except as set forth in SCHEDULE 5.19, the Acquired Companies are not subject to any pending Proceeding, and to the Knowledge of Seller, there are no facts or circumstances reasonably likely to result in a Proceeding, arising out of any injury to individuals or property as a result of the ownership, possession or use of any product manufactured, sold, 28 leased or delivered by the Acquired Companies other than arising in the Ordinary Course of Business, which is fully insured. 5.20. LABOR RELATIONS AND COMPLIANCE. 5.20.1. Seller has provided Buyer with a complete and accurate list of the following information for each employee or commissioned salesperson of the Acquired Companies that is actively employed by the Acquired Companies on the date of this Agreement: (a) employer; (b) name; and (c) job title. 5.20.2. Except as set forth in SCHEDULE 5.20.2, to the Knowledge of Seller, no officer or other Management Employee of the Acquired Companies (a) is a party to, or is otherwise bound by, any Contract, including any confidentiality, noncompetition or proprietary rights agreement, between such employee and any other Person that in any way adversely affects or will affect the performance of such employee's duties as an employee of an Acquired Company or the ability of an Acquired Company to conduct its business, (b) is engaged in activities in connection with such employee's employment by an Acquired Company that will give rise to any valid claim by a former employer that the current employee or the Acquired Company has appropriated or used any Intellectual Property of the former employer or (c) has any plans to terminate employment with an Acquired Company. 5.20.3. Except as set forth in SCHEDULE 5.20.3, no Acquired Company is a party to any collective bargaining or other labor Contract. Except as set forth in SCHEDULE 5.20.3, since January 1, 1997, no Acquired Company has experienced (a) any strike, slowdown, picketing or work stoppage, (b) any Proceeding against or affecting the Acquired Company relating to the alleged violation of any Legal Requirement pertaining to labor relations or employment matters (including any charge or complaint filed by an employee or union with the National Labor Relations Board, the Equal Employment Opportunity Commission or any comparable Governmental Body), organizational activity, or other labor or employment dispute against or affecting the Acquired Company or any of its premises, or (c) any application for certification of a collective bargaining agent, or to the Knowledge of Seller, any organizational effort by or on behalf of any labor union with respect to employees of any Acquired Company. There is no lockout of any employees by an Acquired Company and no such action is contemplated by an Acquired Company. 5.20.4. Except as set forth in SCHEDULE 5.20.4, each Acquired Company has in all material respects complied with all Legal Requirements relating to the employment of labor, including, without limitation, all Legal Requirements related to non-discrimination, immigration, wages and hours. Except as set forth in SCHEDULE 5.20.4, each Acquired Company has complied with all Legal Requirements relating to the collection and payment of social security or withholding Taxes, or both, and similar Taxes in respect of its Business. The Acquired Companies are not liable for the payment of any compensation, damages, Taxes, fines, penalties or other amounts, however designated, for failure to comply with any of the foregoing Legal Requirements. 29 5.21. EMPLOYEE BENEFITS. 5.21.1. SCHEDULE 5.21 lists each "employee benefit plan," as such term is defined in Section 3(3) of ERISA, sponsored, maintained or contributed to, within the three years prior to Closing, by Seller or any of the Acquired Companies for the benefit of the employees of the Acquired Companies ("Applicable Plan") or under which any Acquired Company may have Liability. 5.21.2. Each Applicable Plan (and each related trust, insurance contract or fund) has been maintained, funded and administered in accordance with the terms of such Applicable Plan and complies in form and in operation in all material respects with the applicable requirements of ERISA and the IRC, including compliance with all applicable reporting and disclosure obligations. 5.21.3. All contributions (including all employer contributions and employee salary reduction contributions) which are due have been made on a timely basis to each Applicable Plan. 5.21.4. Except as otherwise set forth in SCHEDULE 5.21: (a) none of Seller, any of the Acquired Companies and any corporation, trade, business or entity under common control with Seller, within the meaning of Section 414(b), (c) or (m) of the IRC or Section 4001 of ERISA ("Commonly Controlled Entity") contributes to or has an obligation to contribute to, on behalf of Covered Employees, and has not at any time within three years prior to the Closing contributed to or had an obligation to contribute to, on behalf of Covered Employees, a multi-employer plan within the meaning of Section 3(37) of ERISA. As of the Closing, none of Seller, any of the Acquired Companies or any Commonly Controlled Entity has incurred any Liability for either a complete or partial withdrawal from a multi-employer plan which would in any way affect Covered Employees. For purposes of this Section 5.21.4, Covered Employees means only present or former employees of the Acquired Companies; (b) there are no Proceedings pending (other than routine claims for benefits) or, to the Knowledge of Seller, threatened against, or with respect to, any of the Applicable Plans or their assets; and to the Knowledge of Seller, no act, omission or transaction has occurred which is reasonably likely to result in such a Proceeding; (c) each of the Applicable Plans intended to be qualified under Section 401(a) of the IRC, to the Knowledge of Seller, satisfies the requirements of such Section and has received a favorable determination letter from the IRS regarding such qualified status and has not, since receipt of the most recent favorable determination letter, been amended or, to the Knowledge of Seller, operated in any way which would adversely affect such qualified status; (d) the Acquired Companies do not maintain any defined benefit plans; and (e) no benefit is provided under any Applicable Plan through a voluntary employees' beneficiary association, as defined in Section 501(c)(9) of the IRC. 30 5.21.5. Except as set forth in SCHEDULE 5.21, no Acquired Company is a party to or bound by any written severance agreements, programs or policies. 5.21.6. Except as set forth in SCHEDULE 5.21, (a) no Applicable Plan provides retiree medical or retiree life insurance benefits to any Person and (b) the Acquired Companies are not contractually or otherwise obligated (whether or not in writing) to provide any Person with life insurance or medical benefits upon retirement or termination of employment, other than as required by the provisions of Section 601 through 608 of ERISA and Section 4980B of the IRC. 5.21.7. No payment that is owed or may become due to any director, officer, employee or agent of any Acquired Company by an Acquired Company will be non-deductible to the Acquired Companies or subject to tax under IRC Section 280G or Section 4999; nor will any Acquired Company be required to "gross up" or otherwise compensate any such Person because of the imposition of any excise tax on a payment to such Person. 5.21.8. The consummation of the Contemplated Transactions will not result in the payment, vesting or acceleration of any benefit. 5.22. GUARANTIES. Except as disclosed in SCHEDULE 5.22, none of the Acquired Companies is a guarantor or otherwise liable for any Liability or obligation (including Indebtedness) of any other Person. 5.23. ENVIRONMENTAL MATTERS. Except for matters disclosed in SCHEDULE 5.23: 5.23.1. To the Knowledge of Seller, each Acquired Company is, and at all times has been, in compliance in all material respects with, and has not been and is not in material violation of or liable under, any Environmental Law. Neither Seller nor any Acquired Company has received, or been threatened to receive, any actual or threatened Order, written notice or other formal communication from (a) any Governmental Body or private citizen acting in the public interest, or (b) the current or prior owner or operator of any Facility, of any alleged, actual or potential violation or failure to comply with any Environmental Law, or of any alleged, actual or threatened obligation to undertake or bear the cost of any Environmental Liabilities with respect to any of the Facilities or any other properties or assets (whether real, personal, or mixed) which any Acquired Company (or any predecessor) owned or operated or in which any Acquired Company (or any predecessor) has or had an interest, or with respect to any property or facility at, from or to which Contaminants generated, manufactured, refined, transferred, imported, used or processed by any Acquired Company (or any predecessor) have been transported, treated, stored, handled, transferred, disposed, recycled or received. 5.23.2. There are no pending or, to the Knowledge of Seller, threatened claims, Encumbrances or other restrictions of any nature, resulting from any Environmental Liabilities with respect to or affecting any of the Facilities or any other properties and assets (whether real, personal, or mixed) which any Acquired Company (or any predecessor) owned or operated or in which any Acquired Company (or any predecessor) has or had an interest. 5.23.3. Neither Seller nor any Acquired Company has received, or to the Knowledge of Seller, been threatened to receive, any citation, directive, inquiry, written notice, 31 Order, summons, warning or other formal communication that relates to Hazardous Activity or Contaminants. 5.23.4. To the Knowledge of Seller, neither Seller nor any Acquired Company has any Environmental Liabilities with respect to the Facilities or with respect to any other properties and assets (whether real, personal, or mixed) which any Acquired Company (or any predecessor) owned or operated or in which any Acquired Company (or any predecessor) has or had an interest, or at any property geologically or hydrologically adjoining the Facilities or any such other property or assets. 5.23.5. To the Knowledge of Seller, there are no Contaminants present on or in the Environment at the Facilities or at any geologically or hydrologically adjoining property, including any Contaminants (other than cleaning fluids, office supplies and paint used in the normal maintenance of the Facilities in compliance with Environmental Laws) contained in barrels, above or underground storage tanks, landfills, land deposits, dumps, equipment (whether moveable or fixed) or other containers, either temporary or permanent, and deposited or located in land, water, sumps, or any other part of the Facilities or such adjoining property, or incorporated into any structure therein or thereon. None of Seller, any Acquired Company, or, to the Knowledge of Seller, any other Person, has permitted or conducted, or is aware of, any Hazardous Activity conducted with respect to the Facilities or any other properties or assets (whether real, personal, or mixed) which any Acquired Company (or any predecessor) owned or operated or in which any Acquired Company (or any predecessor) has or had an interest except in compliance in all material respects with all applicable Environmental Laws. 5.23.6. To the Knowledge of Seller, there has been no Release, or threat of Release, of any Contaminants at or from the Facilities or at any other locations where any Contaminants were generated, manufactured, refined, transferred, produced, imported, used or processed from or by the Facilities, or from or by any other properties and assets (whether real, personal, or mixed) which were operated by any Acquired Company (or any predecessor) or in which any Acquired Company (or any predecessor) has or had an interest, or any geologically or hydrologically adjoining property, whether by any Acquired Company or any other Person. 5.23.7. Seller has delivered to Buyer true and complete copies and results of any reports, studies, analyses, tests or monitoring possessed or initiated by Seller or any Acquired Company pertaining to Contaminants or Hazardous Activities in, on, or under the Facilities, or concerning compliance by any Acquired Company with Environmental Laws. 5.24. OCCUPATIONAL SAFETY AND HEALTH MATTERS. Except for matters disclosed in SCHEDULE 5.24: 5.24.1. Each Acquired Company is, and at all times has been, in compliance in all material respects with, and has not been and is not in violation of or liable under, any Occupational Safety and Health Law. Neither Seller nor any Acquired Company has received, or been threatened to receive, any actual or threatened Order, citation, written notice or other formal communication from any Governmental Body or any other Person of any actual or potential violation or failure to comply with any Occupational Safety and Health Law, or any actual or threatened obligation to undertake or bear the cost of any Occupational Safety and 32 Health Liabilities with respect to any of the Facilities or any other properties or assets (whether real, personal, or mixed) which any Acquired Company owns or operates or in which any Acquired Company has an interest. 5.24.2. There are no pending or, to the Knowledge of Seller, threatened claims, Encumbrances or other restrictions of any nature, for any Occupational Safety and Health Liabilities arising under or pursuant to any Occupational Safety and Health Law, with respect to or affecting any of the Facilities or any other properties or assets (whether real, personal, or mixed) which any Acquired Company owns or operates or in which any Acquired Company has an interest. 5.24.3. Neither Seller nor any Acquired Company has received, or been threatened to receive, any citation, written inquiry, notice, Order, summons or other formal communication that relates to any alleged, actual or potential violation or failure to comply with any Occupational Safety and Health Law, or of any alleged, actual or potential obligation to undertake or bear the cost of any Occupational Safety and Health Liabilities with respect to any of the Facilities or any other properties or assets (whether real, personal or mixed) which any Acquired Company owns or operates or in which any Acquired Company has an interest. 5.24.4. Seller and the Acquired Companies do not have Occupational Safety and Health Liabilities in excess of $25,000 in the aggregate with respect to the Facilities or with respect to any other properties and assets (whether real, personal, or mixed) which any Acquired Company owns or operates or in which any Acquired Company has an interest. 5.25. CERTAIN PAYMENTS. Except as set forth in SCHEDULE 5.25, in respect of periods for which any Acquired Company could have Liability to any third Person or under any applicable Legal Requirement, neither an Acquired Company nor any director, officer, agent or employee of an Acquired Company has directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback or other payment to any Person, private or public, regardless of form, whether in money, property or services (i) to obtain favorable treatment in securing business, (ii) to pay for favorable treatment for business secured, (iii) to obtain special concessions or for special concessions already obtained, for or in respect of the Acquired Company, or (iv) in violation of any Legal Requirement, or (b) established or maintained any fund or asset that has not been recorded in an Acquired Company's books and records. 5.26. RELATED PERSON SERVICES. SCHEDULE 5.26 sets forth (a) a description of all material services provided since December 31, 2000 to an Acquired Company by Seller or any Affiliate of Seller (other than an Acquired Company) utilizing either (i) assets not owned or leased by an Acquired Company or (ii) employees not employed by an Acquired Company and (b) the manner in which the costs of providing such services have been allocated to the Acquired Company and the amounts of such allocations. SCHEDULE 5.26 also sets forth all payments made and/or cash or other assets or property transferred, since December 31, 2000, between Seller or any Affiliate of Seller (other than an Acquired Company) and an Acquired Company. 5.27. BROKERS' FEES. Except for the fees paid or payable to Houlihan Lokey Howard & Zukin Capital, which will be paid by Seller, neither Seller nor any Acquired Company has any 33 Liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the Contemplated Transactions. 5.28. DISCLOSURE. The representations and warranties of Seller in this Agreement do not contain any untrue statement or omit to state a material fact necessary to make the statements herein, in light of the circumstances in which they were made, not misleading. SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to Seller as follows: 6.1. ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Ohio. Buyer has full corporate power and authority to conduct its business as it is now being conducted. 6.2. AUTHORITY; NO CONFLICT. 6.2.1. Buyer has full corporate power and authority to execute, deliver and perform this Agreement and each Buyer Ancillary Agreement to which Buyer is a party. This Agreement and each Buyer Ancillary Agreement have been duly approved and authorized by all requisite corporate action. This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable against Buyer in accordance with its terms. Upon the execution and delivery of the Buyer Ancillary Agreements to which Buyer is a party, such agreements will constitute the valid and legally binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms. 6.2.2. Subject to the satisfaction of the conditions precedent set forth in Sections 9.5 and 10.5 of this Agreement, except as set forth in SCHEDULE 6.2.2, neither the execution and delivery of this Agreement or any of the Buyer Ancillary Agreements nor the consummation or performance of this Agreement, any of the Buyer Ancillary Agreements or any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time or both): (a) contravene, conflict with or result in a violation of (i) any provision of the Organizational Documents of Buyer or (ii) any resolution adopted by the board of directors (or committees thereof) or the shareholders of Buyer; (b) contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any material Legal Requirement or any material Order to which Buyer may be subject; or (c) contravene, conflict with, or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify, any material Contract to which Buyer is a party. Except as provided under the HSR Act and except as set forth in SCHEDULE 6.2.2, Buyer is not and will not be required to give any notice to or obtain any Consent from any Person (including from any Governmental Body) in connection with the execution and delivery of this Agreement or any of the Buyer Ancillary Agreements or the consummation or performance of any of the Contemplated Transactions. 6.3. CERTAIN PROCEEDINGS. There is no pending Proceeding that has been commenced against Buyer and that challenges, or may have the effect of preventing, delaying, making illegal, 34 or otherwise interfering with, any of the Contemplated Transactions. To Buyer's knowledge, no such Proceeding has been threatened and there are no facts or circumstances reasonably likely to result in such a Proceeding. 6.4. BROKERS' FEES. Buyer has no Liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the Contemplated Transactions for which Seller could become liable or obligated. 6.5. INVESTMENT INTENT. 6.5.1. Buyer is acquiring the Shares for its own account and/or for the account of one or more of its Subsidiaries and not for distribution and acknowledges that it must bear the economic risk of the investment in the Shares for an indefinite period of time under applicable securities laws and regulations. Buyer agrees that the Shares acquired by it pursuant to this Agreement will not be offered, sold, transferred, assigned or otherwise disposed of without compliance with applicable securities laws and regulations. Buyer has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of acquiring the Shares pursuant to this Agreement; and Buyer has the financial ability to bear the economic risks of acquiring and holding the Shares to be acquired by Buyer pursuant to this Agreement for investment. 6.5.2. Buyer understands that the Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that Seller is relying in part upon the truth and accuracy of, and Buyer's compliance with, the representations, warranties, agreements, acknowledgments and understandings of Buyer set forth in this Agreement in order to determine the availability of such exemptions and the eligibility of Buyer to acquire the Shares. 6.6. AVAILABLE CONSIDERATION. Buyer has or will have at Closing sufficient funds to pay the Purchase Price. SECTION 7. CERTAIN AGREEMENTS. Buyer and Seller covenant and agree as follows: 7.1. INVESTIGATION OF THE ACQUIRED COMPANIES BY BUYER. Seller shall afford and cause the Acquired Companies to afford to the Representatives of Buyer upon reasonable notice, reasonable access during normal business hours, coordinated through Garen W. Smith or Arthur L. Whitman, to the offices, properties (including for subsurface testing), employees and business and financial records (including computer files, retrieval programs and similar documentation and such access and information that may be necessary in connection with an environmental audit) of Seller and the Acquired Companies relating to the Business to the extent Buyer shall deem necessary or desirable and is permissible under applicable Legal Requirements. Seller shall furnish, and shall cause the Acquired Companies to furnish, to Buyer or its Representatives such information concerning the assets, business and the operations of the Acquired Companies as shall be reasonably requested to verify the accuracy of the representations and warranties contained in this Agreement, to verify that the covenants of Seller contained in this Agreement have been complied with and to determine whether the conditions 35 set forth herein have been satisfied. Buyer agrees that such investigation shall be conducted in such a manner as not to interfere unreasonably with the operations of Seller or the Acquired Companies or violate any applicable Legal Requirement. No investigation made by Buyer or its Representatives hereunder shall affect the representations and warranties of Seller hereunder. 7.2. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of the parties hereto shall, and Seller shall cause each of the Acquired Companies to, refrain from taking any action which would render any representation or warranty contained in Section 5 or 6 of this Agreement inaccurate as of the Closing Date. Each of Buyer, as a party on the one hand, and Seller and the Acquired Companies, as a party on the other, shall promptly notify the other of any Proceeding that shall be instituted or threatened against such party to restrain, prohibit or otherwise challenge the legality of any of the Contemplated Transactions. Seller shall promptly notify Buyer of (a) any Proceeding that may be threatened, brought, asserted or commenced against an Acquired Company which would have been listed in SCHEDULE 5.9 if such Proceeding had arisen prior to the date hereof, (b) any fact which, if known on the date of this Agreement, would have been required to be set forth or disclosed pursuant to this Agreement, and (c) any actual, impending or threatened breach in any material respect of any of the representations and warranties contained in this Agreement and with respect to the latter, shall use their Best Efforts to remedy such actual, impending or threatened breach. 7.3. CONSENTS OF THIRD PARTIES; GOVERNMENTAL AUTHORIZATIONS. 7.3.1. Seller will (and will cause the Acquired Companies to) act diligently and reasonably to secure the Consent, in form and substance reasonably satisfactory to Buyer, from any party to any Applicable Contract required to be obtained to permit the consummation of the Contemplated Transactions or to otherwise satisfy the conditions set forth in Sections 9 and 10; provided that (a) none of Seller, the Acquired Companies or Buyer shall have any obligation to offer or pay any consideration in order to obtain any such Consents and (b) Seller shall not make (or permit any Acquired Company to make) any agreement or understanding affecting the Assets or Business of the Acquired Companies as a condition for obtaining any such Consent except with the prior written consent of Buyer. During the period prior to the Closing Date, Buyer shall act diligently and reasonably to cooperate with Seller and the Acquired Companies to obtain the Consents contemplated by this Section 7.3.1. 7.3.2. During the period prior to the Closing Date, Seller and Buyer shall (and Seller shall cause the Acquired Companies to) act diligently and reasonably, and shall cooperate with each other, in making any required filing or notification and in securing any Consents of any Governmental Body required to be obtained by them in order to permit the consummation of the Contemplated Transactions, or to otherwise satisfy the conditions set forth in Sections 9 and 10; provided that Seller shall not make (or permit any Acquired Company to make) any agreement or understanding affecting the Assets or Business of the Acquired Companies as a condition to obtaining any such Consents except with the prior written consent of Buyer. 7.3.3. Seller and Buyer shall each promptly prepare and file a notification with the Justice Department and the FTC as required by the HSR Act. Seller and Buyer shall cooperate with each other in connection with the preparation of such notification and shall provide the other such information and assistance as the other may reasonably request to 36 complete such notification, and shall provide a copy of such notification to the other prior to filing. Each of Seller and Buyer shall keep confidential all information about the other obtained in connection with the preparation of such notification. Buyer and Seller shall share equally the payment of the filing fee required under the HSR Act. Buyer and Seller shall keep each other apprised of the status of any communications with, and inquiries or requests for additional information from, any Governmental Body including the Justice Department and the FTC. Buyer and Seller shall use their reasonable efforts to obtain any clearance required under the HSR Act for the Contemplated Transactions in accordance with the terms and conditions hereof. Nothing contained in this Agreement will require or obligate Buyer or its Affiliates to: (a) initiate, pursue or defend any litigation to which any Governmental Body (including the Justice Department and the FTC) is a party; (b) agree to otherwise become subject to any limitations on their, or the Acquired Companies', respective rights effectively to acquire, control or operate their businesses or exercise full rights of ownership of the Business or all or any portion of the Assets; (c) agree or otherwise be required to sell or otherwise dispose of, hold separate (through the establishment of a trust or otherwise), or divest themselves of all or any portion of the Business or the business, assets or operations of Buyer or any of its Affiliates, or (d) otherwise take any action which, in the judgment of Buyer, in its sole discretion, would materially and adversely affect the value of the Contemplated Transactions; and no representation, warranty or covenant of Buyer contained in this Agreement shall be breached or deemed breached as a result of the failure by Buyer or any of its Affiliates to take any of the actions specified in this sentence. 7.4. OPERATIONS PRIOR TO THE CLOSING DATE. 7.4.1. Seller shall cause the Acquired Companies to operate and carry on their business only in the Ordinary Course of Business and substantially as presently operated. Consistent with the foregoing, Seller shall cause the Assets to be maintained in the same working order and condition, in a manner consistent with past practice, as such Assets are in as of the date of this Agreement (reasonable wear and tear excepted) and shall use its Best Efforts to maintain the business organization of the Acquired Companies intact and to preserve the present relationships with the suppliers, contractors, licensors, employees, customers, distributors and others having business relations with the Acquired Companies. 7.4.2. Except as expressly contemplated by this Agreement or as set forth on SCHEDULE 7.4.2 or except with the express written approval of Buyer, Seller shall not with respect to the Acquired Companies and shall cause each Acquired Company not to: (a) amend its Organizational Documents; (b) issue, grant, sell or encumber any shares of its capital stock, any other voting, equity or ownership interest in the Acquired Company or any other securities; or issue, grant, sell or encumber any security, option, warrant, put, call, subscription or other right of any kind, fixed or contingent, that directly or indirectly calls for the acquisition, issuance, sale, pledge or other disposition of any shares of its capital stock, any other voting, equity or ownership interest in the Acquired Company or any other securities or make any other changes in the equity capital structure of any Acquired Company; (c) make any material change in the Business or the operations of the Acquired Companies; (d) make any capital expenditures in excess of $100,000 in the aggregate or enter into any contract or commitment therefor, other than capital expenditures or commitments for capital expenditures currently budgeted and disclosed in 37 SCHEDULE 7.4.2; (e) enter into any Contract which requires the Consent of any third party to consummate the Contemplated Transactions; or make any modification to any existing Applicable Contract or to any Governmental Authorization, other than changes made in good faith that would not be material to the Acquired Companies as a whole, would not adversely affect the ability of Seller, the Acquired Companies or any of their respective Affiliates to consummate the Contemplated Transactions and would not adversely affect the ability of Buyer to conduct the Business of the Acquired Companies as currently conducted from and after the Closing; (f) enter into any Contract for the purchase, lease (as lessee) or other occupancy of real property or for the sale of any Owned Real Property or exercise any option to purchase real property listed in SCHEDULE 5.11.2 or any option to extend a lease listed in SCHEDULE 5.11.2; (g) sell, lease (as lessor), transfer or otherwise dispose of (including any transfers from any Acquired Company to Seller or any Affiliate of Seller other than another Acquired Company), or mortgage or pledge, or impose or suffer to be imposed any Encumbrance (other than a Permitted Encumbrance) on, any of the assets of any Acquired Company, other than inventory or other Personal Property not material to the Business sold or otherwise disposed of for fair value in the Ordinary Course of Business; (h) cancel any Indebtedness owed to or claims held by any Acquired Company (including the settlement of any claims or litigation) other than in the Ordinary Course of Business; (i) create, incur or assume, or agree to create, incur or assume, any Indebtedness or enter into, as lessee, any capitalized lease obligations (as defined in Statement of Financial Accounting Standards No. 13), except for borrowings incurred in the Ordinary Course of Business consistent with past practice, or Indebtedness incurred by loans or advances to officers and employees of the Acquired Companies for travel, business or relocation expenses in the Ordinary Course of Business; (j) accelerate or delay collection of any notes or accounts receivable in advance of or beyond their regular due dates or the dates when the same would have been collected in the Ordinary Course of Business; (k) delay or accelerate payment of any account payable or other Liability beyond or in advance of its due date or the date when such Liability would have been paid in the Ordinary Course of Business; (l) incur any Liability other than current Liabilities incurred in the Ordinary Course of Business; (m) make, or agree to make, any payment of any dividend or distribution of cash or any other assets to Seller or any Affiliate of Seller (other than another Acquired Company or in connection with the purchase of steel raw materials from WPC or PCC on normal terms and at prices not in excess of market prices in the Ordinary Course of Business); (n) make any addition to, contribution to, or modification of the Applicable Plans, other than (i) contributions made in accordance with the Ordinary Course of Business (which would include the normal discretionary contribution for 2001 to the Company's 401(k) Retirement Savings Plan in an amount consistent with that made in prior years); (ii) the extension of coverage to other employees who become eligible after December 31, 2001; and (iii) any plan amendments required by applicable Legal Requirements; (o) make any change in the compensation of the employees of the Acquired Companies, other than changes made in accordance with normal compensation practices and consistent with past practices; (p) make any change in the accounting policies applied in the preparation of the Financial Statements contained in SCHEDULE 5.5 other than as required by GAAP; (q) prepare or file any Tax Return inconsistent with past practice or, on any such Tax Return, take any position, make any election or adopt any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods (including, without limitation, positions, elections or methods which would have the effect of deferring income to periods for which 38 Buyer is liable or accelerating deductions to periods for which Seller is liable); or (r) enter into any agreement or take any action that would be prohibited by this Section 7.4. 7.5. NOTIFICATION BY SELLER OF CERTAIN MATTERS. During the period prior to the Closing Date, Seller will promptly advise Buyer in writing of (a) any Material Adverse Change in the Acquired Companies or the condition of their assets, (b) any written notice or other formal communication from any third Person alleging that the Consent of such third Person is or may be required in connection with the Contemplated Transactions and (c) any material default of which Seller has Knowledge under any Applicable Contract or event of which Seller has Knowledge which, with notice or lapse of time or both, would become such a default on or prior to the Closing Date. 7.6. TITLE ABSTRACTS AND SURVEYS. Seller has caused to be delivered to Buyer prior to the date of this Agreement, with respect to each parcel of Owned Real Property and Leased Real Property, any and all real estate title abstracts, commitments, reports, policies and surveys in the possession of Seller or any Acquired Company. If Buyer has ordered any additional title abstracts, reports, commitments or surveys for any or all of the Owned Real Property and/or Leased Real Property, Buyer shall pay the cost and expense of obtaining such title abstracts, reports, commitments and surveys. 7.7. COMPLIANCE WITH ENVIRONMENTAL PROPERTY TRANSFER ACTS. Seller shall provide or cause to be provided documentation deemed adequate by Buyer demonstrating full compliance with any applicable Environmental Property Transfer Act. Buyer shall cooperate with Seller in obtaining such compliance. 7.8. PAYMENT OF PITTSBURGH-CANFIELD OBLIGATION. Seller shall pay the Pittsburgh-Canfield Obligation to the Company at or prior to the Closing. 7.9. ERISA INDEMNITY. Seller and Buyer shall act reasonably and diligently, and shall cooperate with each other, in securing the Consent of the Agent (as defined in SCHEDULE 2.1) to the termination of that certain ERISA Indemnity, dated as of November 24, 1998, between Seller and the Company. SECTION 8. ADDITIONAL AGREEMENTS. 8.1. ACCESS TO RECORDS AFTER CLOSING. 8.1.1. For a period of five years after the Closing Date, Buyer shall retain, at Buyer's sole expense, the books, records and other data of the Business. During such period, Seller and its Representatives shall have reasonable access to all of the books and records of the Acquired Companies to the extent that such access may reasonably be required by Seller in connection with matters relating to or affected by the operations of the Acquired Companies prior to the Closing Date. Such access shall be afforded by Buyer upon receipt of reasonable advance notice and during normal business hours. Seller shall be solely responsible for any costs or expenses incurred by it pursuant to this Section 8.1.1. If Buyer shall desire to dispose of any of such books and records prior to the expiration of such five-year period, Buyer shall, prior to such disposition, give Seller a reasonable opportunity, at Seller's expense, to segregate and remove such books and records as Seller may select. 39 8.1.2. For a period of five years after the Closing Date, Buyer and its Representatives shall have reasonable access to all of the books and records relating to the Acquired Companies which Seller or any of its Affiliates may retain after the Closing Date. Such access shall be afforded by Seller upon receipt of reasonable advance notice and during normal business hours. Buyer shall be solely responsible for any costs and expenses incurred by it pursuant to this Section 8.1.2. If Seller or any of its Affiliates shall desire to dispose of any of such books and records prior to the expiration of such five-year period, Seller shall, prior to such disposition, give Buyer a reasonable opportunity, at Buyer's expense, to segregate and remove such books and records as Buyer may select. 8.2. EMPLOYEES AND EMPLOYEE BENEFIT PLANS. Seller covenants and agrees that, except for those plans listed on SCHEDULE 5.21 which cover only the Covered Employees, neither Buyer nor any Acquired Company shall have Liability with respect to or arising from any employee benefit plan (as defined in Section 3(3) of ERISA) which covers employees or former employees of Seller or a Commonly Controlled Entity (other than any of the Acquired Companies), including, without limitation, any multi-employer plan (as defined in Section 3(37) of ERISA) which covers employees or former employees of Seller or a Commonly Controlled Entity (other than any of the Acquired Companies). 8.3. CONFIDENTIAL NATURE OF INFORMATION. Each of Buyer, as a party on the one hand, and Seller, as a party on the other, agrees that it will treat in confidence all documents, materials and other information which it shall have obtained regarding the other party during the course of the negotiations leading to the consummation of the Contemplated Transactions (whether obtained before or after the date of this Agreement), the investigation provided for herein and the preparation of this Agreement and other related documents, and, in the event the Contemplated Transactions shall not be consummated, each party will return to the other party all copies of nonpublic documents and materials which have been furnished in connection therewith. Such documents, materials and information shall not be communicated to any third Person (other than, in the case of Buyer, to its counsel, accountants, financial advisors or lenders, and in the case of Seller, to its counsel, accountants or financial advisors). No Person shall use any confidential information, including, without limitation, with respect to the Business, any information relating to the Business or customers, suppliers, contractors, subcontractors and licensors, in any manner whatsoever except for (a) the purpose of evaluating the proposed purchase and sale of the Shares or the negotiation or enforcement of this Agreement or any agreement contemplated hereby; (b) where the disclosure of any portion thereof is required by applicable law or determined to be necessary to comply with any Order or Governmental Authorization (but only to the extent so required); PROVIDED, HOWEVER, that such party shall first notify the other party of any such requirement and, if the other party desires, shall cooperate with that party to seek approval to prevent or limit such disclosure; (c) where the disclosure of any portion thereof is required in order to obtain any of the Consents contemplated hereby, and both parties agree in writing that such disclosure is necessary; (d) where the information becomes generally available to the public other than as a result of a disclosure by Buyer, Seller or the Acquired Companies; or (e) where the information is or becomes lawfully available to Buyer from a source other than Seller. Notwithstanding the foregoing, after the Closing, Buyer and the Acquired Companies may use or disclose any confidential information related to the Acquired Companies or their Assets or Business. 40 8.4. NO SOLICITATION. From and after the date of this Agreement until the termination of this Agreement or Closing, neither Seller nor any of the Acquired Companies will, and each will use its Best Efforts to cause any Representative of Seller or any Acquired Company to not, (a) solicit or initiate the submission of any proposal or offer from any Person (other than Buyer) with respect to the acquisition of all or a portion of the outstanding capital stock of any Acquired Company or the merger, consolidation or sale of all or a significant portion of the Assets of any Acquired Company (an "Acquisition Proposal"), or (b) engage in negotiations or discussions with, or furnish any information or data to any third party relating to an Acquisition Proposal (other than the transactions contemplated hereby). Seller shall cause the Acquired Companies to comply with the provisions of this Section 8.4. 8.5. INDEBTEDNESS TO ACQUIRED COMPANIES. Seller shall cause all Indebtedness owed to an Acquired Company by Seller or any Affiliate of Seller (other than an Acquired Company) to be paid in full on or prior to the Closing Date. 8.6. INTERCOMPANY LIABILITIES. As of the Closing Date, there shall be no outstanding Liabilities of the Acquired Companies to Seller or any Affiliate of Seller (other than another Acquired Company) other than those Liabilities identified on SCHEDULE 8.6. Following the Closing, the Acquired Companies shall not be required to pay any of the Liabilities identified on SCHEDULE 8.6 in advance of their regular due date. 8.7. COVENANT NOT TO COMPETE OR SOLICIT BUSINESS. 8.7.1. In furtherance of the sale of the Shares to Buyer and to protect the value and goodwill of the Business of the Acquired Companies and in consideration of the Purchase Price, Seller covenants and agrees that, after the Closing: (a) for a period ending 18 months after the Closing Date, neither Seller nor any of Seller's Affiliates will directly or indirectly (whether as owner, consultant, manager, principal, agent, shareholder, partner or otherwise) own, manage, operate, control, participate in, or otherwise carry on, any business that produces, manufactures or sells any of the products produced, manufactured or sold by any of the Acquired Companies on the Closing Date anywhere in North America; PROVIDED, HOWEVER, THAT Buyer expressly acknowledges and agrees that PCC and Wheeling Corrugating, a division of Wheeling-Pittsburgh Steel Corporation, may continue to engage in their respective businesses as conducted on the Closing Date without violating the foregoing covenant; and, PROVIDED FURTHER, THAT nothing set forth in this Section 8.7 shall prohibit Seller or Seller's Affiliates from owning not in excess of 1% in the aggregate of any class of capital stock of any corporation if such stock is publicly traded and listed on any national or regional stock exchange or on The Nasdaq National Market; (b) for a period ending 18 months after the Closing Date, neither Seller nor any of Seller's Affiliates will directly or indirectly induce or attempt to persuade any supplier or customer of an Acquired Company to terminate or alter such business relationship with such Acquired Company; or (c) except as approved by Buyer, for a period ending 18 months after the Closing Date, neither Seller nor any of Seller's Affiliates will employ or otherwise retain the 41 services of any Person who was employed by any of the Acquired Companies at any time between March 31, 2002, and the Closing Date; PROVIDED, HOWEVER, THAT Buyer expressly acknowledges and agrees that Seller or any Affiliate of Seller may, without violating the foregoing covenant, (i) employ Garen W. Smith and Arthur L. Whitman at any time; (ii) immediately employ any Person who Buyer or any of the Acquired Companies voluntarily terminates after the Closing Date; or (iii) employ any Person who voluntarily terminates such Person's employment with any of the Acquired Companies after the Closing Date and who is not offered total annual compensation after the Closing at least equal to 100% of such Person's normal total annual compensation from the Acquired Companies (excluding any retention bonus or other non-recurring payments) in the year prior to Closing. 8.7.2. In addition, Seller covenants and agrees that neither Seller nor any Affiliate of Seller will divulge or make use of any Trade Secrets of the Acquired Companies other than to disclose such Trade Secrets to Buyer. 8.7.3. In the event Seller or any Affiliate of Seller violates any of such Person's obligations under this Section 8.7, Buyer or any of the Acquired Companies may proceed against such Person in law or in equity for such Damages or other relief as a court may deem appropriate. Seller acknowledges that a violation of this Section 8.7 may cause Buyer or the Acquired Companies irreparable harm which may not be adequately compensated for by money damages. Seller therefore agrees that in the event of any actual or threatened violation of this Section 8.7, Buyer or any of the Acquired Companies shall be entitled, in addition to other remedies that Buyer or any Acquired Company may have, to a temporary restraining order and to preliminary and final injunctive relief against Seller or such Affiliate of Seller to prevent any violations of this Section 8.7, without the necessity of posting a bond. The prevailing party in any action commenced under this Section 8.7 shall also be entitled to receive reasonable attorneys' fees and court costs. 8.7.4. It is the intent and understanding of each party hereto that if, in any Proceeding before any Governmental Body or arbitrator legally empowered to enforce this Section 8.7, any term, restriction, covenant or promise in this Section 8.7 is found to be unreasonable and for that reason unenforceable, then such term, restriction, covenant or promise shall be deemed modified to the extent necessary to make it enforceable by such Governmental Body or arbitrator. SECTION 9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. The obligation of Buyer to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction or waiver by Buyer of the following conditions: 9.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties made by Seller to Buyer in this Agreement or any Seller Ancillary Agreement or certificate delivered to Buyer on the Closing Date shall be true and correct in all material respects (a) when made and (b) on the Closing Date with the same force and effect as though such representations and warranties had been made on and as of such date, except for changes contemplated by this Agreement. 42 9.2. PERFORMANCE. Seller shall have duly performed all of the agreements, covenants and obligations required to be performed on the part of Seller under this Agreement on or before the Closing Date. 9.3. NO PROCEEDINGS. There shall not be pending any Proceeding brought or threatened by any Person before any Governmental Body or otherwise challenging, affecting or seeking material Damages in connection with, this Agreement or any of the Contemplated Transactions. 9.4. OPINION OF COUNSEL FOR SELLER. A favorable opinion of Olshan Grundman Frome Rosenzweig & Wolosky LLP, counsel for Seller, shall have been delivered to Buyer dated as of the Closing Date, in the form agreed to by the parties (the "Seller Opinion"). 9.5. HSR APPROVAL. All applicable waiting periods in respect of the Contemplated Transactions under the HSR Act and any other applicable antitrust laws shall have expired or been terminated. 9.6. CONSENTS. Consents (including all Consents required to be obtained by Seller under any Applicable Contracts to prevent a breach of such Contracts) required of Seller or any Acquired Company shall have been obtained, on terms and conditions reasonably satisfactory to Buyer, and Seller and the applicable Acquired Company shall provide evidence of the receipt of such Consents to Buyer. 9.7. NO ADVERSE CHANGE. No Material Adverse Change shall have occurred since the date of this Agreement. 9.8. DELIVERIES BY SELLER. Seller shall have made each and all of the deliveries contemplated by Section 4.1 of this Agreement. 9.9. LEVEL OF INDEBTEDNESS. The Company and the other Acquired Companies shall have no Indebtedness outstanding on the Closing Date other than the Indebtedness identified on SCHEDULE 9.9. 9.10. NO CLAIM REGARDING SHARE OWNERSHIP OR SALE PROCEEDS. There shall not have been made or threatened by any Person any claim asserting that such Person (a) is the holder or beneficial owner of, or has the right to acquire or to obtain beneficial ownership of, any capital stock of, or any other voting, equity or ownership interest in, any of the Acquired Companies, or (b) is entitled to all or any portion of the Purchase Price payable for the Shares. 9.11. AGREEMENT WITH GAREN W. SMITH. Garen W. Smith shall have entered into an agreement with Buyer whereby he shall agree that, except as approved by Buyer, for a period ending 18 months after the Closing Date, neither he nor any of his Affiliates will employ or otherwise retain the services of any Person who was employed by any of the Acquired Companies at any time between March 31, 2002, and the Closing Date; PROVIDED, HOWEVER, THAT Garen W. Smith or any of his Affiliates may (a) employ Arthur L. Whitman at any time; (b) immediately employ any Person who Buyer or any of the Acquired Companies voluntarily terminates after the Closing Date; or (c) employ any Person who voluntarily terminates such Person's employment with any of the Acquired Companies after the Closing Date and who is not 43 offered total annual compensation after the Closing at least equal to 100% of such Person's normal total annual compensation from the Acquired Companies (excluding any retention bonus or other non-recurring payments) in the year prior to Closing. SECTION 10. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. The obligation of Seller to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction or waiver by Seller of the following conditions: 10.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties made by Buyer to Seller in this Agreement or any Buyer Ancillary Agreement or certificate delivered to Seller on the Closing Date shall be true and correct in all material respects (a) when made and (b) on the Closing Date with the same force and effect as though such representations and warranties had been made on and as of such date, except for changes contemplated by this Agreement. 10.2. PERFORMANCE. Buyer shall have duly performed all of the agreements, covenants and obligations required to be performed on the part of Buyer under this Agreement on or before the Closing Date. 10.3. NO PROCEEDINGS. There shall not be pending any Proceeding brought or threatened by any Person before any Governmental Body or otherwise challenging, affecting or seeking material Damages in connection with, this Agreement or any of the Contemplated Transactions. 10.4. OPINION OF COUNSEL FOR BUYER. A favorable opinion of Vorys, Sater, Seymour and Pease LLP, counsel for Buyer, shall have been delivered to Seller dated as of the Closing Date, in the form agreed to by the parties (the "Buyer Opinion"). 10.5. HSR APPROVAL. All applicable waiting periods in respect of the Contemplated Transactions under the HSR Act and any other applicable antitrust laws shall have expired or been terminated. 10.6. CONSENTS. Consents required of Buyer shall have been obtained, on terms and conditions reasonably satisfactory to Seller, and Buyer shall provide evidence of the receipt of such Consents to Seller. 10.7. DELIVERIES BY BUYER. Buyer shall have made each and all of the deliveries contemplated by Section 4.2 of this Agreement. SECTION 11. CERTAIN TAX MATTERS. 11.1. TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE; TAX SHARING PAYMENT. All Taxes payable by or on behalf of an Acquired Company that are attributable to any taxable period ending on or before the Closing Date, including those that become due after the Closing Date, shall be paid by Seller. Buyer shall provide Seller with any and all information Seller may reasonably require in regard to the Acquired Companies for the preparation of Seller's consolidated Tax Return and all applicable final state Tax Returns of the Acquired Companies. All Tax Returns involving the Acquired Companies for such taxable periods shall be prepared and filed by Seller, at Seller's sole cost, when the same are due; PROVIDED, HOWEVER, THAT Seller 44 shall permit Buyer to review and comment on each such Tax Return (except to the extent such Tax Return is filed on a consolidated basis with the Tax Return of Seller or any of Seller's Subsidiaries, Buyer shall be only permitted to review the portion of such Tax Return as specifically relates to the Acquired Companies) prior to filing and shall make such revisions to such Tax Returns as are reasonably requested by Buyer as long as such revisions are consistent with the prior practices of the Acquired Companies and will not delay the filing of the Tax Return in a timely manner. In connection with Buyer's review, which shall be at Buyer's sole cost, Seller agrees to provide any and all financial data that is reasonably necessary to confirm the correctness of any such Tax Returns. Where required by applicable Legal Requirements, a current officer of an Acquired Company will sign and mail any such Tax Return after the review and comment procedure has been completed but in no event later than the date such Tax Return is due. 11.2. TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING DATE. 11.2.1. With respect to Taxes that are payable by or on behalf of an Acquired Company for a taxable period that begins before the Closing Date and ends after the Closing Date, the portion of such Taxes attributable to the pre-Closing Date portion of such taxable period shall (i) in the case of any Taxes other than a Tax based upon or related to income, sales, gross receipts, wages, capital expenditures or expenses, be deemed equal to the amount of such Tax for the entire period multiplied by a fraction the numerator of which is the number of days in the entire period ending on the Closing Date and the denominator of which is the number of days in the entire period, and (ii) in the case of any Taxes based upon or related to income, sales, gross receipts, wages, capital expenditures or expenses, be deemed equal to the amount that would be payable if the taxable period ended on the Closing Date. Any credit arising in connection with such taxable period shall be properly credited to the pre-Closing Date or post-Closing Date portions of such taxable period in which such credit arose. 11.2.2. All Tax Returns for such taxable periods described in Section 11.2.1 shall be prepared and filed by Buyer, at Buyer's sole cost, as and when the same are due; PROVIDED, HOWEVER, that Buyer shall permit Seller to review and comment on each such Tax Return prior to filing and shall make such revisions to such Tax Returns as are reasonably requested by Seller as long as such revisions are consistent with the prior practices of the Acquired Companies. In connection with Seller's review, Buyer agrees to provide any and all financial data that is deemed reasonably necessary or appropriate by Seller's accountants to confirm the correctness of any such Tax Returns. Seller shall pay to Buyer or the Company the pre-Closing Date portion of such Taxes within five days after receipt of a bill from Buyer or the Company therefor. Buyer or the Acquired Companies shall be responsible for the post-Closing Date portion of such Taxes. 11.3. TAX PERIODS BEGINNING AFTER THE CLOSING DATE. All Taxes payable by or on behalf of an Acquired Company that are attributable to any taxable period beginning after the Closing Date shall be paid by Buyer or the Acquired Companies. 11.4. TAX REFUNDS AND CREDITS. Any refunds or credits of Taxes, to the extent arising from taxable periods (or portions thereof) ending on or before the Closing Date, shall be for the account of Seller and, to the extent arising from taxable periods (or portions thereof) beginning 45 after the Closing Date, shall be for the account of Buyer. Seller and Buyer each shall promptly forward to the other any such refunds or credits due to the other after receipt thereof. 11.5. PROPOSED TAX ASSESSMENTS; CONTEST. 11.5.1. Seller agrees to be liable for any additional Taxes which may increase the Taxes of an Acquired Company or Seller's consolidated group as a result of an audit by any Governmental Body of an Acquired Company in regard to any taxable period ending on or before the Closing Date. No Acquired Company shall be liable to contribute to the payment of any Taxes determined on a consolidated, combined or unitary basis with respect to Seller's consolidated group which are imposed on Seller or any member of Seller's consolidated group which included any Acquired Company in regard to any taxable period ending on or before the Closing Date, resulting from the several liability of any Acquired Company pursuant to Treasury Regulations Section 1.1502-6 or any analogous state, local or foreign law or regulation. In the event there is an audit of an Acquired Company for a period that straddles a taxable period ending on or before the Closing Date and on or after the Closing Date, Seller shall be liable for the increase in Tax attributable to the Acquired Companies which may be attributable to a taxable period ending before the Closing Date and Buyer or the Acquired Companies shall be liable for that portion of the same which is attributable to a taxable period ending after the Closing Date. 11.5.2. In the event of an audit of any Acquired Company for a taxable period ending on or before the Closing Date, Seller shall have the right to handle such audit and hire professionals at its own expense to protest in any form any assessment of any increase in Taxes to Seller's consolidated group or the Acquired Companies as a result of the audit of an Acquired Company for such taxable period. Buyer and the Acquired Companies shall fully cooperate with Seller in good faith to provide any information needed by Seller in order to complete such audit or conduct any Proceedings objecting to any position taken by a Governmental Body; PROVIDED, HOWEVER, Seller shall not, in the course of such protest, take a position inconsistent with prior positions which will be likely to establish a precedential custom or practice materially adverse to an Acquired Company and/or Buyer for taxable periods (or portions thereof) beginning after the Closing Date without the prior written consent of the Acquired Companies and/or Buyer, which consent shall not be unreasonably withheld. 11.5.3. If Buyer objects to any settlement proposed by Seller's consolidated group or an Acquired Company, which settlement has been agreed to by a Governmental Body, as a result of an audit of an Acquired Company for the period before the Closing Date, Buyer may take over the defense of that claim at its own cost but shall indemnify Seller for any additional Taxes (including interest and penalties) Seller's consolidated group may incur above the amount Seller's consolidated group was willing to settle for, and in fact could have settled for, provided that the terms of Seller's settlement will not establish a precedential custom or practice materially adverse to an Acquired Company and/or Buyer for taxable periods (or portions thereof) after the Closing Date. 11.6. TRANSFER TAXES. Seller shall pay one-half, and Buyer shall pay one-half, of all transfer taxes (if any) arising from the Contemplated Transactions. 46 11.7. SECTION 338(h)(10) ELECTION. 11.7.1. Buyer and Seller shall file the election provided for by Section 338(h)(10) of the IRC and any comparable election under state, local or foreign law (collectively and separately, the "Election") with respect to (i) the acquisition of the Shares of the Company pursuant to this Agreement and (ii) the deemed acquisition of the shares of each Subsidiary. Each party shall provide to the other all information necessary to permit the Election to be made. Seller and Buyer shall, within the time periods established by applicable Legal Requirements, execute and file IRS Form 8023 and all other forms, returns, elections, schedules and documents as may be required to effect and preserve a timely Election. 11.7.2. Seller and Buyer acknowledge and agree that for federal income tax purposes the acquisition of the Shares pursuant to the Election will be treated as a sale of the Assets of the Company and each Subsidiary followed by a complete liquidation of the Company and each Subsidiary into Seller. In connection with the Election and within the time periods established by applicable Legal Requirements, Seller and Buyer shall act together in good faith (i) to determine and agree upon the amount of the deemed sale price of the Shares as well as the deemed sale price of the shares of each Subsidiary and (ii) to agree upon the proper allocations (the "Allocations") of the deemed sale price of the Shares and the shares of each Subsidiary among the Assets of the Company and each Subsidiary in accordance with the IRC. Within the time periods established by applicable Legal Requirements for making and filing the Election, the Allocations shall be set forth in SCHEDULE 11.7.2 to this Agreement. Neither Seller nor Buyer, nor any of their Affiliates, will take any position inconsistent with the Election, the Allocations or the amount of the deemed sale prices so determined in any Tax Return or otherwise. Any Liability for state and local Taxes resulting from the Election shall be shared equally by Seller and Buyer. Any Liability for federal Taxes resulting from the Election shall be borne by Seller. Buyer and Seller shall act together in good faith to determine jointly the amount of state and local Taxes resulting from the Election. 11.7.3. If Seller breaches any covenant set forth in this Section 11.7, Seller shall indemnify and hold Buyer, each Acquired Company and each of their Affiliates harmless against any and all Taxes due from an Acquired Company which result from such breach for any and all taxable periods ending after the Closing Date (including, but not limited to, the post-Closing Date portion of all taxable periods described in Section 11.2 hereof), together with all Expenses related thereto. Solely for purposes of this Section 11.7.3, the term "Taxes" shall mean the present value as of the Closing Date of the step up in the adjusted basis of the Assets of each Acquired Company that would have resulted from a valid Election, computed on the following assumptions: (i) the Allocations determined pursuant to Section 11.7.2 hereof (taking into account Buyer's transaction costs) are correct; (ii) each highest marginal rate of Tax applied to income of a corporation as of the Closing Date pursuant to applicable federal, state, local and foreign law shall apply; and (iii) the discount rate shall be the rate of interest that the Escrow Agent publishes as its prime rate as of the Closing Date (the "Interest Rate"). Seller shall pay such Taxes and Expenses to Buyer in immediately available funds within thirty days after written demand therefor, together with interest from the Closing Date at a rate per annum equal to the Interest Rate. Buyer shall deliver with such written demand evidence of such Expenses. 47 11.8. COOPERATION AND ASSISTANCE. Buyer and Seller agree to furnish or cause to be furnished to each other, upon written request, as promptly as practicable, such information (including, without limitation, reasonable access to books, records, schedules, work papers and other documents relating thereto during the providing party's regular business hours) and reasonable assistance relating to the Acquired Companies necessary for the filing of any Tax Return required to be filed after the Closing Date, preparation for any audit or prosecution or defense of any Proceeding relating to any proposed adjustment, or the verification by any party hereto of an amount payable under this Section 11 to, or receivable under this Section 11 from, another such party. Buyer and Seller shall cooperate with each other in the conduct of any audit or other Proceeding involving any of the Acquired Companies or any Person with which either of or both of them is consolidated or combined for any purposes relating to Taxes, and each shall execute and deliver such documents as are necessary to carry out the intent of this Section 11.8. 11.9. NONFOREIGN AFFIDAVIT. Seller shall furnish to Buyer an affidavit, in form reasonably satisfactory to Buyer, stating, under penalties of perjury, Seller's United States taxpayer identification number and that Seller is not a foreign person, pursuant to Section 1445(b)(2) of the IRC. 11.10. TAX SHARING PAYMENTS. No later that ninety (90) days after the Closing, Buyer shall remit to Seller an amount equal to payments due to Seller by the Acquired Companies for any fiscal period ending on or prior to the Closing Date pursuant to the Tax Sharing Agreement. SECTION 12. INDEMNIFICATION; REMEDIES. 12.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations, warranties, covenants and agreements set forth in this Agreement by Buyer and Seller are material to this Agreement and have been relied on by the other party hereto. All representations, warranties, covenants and agreements set forth in this Agreement and the remedies of Buyer and Seller with respect thereto, shall survive the Closing Date; PROVIDED, HOWEVER, (a) that any claim for indemnification relating to the breach by Buyer of any of its representations and warranties contained in this Agreement may be made by Seller only if Seller shall notify Buyer on or before the expiration of the second year after the Closing Date; (b) that any claim for indemnification relating to the breach by Seller of any of its representations and warranties contained in this Agreement may be made by Buyer only if Buyer shall notify Seller (i) on or before the expiration of the second year after the Closing Date in the case of indemnification relating to the breach of any of the representations and warranties contained in Section 5.1, Section 5.2, Sections 5.4 through 5.9, Sections 5.11 through 5.22, and Sections 5.24 through 5.28; (ii) at any time after the Closing Date in the case of indemnification relating to the breach of any of the representations and warranties contained in Section 5.3 of this Agreement; (iii) on or before the expiration of the applicable statute of limitations in the case of indemnification relating to the breach of any of the representations and warranties contained in Section 5.10 of this Agreement; and (iv) on or before the expiration of the fifth year after the Closing Date in the case of indemnification relating to the breach of any of the representations and warranties contained in Section 5.23 of this Agreement; and (c) that any claim for indemnification under Section 12.2(d) or Section 12.2(e) of this Agreement may be made by Buyer only if Buyer shall notify Seller on or before the expiration of the fifth year after the Closing Date. 48 12.2. INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER. Seller will indemnify and hold harmless Buyer and its Affiliates, which shall include the Acquired Companies after the Closing (collectively, the "Buyer Indemnified Persons") for, and will pay to the Buyer Indemnified Persons, the amount of, any loss, liability, claim, damage, fine, penalty or Expenses (collectively, "Damages"), incurred by the Buyer Indemnified Persons arising, directly or indirectly, from or in connection with: (a) any breach of any representation or warranty made by Seller in this Agreement or in any other certificate or document delivered by Seller pursuant to this Agreement; (b) any breach by the Seller of any covenant or obligation of Seller in this Agreement; (c) any of the Proceedings and other matters identified on SCHEDULE 12.2(c); (d) any Environmental Liabilities (including, without limitation, property damage (including trespass, nuisance, wrongful eviction and deprivation of the use of real property)) arising out of or relating to: (i)(A) the ownership, operation, or condition at any time on or prior to the Closing Date of the Facilities or any other properties and assets (whether real, personal, or mixed and whether tangible or intangible) in which any Acquired Company has or had an interest, or (B) any Contaminants that were present on the Facilities or such other properties and assets in which any Acquired Company has or had an interest at any time on or prior to the Closing Date, or (ii)(A) any Contaminants, wherever located, that were, or which a Governmental Body or other third Person in a written notice or other formal communication alleges were, used, generated, transported, stored, treated, Released, or otherwise handled by any Acquired Company or by any other Person for whose conduct an Acquired Company is or may be held responsible at any time on or prior to the Closing Date, or (B) any Hazardous Activities that were conducted on or prior to Closing, or which a Governmental Body or other third Person in a written notice or other formal communication alleges were conducted on or prior to Closing, by any Acquired Company or by any other Person for whose conduct an Acquired Company may be held responsible; or (e) any bodily injury (including illness, disability, and death, and regardless of when any such bodily injury occurred, was incurred, or manifested itself) or personal injury to any Person, including any employee or former employee of any Acquired Company or any other Person for whose conduct an Acquired Company may be held responsible, arising from or relating to the exposure or alleged exposure of any Person to any Contaminant (i) present on or before the Closing Date on or at the Facilities (or present on any other property, if such Contaminants emanated, or a Governmental Body or other third Person in a written notice or other formal communication alleges emanated, from any of the Facilities and was present on any of the Facilities on or prior to the Closing Date) or (ii) Released, or a Governmental Body or other third Person in a written 49 notice or other formal communication alleges were Released, by any Acquired Company or any other Person for whose conduct the Acquired Company may be held responsible, at any time on or prior to the Closing Date. For purposes of Section 12 of this Agreement, all Damages shall be computed net of any insurance proceeds actually received or to be received (after taking into account any deductible or co-payment amounts) the Acquired Companies or Buyer with respect thereto which reduces the Damages that would otherwise be sustained; PROVIDED, HOWEVER, THAT in all cases, the timing of the receipt or realization of insurance proceeds shall be taken into account in determining the amount of reduction of Damages. To the extent the Acquired Companies or Buyer receive insurance proceeds relating to the payment of a claim for Damages by Seller, Buyer will refund to Seller the amount of such payment to the extent the Acquired Companies or Buyer receive insurance proceeds duplicative of payments previously paid to the Acquired Companies or Buyer by Seller relating to such claim for Damages. Notwithstanding the foregoing, for purposes of Section 12 of this Agreement, payments made by any captive insurance company of Buyer or any Affiliate of Buyer to any Acquired Company or Buyer shall not be deemed to constitute insurance proceeds. 12.3. INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will indemnify and hold harmless Seller and its Affiliates (the "Seller Indemnified Persons") for, and will pay to the Seller Indemnified Persons, the amount of any Damages incurred by the Seller Indemnified Persons arising, directly or indirectly, from or in connection with: (a) any breach of any representation or warranty made by Buyer in this Agreement, or any other certificate or document delivered by Buyer pursuant to this Agreement; or (b) any breach by Buyer of any covenant or obligation of Buyer in this Agreement. 12.4. LIMITATIONS ON INDEMNIFICATION. 12.4.1. Except for claims for indemnification against Seller in respect of a breach by Seller of a covenant or obligation of Seller under Section 2, Section 3, Section 7, Section 8, Section 11, Section 12.2(c) or Section 14.1 of this Agreement or in respect of a breach by Seller of a representation or warranty of Seller under Section 5.10 or Section 5.27 of this Agreement: (a) no claim shall be made for indemnification against Seller pursuant to this Agreement unless and until the aggregate amount of Damages incurred by the Buyer Indemnified Persons under this Agreement exceeds $500,000 (the "Buyer Indemnification Threshold") and then 50 Seller shall be liable for Damages only to the extent of the excess over the Buyer Indemnification Threshold; and (b) the total Liability of Seller to Buyer under Section 12.2 hereof shall be limited (i) in respect of Damages incurred by Buyer which relate to the ownership or operation of any formerly owned Company Property, in the aggregate to $5 million; and (ii) in respect of all Damages incurred by Buyer, in the aggregate to $15 million, which limit shall include the limit set forth in clause (i) of this Section 12.4.1(b). 12.4.2. Except for claims for indemnification against Buyer under Section 12.3(b) or under the provisions of Section 11 of this Agreement, no claim shall be made for indemnification against Buyer pursuant to this Agreement unless and until the aggregate amount of Damages incurred by the Seller Indemnified Persons exceeds $500,000 (the "Seller Indemnification Threshold") and then Buyer shall be liable for Damages only to the extent of the excess over the Seller Indemnification Threshold. 12.5. PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS. 12.5.1. If any Seller Indemnified Person or Buyer Indemnified Person entitled to indemnification under this Agreement (an "Indemnitee") receives notice of the commencement of any Proceeding by any Person who is not a party to this Agreement or an Affiliate of such a party (a "Third Party Claim") against such Indemnitee for which a party hereto is obligated to provide indemnification under this Agreement (an "Indemnitor"), the Indemnitee will give such Indemnitor reasonably prompt written notice thereof (the "Third Party Claim Notice"), but the failure to so notify Indemnitor shall not relieve Indemnitor of its indemnity obligations with respect to such Third Party Claim unless the Indemnitor establishes that the defense of such Third Party Claim is actually prejudiced by the Indemnitee's failure to give such notice. The Third Party Claim Notice will describe the Third Party Claim in reasonable detail and will indicate the estimated amount, if reasonably practicable, of the Damages that have been or may be sustained by the Indemnitee. Except as otherwise set forth in this Section 12.5, the Indemnitor will have the right to assume the defense of any Third Party Claim at the Indemnitor's own expense and with counsel selected by the Indemnitor (which counsel shall be reasonably satisfactory to the Indemnitee) by giving to the Indemnitee written notice in which the Indemnitor acknowledges its responsibility to indemnify the Indemnitee (the "Assumption Notice") no later than 30 calendar days after receipt of the Third Party Claim Notice. The Indemnitor shall not be entitled to assume the defense of, and the Indemnitee shall be entitled to have sole control over, the defense or settlement of any Third Party Claim to the extent that such claim involves matters, or seeks an order, injunction or other equitable relief against the Indemnitee, which, if successful, would be reasonably likely to materially interfere with the business, operations, assets, financial condition or prospects of the Indemnitee or otherwise have a Material Adverse Effect. In the event the Indemnitor assumes the defense of a Third Party Claim, the Indemnitee will cooperate in good faith with the Indemnitor in such defense and will have the right to participate in the defense of any Third Party Claim assisted by counsel of its own choosing and at its own expense. Notwithstanding the foregoing, if the named parties to the Third Party Claim (including any impleaded parties) include both the Indemnitor and the Indemnitee or if the Indemnitor proposes that the same counsel represent both the Indemnitee 51 and the Indemnitor and the Indemnitee in good faith determines that representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them, then the Indemnitee shall have the right to retain its own counsel at the cost and expense of the Indemnitor. If the Indemnitee does not receive the Assumption Notice within the 30 calendar day period set forth above or if the Indemnitor is not entitled to assume the defense of the Third Party Claim, the Indemnitee shall have sole control over the defense and settlement of the Third Party Claim, and the Indemnitor will be liable for all Damages paid or incurred in connection therewith. 12.5.2. If the Indemnitor assumes the defense of the Third Party Claim, the Indemnitor shall not compromise or settle such claim without the Indemnitee's consent unless (a) there is no finding or admission of any violation of Legal Requirements or any violation of the rights of any Person and no effect on any other claims that may be made against the Indemnitee, (b) the sole relief provided is monetary damages that are paid in full by the Indemnitor and (c) the settlement includes as an unconditional term a complete release of each Indemnitee from all liability in respect of such claim. 12.5.3. Each Indemnitor who assumes the defense of a Third Party Claim shall use reasonable efforts to diligently defend such claim. 12.6. PROCEDURE FOR INDEMNIFICATION--DIRECT CLAIMS. Except for Direct Environmental Claims (as defined in Section 12.7 of this Agreement), any claim by an Indemnitee for indemnification under this Agreement other than indemnification against a Third Party Claim (a "Direct Claim") will be asserted by the Indemnitee giving the Indemnitor written notice thereof, requesting indemnification and specifying the basis on which indemnification is sought and the amount of asserted Damages, to the extent then known, and the Indemnitor will have a period of 30 calendar days within which to respond in writing to such Direct Claim (an "Objection Notice"). If the Indemnitee receives an Objection Notice, then the Indemnitor and the Indemnitee shall negotiate in good faith for a period of 30 calendar days from the date the Indemnitee receives the Objection Notice prior to commencing any Proceeding with respect to such Direct Claim; PROVIDED, THAT such obligation to negotiate shall not be deemed to toll or otherwise extend the length of any cure or notice period set forth in this Agreement or otherwise limit the ability of the Indemnitee to exercise any rights which would otherwise be available to it but for the obligation to negotiate. If the Indemnitor does not respond within the 30 calendar day period specified above, the Indemnitor will be deemed to have rejected such claim, in which event the Indemnitee will be free to pursue such remedies as may be available to the Indemnitee under this Agreement or pursuant to law. 12.7. PROCEDURE FOR INDEMNIFICATION--DIRECT ENVIRONMENTAL CLAIMS. 12.7.1. If the Indemnitee shall assert against the Indemnitor any Direct Claim for indemnification relating to any Environmental Liabilities (a "Direct Environmental Claim"), Indemnitee shall give the Indemnitor notice of such Direct Environmental Claim (the "Environmental Claim Notice"), which notice shall describe in reasonable detail the claim, the amount thereof (if known and quantifiable), and a reasonably detailed description of the facts giving rise to such Direct Environmental Claim. 52 12.7.2. Indemnitor shall be entitled to assume principal management of a Direct Environmental Claim which it acknowledges to be Indemnitor's sole or principal responsibility under this Agreement. To assume principal management, Indemnitor must notify Indemnitee within 30 calendar days (or such other period as the parties may agree to in writing) of receipt of the Environmental Claim Notice that it intends to assume principal management, subject to Indemnitor's right to rescind such acknowledgment upon its reasonable determination, and upon prompt written notice to Indemnitee (a "Denial Notice"), that it does not bear sole or principal liability under this Agreement for the claim. Provided, however, Indemnitor shall not be entitled to issue a Denial Notice after Indemnitee has incurred substantial expenditures, obligations, or exposure in reliance on Indemnitor's assumption of principal management. Indemnitee shall provide Indemnitor with 30 calendar days' advance notice (or such shorter period of advance notice as exigent circumstances may warrant) prior to incurring any substantial expenditure, obligation or exposure in reliance on Indemnitor's assumption of principal management of a Direct Environmental Claim. In the event Indemnitor either elects not to undertake principal management or provides Indemnitee with a Denial Notice, Indemnitee may assume principal management of the subject matter of the claim, and reserve whatever rights it may have against Indemnitor. Any acknowledgment of responsibility for a claim by either the Indemnitor or Indemnitee shall be without prejudice to any rights to seek indemnity or contribution from third parties. 12.7.3. The party not exercising principal management with respect to a particular Direct Environmental Claim shall be entitled, at its sole cost and expense, to monitor the satisfaction of the claim. Monitoring shall include (a) obtaining copies of all reports, work plans and analytical data submitted to Governmental Bodies, all notices or other letters or documents received from Governmental Bodies, any other documentation and correspondence materially bearing on the claim, and notices of material meetings, (b) the opportunity to attend and participate in such material meetings, and (c) the right of reasonable consultation with the party exercising principal management. The party exercising principal management in respect of a matter, prior to taking any action to satisfy a claim unless not practicable in view of exigent circumstances, shall prepare a written plan describing the details of such action (the "Remedial Plan") and provide the other party with copies of the Remedial Plan. Within 30 calendar days of the date that the Remedial Plan is received, the party receiving the Remedial Plan shall notify the party that provided the Remedial Plan, in writing, if it believes that the Remedial Plan is not in conformity with the standards set forth in this Section 12.7 and shall provide a detailed explanation of the reasons for its conclusions. The parties shall negotiate in good faith any dispute arising from the Remedial Plan and attempt to resolve any differences within 20 calendar days. If the parties are unable to resolve any dispute arising from the Remedial Plan, the matter shall be submitted to arbitration as provided in Section 12.7.7. 12.7.4. In the event it undertakes principal management of any matter, Indemnitor shall, upon notice to Indemnitee, have access to the Assets necessary to implement the Remedial Plan. Indemnitor shall use its best efforts to undertake all activities that it conducts or coordinates hereunder in a manner which does not unreasonably interfere with the day-to-day operation of the Business. 12.7.5. The party undertaking principal management hereunder for any matter shall manage the matter in good faith and in a responsible manner, and any activities conducted 53 in connection therewith shall be undertaken promptly and concluded expeditiously using commercially reasonable efforts. 12.7.6. The adequacy of any remedial action with respect to a claim hereunder for Company Property owned at the time of the claim shall be evaluated using the following criteria. Such remedial action shall be deemed adequate for purposes of satisfying the obligations hereunder if such remedial action (a) attains compliance in a cost-effective manner with the applicable Legal Requirements of Environmental Laws pertaining to such remedial action (including such additional standards as may be imposed by an appropriate Governmental Body) as they relate to the non-residential use of such Company Property, as currently used as of the Closing and, if no Legal Requirements of Environmental Laws apply, then the remedial action shall be that which is necessary to prevent a threat to human health and the Environment; and (b) interferes to the least extent reasonably practicable with the operations of the Business. 12.7.7. If a dispute arises with respect to a remedial action hereunder, the parties agree to negotiate in good faith in an attempt to resolve such dispute. In the event such dispute cannot be resolved within 20 calendar days of written notice of a dispute (or such shorter period as exigent circumstances may warrant), the parties shall select within 14 calendar days thereafter (or such shorter period as exigent circumstances may warrant) a mutually satisfactory technical consultant or attorney (the "Environmental Arbitrator"), who shall review the information relevant to the dispute provided by the parties and within 30 calendar days (or such shorter period as exigent circumstances may warrant) render a decision binding upon the parties hereto irrespective of whether either party contests or participates in the dispute resolution. Any fees charged by the Environmental Arbitrator shall be allocated as determined by the Environmental Arbitrator between Seller and Buyer. In making its determination, the Environmental Arbitrator shall be bound by the standards set forth in this Section 12.7. If an Environmental Arbitrator cannot be agreed upon within the aforesaid period, the parties shall direct the Chicago office of the American Arbitration Association Center to immediately provide a list of six potential arbitrators. From the list provided, each party shall have the opportunity to strike one name, and the American Arbitration Association shall appoint the Environmental Arbitrator from the remaining names. The final determination of the Environmental Arbitrator shall be final and binding on the parties and there shall be no appeal from or reexamination of such final determination, except for fraud, perjury, evident partiality or misconduct by the Environmental Arbitrator prejudicing the rights of any party, and to correct manifest clerical errors. The parties may enforce any final determination of the Environmental Arbitrator in any court of competent jurisdiction. 12.7.8. Neither party shall contact any Governmental Body or third parties, other than such party's own Representatives regarding a potential Direct Environmental Claim without giving reasonably prompt notice thereof to the other party, when reasonably possible within the available time constraints, provided nothing herein shall require any delay in contacting any Governmental Body or third party if such delay would violate any Legal Requirement or Environmental Law. In connection with either party's assumption of the defense of the other party of a Third Party Claim relating to environmental matters, the Indemnifying Party shall promptly provide the Indemnitee with any material correspondence with Governmental Body enforcing Environmental Laws and any test results, work plans, reports, 54 data and other material information relating thereto. Either party shall have the right in its sole discretion to participate in any such contact to the extent reasonably possible. 12.8. ESCROW. Neither the giving of, nor the failure to give, notice of a claim under the Escrow Agreement shall be deemed to constitute an election of remedies or limit Buyer in any manner in the enforcement of any other remedies that may be available to it. SECTION 13. TERMINATION. 13.1. TERMINATION. Anything contained in this Agreement to the contrary notwithstanding, this Agreement may be terminated at any time prior to the Closing Date: (a) by the mutual consent of Buyer and Seller; (b) by Buyer or Seller (the "Terminating Party") if the Closing shall not have occurred on or before September 30, 2002 (or such later date as may be mutually agreed to by Buyer and Seller); provided that (i) if the Closing shall not have occurred as a result of the willful act or omission of one of the parties or (ii) the non-terminating party shall have the right to terminate this Agreement pursuant to Section 13.1(c) or (d), as the case may be, then such Terminating Party may not terminate this Agreement pursuant to this Section 13.1(b); (c) by Buyer in the event of any material breach by Seller of any of Seller's agreements, representations or warranties contained herein and the failure of Seller to cure such breach within 15 days after receipt of written notice from Buyer requesting such breach to be cured; PROVIDED HOWEVER, THAT Buyer may not terminate this Agreement pursuant to this Section 13.1(c) in the event that Buyer is in material breach of any of Buyer's agreements, representations or warranties contained in this Agreement at such time of termination; or (d) by Seller in the event of any material breach by Buyer of any of Buyer's agreements, representations or warranties contained herein and the failure of Buyer to cure such breach within 15 days after receipt of written notice from Seller requesting such breach to be cured; PROVIDED, HOWEVER, that Seller may not terminate this Agreement pursuant to this Section 13.1(d) in the event that Seller is in material breach of any of Seller's agreements, representations or warranties contained in this Agreement at such time of termination. 13.2. NOTICE OF TERMINATION. Any party desiring to terminate this Agreement pursuant to Section 13.1 shall give written notice of such termination to the other party to this Agreement. 13.3. EFFECT OF TERMINATION. In the event that this Agreement shall be terminated pursuant to Section 13.1(a) or 13.1(b), each party shall pay all expenses incurred by it in connection with this Agreement, and no party shall have any further obligations or liability for any damages or expenses under this Agreement. In the event of a termination by Buyer pursuant to Section 13.1(c), then Seller shall pay to Buyer by wire transfer of immediately available funds (not later than five business days after termination of this Agreement) an amount equal to $5 million. In the event of a termination by Seller pursuant to Section 13.1(d), then Buyer shall pay to Seller by wire transfer of immediately available funds (not later than five business days after termination of this Agreement) an amount equal to $5 million. In the event of any termination, all further obligations of the parties under this Agreement (other than those set forth in 55 Section 8.3, 14.1, 14.2 and this Section 13) shall be terminated without further liability of any party to the other. In the event this Agreement is terminated pursuant to Sections 13.1(c) or (d), the $5 million payment described above shall constitute the full amount of liquidated damages payable by Seller or the Acquired Companies, as a party on the one hand, or Buyer, as a party on the other hand, for the failure to close the transactions described in this Agreement or any breach, or series of breaches, by such party of the representations, warranties and covenants of such party set forth in this Agreement. No party shall have any further claim or recourse against the non-terminating party with respect to this Agreement following the payment of such $5 million amount. SECTION 14. GENERAL PROVISIONS. 14.1. EXPENSES. Except as otherwise specifically set forth herein, each of Buyer, as a party on the one hand, and Seller, as a party on the other, will pay all costs and expenses incident to its negotiation and preparation of this Agreement and to its performance and compliance with all agreements and conditions contained herein on its part to be performed or complied with, including the fees, expenses and disbursements of its Representatives. All costs and expenses, if any, incurred by the Acquired Companies prior to the Closing Date in connection with this Agreement and the Contemplated Transactions, including the fees, expenses and disbursements of the Acquired Companies' Representatives, shall be paid by Seller, other than miscellaneous office costs and expenses, such as overnight courier service and facsimile charges, which are immaterial in amount in the aggregate. 14.2. PUBLIC ANNOUNCEMENTS. Neither Buyer nor Seller shall, without the approval of the other, make any press release or other public announcement concerning the Contemplated Transactions, except as and to the extent that counsel for a party advises any such party that it is so obligated by Legal Requirement or the rules of any stock exchange or quotation system to issue a release or announcement, in which case the other party shall be advised and the parties shall use their Best Efforts to cause a mutually agreeable release or announcement to be issued. Seller and Buyer will consult with each other concerning the means by which the Acquired Companies' employees, customers and suppliers and others having dealings with the Acquired Companies will be informed of the Contemplated Transactions, and Buyer will have the right to be present for the same to the extent reasonably practicable. 14.3. NOTICES. All notices, consents, waivers and other communications under this Agreement must be in writing and will be deemed to have been duly given (a) when delivered by hand (with written confirmation of receipt), (b) when sent by telecopier (with written confirmation of receipt) and sent by nationally recognized overnight mail within 24 hours thereafter, or (c) one day following being sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and telecopier numbers set forth below: 56 If to Seller: WHX Corporation 110 East 59th Street New York, New York 10022 Attn: Stewart E. Tabin Fax: (212) 355-5336 with a copy (which shall not constitute notice) to: Olshan Grundman Frome Rosenzweig & Wolosky LLP 505 Park Avenue New York, New York 10022 Attn: Steven Wolosky Fax: (212) 755-1467 If to Buyer: Worthington Industries, Inc. 1205 Dearborn Drive Columbus, Ohio 43085 Attn: Dale T. Brinkman, Esq. Fax: (614) 840-3706 with a copy (which shall not constitute notice) to: Elizabeth Turrell Farrar, Esq. Vorys, Sater, Seymour and Pease LLP 52 East Gay Street P.O. Box 1008 Columbus, Ohio 43216-1008 Fax : (614) 719-4708 Either party hereto may change any of the information specified above by sending notice to the other party with such changed information. 14.4. FURTHER ASSURANCES. The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement. 14.5. WAIVER. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted by 57 applicable law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement. 14.6. ENTIRE AGREEMENT AND MODIFICATION. This Agreement (including the exhibits and schedules referred to herein) supersedes all prior agreements between the parties with respect to its subject matter, including the Confidentiality Agreement between Buyer and Seller dated December 19, 2001. This Agreement constitutes a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended except by a written agreement executed by a duly authorized officer of each of Buyer and Seller. 14.7. SUCCESSORS AND ASSIGNS; NO THIRD-PARTY RIGHTS. Neither party may assign any of its rights under this Agreement without the prior consent of the other party; PROVIDED, HOWEVER, THAT the rights of Buyer under this Agreement may be assigned by Buyer to an Affiliate of Buyer, if such assignee also assumes all of Buyer's obligations under this Agreement; PROVIDED, HOWEVER, THAT in the event of such assignment, Buyer will remain fully liable for all of Buyer's obligations under this Agreement. This Agreement will apply to, be binding in all respects upon, and inure to the benefit of, the successors and permitted assigns of the parties. Nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and permitted assigns. 14.8. SEVERABILITY. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. 14.9. SECTION HEADINGS; CONSTRUCTION. The headings of the Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All references to "Section" or "Sections" refer to the corresponding Section or Sections of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, the word "including" does not limit the preceding words or terms. Unless the context otherwise requires, references herein (a) to Sections, Exhibits and Schedules mean the Sections of and the Exhibits and Schedules attached to, this Agreement, (b) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement and (c) to a statute means such statute as amended from time to time and includes any successor legislation thereto. 58 14.10. TIME OF ESSENCE. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence. 14.11. GOVERNING LAW. This Agreement will be governed by the laws of the State of Ohio without regard to conflicts of laws principles. 14.12. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. 14.13. INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof. 14.14. NO EFFECT ON INSURANCE. Nothing contained in this Agreement shall be construed to release or otherwise relieve any insurer of Buyer or the Company or any other Acquired Company from paying any of its claims or otherwise performing any of its duties and obligations pursuant to the terms and provisions of any policy of insurance which insures the Company or other Acquired Company or any of its properties or assets. Seller agrees to cooperate fully with Buyer to ensure that all policies of insurance currently maintained by the Company or any other Acquired Company, may be continued by the Company and the Acquired Companies, and to ensure that any and all claims made by any Acquired Company prior to the Closing Date pursuant to such policies of insurance are processed in accordance with the terms and provisions of the applicable policy or policies. Seller agrees to cooperate with Buyer in the making and processing of claims which may be made on or after the Closing Date under the applicable policy or policies of insurance in respect of events which occurred prior to the Closing Date; PROVIDED THAT Buyer shall reimburse Seller for any reasonable out-of-pocket costs and expenses incurred by Seller, other than in respect of compensation payable to employees of Seller for services rendered in connection with the making and processing of such claims. 14.15. FINANCIAL INFORMATION. Seller shall provide Buyer or cause Buyer to be provided with all information reasonably necessary to enable Buyer to prepare and file all financial and other information required under the applicable securities laws and regulations as a result of the transaction contemplated hereby, and shall fully cooperate with Buyer in the preparation thereof at Buyer's sole cost and expense. [Remainder of page intentionally left blank; signatures on following page.] 59 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their authorized officers as of the date first above written. WORTHINGTON INDUSTRIES, INC. By: /s/ John P. Mcconnall ---------------------------------------- Printed Name: John P. Mcconnell ----------------------------- Title: Chairman and Chief Executive Officer ------------------------------------ WHX CORPORATION By: /s/ Robert K. Hynes ---------------------------------------- Printed Name: Robert K. Hynes ------------------------------ Title: Vice President-finance -------------------------------------- 60 Agreement to Supplementally Furnish Exhibits and Schedules to Stock Purchase Agreement, dated as of June 24, 2002 between Worthington Industries, Inc. and WHX Corporation The Exhibits and Schedules described in the Table of Contents of the Stock Purchase Agreement, dated as of June 24, 2002, between Worthington Industries, Inc. and WHX Corporation are not being filed herewith pursuant to Item 601(b)(2) of Regulation S-K. Worthington Industries, Inc. hereby agrees to furnish supplementally a copy of any omitted Exhibit or Schedule to the Securities and Exchange Commission upon request. WORTHINGTON INDUSTRIES, INC. By: /s/ John T. Baldwin ------------------------------------------------- Title: Vice President & Chief Financial Officer ---------------------------------------------- Date: August 21, 2002 ---------------------------------------------- EX-4.D 4 l95946aexv4wd.txt EX-4(D) EXHIBIT 4(d) [WORTHINGTON INDUSTRIES LOGO] August 21, 2002 Securities and Exchange Commission Judiciary Plaza 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Worthington Industries, Inc. - Form 10-K for the fiscal year ended May 31, 2002 Ladies and Gentlemen: Worthington Industries, Inc., an Ohio corporation, is today executing and filing a Form 10-K, Annual Report for the fiscal year ended May 31, 2002 (the "Form 10-K"). Pursuant to the instructions relating to the Exhibits in Item 601 of Regulation S-K, Worthington Industries, Inc. hereby agrees to furnish to the Commission, upon request, copies of instruments and agreements defining the rights of holders of its long-term debt and of the long-term debt of its consolidated subsidiaries, which are not being filed as exhibits to the Form 10-K. Such long-term debt does not exceed 10% of the total assets of Worthington Industries, Inc. and its subsidiaries on a consolidated basis. Very truly yours, WORTHINGTON INDUSTRIES, INC. /s/ John T. Baldwin John T. Baldwin Vice President & Chief Financial Officer EX-4.H 5 l95946aexv4wh.txt EX-4(H) EXHIBIT 4(h) FOURTH SUPPLEMENTAL INDENTURE ----------------------------- THIS FOURTH SUPPLEMENTAL INDENTURE, dated as of May 10, 2002, among WORTHINGTON INDUSTRIES, INC., a corporation duly organized and existing under the laws of the State of Ohio, having its principal office at 1205 Dearborn Drive, Columbus, Ohio 43085 (the "Company"), and J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, as successor trustee to Chase Manhattan Trust Company, National Association (successor Trustee to PNC Bank, National Association, formerly known as PNC Bank, Ohio, National Association), a national banking association duly organized and existing under the laws of the United States of America, as Trustee (the "Trustee"). RECITALS -------- WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture, dated as of May 15, 1996, a First Supplemental Indenture thereto, dated as of February 27, 1997, a Second Supplemental Indenture thereto, dated as of December 12, 1997, and a Third Supplemental Indenture thereto, dated as of October 13, 1998 (collectively, the "Indenture"), providing for the issuance by the Company of an unlimited amount of its Debt Securities; and WHEREAS, simultaneously with the execution and delivery of this Fourth Supplemental Indenture, the Company is entering into a Five-Year Revolving Credit Agreement and a 364-Day Revolving Credit Agreement (collectively, the "Credit Agreements"), each dated May 10, 2002, with certain lenders as identified therein (the "Lenders") and certain other parties; and WHEREAS, as a condition to the making of the loans pursuant to the Credit Agreements, the Lenders are requiring the Company to pledge, pursuant to that certain Pledge Agreement (the "Pledge Agreement"), dated as of even date herewith, to Wells Fargo Bank Minnesota, National Association, as Collateral Agent, certain collateral, consisting primarily of certain promissory notes issued by certain subsidiaries of the Company in favor of the Company; and WHEREAS, Section 4.10 of the Indenture would otherwise prohibit such pledge, unless the Company contemporaneously secures the Debt Securities now or hereafter outstanding equally and ratably with the other obligations secured thereby; and WHEREAS, Section 9.01 of the Indenture provides that the Company, when authorized by a resolution of the Board of Directors of the Company, and the Trustee may enter into a supplemental Indenture without the consent of any Holders for the purpose of conveying, transferring, assigning, mortgaging or pledging any property to or with the Trustee, or making such other provisions in regard to matters or questions arising under the Indenture as shall not adversely affect the interests of any Holders of Debt Securities of any series; and WHEREAS, the Pledge Agreement provides for the pledge of the Collateral (as defined in the Pledge Agreement) for the equal and ratable benefit of the Lenders and the Trustee for the benefit of the Holders of the Debt Securities and does not adversely affect the interests of any Holders of the Debt Securities of any series; and WHEREAS, immediately after giving effect to the terms of this Fourth Supplemental Indenture, no Default or Event of Default would occur or be continuing; and WHEREAS, all things necessary to make this Fourth Supplemental Indenture, when executed by the parties hereto, a valid and binding supplement to the Indenture have been done and performed; NOW, THEREFORE, for and in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby mutually covenant and agree as follows: SECTION 1. ACKNOWLEDGEMENT OF, AGREEMENT TO AND ACCEPTANCE OF PLEDGE. The Company hereby expressly acknowledges, represents, warrants, covenants and agrees that it (i) has duly authorized, executed and delivered the Pledge Agreement in favor of Wells Fargo Bank Minnesota, National Association, as collateral agent (the "Collateral Agent"), for the equal and ratable benefit of each of the Lenders and the Holders of Debt Securities (collectively, the "Secured Parties") and, pursuant to the terms and conditions of the Pledge Agreement, pledged to the Secured Parties and granted to the Secured Parties a continuing security interest in all of the Collateral (as defined in the Pledge Agreement), (ii) has deposited with the Collateral Agent all of the promissory notes described on Exhibit A attached to the Pledge Agreement, together with all necessary instruments of transfer or assignment, duly executed in blank, and (iii) has delivered to the Trustee a fully-executed copy of the Pledge Agreement. On behalf of Holders of Debt Securities, the Trustee hereby expressly accepts the benefit of such pledge. SECTION 2. CERTAIN DELIVERIES BY COMPANY. On and as of the date hereof, the Company shall have delivered to the Trustee, as provided in Section 12.05 of the Indenture, the requisite Officers' Certificate and an opinion or opinions of counsel, which Officers' Certificate and opinion(s) of counsel shall comply with the requirements of such Section 12.05. SECTION 3. AUTHORIZATION TO EXECUTE ADDITIONAL DOCUMENTS. The Company hereby expressly acknowledges and approves the execution and delivery by the Trustee of the Pledge Agreement and the Trust Agreement (as defined in the Pledge Agreement), together with any and all other documents, certificates and instruments executed and delivered by the Trustee in accordance with the provisions thereof. SECTION 4. NO CONFLICT. The Company, as of the date of execution of this Fourth Supplemental Indenture, represents and warrants that the execution, delivery and performance of this Fourth Supplemental Indenture, will not violate, conflict with or constitute a breach of, or a default under, its Amended Articles of Incorporation or any other material agreement or instrument to which it is a party or which is binding on it or its assets. -2- SECTION 5. SEVERABILITY. In case any provision of this Fourth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 6. NO THIRD PARTY BENEFITS. Nothing in this Fourth Supplemental Indenture, expressed or implied, shall give to any Person, other than the parties hereto and their successors under the Indenture, and the Holders of Debt Securities, any benefit or any legal or equitable right, remedy or claim under the Indenture. SECTION 7. CONTINUING OF INDENTURE. This Fourth Supplemental Indenture supplements the Indenture and shall be a part of and subject to all the terms thereof. The Indenture, as supplemented by this Fourth Supplemental Indenture, shall continue in full force and effect. SECTION 8. THE TRUSTEE. The Trustee shall not be responsible in any manner for or in respect of the validity or sufficiency of this Fourth Supplemental Indenture, or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely. SECTION 9. GOVERNING LAW. This Fourth Supplemental Indenture shall be construed in accordance with the laws of the State of New York (without reference to principles of conflicts of law). SECTION 10. DEFINED TERMS. All capitalized terms used in this Fourth Supplemental Indenture which are defined in the Indenture but not otherwise defined herein shall have the same meanings assigned to them in the Indenture. SECTION 11. COUNTERPARTS. This Fourth Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but all such counterparts shall together constitute but one and the same instrument. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] -3- IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed as of the date first above written. WORTHINGTON INDUSTRIES, INC., an Ohio corporation By /s/John P. McConnell ------------------------------------------ Name: John P. McConnell --------------------------------------- Title: Chairman & Chief Executive Officer -------------------------------------- Attest: /s/John T. Baldwin - ------------------------------------ Name: John T. Baldwin ------------------------------- Title: Vice President & Chief Financial Officer ------------------------------------------- J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee By /s/Ronald J. McKenna ------------------------------------------ Name: Ronald J. McKenna --------------------------------------- Title: Vice President ------------------------------------- Attest: /s/L. M. Morford - ------------------------------------ Name: L. M. Morford ------------------------------- Title: Assistant Vice President ------------------------------ -4- STATE OF OHIO ) ) SS: COUNTY OF FRANKLIN ) On the 10th day of May, 2002, before me personally came John P. McConnell, to me known, who, being by me duly sworn, did depose and say that he is the Chairman and Chief Executive Officer of WORTHINGTON INDUSTRIES, INC., an Ohio corporation, one of the entities described in and which executed the foregoing instrument; and that he signed his name thereto by authority of the Board of Directors of said corporation. /s/Barbara J. Watson -------------------------------------------------- Notary Public, Barbara J. Watson, Notary Public, State of Ohio My Commission expires October 5, 2002 SEAL STATE OF PENNSYLVANIA ) ) SS: COUNTY OF ALLEGHENY ) On the 10th day of May, 2002, before me personally came Ronald J. McKenna, to me known, who, being by me duly sworn, did depose and say that he is the Vice President of J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, one of the entities described in and which executed the foregoing instrument; and that she/he signed her/his name thereto by authority of the Board of Directors of said national banking association. /s/Judith A. McEachern -------------------------------------------------- Notary Public, Judith A. McEachern, Notary Public City of Pittsburgh, Allegheny County My Commission Expires Nov. 26, 2005 Member, Pennsylvania Association of Notaries SEAL -5- EX-4.I.I 6 l95946aexv4wiwi.txt EX-4(I)(I) EXHIBIT 4(i)(i) ================================================================================ $155,000,000 364-DAY REVOLVING CREDIT AGREEMENT DATED AS OF MAY 10, 2002 AMONG WORTHINGTON INDUSTRIES, INC., THE LENDERS FROM TIME TO TIME PARTY HERETO, PNC BANK, NATIONAL ASSOCIATION, AS SWINGLINE LENDER AND ADMINISTRATIVE AGENT, AND FIRST UNION SECURITIES, INC. AND PNC CAPITAL MARKETS, INC., AS CO-SYNDICATION AGENTS ----------------------------- FIRST UNION SECURITIES, INC. AND PNC CAPITAL MARKETS, INC., AS CO-LEAD ARRANGERS ================================================================================ 364-DAY REVOLVING CREDIT AGREEMENT This 364-Day Revolving Credit Agreement is dated as of May 10, 2002 and is among WORTHINGTON INDUSTRIES, INC., an Ohio corporation (the "BORROWER"), the banks and other financial institutions from time to time party hereto (the "LENDERS"), PNC BANK, NATIONAL ASSOCIATION, Swingline Lender and Administrative Agent. The Borrower has requested the Lenders to provide a revolving credit facility to the Borrower in the aggregate principal amount of $155,000,000 for the purposes hereinafter set forth. The Lenders are willing to make the requested credit facility available to the Borrower on the terms and conditions set forth herein. Accordingly, in consideration of the mutual agreements set forth herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01 DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings set forth below: "ABSOLUTE RATE AUCTION" means a solicitation of Competitive Bids setting forth Competitive Bid Absolute Rates pursuant to SECTION 2.03 for Competitive Bid Loans. "ACTIVE RESTRICTED SUBSIDIARY" means a Restricted Subsidiary having a net worth in excess of $1,000,000. "ADDITIONAL SENIOR INDEBTEDNESS" means Indebtedness of the Borrower incurred after the Closing Date which is secured on a pari passu basis by the Collateral (as defined in the Pledge Agreement). "ADJUSTED CONSOLIDATED OPERATING INCOME" means, for any period, the consolidated operating income (or loss) of the Borrower and its Consolidated Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; PROVIDED, that there shall be excluded from the calculation of Adjusted Consolidated Operating Income (i) the income (or loss) of any consolidated joint venture, except to the extent that any such income is actually received by the Borrower or any such Consolidated Subsidiary in the form of dividends or other distributions during such period and (ii) any effect which would otherwise result from the Consolidation Plan. "ADMINISTRATIVE AGENT" means PNC Bank, National Association, in its capacity as administrative agent for the Lenders hereunder and under the other Loan Documents, and its successor or successors in such capacity. "ADMINISTRATIVE AGENT'S OFFICE" means the Administrative Agent's address and, as appropriate, account as set forth on SCHEDULE 10.02, or such other address and account as the Administrative Agent may from time to time notify to the Borrower and the Lenders. "AFFILIATE" means, as 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 be "controlled by" any other Person if such other Person possesses, directly or indirectly, power (i) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners or (ii) to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. "AGENT" means the Administrative Agent or the Co-Syndication Agents and any successors and assigns in such capacity, and "AGENTS" means any two or more of them. "AGENT-RELATED PERSONS" means any Agent, together with its Affiliates (including in the case of PNC Bank, National Association in its capacity as the Administrative Agent), and the officers, directors, employees, agents and attorneys-in-fact of such Person and its Affiliates. "AGREEMENT" means this Agreement, as amended, restated, supplemented or otherwise modified from time to time. "APPLICABLE INTERBANK OFFERED RATE" for any Eurodollar Loan for the Interest Period applicable thereto means: (i) the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on display page 3750 of the Telerate screen (or any successor thereto) that displays the average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period; or (ii) if the rate referenced in CLAUSE (i) above does not appear on such page or service or such page or service shall cease to be available, the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on such other page or service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 A.M. two Business Days prior to the first day of such Interest Period; or (iii) if the rates referenced in the preceding CLAUSES (i) and (ii) are not available, the rate per annum determined by the Administrative Agent as the rate of interest (rounded upwards to the next 1/100th of 1%) at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Loan being made, continued or converted with a term equivalent to such Interest Period would be offered by PNC Bank, National Association or one of its Affiliates to major banks in the offshore market for Dollars at their request at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period. "APPLICABLE LENDING OFFICE" means with respect to any Lender and for each Class and Type of Loan, the "Lending Office" of such Lender (or of an Affiliate of such Lender) designated for such Class and Type of Loan on SCHEDULE 10.02 or such other office of such Lender (or of an Affiliate of such Lender) as such Lender may from time to time specify to the Administrative Agent and the Borrower as the office by which its Loans of such Class and Type are to be made and maintained; PROVIDED, that any Lender may from time to time by notice to the Borrower and the Administrative Agent (x) designate separate Eurodollar Lending Offices for loans in different currencies, in which case all references herein to the Applicable Lending Office of such Lender shall, with respect to its Eurodollar Loans, be deemed to refer to any or all of such offices, as the context may require, and (y) designate separate Competitive Bid Lending Offices for (A) its Competitive Bid LIBOR Loans, (B) its Competitive Bid Absolute Rate Loans and (C) its Competitive Bid Loans in different currencies, in which case all -2- references herein to the Applicable Lending Office of such Lender shall, with respect to such Loans, be deemed to refer to any or all of such offices, as the context may require. "APPLICABLE MARGIN" means, for purposes of calculating (i) the applicable interest rate for any day for any Base Rate Loans or Eurodollar Loans, (ii) the applicable rate for the Facility Fee for any day for purposes of SECTION 2.11(a) or (iii) the applicable rate for the Utilization Fee for any day for purposes of SECTION 2.11(b), the appropriate applicable percentage set forth below corresponding to then current Worthington's Ratings:
===================== ====================== ========================= ===================== ============================ Applicable Applicable Percentage for Worthington's Applicable Percentage Percentage for Base Eurodollar Ratings (S&P/Moody's) for Facility Fees Rate Loans Loans - --------------------- ---------------------- ------------------------- --------------------- ---------------------------- .400% Category A: A-/A3 or higher .100% 0% - --------------------- ---------------------- ------------------------- --------------------- ---------------------------- Category B: BBB+/Baa1 .125% 0% .500% - --------------------- ---------------------- ------------------------- --------------------- ---------------------------- Category C: BBB/Baa2 .150% 0% .600% - --------------------- ---------------------- ------------------------- --------------------- ---------------------------- Category D: BBB-/Baa3 .175% 0% .700% - --------------------- ---------------------- ------------------------- --------------------- ---------------------------- Category E: BB+/Ba1 or .250% 0% 1.25% lower or unrated ===================== ====================== ========================= ===================== ============================
======================= ====================== ============================= ============================= Applicable Percentage for Applicable Percentage for Worthington's Utilization Fee: Utilization Fee: Ratings (S&P/Moody's) Usage > 33% of Commitments Usage > 66% of Commitments ----------------------- ---------------------- ----------------------------- ----------------------------- Category A: A-/A3 or higher .125% .250% ----------------------- ---------------------- ----------------------------- ----------------------------- Category B: BBB+/Baa1 .125% .250% ----------------------- ---------------------- ----------------------------- ----------------------------- Category C: BBB/Baa2 .125% .250% ----------------------- ---------------------- ----------------------------- ----------------------------- Category D: BBB-/Baa3 .125% .250% ----------------------- ---------------------- ----------------------------- ----------------------------- Category E: BB+/Ba1 or .125% .250% lower or unrated ======================= ====================== ============================= =============================
-3- Initially, the Applicable Margins for Base Rate Loans and Eurodollar Loans and the applicable rate for Facility Fees shall be based upon Worthington's Ratings specified in the certificate delivered pursuant to SECTION 4.01(d)(ii) of this Agreement. Thereafter, each change in the Applicable Margins for Base Rate Loans and Eurodollar Loans and the applicable rate for Facility Fees shall be effective during the period commencing on the date of a public announcement with respect to a change in Worthington's Ratings and ending on the date immediately preceding the effective date of the next such change, if any. In the event a rating differential of one level exists, Worthington's Ratings shall be deemed to be the higher of the two ratings. In the event a rating differential of more than one level exists, Worthington's Ratings shall be deemed to be one level below the higher rating. "APPROVED FUND" means (i) with respect to any Lender, an entity (whether a corporation, partnership, limited liability company, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is managed by such Lender or an Affiliate of such Lender, (ii) with respect to any Lender that is a fund that invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor and (iii) any special purpose funding vehicle described in SECTION 10.06(h). "ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance, substantially in the form of EXHIBIT C hereto, under which an interest of a Lender hereunder is transferred to an Eligible Assignee pursuant to SECTION 10.06(b). "ASSOCIATE" has the meaning given to it in Rule 12b-2 under the Exchange Act. "ATTORNEY COSTS" means all reasonable and actual fees and disbursements of any law firm or other external counsel. "BANKRUPTCY EVENT" means, with respect to any Person, (i) a court or governmental agency having appropriate jurisdiction shall enter a decree or order for relief in respect of such Person in an involuntary case under any Debtor Relief Law now or hereafter in effect, or appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of such Person or for any substantial part of its property or ordering the winding up or liquidation of its affairs, (ii) an involuntary case under any applicable Debtor Relief Law now or hereafter in effect is commenced against such Person and such petition remains unstayed and in effect for a period of 60 consecutive days, (iii) such Person shall commence a voluntary case under any applicable Debtor Relief Law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of such Person or any substantial part of its property or make any general assignment for the benefit of creditors or (iv) such Person shall admit in writing its inability to pay its debts generally as they become due or any definitive action shall be taken by such Person in preparation for any of the aforesaid. "BASE RATE" means, for any day, (a) a rate per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such day (any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Rate) or (b) exclusively for purposes of Swingline Loans, any other rate per annum that may be agreed upon between the Swingline Lender and the Borrower. -4- "BASE RATE LOAN" means a Committed Loan (Syndicated or Swingline) which bears interest at the Base Rate pursuant to the applicable Notice of Syndicated Loan, Swingline Loan Request, Notice of Extension/Conversion or the provisions of ARTICLE III. "BOARD" means the Board of Governors of the Federal Reserve System of the United States of America. "BORROWER" means Worthington Industries, Inc., an Ohio corporation, and its successors. "BORROWER'S 2001 FORM 10-K" means the Borrower's annual report on Form 10-K for the fiscal year ended May 31, 2001, as filed with the Securities and Exchange Commission pursuant to the Exchange Act. "BORROWER'S LATEST FORM 10-Q" means the Borrower's quarterly report on Form 10-Q for the quarter ended February 28, 2002, as filed with the Securities and Exchange Commission pursuant to the Exchange Act. "BORROWING" has the meaning set forth in SECTION 1.04. "BUSINESS DAY" means any day except a Saturday, Sunday or other day on which commercial banks are authorized or required to close, under the laws of, or are in fact closed in, the state where the Administrative Agent's Office is located, except that if such day relates to a borrowing of, a payment or prepayment of principal of or interest on, or the Interest Period for, a Eurodollar Loan, or a notice by the Borrower with respect to any such borrowing, payment, prepayment or Interest Period, such day shall also be a day on which commercial banks are open for international business (including dealings in Dollar deposits) in London. "CAPITAL LEASE" of any Person means any lease of property (whether real, personal or mixed) by such Person as lessee which would, in accordance with GAAP, be required to be accounted for as a capital lease on the balance sheet of such Person. "CAPITAL LEASE OBLIGATIONS" means, with respect to any Person, all obligations of such Person as lessee under Capital Leases, in each case taken at the amount thereof accounted for as liabilities in accordance with GAAP. "CAPITALIZATION" means Consolidated Indebtedness plus Consolidated Net Worth. "CASH EQUIVALENTS" means: (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (PROVIDED, that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition; (ii) Dollar-denominated certificates of deposit of (A) any Lender, (B) any United States commercial bank of recognized standing having capital and surplus in excess of $500,000,000 or (C) any bank whose (or whose parent company's) short-term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody's is at least P-1 or the equivalent thereof (any such bank being an "APPROVED LENDER"), in each case with maturities of not more than 270 days from the date of acquisition; -5- (iii) commercial paper and variable or fixed rate notes issued by any Approved Lender (or by the parent company thereof) or any variable rate notes issued by, or guaranteed by, any domestic corporation not an Affiliate of the Borrower rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better by Moody's and maturing within six months of the date of acquisition; (iv) repurchase agreements with a bank or trust company (including any of the Lenders) or recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States of America in which the Borrower or one or more of its Subsidiaries shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations; and (v) Investments, classified in accordance with GAAP as current assets, in money market investment programs registered under the Investment Company Act of 1940, as amended, which are administered by reputable financial institutions having capital of at least $500,000,000 and the portfolios of which are limited to Investments of the character described in the foregoing CLAUSES (i) through (iv). "CHANGE OF CONTROL" means, with respect to any Person, an event or series of events by which: (i) any "person" or "group" (within the meaning of Section 13(d) and 14(d) of the Exchange Act) (other than John H. McConnell, John P. McConnell, their Affiliates, their Associates (as defined in Rule 12b-2 under the Exchange Act), or a group which the foregoing are a principal participant, or any profit sharing, employee stock ownership or other employee benefit plan of the Borrower or any Subsidiary of the Borrower or any trustee or fiduciary with respect to any such plan when acting in such capacity) has become the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have "beneficial ownership" of all securities that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), by way of merger, consolidation or otherwise, of 30% or more of the Equity Interests of such Person on a fully-diluted basis after giving effect to the conversion and exercise of all outstanding Equity Equivalents (whether or not such Equity Equivalents are then currently convertible or exercisable); or (ii) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of such Person cease to be composed of individuals (A) who were members of that board or equivalent governing body on the first day of such period, (B) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in CLAUSE (ii)(A) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (C) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in CLAUSES (ii)(A) and (B) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body. "CLASS" has the meaning set forth in SECTION 1.04. "CLOSING DATE" means the date on or after the Effective Date when the conditions precedent in SECTION 4.01 are satisfied. -6- "CODE" means the Internal Revenue Code of 1986, as amended, and any successor statute thereto, as interpreted by the rules and regulations issued thereunder, in each case as in effect from time to time. "COLLATERAL AGENT" means Wells Fargo Bank Minnesota, National Association, in its capacity as collateral agent under the Pledge Agreement, together with its successors and permitted assigns. "COMMITMENT" means (i) with respect to each Lender, its Revolving Commitment and (ii) with respect to the Swingline Lender, the Swingline Commitment, in each case in the respective amount set forth on SCHEDULE 1.01A or in the applicable Assignment and Acceptance as its Commitment of the applicable Class, as any such amount may be increased or decreased from time to time pursuant to this Agreement. "COMMITMENT INCREASE DATE" has the meaning set forth in SECTION 2.10(e). "COMMITTED LOAN" means a Syndicated Loan or a Swingline Loan. "COMPETITIVE BID" has the meaning set forth in SECTION 2.03(d). "COMPETITIVE BID ABSOLUTE RATE" has the meaning set forth in Section 2.03(d)(ii)(D). "COMPETITIVE BID ABSOLUTE RATE LOAN" means a Competitive Bid Loan made by a Lender pursuant to an Absolute Rate Auction. "COMPETITIVE BID LIBOR LOAN" means a Competitive Bid Loan made by a Lender pursuant to a LIBOR Auction (including such a Loan bearing interest at the Base Rate pursuant to ARTICLE III). "COMPETITIVE BID LOAN" means a Competitive Bid LIBOR Loan or a Competitive Bid Absolute Rate Loan. "COMPETITIVE BID MARGIN" has the meaning set forth in SECTION 2.03(d)(ii)(C). "COMPETITIVE BID NOTE" means a promissory note, substantially in the form of Exhibit B-2 hereto, evidencing the obligation of the Borrower to repay outstanding Competitive Bid Loans, as such note may be amended, modified, supplemented, extended, renewed or replaced from time to time. "COMPETITIVE BID QUOTE" has the meaning set forth in SECTION 2.03(b)(iv). "COMPETITIVE BID REQUEST" has the meaning set forth in SECTION 2.03(b). "CONSOLIDATED EBITDA" means for any period the sum of (i) Consolidated Net Income for such period plus (ii) an amount which, in the determination of Consolidated Net Income for such period, has been deducted for (A) Consolidated Interest Expense, (B) provisions for Federal, state, local and foreign income, value added and similar taxes, (C) depreciation, amortization (including, without limitation, amortization of goodwill and other intangibles) and other non-cash expense, all determined in accordance with GAAP and (D) solely for the fiscal quarters ended May 31, 2002, August 31, 2002, November 30, 2002 and February 28, 2003, an amount not in excess of $90,000,000 in the aggregate with respect to the expense related to the Consolidation Plan, minus (iii) an amount which, in the determination of Consolidated Net Income for such period, has been added for (A) interest income and (B) any non-cash income or non-cash gains, all as determined in accordance with GAAP. If the Borrower or any -7- Subsidiary makes an acquisition or a material divestiture, in either case to the extent permitted pursuant to this Agreement, during any period for which Consolidated EBITDA is measured, then for purposes of determining the Leverage Ratio, Consolidated EBITDA shall be adjusted for the period of time prior to the date of such acquisition or divesture by adding the historical financial results for such period of the Person or assets acquired (without taking account of cost savings or others synergies unless approved by the Required Lenders) or deleting that portion of the financial results of the Borrower and its Consolidated Subsidiaries for such period attributable to the Person or assets divested, all as reasonably determined by the Borrower and certified to the Administrative Agent and the Lenders. "CONSOLIDATED INDEBTEDNESS" means at any date the Indebtedness of the Borrower and its Subsidiaries, determined on a consolidated basis as of such date. "CONSOLIDATED INTEREST EXPENSE" means, for any period, the total interest expense, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments under Capital Lease Obligations and the implied interest component of Synthetic Lease Obligations (regardless of whether accounted for as interest expense under GAAP), all commissions, discounts and other fees and charges owed with respect to letters of credit, bankers' acceptances and asset securities and other similar off balance street transactions and net costs in respect of Derivatives Obligations constituting interest rate swaps, collars, caps or other arrangements requiring payments contingent upon interest rates of the Borrower and its Restricted Subsidiaries), determined on a consolidated basis for such period. "CONSOLIDATED NET INCOME" means, for any period, the net income (or net loss) after taxes of the Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; PROVIDED, that there shall be excluded from the calculation of Consolidated Net Income (i) the income (or loss) of any Person in which any other Person (other than the Borrower or any of its Wholly-Owned Subsidiaries) has an ownership interest, except to the extent that any such income is actually received by the Borrower or such Wholly-Owned Subsidiary in the form of dividends or other distributions 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. "CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of determination, the sum of the amounts that would appear on a consolidated balance sheet of the Borrower and its Subsidiaries for the total assets (less accumulated depletion, depreciation or amortization, allowances for doubtful receivables, other applicable reserves and other properly deductible items) of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, after giving effect to purchase accounting and after deducting therefrom, to the extent included in total assets, in each case as determined on a consolidated basis in accordance with GAAP (without duplication): (i) the aggregate amount of liabilities of the Borrower and its Subsidiaries which may properly be classified as current liabilities (including taxes accrued as estimated); (ii) current Indebtedness and current maturities of long-term Indebtedness; (iii) minority interests in the Borrower's subsidiaries held by Persons other than the Borrower or a wholly-owned Subsidiary of the Borrower; and (iv) unamortized debt discount and expenses and other unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, licenses, organization or developmental expenses and other intangible items. "CONSOLIDATED NET WORTH" means at any time the consolidated stockholders' equity of the Borrower and its Subsidiaries calculated on a consolidated basis in accordance with GAAP as of such time. -8- "CONSOLIDATED SUBSIDIARY" means with respect to any Person at any date any Subsidiary of such Person or other entity the accounts of which would be consolidated with those of such Person in its consolidated financial statements if such statements were prepared as of such date in accordance with GAAP. "CONSOLIDATION PLAN" means the consolidation plan and impairment reserve announced by the Borrower in a press release dated January 24, 2002 that will result in no more than $90,000,000 in one-time charges to net income during the fiscal quarter ended February 28, 2002. "CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any material security issued by such Person or of any material agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "CONTROLLING PERSON" means, with respect any Person, the beneficial owner of a percentage of the voting power of the Equity Interests of any such Person sufficient to approve an action of any such Person which requires a simple majority of the owners of such Equity Interest to vote to approve any such action; PROVIDED, that any such Person is a Consolidated Subsidiary of such Controlling Person. "CREDIT EXPOSURE" has the meaning set forth in the definition of "REQUIRED LENDERS" in this SECTION 1.01. "CREDIT EXTENSION" means a Borrowing, a Competitive Bid Loan or the purchase by a Lender of a Participation Interest. "CREDITOR" means each Lender, each Agent and each Indemnitee and their respective successors and assigns, and "Creditors" means any two or more of such Creditors. "DEBTOR RELIEF LAWS" means the Bankruptcy Reform Act of 1978, as amended, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization or similar debtor relief laws of the United States of America or other applicable jurisdiction from time to time affecting the rights of creditors generally. "DEFAULT" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "DEFAULTING LENDER" means at any time any Lender that, within one Business Day of when due, (i) has failed to make a Loan or purchase a Participation Interest in a Swingline Loan required pursuant to the terms of this Agreement, (ii) other than as set forth in CLAUSE (i) above, has failed to pay to any Agent or any Lender an amount owed by such Lender pursuant to the terms of this Agreement or any other Loan Document or (iii) has been deemed insolvent or has become subject to a Bankruptcy Event. "DERIVATIVES AGREEMENT" means (i) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement and (ii) any and all transactions of any kind, and the related confirmations, which are subject to the terms and -9- conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement or any other master agreement. "DERIVATIVES OBLIGATIONS" of any Person means all obligations (including, without limitation, any amounts which accrue after the commencement of any Bankruptcy Event with respect to such Person, whether or not allowed or allowable as a claim under any applicable Debtor Relief Laws) of such Person in respect of any Derivatives Agreement, excluding any amounts which such Person is entitled to set-off against its obligations under applicable law. "DISPOSITION" or "DISPOSE" means the sale, transfer, license or other disposition (including any Sale/Leaseback Transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes, accounts receivable or payment intangible or any rights or claims associated therewith. "DOLLARS" and the sign "$" means lawful money of the United States of America. "EFFECTIVE DATE" means the date this Agreement becomes effective in accordance with SECTION 10.17. "ELIGIBLE ASSIGNEE" means (i) any Lender, (ii) any Affiliate of a Lender, (iii) any Approved Fund and (iv) any other Person (other than a natural Person) approved by (A) the Administrative Agent, (B) in the case of any assignment of a Revolving Commitment, the Swingline Lender and (C) unless (x) such Person is taking delivery of an assignment in connection with physical settlement of a credit derivatives transaction or (y) an Event of Default has occurred and is continuing at the time any assignment is effected pursuant to SECTION 10.06(b), the Borrower (each such approval not to be unreasonably withheld or delayed and any such approval required of the Borrower to be deemed given by the Borrower if no objection from the Borrower is received by the assigning Lender and the Administrative Agent within two Business Days after notice of such proposed assignment has been provided by the assigning Lender to the Borrower); PROVIDED, HOWEVER, that the Borrower and its Affiliates shall not qualify as Eligible Assignees. "ENVIRONMENTAL LAWS" means any current or future legal requirement of any Governmental Authority pertaining to (i) the protection of health, safety, and the environment, (ii) the conservation, management or use of natural resources and wildlife, (iii) the protection or use of surface water and groundwater or (iv) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, release, threatened release, abatement, removal, remediation or handling of, or exposure to, any hazardous or toxic substance or material and includes, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USC 9601 et seq., Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendment of 1984, 42 USC 6901 et seq., Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 USC 1251 et seq., Clean Air Act of 1966, as amended, 42 USC 7401 et seq., Toxic Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous Materials Transportation Act, 49 USC App. 1801 et seq., Occupational Safety and Health Act of 1970, as amended, 29 USC 651 et seq., Oil Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning and Community Right-to-Know Act of 1986, 42 USC 11001 et seq., National Environmental Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking Water Act of 1974, as amended, 42 USC 300(f) et seq., any analogous implementing or successor law, and any amendment, rule, regulation, order or directive issued thereunder. -10- "EQUITY EQUIVALENTS" means with respect to any Person any rights, warrants, options, convertible securities, exchangeable securities, indebtedness or other rights, in each case exercisable for or convertible or exchangeable into, directly or indirectly, Equity Interests of such Person or securities exercisable for or convertible or exchangeable into Equity Interests of such Person, whether at the time of issuance or upon the passage of time or the occurrence of some future event. "EQUITY INTERESTS" means all shares of capital stock, partnership interests (whether general or limited), limited liability company membership interests, beneficial interests in a trust and any other interest or participation that confers on a Person the right to receive a share of profits or losses, or distributions of assets, of an issuing Person, but excluding any debt securities convertible into such Equity Interests. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto, as interpreted by the rules and regulations issued thereunder, in each case as in effect from time to time. "ERISA AFFILIATE" means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). "ERISA EVENT" means: (i) a Reportable Event with respect to a Pension Plan; (ii) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA); (iii) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (iv) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (v) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (vi) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate. "EURODOLLAR RATE" means, for each Interest Period for each Eurodollar Loan comprising the same Group, the quotient obtained (rounded upward, if necessary, to the next higher 1/100th of 1%) by dividing (i) the Applicable Interbank Offered Rate for Dollars for such Interest Period by (ii) 1.00 minus the Eurodollar Reserve Percentage. "EURODOLLAR RESERVE PERCENTAGE" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board (or any other entity succeeding to the functions currently performed thereby) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion Dollars in respect of "Eurodollar liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Eurodollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Lender to United States residents), whether or not a Lender has any Eurodollar liabilities subject to such reserve requirement at that time. Eurodollar Loans shall be deemed to constitute Eurodollar liabilities and as such shall be deemed subject to reserve requirements without benefits of credits for prorations, exceptions or offsets that may be available from time to time to a Lender. The Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Percentage. -11- "EURODOLLAR LOAN" means a Syndicated Loan which bears interest at a Eurodollar Rate pursuant to the applicable Notice of Syndicated Loan or Notice of Extension/Conversion. "EVENT OF DEFAULT" has the meaning set forth in SECTION 8.01. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and any successor statute thereto, together with the rules and regulations promulgated thereunder. "EXISTING LETTERS OF CREDIT" means the letters of credit issued for the account of the Borrower and any Restricted Subsidiary before the Closing Date and described by date of issuance, letter of credit number, undrawn amount, name of beneficiary and date of expiry on SCHEDULE 7.01 hereto, without giving effect to any extension of the term thereof. "FACILITY FEE" has the meaning set forth in SECTION 2.11(a). "FAILED LOAN" has the meaning set forth in SECTION 2.04(e). "FEDERAL FUNDS RATE" means for any day the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; PROVIDED, that (i) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate quoted to the Administrative Agent on such day on such transactions as determined by the Administrative Agent. "FIVE YEAR CREDIT AGREEMENT" means the $155,000,000 Five Year Revolving Credit Agreement dated as of May 10, 2002 among the Borrower, the banks and other financial institutions from time to time party thereto and PNC Bank, National Association, as Administrative Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time. "FIXED RATE LOAN" means Eurodollar Loans or Competitive Bid Loans (excluding Competitive Bid LIBOR Loans bearing interest at the Base Rate) or any combination of the foregoing. "FOREIGN SUBSIDIARY" means with respect to any Person any Subsidiary of such Person that is organized outside the United States and conducts substantially all of its business outside the United States. "GAAP" means at any time generally accepted accounting principles as then in effect in the United States, applied on a basis consistent (except for changes with which the Borrower's independent public accountants have concurred) with the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries previously delivered to the Lenders. "GOVERNMENTAL AUTHORITY" means any federal, state, local, provincial or foreign government, authority, agency, central bank, quasi-governmental or regulatory authority, court or other body or entity, and any arbitrator with authority to bind a party at law. "GROUP OF LOANS" means at any time a group of Loans consisting of (i) all Loans which are Base Rate Loans at such time or (ii) all Loans which are Eurodollar Loans having the same Interest Period at such time; PROVIDED, that if a Committed Loan of any particular Lender is converted to or made -12- as a Base Rate Loan pursuant to ARTICLE III, such Loan shall be included in the same Group of Loans from time to time as it would have been had it not been so converted or made. "GUARANTY OBLIGATION" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); PROVIDED, HOWEVER, that the term "Guaranty Obligation" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guaranty" used as a verb has a corresponding meaning. The amount of any Guaranty Obligation hereunder shall (subject to any limitations set forth therein) be deemed to be an amount equal to the outstanding principal amount (or maximum principal amount, if larger) of the Indebtedness in respect of which such Guaranty Obligation is made. "HOLDER OF ADDITIONAL SENIOR INDEBTEDNESS" means a holder of the Additional Senior Indebtedness, or any Person acting in a representative capacity for any such holder, that executes and delivers a Joinder Agreement substantially in the form of Exhibit B to the Trust Agreement. "INDEBTEDNESS" of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such person evidenced by bond, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee that are capitalized in accordance with GAAP, (v) all Guaranty Obligations, (vi) all contingent or non-contingent obligations of such Person to reimburse any bank or other Person in respect of amounts paid or payable (currently or in the future, on a contingent or non-contingent basis) under a letter of credit or similar instrument, (vii) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person to the extent of the value of such property (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business) and (viii) proceeds paid to such Person from asset securitization, synthetic sale/leaseback and other similar off balance sheet transactions. "INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION 10.05. "INDEMNITEE" has the meaning set forth in SECTION 10.05. "INTEREST PAYMENT DATE" means (i) as to Base Rate Loans, the last day of each fiscal quarter of the Borrower and the Maturity Date and (ii) as to Eurodollar Loans, the last day of each applicable Interest Period and the Maturity Date, and, where the applicable Interest Period for a Eurodollar Loan is greater than three months, also the date three months from the beginning of the Interest Period and each three months thereafter. "INTEREST PERIOD" means: (i) with respect to each Eurodollar Loan, a period commencing on the date of borrowing specified in the applicable Notice of Borrowing or on the date specified in the applicable Notice of Extension/Conversion and ending one, two, three or six months thereafter, as the Borrower may elect in the applicable notice; PROVIDED, that: -13- (A) any Interest Period (except an Interest Period determined pursuant to CLAUSE (i)(C) below) which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; (B) any Interest Period which begins on the last Business Day in a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to CLAUSE (C) below, end on the last Business Day of a calendar month; (C) any Interest Period which would otherwise end after the Maturity Date shall end on the Maturity Date; (ii) with respect to each Competitive Bid LIBOR Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending one, two, three or six months thereafter as the Borrower may elect in accordance with SECTION 2.03, PROVIDED, that: (A) any Interest Period (except an Interest Period determined pursuant to CLAUSE (ii)(C) below) which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; (B) any Interest Period which begins on the last Business Day in a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to CLAUSE (ii)(C) below, end on the last Business Day in a calendar month; and (C) any Interest Period which would otherwise end after the Maturity Date shall end on such Maturity Date; and (iii) with respect to each Competitive Bid Absolute Rate Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of days thereafter (but not less than seven) as the Borrower may elect in accordance with SECTION 2.03; PROVIDED, that: (A) any Interest Period (except an Interest Period determined pursuant to CLAUSE (iii)(B) below) which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day; and (B) any Interest Period which would otherwise end after the Maturity Date shall end on such Maturity Date. "INVESTMENT" in any Person means (i) the acquisition (whether for cash, property, services, assumption of Indebtedness, securities or otherwise) of assets, shares of Capital Stock, bonds, notes, debentures, time deposits or other securities of such other Person, (ii) any deposit with, or advance, loan or other extension of credit to or for the benefit of such Person (other than deposits made in connection with the purchase of equipment or inventory in the ordinary course of business) or (iii) any other capital contribution to or investment in such Person, including by way of Guaranty Obligations of -14- any obligation of such Person, any support for a letter of credit issued on behalf of such Person incurred for the benefit of such Person or in the case of any Restricted Subsidiary of the Borrower, any release, cancellation, compromise or forgiveness in whole or in part of any Indebtedness owing by such Restricted Subsidiary. "LAW" means any international, foreign, Federal, state or local statute, treaty, rule, guideline, regulation, ordinance, code, or administrative or judicial precedent or authority, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law. "LENDER" means each bank or other lending institution listed on SCHEDULE 1.01A, each Eligible Assignee that becomes a Lender pursuant to SECTION 10.06(b) and their respective successors and shall include, as the context may require, the Swingline Lender, in such capacity. "LEVERAGE RATIO" means on any date the ratio of (i) Consolidated Indebtedness as of such date to (ii) Consolidated EBITDA. "LIBOR AUCTION" means a solicitation of Competitive Bid Quotes setting forth Competitive Bid Margins based on the Applicable Interbank Offered Rate pursuant to SECTION 2.03. "LIEN" means, with respect to any asset, any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable Laws of any jurisdiction), including the interest of a purchaser of accounts receivable, chattel paper, payment intangibles or promissory notes. Solely for the avoidance of doubt, the filing of a Uniform Commercial Code financing statement that is a protective lease filing in respect of an operating lease that does not constitute a security interest in the leased property or otherwise give rise to a Lien does not constitute a Lien solely on account of being filed in a public office. "LOAN" means a Committed Loan or a Competitive Bid Loan, and "LOANS" means Committed Loans or Competitive Bid Loans or both. "LOAN DOCUMENTS" means this Agreement, the Notes, the Pledge Agreement and the Trust Agreement, in each case as the same may be amended, restated, modified or supplemented from time to time. "MATERIAL ADVERSE CHANGE" has the meaning set forth in SECTION 5.02(c). "MATERIAL ADVERSE EFFECT" means an effect on the business, financial condition, assets or liabilities of the Borrower and its Restricted Subsidiaries, considered on a consolidated basis, which, when combined on a cumulative basis with other changes in the business, financial condition, assets and liabilities of the Borrower and its Consolidated Subsidiaries, considered on a consolidated basis: (i) would have a material adverse effect on the ability of the Borrower to perform its obligations under the Loan Documents or (ii) would result in a material adverse change in the financial condition of the Borrower and its Restricted Subsidiaries, considered on a consolidated basis. -15- "MATURITY DATE" means the day that is 364 days from the Closing Date or such later date to which the Maturity Date for any Loans or Lender may be extended pursuant to SECTION 2.10(d) or, if any such day is not a Business Day, the next preceding Business Day. "MOODY'S" means Moody's Investors Service, Inc., a Delaware corporation, and its successors or, absent any such successor, such nationally recognized statistical rating organization as the Borrower and the Administrative Agent may select. "MULTIEMPLOYER PLAN" means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding three calendar years, has made or been obligated to make contributions. "NOTE" means a Revolving Note, a Competitive Bid Note or a Swingline Note and "NOTES" means all of them, collectively. "NOTICE OF BORROWING" means a Notice of Syndicated Loan or a Notice of Competitive Bid Borrowing. "NOTICE OF COMPETITIVE BID BORROWING" has the meaning set forth in SECTION 2.03(f). "NOTICE OF EXTENSION/CONVERSION" has the meaning set forth in SECTION 2.07. "NOTICE OF SYNDICATED LOAN" has the meaning set forth in SECTION 2.02(a). "OBLIGATIONS" means, without duplication: (i) all principal of and interest (including, without limitation, any interest which accrues after the commencement of any Bankruptcy Event, whether or not allowed or allowable as a claim under any applicable Debtor Relief Law) on any Loan under, or any Note issued pursuant to, this Agreement or any other Loan Document; (ii) all fees, expenses, indemnification obligations and other amounts of whatever nature now or hereafter payable by the Borrower (including, without limitation, any amounts which accrue after the commencement of any Bankruptcy Event, whether or not allowed or allowable as a claim under any applicable Debtor Relief Law) pursuant to this Agreement or any other Loan Document; (iii) all expenses of the Agents as to which one or more of the Agents have a right to reimbursement under SECTION 10.04 of this Agreement; and (iv) all Indemnified Liabilities and other amounts paid by any Indemnitee as to which such Indemnitee has the right to payment or reimbursement under SECTION 10.05 of this Agreement or under any other similar provision of any other Loan Document; together in each case with all renewals, modifications, consolidations or extensions thereof. "OPERATING LEASE" means, as applied to any Person, a lease (including a lease which may be terminated by the lessee at any time) of any property (whether real, personal or mixed) by such Person as lessee which is not a Capital Lease. -16- "ORGANIZATION DOCUMENTS" means: (i) with respect to any corporation, the certificate or articles of incorporation and the bylaws; (ii) with respect to any limited liability company, the articles of formation and operating agreement; and (iii) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation with the secretary of state or other department in the state of its formation, in each case as amended from time to time. "OTHER TAXES" has the meaning set forth in SECTION 3.01(b). "PARTICIPATION INTEREST" means a Credit Extension by a Lender by way of a purchase of a participation interest in Swingline Loans as provided in SECTION 2.01(b)(vi) or in any Loans as provided in SECTION 2.13. "PBGC" means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any entity succeeding to any or all of its functions under ERISA. "PENSION PLAN" means an "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, in which in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five plan years. "PERMIT" means any license, permit, franchise, right or privilege, certificate of authority or order, or any waiver of the foregoing, issued or issuable by any Governmental Authority. "PERMITTED LIENS" means: (i) Liens securing the payment of taxes and special assessments, either not yet due or the validity of which is being contested by the Person being charged in good faith by appropriate proceedings, and as to which it has set aside on its books adequate reserves to the extent required by GAAP; (ii) deposits under workers' compensation, unemployment insurance and social security laws, or to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, or to secure statutory obligations or surety or appeal bonds, or to secure indemnity, performance or other similar bonds in the ordinary course of business; (iii) Liens imposed by law, such as carriers', warehousemen's or mechanics' liens and liens of landlords or mortgagees of landlords arising by operation of law on fixtures located on leased premises, incurred by it in good faith in the ordinary course of business; (iv) Liens incurred in connection with the lease or acquisition of fixed or capital assets limited to the specific assets acquired with such lease or financing or Capital Lease Obligation (subject to the acquisition of such assets and incurrence of such debt being otherwise permitted by the terms of this Agreement); (v) Liens existing on the date of this Agreement securing Indebtedness outstanding on the date of this Agreement in aggregate principal amount not exceeding $27,400,000; -17- (vi) any Lien existing on any asset of any corporation at the time such corporation becomes a Subsidiary of the Borrower and not created in contemplation of such event; (vii) any Lien on any asset of any corporation existing at the time such corporation is merged or consolidated with or into Borrower or a Subsidiary and not created in contemplation of such event; (viii) any Lien existing on any asset prior to the acquisition thereof by Borrower or a Subsidiary and not created in contemplation of such event; (ix) any Lien arising out of the refinancing, extension, renewal or refunding of any Indebtedness secured by any Lien permitted by any of the foregoing CLAUSES (iv), (v), (vi), (vii) OR (viii) of this definition, provided that such Indebtedness is not increased and is not secured by any additional assets; (x) Liens incidental to the conduct of the business of the Borrower or its Subsidiaries or the ownership of their respective assets which (i) do not secure Indebtedness or Derivative Obligations, (ii) do not secure any obligation, or related series of obligations, in an amount exceeding $20,000,000 and (iii) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of the business of the Borrower or its Subsidiaries; (xi) Liens on cash and Cash Equivalents securing Derivative Obligations, provided that the aggregate amount of Cash Equivalents subject to such Liens may at no time exceed $20,000,000; (xii) any attachment Lien being contested in good faith and by proceedings promptly initiated and diligently conducted, unless the attachment giving rise thereto will not, within sixty days after the entry thereof, have been discharged or fully bonded or will not have been discharged within sixty days after the termination of any such bond; (xiii) any judgment Lien, unless the judgment it secures will not, within sixty days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or will not have been discharged within sixty days after the expiration of any such stay; (xiv) easements, rights-of-way, zoning restrictions and other restrictions, charges or encumbrances not materially interfering with the ordinary conduct of the business; (xv) any Lien on property of a Subsidiary securing Indebtedness of such Subsidiary owing to Borrower or a Restricted Subsidiary; (xvi) Liens to banks arising from the issuance of letters of credit issued by such banks ("issuing banks") on the following: (a) any and all shipping documents, warehouse receipts, policies or certificates of insurance and other document accompanying or relative to drafts drawn under any credit, and any draft drawn thereunder (whether or not such documents, goods or other property be released to or upon the order of the Borrower or any Subsidiary under a security agreement or trust or bailee receipt or otherwise), and the proceeds of each and all of the foregoing; (b) the balance of every deposit account, now or at any time hereafter existing, of the Borrower or any Subsidiary with the issuing banks, and any other claims of the Borrower or any Subsidiary against the issuing banks; and all property claims and demands and all rights and -18- interests therein of the Borrower or any Subsidiary and all evidences thereof and all proceeds thereof which have been or at any time will be delivered to or otherwise come into the issuing bank's possession, custody or control, or into the possession, custody or control of any bailee for the issuing bank or of any of its agents or correspondents for the account of the issuing bank, for any purpose, whether or not the express purpose of being used by the issuing bank as collateral security or for the safekeeping or for any other or different purpose, the issuing bank being deemed to have possession or control of all of such property actually in transit to or from or set apart for the issuing bank, any bailee for the issuing bank or any of its correspondents for others acting in its behalf, it being understood that the receipt at any time by the issuing bank, or any of its bailees, agents or correspondents, or other security, of whatever nature, including cash, will not be deemed a waiver of any of the issuing bank's rights or power hereunder; (c) all property shipped under or pursuant to or in connection with any credit or drafts drawn thereunder or in any way related thereto, and all proceeds thereof; (d) all additions to and substitutions for any of the property enumerated above in this subsection; (xvii) any Lien on accounts of the Borrower or any Subsidiary (which accounts arise in the ordinary course of business) in connection with the sale or purported sale of accounts to an Unrestricted Subsidiary or a bankruptcy-remote entity that purchases receivables in the ordinary course of its business; and (xviii) Liens in the Pledged Notes granted to the Collateral Agent pursuant to the Pledge Agreement. "PERSON" means an individual, a corporation, a partnership, an association, a limited liability company, a trust or an unincorporated association or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "PLEDGE AGREEMENT" means the Pledge Agreement, substantially in the form of EXHIBIT D hereto, dated as of the Closing Date, among the Borrower, the Collateral Agent, the Administrative Agent, the Public Debt Trustee and any Holder of Additional Senior Indebtedness, as the same may be amended, modified or supplemented from time to time. "PLEDGED NOTE ISSUERS" means, collectively, the Restricted Subsidiaries of the Borrower which are issuers of the Pledged Notes pledged pursuant to the Pledge Agreement from time to time; PROVIDED, that no Pledged Note Issuer shall be a Foreign Subsidiary. "PLEDGED NOTES" means the promissory notes, in form and substance reasonably satisfactory to the Administrative Agent, pledged by the Borrower pursuant to the Pledge Agreement. "PRIME RATE" means for any day the rate of interest publicly announced by PNC Bank, National Association (or such other principal office of the Administrative Agent as communicated in writing to the Borrower and the Lenders) from time to time as its Prime Rate for Dollars loaned in the United States. It is a rate set by PNC Bank, National Association based upon a variety of factors, including PNC Bank, National Association's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such announced rate. Any change in the interest rate resulting from a change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of such change. "PUBLIC DEBT INDENTURE" has the meaning set forth in the Trust Agreement. "PUBLIC DEBT TRUSTEE" has the meaning set forth in the Trust Agreement. -19- "REAL PROPERTY" means, with respect to any Person, all of the right, title and interest of such Person in and to land, improvements and fixtures, including leaseholds. "REFINANCED AGREEMENT" has the meaning set forth in SECTION 4.01(f). "REFUNDED SWINGLINE LOAN" has the meaning set forth in SECTION 2.01(b)(iii). "REGISTER" has the meaning set forth in SECTION 10.06(d). "REGULATION D, O, T, U OR X" means Regulation D, O, T, U or X, respectively, of the Board as amended, or any successor regulation, in each case together with all interpretations of staff opinions issued in connection therewith. "REMAINING LENDER" has the meaning set forth in SECTION 2.10(d)(i). "REPLACEMENT DATE" has the meaning set forth in SECTION 2.10(c). "REPLACEMENT LENDER" has the meaning set forth in SECTION 2.10(c). "REPORTABLE EVENT" means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30-day notice period has been waived. "REQUIRED LENDERS" means Revolving Lenders whose aggregate Credit Exposure (as hereinafter defined) constitutes more than 50% of the Credit Exposure of all Revolving Lenders at such time. For purposes of the preceding sentence, the term "CREDIT EXPOSURE" as applied to each Lender shall mean (i) at any time prior to the termination of the Commitments, the Revolving Commitment Percentage of such Lender multiplied by the Revolving Committed Amount, and (ii) at any time after the termination of the Commitments, the sum of (A) the principal amount of the outstanding Revolving Loans of such Lender plus (B) the principal amount such Lender's Participation Interests in all Swingline Loans. For purposes of the foregoing, (i) the interest of any Lender holding a Loan in which any other Lender has a Participation Interest pursuant to SECTION 10.06(e) shall be calculated net of all such Participation Interests of other Lenders and (ii) the Participation Interest of any Lender pursuant to SECTION 10.06(e) in a Loan held by any other Lender shall be counted as if such Lender holding a Participation Interest under SECTION 10.06(e) held directly a proportionate part of the related Loan. "RESPONSIBLE OFFICER" means the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of the Borrower. Any document delivered hereunder that is signed by a Responsible Officer of the Borrower shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of the Borrower and such Responsible Officer shall be conclusively presumed to have acted on behalf of the Borrower. "RESTRICTED PAYMENT" means (i) any dividend or other distribution, direct or indirect, on account of any class of Equity Interests or Equity Equivalents of the Borrower or any Subsidiary, now or hereafter outstanding, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any class of Equity Interests or Equity Equivalents of the Borrower or any Subsidiary, now or hereafter outstanding or (iii) any payment made to retire, or to obtain the surrender of, any Equity Interests or Equity Equivalents of or now or hereafter outstanding. "RESTRICTED SUBSIDIARY" means with respect to any Person at any date any Subsidiary of such Person or other entity the accounts of which would be consolidated with those of such Person in its consolidated financial statements if such statements were prepared as of such date in accordance with -20- GAAP, excluding, with respect to the Borrower at any date, all Unrestricted Subsidiaries designated as such pursuant to SECTION 7.07. "REVOLVING BORROWING" means a Syndicated Loan comprised of Revolving Loans and identified as such in the Notice of Borrowing with respect thereto. "REVOLVING COMMITMENT" means, with respect to any Lender, the commitment of such Lender, in an aggregate principal amount at any time outstanding of up to such Lender's Revolving Commitment Percentage of the Revolving Committed Amount, (i) to make Revolving Loans in accordance with the provisions of SECTION 2.01(a) and (ii) to purchase Participation Interests in Swingline Loans in accordance with the provisions of SECTION 2.01(b). "REVOLVING COMMITTED AMOUNT" means $155,000,000 or such greater or lesser amount to which the Revolving Committed Amount may be adjusted pursuant to SECTION 2.10. "REVOLVING COMMITMENT PERCENTAGE" means, for each Lender, the percentage identified as its Revolving Commitment Percentage on SCHEDULE 1.01A hereto, as such percentage may be modified in connection with any assignment made in accordance with the provisions of SECTION 10.06(b). "REVOLVING LENDER" means each Lender identified in the SCHEDULE 1.01A as having a Revolving Commitment and each Eligible Assignee which acquires a Revolving Commitment or Revolving Loan pursuant to SECTION 10.06(b) and their respective successors. "REVOLVING LOAN" means a Committed Loan made under SECTION 2.01(a). "REVOLVING NOTE" means a promissory note, substantially in the form of EXHIBIT B-1 hereto, evidencing the obligation of the Borrower to repay outstanding Revolving Loans, as such Note may be amended, modified, supplemented, extended, renewed or replaced from time to time. "REVOLVING OUTSTANDINGS" means at any date the aggregate outstanding principal amount of all Revolving Loans and Swingline Loans. "SALE/LEASEBACK TRANSACTION" means any direct or indirect arrangement with any Person or to which any such Person is a party providing for the leasing to the Borrower or any of its Subsidiaries of any property, whether owned by the Borrower or any of its Subsidiaries as of the Closing Date or later acquired, which has been or is to be sold or transferred by the Borrower or any of its Subsidiaries to such Person or to any other Person from whom funds have been, or are to be, advanced by such Person on the security of such property. "S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill, Inc., a New York corporation, and its successor or, absent any such successor, such nationally recognized statistical rating organization as the Borrower and the Administrative Agent may select. "SECURITIES ACT" means the Securities Act of 1933, as amended, and any successor statute thereto, together with the rules and regulations promulgated thereunder. "SUBSIDIARY" means with respect to any Person any corporation, partnership, limited liability company, association or other business entity of which (i) if a corporation, more than 50% of the total voting power of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, limited liability company, association or business entity other than a corporation, more than -21- 50% of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have more than 50% ownership interest in a partnership, limited liability company, association or other business entity if such Person or Persons shall be allocated more than 50% of partnership, association or other business entity gains or losses or shall be or control the managing director, manager or a general partner of such partnership, association or other business entity. Notwithstanding the foregoing, any Person that is not included as a "Consolidated Subsidiary" under GAAP shall not be a Subsidiary hereunder. "SWINGLINE COMMITMENT" means the agreement of the Swingline Lender to make Loans pursuant to SECTION 2.01(b). "SWINGLINE COMMITTED AMOUNT" means the lesser of (i) $20,000,000 or (ii) an amount which, when added to the aggregate principal amount of all other Loans then outstanding under this Agreement, does not exceed $155,000,000 or such greater or lesser amount as the Revolving Committed Amount may be adjusted pursuant to SECTION 2.10(e). "SWINGLINE LENDER" means PNC Bank, National Association, in its capacity as the Swingline Lender under SECTION 2.01(b), and its successor or successors in such capacity. "SWINGLINE LOAN" means a Base Rate Loan made by the Swingline Lender in Dollars pursuant to SECTION 2.01(b), and "SWINGLINE LOANS" means any two or more of such Base Rate Loans. "SWINGLINE LOAN REQUEST" has the meaning set forth in SECTION 2.02(b). "SWINGLINE NOTE" means a promissory note, substantially in the form of EXHIBIT B-3 hereto, evidencing the obligation of the Borrower to repay outstanding Swingline Loans, as such Note may be amended, modified, supplemented, extended, renewed or replaced from time to time. "SWINGLINE TERMINATION DATE" means the earlier of (i) May 9, 2007 (or, if such day is not a Business Day, the next preceding Business Day) or such earlier date upon which the Revolving Commitments shall have been terminated in their entirety in accordance with this Agreement and (ii) the date on which the Swingline Commitment is terminated in its entirety in accordance with the Agreement. "SYNDICATED LOAN" means a Committed Loan made by a Lender pursuant to SECTION 2.01(a); PROVIDED, that if any such Loan or Loans (or portions thereof) are combined or subdivided pursuant to a Notice of Extension/Conversion, the term "SYNDICATED Loan" shall refer to the combined principal amount resulting from such combination or to each of the separate principal amounts resulting from such subdivision, as the case may be. "SYNTHETIC LEASE OBLIGATION" means the monetary obligation of a Person under (i) a so-called synthetic, off-balance sheet or tax retention lease or (ii) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such person (without regard to accounting treatment). "TAXES" has the meaning set forth in SECTION 3.01. "TRUST AGREEMENT" means Trust Agreement, substantially in the form of EXHIBIT E hereto, dated as of the Closing Date, among the Borrower, the Trustee, the Administrative Agent, the Public Debt Trustee and any Holder of Additional Senior Indebtedness, as the same may be amended, modified or supplemented from time to time. -22- "TRUSTEE" means Wells Fargo Bank Minnesota, National Association, in its capacity as trustee under the Trust Agreement, together with its successors and permitted assigns. "TYPE" has the meaning set forth in SECTION 1.04. "UNITED STATES" means the United States of America, including the states and the District of Columbia, but excluding its territories and possessions. "UNRESTRICTED SUBSIDIARY" means any Subsidiary which would otherwise be a Consolidated Subsidiary, but which has been designated as an Unrestricted Subsidiary by the Borrower pursuant to the provisions of SECTION 7.07. "WORTHINGTON'S RATINGS" means the ratings from Moody's and S&P with respect to the senior, unsecured, long-term indebtedness for borrowed money of the Borrower that is not guaranteed by any other Person. "WHOLLY-OWNED SUBSIDIARY" means, with respect to any Person at any date, any Subsidiary of such Person all of the shares of capital stock or other ownership interests of which (except directors' qualifying shares) are at the time directly or indirectly owned by such Person. SECTION 1.02 COMPUTATION OF TIME PERIODS AND OTHER DEFINITIONAL PROVISIONS. For purposes of computation of periods of time hereunder, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". All references to time herein shall be references to Eastern Standard time or Eastern Daylight time, as the case may be, unless specified otherwise. References in this Agreement to Articles, Sections, Schedules, Appendices or Exhibits shall be to Articles, Sections, Schedules, Appendices or Exhibits of or to this Agreement unless otherwise specifically provided. The definitions in SECTION 1.01 shall apply equally to both the singular and plural forms of the terms defined. SECTION 1.03 ACCOUNTING TERMS AND DETERMINATIONS. Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall be prepared, in accordance with GAAP applied on a consistent basis. All financial statements delivered to the Lenders hereunder shall be accompanied by a statement from the Borrower that GAAP has not changed since the most recent financial statements delivered by the Borrower to the Lenders or, if GAAP has changed, describing such changes in detail and explaining how such changes affect the financial statements. All calculations made for the purposes of determining compliance with this Agreement shall (except as otherwise expressly provided herein) be made by application of GAAP applied on a basis consistent with the most recent annual or quarterly financial statements delivered pursuant to SECTION 6.01 (or, prior to the delivery of the first financial statements pursuant to SECTION 6.01, consistent with the financial statements described in SECTION 5.02(a)). Any change in GAAP that effects the calculation of financial covenants will result in an adjustment in the affected covenant so that it is no more or less restrictive than on the Closing Date. SECTION 1.04 CLASSES AND TYPES OF BORROWINGS. The term "BORROWING" denotes the aggregation of Loans of one or more Lenders to be made to the Borrower pursuant to ARTICLE II on the same date, all of which Loans are of the same Class and Type (subject to ARTICLE III) and, except in the case of Base Rate Loans, have the same initial Interest Period. Loans hereunder are distinguished by "Class" and "Type". The "CLASS" of a Loan (or of a Commitment to make such a Loan or of a Borrowing comprised of such Loans) refers to whether such Loan is a Committed Loan (Syndicated or Swingline) or a Competitive Bid Loan. The "TYPE" of a Loan refers (i) in the case of Committed Loans, to whether such Loan is a Base Rate Loan or a Eurodollar Loan and (ii) in the case of Competitive Bid Loan, to -23- whether such Loan is a Competitive Bid Absolute Rate Loan or a Competitive Bid LIBOR Loan. Identification of a Loan (or a Borrowing) by both Class and Type (e.g., a "Committed Eurodollar Loan") indicates that such Loan is a Loan of both such Class and such Type (e.g., both a Committed Loan and a Eurodollar Loan) or that such Borrowing is comprised of such Loans. In addition, Borrowings are classified by reference to the provisions of ARTICLE II under which participation therein is determined (i.e., a "Committed Loan" is a Syndicated Loan under SECTION 2.01(a) in which all Lenders participate in proportion to their Commitments or a Swingline Borrowing under SECTION 2.01(b) funded by the Swingline Lender, while a "Competitive Bid Borrowing" is a Borrowing under SECTION 2.03 in which the Lender participants are determined on the basis of their respective bids in accordance therewith). ARTICLE II THE CREDIT FACILITIES SECTION 2.01 COMMITMENTS TO LEND. (a) SYNDICATED LOANS. Each Revolving Lender severally agrees, on the terms and conditions set forth in this Agreement, to make Revolving Loans to the Borrower pursuant to this SUBSECTION 2.01(a) from time to time prior to the Maturity Date in amounts such that the aggregate of its Revolving Outstandings shall not exceed (after giving effect to all Revolving Loans and Competitive Bid Loans repaid and all Refunded Swingline Loans paid, concurrently with the making of any Revolving Loans) its Revolving Commitment; PROVIDED, that immediately after giving effect to each such Revolving Loan, the aggregate of the Revolving Outstandings plus the aggregate principal amount of Competitive Bid Loans shall not exceed the aggregate amount of the Revolving Commitments. Each Revolving Borrowing (other than a Borrowing to be used to repay Refunded Swingline Loans which shall be in an aggregate amount equal to such Refunded Swingline Loans) shall be in an aggregate principal amount of $5,000,000 or any larger multiple of $1,000,000 (except that any such Borrowing may be in the aggregate amount of the unused Revolving Commitments) and shall be made from the several Revolving Lenders ratably in proportion to their respective Revolving Commitments. Within the foregoing limits, the Borrower may borrow under this SUBSECTION 2.01(a), repay, or, to the extent permitted by SECTION 2.09, prepay, Revolving Loans and reborrow under this SUBSECTION 2.01(a). (b) SWINGLINE LOANS. (i) The Swingline Lender agrees, on the terms and subject to the conditions set forth herein, to make a portion of the Revolving Commitments available to the Borrower from time to time prior to the Swingline Termination Date by making Swingline Loans to the Borrower in Dollars (each such loan, a "SWINGLINE LOAN" and collectively, the "SWINGLINE LOANS"); PROVIDED, that (i) the aggregate principal amount of the Swingline Loans outstanding at any one time shall not exceed the Swingline Committed Amount, (ii) with regard to each Lender individually (other than the Swingline Lender in its capacity as such), the principal amount of such Lender's outstanding Revolving Loans plus its Participation Interests in outstanding Swingline Loans shall not at any time exceed such Lender's Revolving Commitment Percentage of the Revolving Committed Amount, (iii) with regard to the Revolving Lenders collectively, the aggregate of the Revolving Outstandings shall not exceed the Revolving Committed Amount, (iv) the Swingline Committed Amount shall not exceed the aggregate of the Revolving Commitments then in effect and (v) no Swingline Loans (as defined in the Five Year Credit Agreement) are outstanding under the Five Year Credit Agreement. Swingline Loans may be repaid and reborrowed in accordance with the provisions hereof prior to the Swingline Termination Date. Swingline Loans may be made notwithstanding the fact that such Swingline Loans, when aggregated with the Swingline Lender's other Revolving Outstandings, exceeds its Revolving -24- Commitment. The proceeds of a Swingline Borrowing may not be used, in whole or in part, to refund any prior Swingline Borrowing. (ii) The principal amount of all Swingline Loans shall be due and payable on the earliest of (A) the maturity date agreed to by the Swingline Lender and the Borrower with respect to such Swingline Loan (which maturity date shall not be a date more than 10 Business Days from the date of advance thereof), (B) the Swingline Termination Date, (C) the occurrence of a Bankruptcy Event with respect to the Borrower or (D) the acceleration of any Loan or the termination of the Revolving Commitments pursuant to SECTION 8.02. (iii) With respect to any Swingline Loans that have not been voluntarily prepaid by the Borrower or paid by the Borrower when due under CLAUSE (ii) above, the Swingline Lender (by request to the Administrative Agent) or Administrative Agent at any time may, and shall at any time Swingline Loans have been outstanding for more than 10 Business Days, on one Business Day's notice, require each Revolving Lender, including the Swingline Lender, and each such Lender hereby agrees, subject to the provisions of this SECTION 2.01(b), to make a Revolving Loan (which shall be initially funded as a Base Rate Loan) in an amount equal to such Lender's Revolving Commitment Percentage of the amount of the Swingline Loans ("REFUNDED SWINGLINE Loans") outstanding on the date notice is given. (iv) In the case of Revolving Loans made by Lenders other than the Swingline Lender under CLAUSE (iii) above, each such Revolving Lender shall make the amount of its Revolving Loan available to the Administrative Agent, in Dollars in same day funds, at the Administrative Agent's Office, not later than 1:00 P.M. on the Business Day next succeeding the date such notice is given. The proceeds of such Revolving Loans shall be immediately delivered to the Swingline Lender (and not to the Borrower) and applied to repay the Refunded Swingline Loans. On the day such Revolving Loans are made, the Swingline Lender's Revolving Commitment Percentage of the Refunded Swingline Loans shall be deemed to be paid with the proceeds of a Revolving Loan made by the Swingline Lender and such portion of the Swingline Loans deemed to be so paid shall no longer be outstanding as Swingline Loans and shall instead be outstanding as Revolving Loans. The Borrower authorizes the Administrative Agent and the Swingline Lender to charge the Borrower's account with the Administrative Agent (up to the amount available in such account) in order to pay immediately to the Swingline Lender the amount of such Refunded Swingline Loans to the extent amounts received from the Revolving Lenders, including amounts deemed to be received from the Swingline Lender, are not sufficient to repay in full such Refunded Swingline Loans. If any portion of any such amount paid (or deemed to be paid) to the Swingline Lender should be recovered by or on behalf of any Borrower from the Swingline Lender in bankruptcy, by assignment for the benefit of creditors or otherwise, the loss of the amount so recovered shall be ratably shared among all Revolving Lenders in the manner contemplated by SECTION 2.13. (v) A copy of each notice given by the Swingline Lender pursuant to this SECTION 2.01(b) shall be promptly delivered by the Swingline Lender to the Administrative Agent and the Borrower. Upon the making of a Revolving Loan by a Revolving Lender pursuant to this SECTION 2.01(b), the amount so funded shall no longer be owed in respect of its Participation Interest in the related Refunded Swingline Loans. (vi) If as a result of any Bankruptcy Event, Revolving Loans are not made pursuant to this SECTION 2.01(b) sufficient to repay any amounts owed to the Swingline Lender as a result of a nonpayment of outstanding Swingline -25- Loans, each Revolving Lender agrees to purchase, and shall be deemed to have purchased, a participation in such outstanding Swingline Loans in an amount equal to its Revolving Commitment Percentage of the unpaid amount together with accrued interest thereon. Upon one Business Day's notice from the Swingline Lender, each Revolving Lender shall deliver to the Swingline Lender an amount in Dollars equal to its respective Participation Interest in such Swingline Loans in same day funds at the office of the Swingline Lender specified on SCHEDULE 10.02. In order to evidence such Participation Interest each Revolving Lender agrees to enter into a participation agreement at the request of the Swingline Lender in form and substance reasonably satisfactory to all parties. In the event any Revolving Lender fails to make available to the Swingline Lender the amount of such Revolving Lender's Participation Interest as provided in this SECTION 2.01(b)(vi), the Swingline Lender shall be entitled to recover such amount on demand from such Revolving Lender together with interest at the customary rate set by the Swingline Lender for correction of errors among banks in New York City for one Business Day and thereafter at the Base Rate plus the then Applicable Margin for Base Rate Loans. (vii) Each Revolving Lender's obligation to make Revolving Loans pursuant to CLAUSE (iv) above and to purchase Participation Interests in outstanding Swingline Loans pursuant to CLAUSE (vi) above shall be absolute and unconditional and shall not be affected by any circumstance, including (without limitation) (i) any set-off, counterclaim, recoupment, defense or other right which such Revolving Lender or any other Person may have against the Swingline Lender or the Borrower, (ii) the occurrence or continuance of a Default or an Event of Default or the termination or reduction in the amount of the Revolving Commitments after any such Swingline Loans were made, (iii) any adverse change in the condition (financial or otherwise) of the Borrower or any other Person, (iv) any breach of this Agreement or any other Loan Document by the Borrower or any other Lender, (v) whether any condition specified in ARTICLE IV is then satisfied or (vi) any other circumstance, happening or event whatsoever, whether or not similar to any of the forgoing; PROVIDED, that no Revolving Lender shall be obligated following the occurrence and during the continuance of any Default or Event of Default to make any payment to the Swingline Lender under this SUBSECTION (b) with respect to a Swingline Loan made by the Swingline Lender at a time when it had actual knowledge that a Default or Event of Default had occurred and was continuing. If such Lender does not pay such amount forthwith upon the Swingline Lender's demand therefor, and until such time as such Lender makes the required payment, the Swingline Lender shall be deemed to continue to have outstanding Swingline Loans in the amount of such unpaid Participation Interest for all purposes of the Loan Documents other than those provisions requiring the other Lenders to purchase a participation therein. Further, such Lender shall be deemed to have assigned any and all payments made of principal and interest on its Loans, and any other amounts due to it hereunder to the Swingline Lender to fund Swingline Loans in the amount of the Participation Interest in Swingline Loans that such Lender failed to purchase pursuant to this SECTION 2.01(b)(vii) until such amount has been purchased (as a result of such assignment or otherwise). SECTION 2.02 NOTICE OF COMMITTED LOAN. (a) SYNDICATED LOANS. The Borrower shall give the Administrative Agent notice of each Syndicated Loan substantially in the form of Exhibit A-1 hereto (a "NOTICE OF SYNDICATED LOAN") not later than 11:00 A.M. on (i) the date of each Syndicated Base Rate Borrowing and (ii) the third Business Day before each Syndicated Eurodollar Borrowing. Each such notice shall be irrevocable and shall specify: (A) the date of such Borrowing, which shall be a Business Day; (B) the aggregate amount of such Borrowing; -26- (C) whether the Loans comprising such Borrowing are to bear interest initially at the Base Rate or the Eurodollar Rate; and (D) in the case of a Eurodollar Borrowing, the duration of the initial Interest Period applicable thereto, subject to the provisions of the definition of Interest Period and to SECTION 2.06(a). (b) SWINGLINE BORROWINGS. The Borrower shall request a Swingline Loan by written notice (or telephone notice promptly confirmed in writing) substantially in the form of EXHIBIT A-5 hereto (a "SWINGLINE LOAN REQUEST") to the Swingline Lender and the Administrative Agent not later than 2:00 P.M. on the Business Day of the requested Swingline Loan. Each such notice shall be irrevocable and shall specify (i) that a Swingline Loan is requested, (ii) the date of the requested Swingline Loan (which shall be a Business Day) and (iii) the principal amount of the Swingline Loan requested. Each Swingline Loan shall be made in Dollars as a Base Rate Loan and, subject to SECTION 2.01(b)(ii), shall have such maturity date as agreed to by the Swingline Lender and the Borrower upon receipt by the Swingline Lender of the Swingline Loan Request from the Borrower. SECTION 2.03 COMPETITIVE BID BORROWINGS. (a) COMPETITIVE BID OPTION. In addition to Committed Loans pursuant to SECTION 2.01, the Borrower may, so long as Worthington's Ratings are at least BBB/Baa2 from Moody's and S&P, respectively, and as set forth in this SECTION 2.03, request the Lenders to make offers to make Competitive Bid Loans to the Borrower from time to time prior to the Maturity Date. The Lenders may, but shall have no obligation to, make such offers and the Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this SECTION 2.03. After giving effect to any borrowing of Competitive Bid Loans, (i) the aggregate Revolving Outstandings plus the aggregate principal amount of all Competitive Bid Loans shall not exceed the aggregate amount of the Revolving Commitments and (ii) there shall not be more than five different Interest Periods in effect with respect to Competitive Bid Loans at any time. (b) COMPETITIVE BID REQUEST. When the Borrower wishes to request offers to make Competitive Bid Loans under this SECTION 2.03, it shall transmit to the Administrative Agent by telephone call followed promptly by facsimile transmission (a "COMPETITIVE BID REQUEST") substantially in the form of EXHIBIT A-2 hereto so as to be received by the Administrative Agent at the Administrative Agent's Office not later than 12:00 Noon on (x) the fourth Business Day before the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y) the Business Day next preceding the date of Borrowing proposed therein, in the case of an Absolute Rate Auction, or, in any such case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Lenders not later than the date of the Competitive Bid Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective. Each such Competitive Bid Request shall specify: (i) the proposed date of Borrowing, which shall be a Business Day; (ii) the aggregate amount of such Borrowing, which shall be $5,000,000 in aggregate principal amount (or any larger multiple of $1,000,000); (iii) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period; and -27- (iv) whether the Competitive Bid Borrowing quote requested (each, a "COMPETITIVE BID QUOTE") are to set forth a Competitive Bid Margin or a Competitive Bid Absolute Rate. The Borrower may request offers to make Competitive Bid Loans for more than one Interest Period in a single Competitive Bid Request. No more than two Competitive Bid Requests shall be given within five Business Days (or such other number of days as the Borrower and the Administrative Agent may agree) of any other Competitive Bid Request. (c) DELIVERY OF COMPETITIVE BIDS REQUESTS. The Administrative Agent shall promptly notify each Revolving Lender of each Competitive Bid Request received by it from the Borrower and the contents of such Competitive Bid Requests, which notice shall constitute an invitation by the Borrower to each Revolving Lender to submit Competitive Bids offering to make the Competitive Bid Loans to which such Competitive Bid Request relates in accordance with this SECTION 2.03. (d) SUBMISSION AND CONTENTS OF COMPETITIVE BIDS. (i) Each Lender may submit a competitive bid (a "COMPETITIVE BID") containing an offer or offers to make Competitive Bid Loans in response to any invitation for Competitive Bids. Each Competitive Bid must comply with the requirements of this SUBSECTION 2.03(d) and must be submitted to the Administrative Agent by telex or facsimile at the Administrative Agent's office not later than (x) 10:00 A.M. on the third Business Day before the proposed date of Borrowing, in the case of a LIBOR Auction or (y) 10:00 A.M. on the proposed date of Borrowing, in the case of an Absolute Rate Auction, or, in any such case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Lenders not later than the date of the Competitive Bid Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective; PROVIDED, that Competitive Bids submitted by the Administrative Agent (or any affiliate of the Administrative Agent) in the capacity of a Lender may be submitted, and may only be submitted, if the Administrative Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than 30 minutes before the deadline for the other Lenders. Subject to ARTICLES III and IV, any Competitive Bid so made shall not be revocable except with the written consent of the Administrative Agent given on the instructions of the Borrower. (ii) Each Competitive Bid shall be substantially in the form of EXHIBIT A-3 hereto and shall in any case specify: (A) the proposed date of Borrowing; (B) the principal amount of the Competitive Bid Loan for which each such offer is being made, which principal amount (w) may be greater than or less than the Commitment of the quoting Lender, (x) must be in the principal amount of $5,000,000 (or any larger multiple of $1,000,000), (y) may not exceed the principal amount of Competitive Bid Loans for which offers were requested and (z) may be subject to an aggregate limitation as to the principal amount of Competitive Bid Loans for which offers being made by such quoting Lender may be accepted; (C) in the case of a LIBOR Auction, the margin above or below the Applicable Interbank Offered Rate (the "COMPETITIVE BID Margin") offered for each such Competitive Bid Loan, expressed as a percentage (specified to the nearest 1/1,00th of 1%) to be added to or subtracted from such base rate; -28- (D) in the case of an Absolute Rate Auction, the rate of interest per annum (specified to the nearest 1/100th of 1%) (the "COMPETITIVE BID ABSOLUTE RATE") offered for each such Competitive Bid Loan; and (E) the identity of the quoting Lender. A Competitive Bid may set forth up to three separate offers by the quoting Lender with respect to each Interest Period specified in the related Invitation for Competitive Bids. (iii) Any Competitive Bid shall be disregarded if it: (A) is not substantially in conformity with EXHIBIT A-3 hereto or does not specify all of the information required by SUBSECTION 2.03(d)(ii) above; (B) contains qualifying, conditional or similar language; (C) proposes terms other than or in addition to those set forth in the applicable Invitation for Competitive Bids; or (D) arrives after the time set forth in SUBSECTION 2.03(d)(i). (e) NOTICE TO THE BORROWER. The Administrative Agent shall promptly notify the Borrower, but using its best efforts in no event later than 11:00 A.M. of the terms of (i) any Competitive Bid submitted by a Lender that is in accordance with SUBSECTION 2.03(d) and (ii) any Competitive Bid that amends, modifies or is otherwise inconsistent with a previous Competitive Bid submitted by such Lender with respect to the same Competitive Bid Request. Any such subsequent Competitive Bid shall be disregarded by the Administrative Agent unless such subsequent Competitive Bid is submitted solely to correct a manifest error in such former Competitive Bid. The Administrative Agent's notice to the Borrower shall specify (A) the aggregate principal amount of Competitive Bid Loans for which offers have been received for each Interest Period specified in the related Competitive Bid Request, (B) the respective principal amounts and Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be, so offered and (C) if applicable, limitations on the aggregate principal amount of Competitive Bid Loans for which offers in any single Competitive Bid may be accepted. (f) ACCEPTANCE AND NOTICE BY THE BORROWER. The Borrower shall notify the Administrative Agent of its acceptance or non-acceptance of the offers notified to it pursuant to SUBSECTION 2.03(e) at the Administrative Agent's Office not later than 11:00 A.M. on (x) the third Business Day before the proposed date of Borrowing, in the case of a LIBOR Auction in Dollars or (y) the proposed date of Borrowing, in the case of an Absolute Rate Auction, or, in any such case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Lenders not later than the date of the Competitive Bid Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective. In the case of acceptance, such notice (a "NOTICE OF COMPETITIVE BID BORROWING") shall specify the aggregate principal amount of offers for each Interest Period that are accepted. The Borrower may accept any Competitive Bid in whole or in part; PROVIDED, that: (i) the aggregate principal amount of each Competitive Bid Borrowing may not exceed the applicable amount set forth in the related Competitive Bid Request; (ii) the aggregate principal amount of each Competitive Bid Borrowing must be in the amount of $5,000,000 (or any larger multiple of $1,000,000); -29- (iii) acceptance of offers may only be made on the basis of ascending Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be; and (iv) the Borrower may not accept any offer that is described in SUBSECTION 2.03(d)(iii) or that otherwise fails to comply with the requirements of this Agreement. (g) ALLOCATION BY ADMINISTRATIVE AGENT. If offers are made by two or more Lenders with the same Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Competitive Bid Loans in respect of which such offers are accepted shall be allocated by the Administrative Agent among such Lenders as nearly as possible (in multiples of $1,000,000) in proportion to the aggregate principal amounts of such offers. Determinations by the Administrative Agent of the amounts of Competitive Bid Loans shall be conclusive in the absence of manifest error. After each Absolute Rate Auction and LIBOR Auction pursuant to this SECTION 2.03, the Administrative Agent shall notify each Lender that submitted a Competitive Bid in such auction of the range of bids submitted (without the bidder's name) and accepted for each Competitive Bid Loan and the aggregate principal amount of each Competitive Bid Borrowing resulting from such auction. SECTION 2.04 NOTICE TO LENDERS; FUNDING OF LOANS. (a) NOTICE TO LENDERS. Upon receipt of a Notice of Borrowing, the Administrative Agent shall promptly notify each Lender of such Lender's ratable share (if any) of the Borrowing referred to therein, and such Notice of Borrowing shall not thereafter be revocable by the Borrower. (b) FUNDING OF LOANS. (i) On the date of each Borrowing, each Lender participating therein shall make available its share of such Borrowing not later than 2:00 P.M., in Federal or other funds immediately available, to the Administrative Agent at the Administrative Agent's Office. Unless the Administrative Agent determines that any applicable condition specified in Article IV has not been satisfied, the Administrative Agent will make the funds so received from the Lenders available to the Borrower in the Borrower's account established at the Administrative Agent's Office; PROVIDED, HOWEVER, that if on the date of any Syndicated Loan there are outstanding Swingline Loans, then the funds so received shall be applied, FIRST, to the repayment of such Swingline Loans and SECOND, to the Borrower as provided above. (ii) Not later than 3:00 P.M. on the date of each Swingline Borrowing, the Swingline Lender shall, unless the Administrative Agent shall have notified the Swingline Lender that any applicable condition specified in ARTICLE IV has not been satisfied, make available the amount of such Swingline Borrowing, in Federal or other immediately available funds, to the Borrower in the Borrower's account established at the Swingline Lender's address referred to in SCHEDULE 10.02. (c) FUNDING BY THE ADMINISTRATIVE AGENT IN ANTICIPATION OF AMOUNTS DUE FROM THE LENDERS. Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing (except in the case of a Base Rate Borrowing, in which case prior to the time of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender's share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available to the Administrative Agent on the date of such Borrowing in accordance with SECTION 2.04(b) above, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such share -30- available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount, together with interest thereon for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent at (i) a rate per annum equal to the higher of the Federal Funds Rate (if such Borrowing is in Dollars) or the rate then applicable to such Loan in accordance with SECTION 2.06, in the case of the Borrower, and (ii) the Federal Funds Rate, in the case of such Lender. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender's Loan included in such Borrowing for purposes of this Agreement. (d) OBLIGATIONS OF LENDERS SEVERAL. The failure of any Lender to make a Loan required to be made by it as part of any Borrowing hereunder shall not relieve any other Lender of its obligation, if any, hereunder to make any Loan on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on such date of Borrowing. (e) FAILED LOANS. If any Lender shall fail to make any Loan (a "FAILED LOAN") which such Lender is otherwise obligated hereunder to make to the Borrower on the date of Borrowing thereof, and the Administrative Agent shall not have received notice from the Borrower or such Lender that any condition precedent to the making of the Failed Loan has not been satisfied, then, until such Lender shall have made or be deemed to have made (pursuant to the last sentence of this SUBSECTION (e)) the Failed Loan in full or the Administrative Agent shall have received notice from the Borrower or such Lender that any condition precedent to the making of the Failed Loan was not satisfied at the time the Failed Loan was to have been made, whenever the Administrative Agent shall receive any amount from the Borrower for the account of such Lender, (i) the amount so received (up to the amount of such Failed Loan) will, upon receipt by the Administrative Agent, be deemed to have been paid to the Lender in satisfaction of the obligation for which paid, without actual disbursement of such amount to the Lender, (ii) the Lender will be deemed to have made the same amount available to the Administrative Agent for disbursement as a Loan to the Borrower (up to the amount of such Failed Loan) and (iii) the Administrative Agent will disburse such amount (up to the amount of the Failed Loan) to the Borrower or, if the Administrative Agent has previously made such amount available to the Borrower on behalf of such Lender pursuant to the provisions hereof, reimburse itself (up to the amount of the amount made available to the Borrower); PROVIDED, HOWEVER, that the Administrative Agent shall have no obligation to disburse any such amount to the Borrower or otherwise apply it or deem it applied as provided herein unless the Administrative Agent shall have determined in its sole discretion that to so disburse such amount will not violate any law, rule, regulation or requirement applicable to the Administrative Agent. Upon any such disbursement by the Administrative Agent, such Lender shall be deemed to have made a Base Rate Loan of the same Class as the Failed Loan to the Borrower in satisfaction, to the extent thereof, of such Lender's obligation to make the Failed Loan. SECTION 2.05 EVIDENCE OF LOANS. (a) LENDER ACCOUNTS. Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness owed by the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (b) ADMINISTRATIVE AGENT RECORDS. The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Class and Type of each Loan made and the Interest Period, if any, applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Agent hereunder from the Borrower and each Lender's share thereof. -31- (c) EVIDENCE OF DEBT. The entries made in the accounts maintained pursuant to SUBSECTIONS (a) and (b) of this SECTION 2.05 shall be prima facie evidence of the existence and amounts of the obligations therein recorded; PROVIDED, HOWEVER, 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 obligations of the Borrower to repay the Loans in accordance with their terms. (d) NOTES. Notwithstanding any other provision of this Agreement, if any Lender shall request and receive a Note or Notes as provided in SECTION 10.06 or otherwise, then the Loans of such Lender shall be evidenced by Notes of the applicable Class, in each case, substantially in the form of EXHIBIT B-1 or B-2, as applicable, and payable to the order of such Lender for the account of its Applicable Lending Office in an amount equal to the aggregate unpaid principal amount of such Lender's Revolving Loans or Competitive Bid Loans, as applicable. If requested by the Swingline Lender, the Swingline Loans shall be evidenced by a single Swingline Note, substantially in the form of EXHIBIT B-3, and payable to the order of the Swingline Lender in an amount equal to the aggregate unpaid principal amount of the Swingline Loans. (e) NOTES FOR LOANS OF DIFFERENT TYPES. Each Lender may, by notice to the Borrower and the Administrative Agent, request that its Loans of a particular Type be evidenced by separate Notes in an amount equal to the aggregate unpaid principal amount of such Loans. Each such Note shall be in substantially the form of EXHIBIT B-1 or B-2 hereto with appropriate modifications to reflect the fact that it evidences solely Loans of the relevant Type. Each reference in this Agreement to such Lender's "Note" of a particular Class shall be deemed to refer to and include any or all of such Notes, as the context may require. (f) NOTE ENDORSEMENTS. Each Lender having one or more Notes shall record the date, amount, Class and Type of each Loan made by it and the date and amount of each payment of principal made by the Borrower with respect thereto, and may, if such Lender so elects in connection with any transfer or enforcement of any Note, endorse on the reverse side or on the schedule, if any, forming a part thereof appropriate notations to evidence the foregoing information with respect to each outstanding Loan evidenced thereby; PROVIDED, that the failure of any Lender to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under any such Note. Each Lender is hereby irrevocably authorized by the Borrower so to endorse each of its Notes and to attach to and make a part of each of its Notes a continuation of any such schedule as and when required. SECTION 2.06 INTEREST. (a) RATE OPTIONS APPLICABLE TO LOANS. Each Committed Loan shall be comprised of Base Rate Loans or (except in the case of Swingline Loans which shall be made and maintained as Base Rate Loans) Eurodollar Loans, as the Borrower may request pursuant to SECTION 2.02 or 2.03, as applicable. Borrowings of more than one Type may be outstanding at the same time; PROVIDED, HOWEVER, that the Borrower may not request any Borrowing that, if made, would result in an aggregate of more than five separate Groups of Eurodollar Loans being outstanding hereunder at any one time. For this purpose, Loans having different Interest Periods, regardless of whether commencing on the same date, shall be considered separate Groups. (b) BASE RATE LOANS. Each Loan of a Class which is made as, or converted into, a Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made as, or converted into, a Base Rate Loan until it becomes due or is converted into a Loan of any other Type or repaid in full, at a rate per annum equal to the Applicable Margin for Base Rate Loans of such Class for such day plus the Base Rate for such day. Such interest shall be payable quarterly in arrears on each Interest Payment Date and, with respect to the principal amount of any Base -32- Rate Loan converted to a Eurodollar Loan, on the date such Base Rate Loan is so converted. Any overdue principal of or interest on any Base Rate Loan of any Class shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the rate otherwise applicable to Base Rate Loans of the same Class for such day. (c) EURODOLLAR LOANS. Each Eurodollar Loan shall bear interest on the outstanding principal amount thereof, for each day during the Interest Period applicable thereto, at a rate per annum equal to the sum of the Applicable Margin for Eurodollar Loans for such day plus the Eurodollar Rate; PROVIDED, that if any Eurodollar Loan or any portion thereof shall, as a result of the definition of Interest Period, have an Interest Period of less than one month, such portion shall bear interest during such Interest Period at the rate applicable to Base Rate Loans during such period. Such interest shall be payable for each Interest Period on each Interest Payment Date. Any overdue principal amount of or interest on any Eurodollar Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the higher of (i) the sum of 2% plus the Applicable Margin for Eurodollar Loans for such day plus the Eurodollar Rate applicable to such Loan at the date such payment was due and (ii) the sum of 2% plus the Applicable Margin for Eurodollar Loans for such day plus the quotient obtained (rounded upward, if necessary, to the nearest 1/100th of 1%) by dividing (x) the Applicable Interbank Offered Rate for one day (or if such amount due remains unpaid more than three Business Days, then for such other period of time not longer than six months as the Administrative Agent may select) deposits in Dollars in an amount approximately equal to such overdue payment by (y) 1.00 minus the Eurodollar Reserve Percentage (or, if the circumstances described in SECTION 3.02 shall exist, at a rate per annum equal to the sum of 2% plus the rate applicable to Revolving Base Rate Loans for such day). (d) COMPETITIVE BID LOANS. Subject to ARTICLE III, the unpaid principal amount of each Competitive Bid LIBOR Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the Eurodollar Rate for such Interest Period (determined in accordance with SECTION 2.06(C) as if the related Competitive Bid LIBOR Borrowing were a Eurodollar Borrowing) plus (or minus) the Competitive Bid Margin quoted by the Lender making such Loan. The unpaid principal amount of each Competitive Bid Absolute Rate Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Competitive Bid Absolute Rate quoted by the Lender making such Loan. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. Any overdue principal of or interest on any Competitive Bid Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the Base Rate for such day. (e) DETERMINATION AND NOTICE OF INTEREST RATES. The Administrative Agent shall determine each interest rate applicable to the Loans hereunder. The Administrative Agent shall give prompt notice to the Borrower and the participating Lenders of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error. Any notice with respect to Eurodollar Loans shall, without the necessity of the Administrative Agent so stating in such notice, be subject to adjustments in the Applicable Margin applicable to such Loans after the beginning of the Interest Period applicable thereto. When during an Interest Period any event occurs that causes an adjustment in the Applicable Margin applicable to Loans to which such Interest Period is applicable, the Administrative Agent shall give prompt notice to the Borrower and the Lenders of such event and the adjusted rate of interest so determined for such Loans, and its determination thereof shall be conclusive in the absence of manifest error. (f) DEFAULT INTEREST. Upon the occurrence and during the continuance of an Event of Default, and regardless of whether or not any judgment has been entered thereon, the principal amount of and, to the extent permitted by law, interest on the Loans and any other amounts owing herein or under -33- the other Loan Documents shall bear interest, payable on demand, at a per annum rate equal to (i) in the case of principal of any Loan, the rate otherwise applicable to such Loan during such period pursuant to this SECTION 2.06 plus 2.00% (without duplication of any amount owing in respect of Base Rate Loans under the third sentence of SECTION 2.06(b), in respect of Eurodollar Loans under the third sentence of SECTION 2.06(c) or in respect of any Competitive Bid Loan under the fourth sentence of SECTION 2.06(d)), (ii) in the case of interest on any Loan the Base Rate plus the Applicable Margin for Loans of such Class on such day plus 2.00% and (iii) in the case of any other amount, the Base Rate plus the Applicable Margin for Revolving Base Rate Loans plus 2.00%. SECTION 2.07 EXTENSION AND CONVERSION. (a) CONTINUATION CONVERSION OPTIONS. The Loans included in each Syndicated Loan shall bear interest initially at the type of rate specified by the Borrower in the applicable Notice of Syndicated Loan. Thereafter, the Borrower shall have the option, on any Business Day, to elect to change or continue the type of interest rate borne by each Group of Syndicated Loans (subject in each case to the provisions of ARTICLE III and SUBSECTION 2.06(d)), as follows: (i) if such Loans are Base Rate Loans, the Borrower may elect to convert such Loans to Eurodollar Loans as of any Business Day; and (ii) if such Loans are Eurodollar Loans, the Borrower may elect to convert such Loans to Base Rate Loans or elect to continue such Loans as Eurodollar Loans for an additional Interest Period, subject to SECTION 3.05 in the case of any such conversion or continuation effective on any day other than the last day of the then current Interest Period applicable to such Loans. Each such election shall be made by delivering a notice, substantially in the form of EXHIBIT A-4 hereto (a "NOTICE OF EXTENSION/CONVERSION") to the Administrative Agent not later than 12:00 Noon on the third Business Day before the conversion or continuation selected in such notice is to be effective. A Notice of Extension/Conversion may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans, PROVIDED, that (i) such portion is allocated ratably among the Loans comprising such Group and (ii) the portion to which such Notice applies, and the remaining portion to which it does not apply, are each $5,000,000 or any larger multiple of $1,000,000. (b) CONTENTS OF NOTICE OF EXTENSION/CONVERSION. Each Notice of Extension/ Conversion shall specify: (i) the Group of Loans (or portion thereof) to which such notice applies; (ii) the date on which the conversion or continuation selected in such notice is to be effective, which shall comply with the applicable clause of SUBSECTION 2.07(a) above; (iii) if the Loans comprising such Group are to be converted, the new type of Loans and, if the Loans being converted are to be Eurodollar Loans, the duration of the next succeeding Interest Period applicable thereto; and (iv) if such Loans are to be continued as Eurodollar Loans for an additional Interest Period, the duration of such additional Interest Period. Each Interest Period specified in a Notice of Interest Rate Election shall comply with the provisions of the definition of the term "Interest Period". -34- (c) NOTIFICATION TO LENDERS. Upon receipt of a Notice of Extension/Conversion from the Borrower pursuant to SUBSECTION 2.07(a) above, the Administrative Agent shall promptly notify each Lender of the contents thereof and such notice shall not thereafter be revocable by the Borrower. If no Notice of Extension/Conversion is timely received prior to the end of an Interest Period for any Group of Eurodollar Loans, the Borrower shall be deemed to have elected that such Group be converted to Base Rate Loans as of the last day of such Interest Period. (d) LIMITATION ON CONVERSION/CONTINUATION OPTIONS. The Borrower shall not be entitled to elect to convert any Syndicated Loans to, or continue any Syndicated Loans for an additional Interest Period as, Eurodollar Loans if (i) the aggregate principal amount of any Group of Eurodollar Loans created or continued as a result of such election would be less than $5,000,000 or (ii) a Default shall have occurred and be continuing when the Borrower delivers notice of such election to the Administrative Agent. (e) CERTAIN MANDATORY CONVERSIONS AND PREPAYMENTS OF EURODOLLAR LOANS. On the date in which the aggregate unpaid principal amount of Eurodollar Loans comprising any Group of Loans shall be reduced, by payment or prepayment or otherwise, to less than $5,000,000, such Loans shall, on the last day of the then current Interest Period therefor, automatically be converted into Base Rate Syndicated Loans. Upon the occurrence and during the continuance of any Event of Default, (i) each Eurodollar Loan shall automatically, on the last day of the then current Interest Period therefor, be converted into a Syndicated Base Rate Loan and (ii) the obligation of the Lenders to make, or to continue or convert Syndicated Loans into, Eurodollar Loans shall be suspended. (f) ACCRUED INTEREST. Accrued interest on a Loan (or portion thereof) being extended or converted shall be paid by the Borrower (i) with respect to any Base Rate Loan being converted to a Eurodollar Loan, on the last day of the first fiscal quarter of the Borrower ending on or after the date of conversion and (ii) otherwise, on the date of extension or conversion. SECTION 2.08 SCHEDULED TERMINATION OF COMMITMENTS; MANDATORY PREPAYMENTS. The Commitments shall terminate on the Maturity Date, and any Loans then outstanding (together with accrued interest thereon) shall be due and payable on the Maturity Date. If on any date the aggregate of all Revolving Outstandings plus the aggregate principal amount of Competitive Bid Loans exceeds the aggregate amount of the Revolving Commitments, the Borrower shall, within five Business Days, prepay outstanding Loans (as selected by the Borrower and notified to the Revolving Lenders through the Administrative Agent not less than three Business Days prior to the date of such payment) to the extent necessary to eliminate any such excess. SECTION 2.09 OPTIONAL PREPAYMENTS. (a) Subject in the case of any Fixed Rate Loan to SECTION 3.05, the Borrower may (i) with notice by 12:00 Noon on the date of such prepayment, prepay any Group of Base Rate Loans, any Swingline Borrowing or any Competitive Bid Borrowing bearing interest at the Base Rate pursuant to SECTION 3.02, in each case in whole at any time, or from time to time in part in an aggregate principal amount of $5,000,000 or any larger multiple of $1,000,000, or (ii) upon at least three Business Days' notice to the Administrative Agent, prepay any Group of Eurodollar Loans in whole at any time, or from time to time in part in an aggregate principal amount of $5,000,000 or any larger multiple of $1,000,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. Each such optional prepayment shall be applied to prepay ratably the Loans of the several Lenders included in such Group or Borrowing. -35- (b) Except as provided in SUBSECTION 2.09(a) above, the Borrower may not prepay all or any portion of the principal amount of any Competitive Bid Loan prior to the maturity thereof. (c) Upon receipt of a notice of prepayment pursuant to this Section, the Administrative Agent shall promptly notify each Lender of the contents thereof and of such Lender's ratable share (if any) of such prepayment and such notice shall not thereafter be revocable by the Borrower. SECTION 2.10 ADJUSTMENT OF COMMITMENTS. (a) OPTIONAL TERMINATION OR REDUCTION OF REVOLVING COMMITTED AMOUNT. The Borrower may from time to time terminate in full or permanently reduce the Revolving Committed Amount upon five Business Days' prior written or telecopied notice to the Administrative Agent; PROVIDED, HOWEVER, that (i) no such termination or reduction shall be made which would cause the Revolving Outstandings plus the aggregate principal amount of Competitive Bid Loans (after giving effect to any concurrent repayment of Revolving Loans, Competitive Bid Loans or Swingline Loans) to exceed the Revolving Committed Amount as so reduced, and (ii) any such partial reduction shall be in a minimum aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess thereof (or, if less, the full remaining amount of the then applicable Revolving Committed Amount). The Administrative Agent shall promptly notify each affected Lender of the receipt by the Administrative Agent of any notice from the Borrower pursuant to this SECTION 2.10(a). Any partial reduction of the Revolving Committed Amount pursuant to this SECTION 2.10(a) shall be applied to the Revolving Commitments of the Lenders pro-rata based upon their respective Revolving Commitment Percentages. The Borrower shall pay to the Administrative Agent for the account of the Lenders in accordance with the terms of SECTION 2.11, on the date of each termination or reduction of the Revolving Committed Amount, any fees accrued through the date of such termination or reduction on the amount of the Revolving Committed Amount so terminated or reduced. (b) AUTOMATIC TERMINATION AT MATURITY. The Revolving Commitments of the Lenders shall terminate automatically on the Maturity Date. The Swingline Commitment of the Swingline Lender shall terminate automatically on the Swingline Termination Date. (c) OPTIONAL REPLACEMENT OF LENDERS, NON-PRO-RATA TERMINATION OF COMMITMENTS. If (i) any Lender has demanded compensation or indemnification pursuant to SECTION 3.01 or SECTION 3.04, (ii) the obligation of any Lender to make Eurodollar Loans has been suspended pursuant to SECTION 3.02, (iii) any Lender is a Defaulting Lender or (iv) any Lender has failed to consent to a proposed amendment, waiver, discharge or termination which pursuant to the terms of SECTION 10.01 or any other provision of any Loan Document requires the consent of all of the Lenders and with respect to which the Required Lenders shall have granted their consent, the Borrower shall have the right, if no Default or Event of Default then exists, to (i) remove such Lender by terminating such Lender's Commitment in full or (ii) replace such Lender by causing such Lender to assign its Commitment (without payment of any assignment fee) to one or more existing Lenders or Eligible Assignees (each a "REPLACEMENT LENDER") pursuant to SECTION 10.06; PROVIDED, HOWEVER, that if the Borrower elects to exercise such right with respect to any Lender pursuant to CLAUSE (i) or (ii) above, it shall be obligated to remove or replace, as the case may be, all Lenders that have made similar requests for compensation pursuant to SECTION 3.01 or 3.04 or whose obligation to make Eurodollar Loans has been similarly suspended. The replacement of a Lender pursuant to this SECTION 2.10(c) shall be effective on the tenth Business Day (the "REPLACEMENT DATE") following the date of notice of such replacement to the Lenders through the Administrative Agent, subject to the satisfaction of the following conditions: -36- (i) each Replacement Lender, and each Lender subject to replacement, shall have satisfied the conditions to an Assignment and Acceptance set forth in SECTION 10.06(b) and, in connection therewith, the Replacement Lender(s) shall pay to each Lender subject to replacement an amount equal in the aggregate to the sum of (y) the principal amount of, and all accrued but unpaid interest on, its outstanding Loans and (z) all accrued but unpaid fees owing to it pursuant to SECTION 2.11; and (ii) the Borrower shall have paid to the Administrative Agent for the account of each replaced Lender an amount equal to all obligations owing to such replaced Lenders by the Borrower pursuant to this Agreement and the other Loan Documents (other than those obligations of the Borrower referred to in CLAUSE (I) above). In the case of the removal of a Lender pursuant to this SECTION 2.10(c), upon (i) payment by the Borrower to the Administrative Agent for the account of the Lender subject to such removal of an amount equal to the sum of (A) the aggregate principal amount of all Loans held by such Lender and (B) all accrued interest, fees and other amounts owing to such Lender hereunder, including, without limitation, all amounts payable by the Borrower to such Lender under ARTICLE III or SECTIONS 10.04 and 10.05, and (ii) provision by the Borrower to the Swingline Lender of appropriate assurances and indemnities (which may include letters of credit) as each may reasonably require with respect to any continuing obligation of such removed Lender to purchase Participation Interests in any Swingline Loans then outstanding, such Lender shall cease to constitute a Lender hereunder; PROVIDED, that the provisions of this Agreement (including, without limitation, the provisions of ARTICLE III and SECTIONS 10.04 and 10.05) shall continue to govern the rights and obligations of a removed Lender with respect to any Loans made or any other actions taken by such removed Lender while it was a Lender. (d) OPTIONAL EXTENSIONS OF COMMITMENTS. (i) If the Borrower shall request, by notice to the Administrative Agent not less than 30 days prior to the Maturity Date then in effect, that the availability period for Revolving Loans be extended until the first anniversary of such Maturity Date, then the Administrative Agent shall promptly notify each Revolving Lender of such request, and each Revolving Lender shall notify the Borrower and the Administrative Agent not more than 15 Business Days after the date on which the Administrative Agent shall have received the Borrower's request (which date shall be set forth in the notice of such request given by the Administrative Agent) of its election so to extend (in such case, each a "REMAINING LENDER") or not extend the availability period for Revolving Loans; PROVIDED, that any Revolving Lender that is a national banking association shall not be required to notify the Borrower and the Administrative Agent of its election to so extend earlier than 30 days prior to the Maturity Date then in effect. Any Lender which shall not timely notify the Administrative Agent of such election shall be deemed to have elected not to extend such availability period. (ii) If one or more Lenders shall timely notify the Administrative Agent pursuant to CLAUSE (d)(i) of this SECTION 2.10 of its election not to extend the availability period for Revolving Loans or shall be deemed to have elected not to extend the availability period for Revolving Loans by virtue of having not timely notified the Administrative Agent of its election to extend such availability period, then the Administrative Agent shall so advise the Borrower and the Remaining Lenders, and the Remaining Lenders or any of them shall have the right (but not the obligation), upon notice to the Administrative Agent not later than 10 Business Days immediately preceding the applicable Maturity Date, to increase their respective Revolving Commitments by an amount equal in the aggregate to the Revolving Commitments of the Lenders who have, or have been deemed to have, elected not to extend the availability period for -37- Revolving Loans. Each Lender electing to increase its Revolving Commitment hereunder shall specify in its notice to the Administrative Agent the amount by which it is willing to increase its Revolving Commitment. Each increase in the Revolving Commitment of a Lender hereunder shall be evidenced by a written instrument executed by such Lender, the Administrative Agent and the Borrower and shall take effect on the Maturity Date in effect for the Lenders who have, or have been deemed to have, elected not to extend the availability period for Revolving Loans. (iii) If the aggregate Revolving Commitments of the Lenders prior to any adjustments under this SECTION 2.10 shall exceed the aggregate Revolving Commitments of the Remaining Lenders that have agreed to increase their Revolving Commitments pursuant to SUBSECTION (d)(ii) of this SECTION 2.10, the Borrower may, with the approval of the Administrative Agent, such approval not to be unreasonably withheld, designate one or more Eligible Assignees willing to extend Revolving Commitments until the first anniversary of the Maturity Date in effect for the Lenders who have, or have been deemed to have, elected not to extend the availability period for Revolving Loans in an aggregate amount not greater than such excess. Any such Eligible Assignee shall, on or prior to the Maturity Date in effect for the Lenders who have, or have been deemed to have, elected not to extend the availability period for Revolving Loans, execute and deliver to the Borrower, the Administrative Agent and each Remaining Lender an instrument, satisfactory to the Borrower and the Administrative Agent, setting forth the amount of its Revolving Commitment and containing its agreement to become, and to perform all the obligations of, a Lender hereunder. The Revolving Commitment of such Eligible Assignee shall become effective, and such Eligible Assignee shall become a Lender hereunder, on the Maturity Date then in effect for the Lenders who have, or have been deemed to have, elected not to extend the availability period for Revolving Loans. (iv) The Borrower shall deliver to each Eligible Assignee and each Lender who has increased its Revolving Commitment pursuant to SECTION 2.10(d)(ii), on the Maturity Date in effect for the Lenders who have, or have been deemed to have, elected not to extend the availability period for Revolving Loans, a Revolving Note evidencing the Borrower's obligation to pay Revolving Loans made by such Eligible Assignee or such Lender pursuant to this Agreement. (v) If some or all of the Lenders shall have elected to extend the availability period for Revolving Loans as provided in this SECTION 2.10(d), then (A) the availability period with respect to the Revolving Commitments of such Lenders and any which becomes a Lender hereunder shall continue until the first anniversary of the Maturity Date in effect prior to such election and, as to such Lenders, the term "Maturity Date", as used herein, shall mean such first anniversary; (B) the Revolving Commitments of the Lenders who have, or have been deemed to have, elected not to extend the availability period for Revolving Loans shall continue in effect until the Maturity Date in effect prior to such extension and shall then terminate, and, as to such Lenders, the term "Maturity Date", as used herein, shall continue to mean such Maturity Date and the Borrower shall repay all such Revolving Loans on such date; and (C) on the Maturity Date in effect prior to such extension, each Lender who has, or has been deemed to have, elected not to extend the availability period for Revolving Loans shall cease to be a Lender hereunder upon payment in full of all Revolving Loans, accrued interest, fees, costs and expenses due to such Lender hereunder; PROVIDED, that the provisions of this Agreement (including, without limitation, the provisions of ARTICLE III and SECTIONS 10.04 and 10.05) shall continue to govern the rights and obligations of such Lender with respect to any Loans made or any other actions taken by such Lender while it was a Lender. -38- (vi) If some or all of the Lenders shall have elected to extend the availability period for Revolving Loans as provided in this SECTION 2.10(d), the availability period for Swingline Loans shall, automatically without action on the part of the Borrower, continue until the date to which the Maturity Date has been extended, and the term "Swingline Termination Date", as used herein, shall mean such date. The foregoing notwithstanding (i) in the event that the Swingline Lender is also a Lender who has not extended its Revolving Commitment hereunder, the Borrower's right to so extend the Swingline Termination Date shall be subject to the appointment of a successor Swingline Lender hereunder; and (ii) to the extent the Swingline Lender's Revolving Commitment has been reduced in connection with any such extension or there has been the appointment of a successor Swingline Lender whose Revolving Commitment is less than the Swingline Commitment existing immediately preceding such appointment, then the Swingline Termination Date may only be extended with respect to such lesser amount. (e) OPTIONAL INCREASE OF REVOLVING COMMITMENTS. (i) The Borrower shall have the right at any time prior to August 31, 2002 to increase the Revolving Committed Amount hereunder by an amount not to exceed $50,000,000 by causing one or more Eligible Assignees to become a Revolving Lender under this Agreement or by causing one or more existing Lenders to increase the amount of such Lender's Revolving Commitment; provided that the Revolving Commitment of each Eligible Assignee and any increase in the amount of the Revolving Commitment of each existing Lender shall be in an amount equal to $5,000,000 or any larger multiple of $1,000,000 and provided, further, that no Lender shall at any time be required to agree to a request of the Borrower to increase its Revolving Commitment or other obligations hereunder. (ii) Any increase in the aggregate Revolving Committed Amount pursuant to subsection (e)(i) shall be effective only upon the execution and delivery by each Eligible Assignee or existing Lender, as the case may be, to the Borrower and the Administrative Agent at least five Business Days before any such increase is to become effective of an instrument satisfactory to the Borrower and the Administrative Agent: (A) in the case of an Eligible Assignee, setting forth the amount of its Revolving Commitment and the date upon which it is to become effective (the "Commitment Increase Date") and containing its agreement to become, and to perform all the obligations of, a Lender hereunder; and (B) in the case of an existing Lender, setting forth the amount by which its Revolving Commitment hereunder is to be increased and the Commitment Increase Date applicable thereto. (iii) Any increase in the Revolving Committed Amount pursuant to subsection (e)(i) shall not be effective unless: (A) no Default or Event of Default shall have occurred and be continuing on the Commitment Increase Date; (B) each of the representations and warranties of the Borrower contained in this Agreement and the other Loan Documents shall be true and correct on and as of the Commitment Increase Date; -39- (C) immediately after giving effect to such increase, the aggregate Revolving Committed Amount shall not exceed $205,000,000; and (D) each Lender (including each Eligible Assignee which becomes a Lender pursuant to this Section 2.10(e)) shall have received a certificate of the secretary or assistant secretary of the Borrower as to the taking of any corporate action necessary in connection with such increase. (iv) From and after the Commitment Increase Date, the term "Lenders", as used herein, shall include all Eligible Assignees which become Lenders pursuant to this SECTION 2.10(e). SECTION 2.11 FEES. (a) FACILITY FEE. The Borrower shall pay to the Administrative Agent for the account of each Revolving Lender a fee (the "FACILITY FEE") on such Lender's Revolving Commitment Percentage of the daily Revolving Committed Amount, computed at a per annum rate for each day at a rate equal to the Applicable Margin then in effect. The Facility Fee shall commence to accrue on the Closing Date and shall be due and payable in arrears on last Business Day of each March, June, September and December (and any date that the Revolving Committed Amount is reduced as provided in SECTION 2.09(a) or (b) and the Maturity Date) for the calendar quarter or portion thereof ending on each such date, beginning with the first of such dates to occur after the Closing Date. (b) UTILIZATION FEE. The Borrower shall pay to the Administrative Agent for the account of each Revolving Lender a fee (the "UTILIZATION FEE") on such Lender's Revolving Commitment Percentage of the actual daily aggregate Revolving Outstandings with respect to each day on which the principal amount of all Loans then outstanding exceeds 33% or 66%, as the case may be, of the aggregate Revolving Commitments (each such day a "UTILIZATION FEE DAY"). Such fee shall be computed with respect to each Utilization Fee Day at a rate equal to the Applicable Margin then in effect, and shall accrue with respect to each Utilization Fee Day occurring on and after the Closing Date to the later to occur of (i) the Maturity Date and (ii) the date on which all Loans and interest thereon are paid in full and the commitments hereunder are terminated and, to the extent accrued during such period, shall be due and payable, quarterly in arrears, on the last Business Day of each March, June, September and December, beginning on the first of such dates to occur after the Closing Date. (c) AGENCY FEES. The Borrower shall pay an agency fee to the Administrative Agent's own account, in amounts and at times specified in the letter agreement dated May 8, 2002 among the Borrower and the Administrative Agent. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever. SECTION 2.12 PRO-RATA TREATMENT. Except to the extent otherwise provided herein, each Syndicated Loan, each payment or prepayment of principal of or interest on any Syndicated Loan, each payment of fees (other than the fees retained by the Agents for their own account), each reduction of the Revolving Committed Amount and each conversion or continuation of any Syndicated Loan, shall be allocated pro-rata among the relevant Lenders in accordance with the respective Revolving Commitment Percentages, of such Lenders (or, if the Commitments of such Lenders have expired or been terminated, in accordance with the respective principal amounts of the outstanding Loans of the applicable Class and Participation Interests of such Lenders); PROVIDED, that in the event any amount paid to any Lender pursuant to this SUBSECTION (a) is rescinded or must otherwise be returned by the Administrative Agent, each Lender shall, upon the request of the Administrative Agent, repay to the Administrative Agent the amount so paid to such Lender, with interest for the period commencing on the date such payment is -40- returned by the Administrative Agent until the date the Administrative Agent receives such repayment at a rate per annum equal to, during the period to but excluding the date two Business Days after such request, the Federal Funds Rate, and thereafter, the Base Rate plus two percent (2%) per annum. SECTION 2.13 SHARING OF PAYMENTS. The Lenders agree among themselves that, except to the extent otherwise provided herein, if any Lender shall obtain payment in respect of any Loan or any other obligation owing to such Lender under this Agreement through the exercise of a right of setoff, banker's lien or counterclaim, or pursuant to a secured claim under Section 506 of the Bankruptcy Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, in excess of its pro-rata share of such payment as provided for in this Agreement, such Lender shall promptly pay in cash or purchase from the other Lenders a participation in such Loans and other obligations in such amounts, and make such other adjustments from time to time, as shall be equitable to the end that all Lenders share such payment in accordance with their respective ratable shares as provided for in this Agreement; PROVIDED, that nothing in this SECTION 2.13 shall impair the right of any Lender to exercise any right of set-off or counterclaim it may have for payment of indebtedness of the Borrower other than its indebtedness hereunder. The Lenders further agree among themselves that if payment to a Lender obtained by such Lender through the exercise of a right of setoff, banker's lien, counterclaim or other event as aforesaid shall be rescinded or must otherwise be restored, each Lender which shall have shared the benefit of such payment shall, by payment in cash or a repurchase of a participation theretofore sold, return its share of that benefit (together with its share of any accrued interest payable with respect thereto) to each Lender whose payment shall have been rescinded or otherwise restored. The Borrower agrees that any Lender so purchasing such a participation may, to the fullest extent permitted by law, exercise all rights of payment, including setoff, banker's lien or counterclaim, with respect to such participation as fully as if such Lender were a holder of such Loan, LC Obligation or other obligation in the amount of such participation. Except as otherwise expressly provided in this Agreement, if any Lender or the Administrative Agent shall fail to remit to the Administrative Agent or any other Lender an amount payable by such Lender or the Administrative Agent to the Administrative Agent or such other Lender pursuant to this Agreement on the date when such amount is due, such payments shall be made together with interest thereon if paid within two Business Days of the date when such amount is due at a per annum rate equal to the Federal Funds Rate and thereafter at a per annum rate equal to the Base Rate until the date such amount is paid to the Administrative Agent or such other Lender. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this SECTION 2.13 applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders under this SECTION 2.13 to share in the benefits of any recovery on such secured claim. SECTION 2.14 PAYMENTS; COMPUTATIONS. (a) PAYMENTS BY THE BORROWER. Each payment of principal of and interest on Loans and fees hereunder (other than fees payable directly to the Agents) shall be paid not later than 2:00 P.M. on the date when due, in funds immediately available to the Administrative Agent at the Administrative Agent's Office. Each such payment shall be made irrespective of any set-off, counterclaim or defense to payment which might in the absence of this provision be asserted by the Borrower or any Affiliate against any Agent or any Lender. Except as otherwise provided herein, payments received after 2:00 P.M. shall be deemed to have been received on the next Business Day. The Borrower shall, at the time it makes any payments under this Agreement, specify to the Administrative Agent the Loan, fees or other amounts payable by the Borrower hereunder to which such payment is to be applied (and if it fails so to specify or if such application would be inconsistent with the terms hereof, the Administrative Agent shall, subject to SECTION 2.12, distribute such payment to the Lenders in such manner as the Administrative Agent may deem appropriate). The Administrative Agent will distribute such payments in like funds to the -41- applicable Lenders on the date of receipt thereof, if such payment is received prior to 2:00 P.M.; otherwise the Administrative Agent will distribute such payment to the applicable Lenders on the next succeeding Business Day. Whenever any payment hereunder shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day unless (in the case of Eurodollar Loans) such Business Day falls in another calendar month, in which case the date for payment thereof shall be the next preceding Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. The Borrower hereby authorizes and directs the Administrative Agent to debit any account maintained by the Borrower with the Administrative Agent to pay when due any amounts required to be paid from time to time under this Agreement. (b) DISTRIBUTIONS BY THE ADMINISTRATIVE AGENT. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date, and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate. (c) COMPUTATIONS. Except for Base Rate Loans, in which case interest shall be computed on the basis of a 365 or 366 day year as the case may be (unless the Base Rate is determined by reference to the Federal Funds Rate), all computations of interest and fees hereunder shall be made on the basis of the actual number of days elapsed over a year of 360 days. Interest shall accrue from and include the date of borrowing (or continuation or conversion) but excluding the date of payment. ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY SECTION 3.01 TAXES. (a) PAYMENTS NET OF CERTAIN TAXES. Any and all payments by the Borrower to or for the account of any Lender or any Agent hereunder or under any other Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender (or its Applicable Lending Office) and each Agent, taxes imposed on its income, and franchise taxes imposed on it, by: (i) the jurisdiction under the laws of which such Lender (or its Applicable Lending Office) or such Agent (as the case may be) is incorporated or organized or any political subdivision thereof, (ii) the jurisdiction in which its principal executive office is located or (iii) reason of any connection between it and the jurisdiction imposing such tax other than a connection arising from its having executed, delivered or performed its obligations under, or received payment under or enforced, this Agreement (all such non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "TAXES"). If the Borrower or the Administrative Agent shall be required by law to deduct or withhold any Taxes from or in respect of any sum payable under this Agreement or any other Loan Document to any Lender or any other Agent, (i) the sum payable shall be increased as necessary so that after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this SECTION 3.01) such Lender or such Agent receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and withholdings, (iii) the Borrower shall pay the full -42- amount deducted or withheld to the relevant taxation Governmental Authority or other authority in accordance with applicable law and (iv) the Borrower shall furnish to the Administrative Agent, at the office of the Administrative Agent specified in SCHEDULE 10.02, the original or a certified copy of a receipt evidencing payment thereof. (b) OTHER TAXES. In addition, the Borrower agrees to pay any and all present or future stamp or documentary, excise or property taxes or similar levies (including mortgage recording taxes) which arise from any payment made under this Agreement or any other Loan Document or from the execution or delivery of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as "OTHER TAXES"). (c) ADDITIONAL TAXES. If the Borrower fails to pay Taxes or Other Taxes in accordance with the provisions of SECTIONS 3.01(a) or (b), the Borrower agrees to indemnify each Lender and each Agent for the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this SECTION 3.01) paid by such Lender or such Agent (as the case may be) and any liability (including penalties, interest and expenses) arising from such failure or with respect thereto. (d) TAX FORMS AND CERTIFICATES. Each Lender (or its Applicable Lending Office) organized under the laws of a jurisdiction outside the United States (a "NON-U.S. LENDER"), on or prior to the date of its execution and delivery of this Agreement in the case of each Lender listed on the signature pages hereof and on or prior to the date on which it becomes a Lender in the case of each other Lender, and from time to time thereafter as required by law, shall provide the Borrower and the Administrative Agent with (i) Internal Revenue Service Form W-8 BEN or W-8 ECI, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces or eliminates the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States, (ii) Internal Revenue Service Form W-8 or W-9, as appropriate, or any successor form prescribed by the Internal Revenue Service and (iii) any other form or certificate required by any taxing authority (including any certificate required by Sections 871(h) and 881(c) of the Internal Revenue Code), certifying that such Lender is entitled to an exemption from tax on payments pursuant to this Agreement or any of the other Loan Documents. (e) FAILURE TO PROVIDE TAX FORMS AND CERTIFICATES. For any period with respect to which a Lender (or its Applicable Lending Office) has failed to provide the Borrower and the Administrative Agent with the appropriate form pursuant to SECTION 3.01(d) (unless such failure is due to a change in treaty, law or regulation occurring subsequent to the date on which a form originally was required to be provided), such Lender shall not be entitled to indemnification under SECTION 3.01(a) or 3.01(b) with respect to Taxes imposed by the United States; PROVIDED, HOWEVER, that should a Lender, which is otherwise exempt from withholding tax, become subject to Taxes because of its failure to deliver a form required to be delivered hereunder, the Borrower shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Taxes. (f) OBLIGATIONS IN RESPECT OF NON-U.S. LENDERS. The Borrower shall not be required to indemnify any Non-U.S. Lender or to pay any additional amounts to any Non-U.S. Lender, in respect of United States Federal withholding tax pursuant to SUBSECTIONS (a) or (b) above to the extent that the obligation to withhold amounts with respect to United States Federal withholding tax existed on the date such Non-U.S. Lender became a party to this Agreement (or, in the case of a participant, on the date such participant acquired its participation interest) or, with respect to payments to a new Applicable Lending Office, the date such Non-U.S. Lender designated such new Applicable Lending Office with respect to a -43- Loan; PROVIDED, HOWEVER, that this SUBSECTION (f) shall not apply (i) to any participant or new Applicable Lending Office that becomes a participant or new Applicable Lending Office as a result of an assignment, participation, transfer or designation made at the request of the Borrower and (ii) to the extent the indemnity payment or additional amounts any participant, or any Lender acting through a new Applicable Lending Office, would be entitled to receive (without regard to this SUBSECTION (f)) do not exceed the indemnity payment or additional amounts that the Person making the assignment, participation or transfer to such participant, or Lender (or participant) making the designation of such new Applicable Lending Office, would have been entitled to receive in the absence of such assignment, participation, transfer or designation. (g) MITIGATION. If the Borrower is required to pay additional amounts to or for the account of any Lender (or its Applicable Lending Office) pursuant to this SECTION 3.01, then such Lender will agree to use reasonable efforts to change the jurisdiction of its Applicable Lending Office so as to eliminate or reduce any such additional payment which may thereafter accrue if such change, in the judgment of such Lender, is not otherwise disadvantageous to such Lender. (h) TAX RECEIPTS. Within thirty days after the date of any payment of Taxes, the Borrower shall furnish to the Agent the original or a certified copy of a receipt evidencing such payment (to the extent one is so provided). SECTION 3.02 ILLEGALITY. If, on or after the date of this Agreement, the adoption of any applicable Law, or any change in any applicable Law, 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 Lender (or its Applicable Lending Office) with any request or directive (whether or not having the force of Law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Lender (or its Applicable Lending Office) to make, maintain or fund any of its Eurodollar Loans and such Lender shall so notify the Administrative Agent, the Administrative Agent shall forthwith give notice thereof to the other Lenders and the Borrower, whereupon until such Lender notifies the Borrower and the Administrative Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Lender to make Eurodollar Loans, or to convert outstanding Loans into Eurodollar Loans, shall be suspended. Before giving any notice to the Administrative Agent pursuant to this SECTION 3.02, such Lender shall designate a different Applicable Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. If such notice is given, each Eurodollar Loan of such Lender then outstanding shall be converted to a Base Rate Loan either (i) on the last day of the then current Interest Period applicable to such Eurodollar Loan if such Lender may lawfully continue to maintain and fund such Loan to such day or (ii) immediately if such Lender shall determine that it may not lawfully continue to maintain and fund such Loan to such day. SECTION 3.03 BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR. If on or prior to the first day of any Interest Period for any Eurodollar Loan or Competitive Bid LIBOR Loan: (i) the Administrative Agent determines (which determination shall be conclusive) that by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the applicable Eurodollar Rate for such Interest Period; or (ii) in the case of Eurodollar Loans, Lenders having 50% or more of the aggregate amount of the Commitments advise the Administrative Agent that the Applicable Interbank Offered Rate as determined by the Administrative Agent will not adequately and fairly reflect the cost to such Lenders of funding their Eurodollar Loans for such Interest Period; -44- the Administrative Agent shall forthwith give notice thereof to the Borrower and the Lenders, whereupon until the Administrative Agent notifies the Borrower that the circumstances giving rise to such suspension no longer exist, (i) the obligations of the Lenders to make Eurodollar Loans, or to continue or convert outstanding Loans as or into Eurodollar Loans, shall be suspended and (ii) each outstanding Eurodollar Loan shall be converted into a Base Rate Loan on the last day of the then current Interest Period applicable thereto. Unless the Borrower notifies the Administrative Agent at least two Business Days before the date of any Fixed Rate Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a Syndicated Loan, such Borrowing shall instead be made as a Base Rate Borrowing in the same aggregate principal amount as the requested Borrowing and (ii) if such affected Borrowing is a Competitive Bid LIBOR Borrowing, the Competitive Bid LIBOR Loans comprising such Borrowing shall be made in the same aggregate principal amount as the requested Borrowing and shall bear interest for each day from and including the first day to but excluding the last day of the Interest Period applicable thereto at the rate applicable to Revolving Base Rate Loans for such day. SECTION 3.04 INCREASED COSTS AND REDUCED RETURN. (a) If on or after (x) the date hereof, in the case of any Committed Loan or any obligation to make Committed Loans or (y) the date of any related Competitive Bid, the adoption of or any change in any applicable Law or in the interpretation or application thereof applicable to any Lender (or its Applicable Lending Office), or compliance by any Lender (or its Applicable Lending Office) with any request or directive (whether or not having the force of Law) from any central bank or other Governmental Authority: (i) shall subject such Lender (or its Applicable Lending Office) to any tax of any kind whatsoever with respect to any Eurodollar Loans made by it or any of its Notes or its obligation to make Eurodollar Loans, or change the basis of taxation of payments to such Lender (or its Applicable Lending Office) in respect thereof (except for (A) Taxes and Other Taxes covered by SECTION 3.01 (including Taxes imposed solely by reason of any failure of such Lender to comply with its obligations under SECTION 3.01(d)) and (B) changes in taxes measured by or imposed upon the overall net income, or franchise tax (imposed in lieu of such net income tax), of such Lender or its Applicable Lending Office, branch or any affiliate thereof)); (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender (or its Applicable Lending Office) which is not otherwise included in the determination of the Eurodollar Rate hereunder; or (iii) shall impose on such Lender (or its Applicable Lending Office) any other condition (excluding any tax of any kind whatsoever); and the result of any of the foregoing is to increase the cost to such Lender (or its Applicable Lending Office) of making, converting into, continuing or maintaining any Fixed Rate Loans or to reduce any amount receivable hereunder in respect thereof, then, in any such case, upon notice to the Borrower from such Lender, through the Administrative Agent, in accordance herewith, the Borrower shall be obligated to promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender on an after-tax basis (after taking into account applicable deductions and credits in respect of the amount indemnified) for such increased cost or reduced amount receivable. (b) If any Lender shall have determined that the adoption or the becoming effective of, or any change in, or any change by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof in the interpretation or administration of, any -45- applicable Law, regarding capital adequacy, 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, has or would have the effect of reducing the rate of return on such Lender's (or parent corporation's) capital or assets as a consequence of its 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 parent corporation's) policies with respect to capital adequacy), then, upon notice from such Lender to the Borrower, the Borrower shall be obligated to pay to such Lender such additional amount or amounts as will compensate such Lender on an after-tax basis (after taking into account applicable deductions and credits in respect of the amount indemnified) for such reduction. Each determination by any such Lender of amounts owing under this SECTION 3.04 shall, absent manifest error, be conclusive and binding on the parties hereto; PROVIDED, that the Borrower shall not be required to compensate any Lender pursuant to SUBSECTION (a) above or this SUBSECTION (b) for any additional costs or reductions suffered more than 180 days prior to the date such Lender notifies the Borrower of the circumstances giving rise to such additional costs or reductions and of such Lender's intentions to claim compensation therefor, and PROVIDED FURTHER that, if the change in Law or in the interpretation or administration thereof giving rise to such additional costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. (c) A certificate of each Lender setting forth such amount or amounts as shall be necessary to compensate such Lender or its holding company as specified in SUBSECTION (a) or (b) above, as the case may be, shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay each Lender the amount shown as due on any such certificate delivered by it within 10 Business Days after receipt of the same. (d) Promptly after any Lender becomes aware of any circumstance that will, in its sole judgment, result in a request for increased compensation pursuant to this SECTION 3.04, such Lender shall notify the Borrower thereof. Failure on the part of any Lender so to notify the Borrower or to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital with respect to any period shall not constitute a waiver of such Lender's right to demand compensation with respect to such period or any other period. The protection of this SECTION 3.04 shall be available to each Lender regardless of any possible contention of the invalidity or inapplicability of the law, rule, regulation, guideline or other change or condition which shall have occurred or been imposed. SECTION 3.05 FUNDING LOSSES. The Borrower shall indemnify each Lender against any loss or reasonable expense (including any loss of anticipated profits) which such Lender may sustain or incur as a consequence of (i) any failure by the Borrower to fulfill on the date of any Borrowing hereunder the applicable conditions set forth in ARTICLE IV, so long as any such failure is not solely due to the failure of the Agent or any Lender to comply with its obligations hereunder in all material respects, (ii) any failure by the Borrower to borrow or to refinance, convert or continue any Loan hereunder after irrevocable notice of such Borrowing, refinancing, conversion or continuation has been given pursuant to SECTION 2.02 or 2.07, so long as any such failure is not solely due to the failure of the Agent or any Lender to comply with its obligations hereunder in all material respects, (iii) any payment, prepayment or conversion of a Fixed Rate Loan, whether voluntary or involuntary, pursuant to any other provision of this Agreement or otherwise made on a date other than the last day of the Interest Period applicable thereto, so long as any such payment, prepayment or conversion is not solely due to the failure of the Agent or any Lender to comply with its obligations hereunder in all material respects, (iv) any default in payment or prepayment of the principal amount of any Loan or any part thereof or interest accrued thereon, as and when due and payable (at the due date thereof, by irrevocable notice of prepayment or otherwise), or (v) the occurrence of any Event of Default, including, in each such case, any loss or -46- reasonable expense sustained or incurred or to be sustained or incurred in liquidating or employing deposits from third parties acquired to effect or maintain such Loan or any part thereof as a Fixed Rate Loan. Such loss or reasonable expense shall include an amount equal to the excess, if any, as reasonably determined by such Lender, of (i) its cost of obtaining the funds for the Loan being paid, prepaid, converted or not borrowed (based on the applicable Eurodollar Rate), for the period from the date of such payment, prepayment, conversion or failure to borrow, convert or continue to the last day of the Interest Period for such Loan (or, in the case of a failure to borrow, the Interest Period for such Loan which would have commenced on the date of such failure to borrow, convert or continue) over (ii) the amount of interest (as reasonably determined by such Lender) that would be realized by such Lender in reemploying the funds so paid, prepaid, converted or not borrowed, converted or continued for such period or Interest Period, as the case may be. A certificate of any Lender setting forth any amount or amounts which such Lender is entitled to receive pursuant to this SECTION 3.05 shall be delivered to the Borrower and shall be conclusive absent manifest error. SECTION 3.06 BASE RATE LOANS SUBSTITUTED FOR AFFECTED FIXED RATE LOANS. If (i) the obligation of any Lender to make, or to continue or convert outstanding Loans as or to, Eurodollar Loans has been suspended pursuant to SECTION 3.02 or (ii) any Lender has demanded compensation under SECTION 3.01 or 3.04 with respect to its Eurodollar Loans, and in any such case the Borrower shall, by at least five Business Days' prior notice to such Lender through the Administrative Agent, have elected that the provisions of this SECTION 3.06 shall apply to such Lender, then, unless and until such Lender notifies the Borrower that the circumstances giving rise to such suspension or demand for compensation no longer exist, all Loans which would otherwise be made by such Lender as (or continued as or converted to) Eurodollar Loans shall instead be Base Rate Loans (on which interest and principal shall be payable contemporaneously with the related Eurodollar Loans of the other Lenders). If such Lender notifies the Borrower that the circumstances giving rise to such suspension or demand for compensation no longer exist, the principal amount of each such Base Rate Loan shall be converted into a Eurodollar Loan on the first day of the next succeeding Interest Period applicable to the related Eurodollar Loans of the other Lenders. ARTICLE IV CONDITIONS SECTION 4.01 CONDITIONS TO CLOSING. The obligation of each Lender to make a Loan on the Closing Date is subject to the satisfaction of the following conditions: (a) EXECUTED LOAN DOCUMENTS. Receipt by the Administrative Agent of duly executed copies of: (i) this Agreement; (ii) the Notes, if any, (iii) the Pledge Agreement and (iv) the Trust Agreement, each of which shall be in full force and effect. (b) LEGAL MATTERS. All legal matters incident to this Agreement and the borrowings hereunder shall be satisfactory to the Administrative Agent and to Mayer, Brown, Rowe & Maw, counsel for the Administrative Agent. (c) ORGANIZATION DOCUMENTS. The Administrative Agent shall have received: (i) a copy of the Organization Documents of the Borrower, certified as of a recent date by the Secretary of State of its respective state of organization, and a certificate as to the good standing of the Borrower, from such Secretary of State, as of a recent date; (ii) a certificate of the Secretary or Assistant Secretary of the Borrower dated the Closing Date and certifying (A) that the Organization Documents of the Borrower have not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to CLAUSE (i) above; (B) that attached thereto is a true and complete copy of the code of regulations of the Borrower as in effect on the Closing Date and at all times since a date prior -47- to the date of the resolutions described in CLAUSE (C) below, (C) that attached thereto is a true and complete copy of resolutions duly adopted by the board of directors of the Borrower authorizing the execution, delivery and performance of the Loan Documents and the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect; and (D) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of the Borrower; (iii) a certificate of another officer of the Borrower as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to CLAUSE (ii) above; and (iv) such other documents as the Administrative Agent or Mayer, Brown, Rowe & Maw, counsel for the Administrative Agent, may reasonably request. (d) OFFICER'S CERTIFICATE. The Agent shall have received a certificate, dated the Closing Date and signed by a Responsible Officer of the Borrower, (i) confirming compliance with the conditions precedent set forth in PARAGRAPHS (b) and (c) of SECTION 4.02 and (ii) certifying the current Worthington's Ratings. (e) OPINIONS OF COUNSEL. On the Closing Date, the Administrative Agent shall have received a favorable written opinion of Vorys, Sater, Seymour and Pease LLP, special counsel to the Borrower or, as appropriate or customary, of in-house counsel of the Borrower, addressed to the Administrative Agent and each Lender, dated the Closing Date, substantially in the form of EXHIBIT F hereto and covering such additional matters incident to the transactions contemplated hereby as the Administrative Agent or the Required Lenders may reasonably request. (f) REPAYMENT OF REFINANCED AGREEMENT. The Administrative Agent shall be satisfied that no later than as of the Closing Date, the commitments under the Second Amended and Restated Loan Agreement dated as of October 14, 1998, as amended through the Closing Date, among the Borrower, the Lenders party thereto and The Bank of Nova Scotia and PNC Bank, National Association, as Agents for the Lenders (the "REFINANCED AGREEMENT"), shall be terminated, all loans outstanding under the Refinanced Agreement shall be repaid in full, together with accrued interest thereon (including, without limitation, any prepayment premium), and all other amounts owing pursuant to the Refinanced Agreement shall be repaid in full. (g) FINANCIAL STATEMENTS. The Administrative Agent and each Lender shall have received and be satisfied with the (i) the audited consolidated financial statements of each of the Borrower for the fiscal year ending May 31, 2001, audited by Ernst & Young, or other nationally recognized independent public accountants, and containing an opinion of such firm that such financial statements present fairly, in all material respects, the financial position and results of operations of the Borrower and its Consolidated Subsidiaries and are prepared in conformity with GAAP, and (ii) unaudited, consolidated, interim financial statements of the Borrower and its Consolidated Subsidiaries for the fiscal quarter ending February 28, 2002. (h) CONSENTS. All necessary governmental (domestic or foreign), regulatory and third party approvals, if any, in connection with the transactions contemplated by this Agreement and the other Loan Documents shall have been obtained and remain in full force and effect, in each case without any action being taken by any competent authority which could restrain or prevent such transaction or impose, in the reasonable judgment of the Administrative Agent, materially adverse conditions upon the consummation of such transactions. (i) PAYMENT OF FEES. All costs, fees and expenses due to the Administrative Agent and the Lenders on or before the Closing Date shall have been paid. -48- (j) COUNSEL FEES. The Administrative Agent shall have received full payment from the Borrower of the reasonable and actual fees and expenses of Mayer, Brown, Rowe & Maw described in SECTION 10.04 which are billed through the Closing Date. (k) DELIVERY OF PLEDGED NOTES. All of the Pledged Notes, which Pledged Notes shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, with signatures appropriately guaranteed, if necessary, all in form and substance satisfactory to the Collateral Agent, shall have been delivered to the Collateral Agent. All corporate and legal proceedings and instruments and agreements relating to the transactions contemplated by this Agreement or in any other document delivered in connection herewith or therewith shall be satisfactory in form and substance to the Administrative Agent and its counsel, and the Administrative Agent shall have received all information and copies of all documents and papers, including records of corporate proceedings, governmental approvals, good standing certificates and bring-down telegrams, if any, which the Administrative Agent reasonably may have requested in connection therewith, such documents and papers where appropriate to be certified by proper corporate or Governmental Authorities. The documents referred to in this SECTION 4.01 shall be delivered to the Administrative Agent no later than the Closing Date. The certificates and opinions referred to in this Section shall be dated the Closing Date. Promptly upon the satisfaction of each of the conditions contained in this SECTION 4.01, the Administrative Agent shall notify the Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding on all parties hereto. If the Closing does not occur before 5:00 P.M. on June 30, 2002, the Commitments shall terminate at the close of business on such date and all unpaid facility fees accrued to such date shall be due and payable on such date. SECTION 4.02 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of any Lender to make a Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions: (a) NOTICE. The Borrower shall have delivered (i) in the case of any Revolving Loan, to the Administrative Agent, an appropriate Notice of Borrowing, duly executed and completed, by the time specified in SECTION 2.02 or 2.03, and (ii) in the case of any Swingline Loan, to the Swingline Lender, a Swingline Loan Request, duly executed and completed, by the time specified in SECTION 2.02. (b) REPRESENTATIONS AND WARRANTIES. The representations and warranties made by the Borrower in any Loan Document are true and correct in all material respects at and as if made as of such date except to the extent they expressly relate to an earlier date. (c) NO DEFAULT. No Default or Event of Default shall exist or be continuing either prior to or after giving effect thereto. (d) AVAILABILITY. Immediately after giving effect to the making of a Loan (and the application of the proceeds thereof), (i) the Revolving Outstandings plus the aggregate principal amount of Competitive Bid Loans shall not exceed the Revolving Committed Amount, (ii) the sum of Swingline Loans outstanding shall not exceed the Swingline Committed Amount and (iii) the principal amount of all Competitive Bid Loans shall not exceed the Revolving Committed Amount. The delivery of each Notice of Borrowing, Swingline Loan Request and each notice requesting an extension of the availability period for Revolving Loans pursuant to SECTION 2.10(d) shall constitute a representation and warranty by the Borrower of the correctness of the matters specified in SUBSECTIONS (b) and (c) above. -49- ARTICLE V REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants to the Agents and the Lenders that: SECTION 5.01 ORGANIZATION. The Borrower and each of its Active Restricted Subsidiaries is a corporation duly organized and in good standing under the laws of the state of its incorporation, is duly qualified in all jurisdictions where required by the conduct of its business or ownership of its assets, except where the failure to so qualify would not have a Material Adverse Effect, and has the power and authority to own and operate its assets and to conduct its business as is now done. SECTION 5.02 FINANCIAL CONDITION. (a) AUDITED FINANCIAL STATEMENTS. The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of May 31, 2001 and the related consolidated statements of income and cash flows for the fiscal year then ended, reported on by Ernst & Young and set forth in the Borrower's 2001 Form 10-K, a copy of which has been delivered to each of the Lenders, fairly present, in conformity with GAAP, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year. (b) INTERIM FINANCIAL STATEMENTS. The unaudited consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of February 28, 2002 and the related unaudited consolidated statements of income and cash flows for the six months then ended, set forth in the Borrower's Latest Form 10-Q, a copy of which has been delivered to each of the Lenders, fairly present, in conformity with GAAP applied on a basis consistent with the financial statements referred to in SUBSECTION (a) of this SECTION 5.02, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such six-month period (subject to normal year-end audit adjustments). (c) MATERIAL ADVERSE CHANGE. Since May 31, 2001, except as reflected in the interim financial statements through February 28, 2002, there has been no change in the business, assets, financial condition or operations of the Borrower and its Consolidated Subsidiaries, considered as a whole, but excluding the impact of the Consolidation Plan, that would materially and adversely affect the Borrower's ability to perform any of its respective obligations under this Agreement or the other Loan Documents (a "MATERIAL ADVERSE CHANGE"), and no event or development has occurred which could reasonably be expected to result in a Material Adverse Effect. (d) POST-CLOSING FINANCIAL STATEMENTS. The financial statements delivered to the Lenders pursuant to SECTION 6.01(a)(i), (a)(iii), (b) and (c), if any, (i) have been prepared in accordance with GAAP (except as may otherwise be permitted under SECTION 6.01(a), (b) and (c)) and (ii) present fairly (on the basis disclosed in the footnotes to such financial statements, if any) the consolidated financial condition, results of operations and cash flows of the Borrower and its Consolidated Subsidiaries as of the respective dates thereof and for the respective periods covered thereby. SECTION 5.03 LITIGATION, ETC. As of the date hereof, there are no actions, suits, proceedings or governmental investigations pending, or, to its knowledge, threatened against the Borrower or any of its Subsidiaries which, in the reasonable judgment of the Borrower, would result in a Material Adverse Effect. SECTION 5.04 TAXES. United States Federal income tax returns of the Borrower and its Consolidated Subsidiaries have been examined and closed through the fiscal year ended May 31, 1990 -50- and for the fiscal years ended May 31, 1996 through May 31, 1998. Such returns for the fiscal years ended May 31, 1991 through May 31, 1995 are currently on appeal with the IRS. The Borrower and its Restricted Subsidiaries have filed all United States Federal income tax returns and all other material tax returns which are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Borrower or any Restricted Subsidiary. The charges, accruals and reserves on the books of the Borrower and its Restricted Subsidiaries in respect of taxes or other governmental charges are, in the opinion of the Borrower, adequate. SECTION 5.05 AUTHORITY. The Borrower has full power and authority to enter into the transactions provided for in this Agreement. The documents to be executed by it in connection with this Agreement, when executed and delivered by it will constitute the legal, valid and binding obligations of it enforceable in accordance with their respective terms except as such enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or similar laws in effect from time to time affecting the rights of creditors generally and except as such enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). SECTION 5.06 OTHER DEFAULTS. There does not now exist any material default or violation by the Borrower or any Restricted Subsidiary of or under any of the terms, conditions or obligations of: (i) its Articles or Certificate of Incorporation and Regulations or Bylaws, as applicable, (ii) any indenture, mortgage, deed of trust, franchise, permit, contract, agreement, or other instrument to which it is a party or by which it is bound or (iii) any law, regulation, ruling, order, injunction, decree, condition or other requirement applicable to or imposed upon it by any law or by any governmental authority, court or agency; and the transactions contemplated by this Agreement and the other Loan Documents will not result in any such default or violation. As used herein, a material default or violation will mean one which would result in a Material Adverse Effect. SECTION 5.07 LICENSES, ETC. The Borrower and each of its Restricted Subsidiaries has obtained any and all licenses, permits, franchises, or other governmental authorizations necessary for the ownership of its properties and the conduct of its business, except where failure to obtain any such item would not cause a Material Adverse Effect. SECTION 5.08 ERISA. The Borrower and each of its Subsidiaries is in compliance with the applicable provisions of ERISA, the applicable provisions of the Code and other related Federal and state laws and the regulations and published interpretations thereunder, to the extent necessary to avoid a Material Adverse Effect. SECTION 5.09 ENVIRONMENTAL MATTERS. The Borrower and its Subsidiaries are in material compliance with Environmental Laws and neither the Borrower nor any of its Subsidiaries are subject to any liability or obligation under any Environmental Laws which would have a Material Adverse Effect. SECTION 5.10 OWNERSHIP OF PROPERTY; LIENS. The Borrower and each Restricted Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as would not, individually or in the aggregate, have a Material Adverse Effect. As of the Effective Date, the property of the Borrower and its Restricted Subsidiaries is subject to no Liens, other than Liens permitted by SECTION 7.02. SECTION 5.11 INSURANCE. The properties of the Borrower and its Restricted Subsidiaries are insured with responsible insurance companies against loss or damage from hazards and the Borrower -51- and its Restricted Subsidiaries maintain public liability insurance, all in amounts reasonably consistent with the Borrower's current practices. SECTION 5.12 SUBSIDIARIES. SCHEDULE 5.12 sets forth a complete and accurate list as of the Closing Date of all Restricted Subsidiaries of the Borrower. SCHEDULE 5.12 sets forth as of the Closing Date the jurisdiction of formation of each such Restricted Subsidiary, the number of authorized shares of each class of Equity Interests of each such Restricted Subsidiary, the number of outstanding shares of each class of Equity Interests, the number and percentage of outstanding shares of each class of Equity Interests of each such Restricted Subsidiary owned (directly or indirectly) by any Person and the number and effect, if exercised, of all Equity Equivalents with respect to Capital Stock of each such Restricted Subsidiary. SECTION 5.13 MARGIN REGULATION; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. (a) None of the Borrower and its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying "margin stock" within the meaning of Regulation U. No part of the proceeds of the Loans will be used, directly, or indirectly, for the purpose of purchasing or carrying any "margin stock" within the meaning of Regulation U. If requested by any Lender or the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form U-1 referred to in Regulation U. No indebtedness being reduced or retired out of the proceeds of the Loans was or will be incurred for the purpose of purchasing or carrying any margin stock within the meaning of Regulation U or any "margin security" within the meaning of Regulation T. "Margin stock" within the meaning of Regulation U does not constitute more than 25% of the value of the consolidated assets of the Borrower and its Consolidated Subsidiaries. None of the transactions contemplated by this Agreement (including the direct or indirect use of the proceeds of the Loans) will violate or result in a violation of the Securities Act, as amended, the Exchange Act or regulations issued pursuant thereto, or Regulation T, U or X. (b) None of the Borrower and its Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act or the Investment Company Act of 1940, each as amended. In addition, none of the Borrower and its Subsidiaries is (i) an "investment company" registered or required to be registered under the Investment Company Act of 1940, as amended, (ii) controlled by such a company, or (iii) a "holding company", a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1934, as amended. (c) No director, executive officer or principal holder of any Equity Interest of the Borrower or any of its Subsidiaries is a director, executive officer or principal shareholder of any Lender. For the purposes hereof, the terms "director", "executive officer" and "principal shareholder" (when used with reference to any Lender) have the respective meanings assigned thereto in Regulation O. SECTION 5.14 DISCLOSURE. No statement, information, report, representation, or warranty made by the Borrower in any Loan Document or furnished to the Administrative Agent or any Lender by or on behalf of the Borrower in connection with any Loan Document contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. -52- ARTICLE VI AFFIRMATIVE COVENANTS The Borrower agrees that so long as any Lender has any Commitment hereunder, any Obligation or other amount payable hereunder or under any Note or other Loan Document remains unpaid: SECTION 6.01 INFORMATION. The Borrower will furnish, or cause to be furnished, to the Administrative Agent and each of the Lenders: (a) CERTAIN SEC FILINGS AND SHAREHOLDER REPORTS. As soon as available, and in any event within 14 days of the filing or distribution thereof, (i) copies of all periodic reports on Forms 10-K and 10-Q, (ii) copies of all current reports on Form 8-K, and (iii) its annual reports to its shareholders (in all cases as filed with the Securities and Exchange Commission). (b) ANNUAL FINANCIAL STATEMENTS. If the Borrower is not required to file 10-K filings with the Securities and Exchange Commission or does not file the same within 90 days after the end of each fiscal year, as soon as available, and in any event within 90 days after the end of each fiscal year of the Borrower, a consolidated balance sheet and income statement of the Borrower and its Consolidated Subsidiaries, as of the end of such fiscal year, and the related consolidated statements of operations and retained earnings and cash flows for such fiscal year, setting forth in comparative form consolidated figures for the preceding fiscal year, all such financial statements to be in reasonable form and detail and audited by independent certified public accountants of recognized national standing reasonably acceptable to the Administrative Agent and accompanied by an opinion of such accountants (which shall not be subject to any qualifications or exceptions as to the scope of the audit nor to any qualifications or exceptions not reasonably acceptable to the Required Lenders) to the effect that such consolidated financial statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP the consolidated financial position and consolidated results of operations and cash flows of the Borrower and its Consolidated Subsidiaries in accordance with GAAP consistently applied (except for changes with which such accountants concur). (c) QUARTERLY FINANCIAL STATEMENTS. If the Borrower is not required to file 10-Q filings with the Securities and Exchange Commission or does not file the same within 45 days after the end of each fiscal year, as soon as available, and in any event within 45 days after the end of each of the first three fiscal quarters in each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal quarter, together with related consolidated statements of operations and retained earnings and cash flows for such fiscal quarter and the then elapsed portion of such fiscal year, setting forth in comparative form consolidated figures for the corresponding periods of the preceding fiscal year, all such financial statements to be in form and detail and reasonably acceptable to the Administrative Agent, and accompanied by a certificate of the chief financial officer of the Borrower to the effect that such quarterly financial statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP in all material respects the consolidated financial position and consolidated results of operations and cash flows of the Borrower and its Consolidated Subsidiaries in accordance with GAAP consistently applied, subject to changes resulting from normal year-end audit adjustments and the absence of footnotes required by GAAP. (d) OFFICER'S CERTIFICATE. At the time of delivery of the financial statements provided for in SECTIONS 6.01(a), 6.01(b) and 6.01(c) above, a certificate of the chief financial officer of the Borrower (i) demonstrating compliance with the financial covenants contained in SECTION 7.14 by calculation thereof as of the end of the fiscal period covered by such financial statements, (ii) stating that no Default or Event of Default exists, or if any Default or Event of Default does exist, specifying the -53- nature and extent thereof and what action the Borrower proposes to take with respect thereto, (iii) stating whether, since the date of the most recent financial statements delivered hereunder, there has been any material change in the GAAP applied in the preparation of the financial statements of the Borrower and its Consolidated Subsidiaries, and, if so, describing such change. (e) REPORTS. Promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto. (f) NOTICES. Prompt notice of: (i) the occurrence of any Default or Event of Default; (ii) breach or non-performance of, or any default under, a material Contractual Obligation of the Borrower or any Subsidiary; (iii) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Subsidiary and any Governmental Authority; (iv) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any applicable Environmental Law; (v) the occurrence of any ERISA Event; (vi) any material change in accounting policies or financial reporting practice by the Borrower or any Restricted Subsidiary; and (vii) of any public announcement by Moody's or S&P of any change or possible change in Worthington's Ratings; PROVIDED, that in the case of the events set forth in SUB CLAUSES (ii) through (v), of this CLAUSE (f), any such event has had, or the Borrower reasonably expects such event will have, a Material Adverse Effect. Each notice pursuant to this Section 6.01(g) shall (i) be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto and (ii) describe with particularity any and all provisions of this Agreement or other Loan Document that have been breached. (g) OTHER INFORMATION. With reasonable promptness upon request therefor, such other information regarding the business, properties or financial condition of the Borrower or any Restricted Subsidiary as the Administrative Agent or the Required Lenders may reasonably request. SECTION 6.02 BOOKS AND RECORDS. The Borrower will, and will cause each of its Restricted Subsidiaries to, maintain proper books of account and other records and enter therein complete and accurate entries and records of all of its transactions and give representatives of the Agents, at the Lenders' expense, reasonable access thereto at all reasonable times, including permission to examine, copy and make abstracts from any of such books and records and such other information as it may from time to time reasonably request. In addition, it will be available to the Agents, or cause its officers to be available from time to time upon reasonable notice to discuss the status of the Loans, its business and any statements, records or documents furnished or made available to the Agents in connection with this Agreement. SECTION 6.03 PAYMENT OF OBLIGATIONS. The Borrower will, and will cause each of its Restricted Subsidiaries to, pay and discharge as the same shall become due and payable, all its obligations and liabilities the non-payment of which could reasonably be expected to have a Material Adverse Effect, including: (i) material taxes, assessments, charges, levies and other similar material liabilities imposed upon it, its income, profits, property or business, except those which currently are being contested in good faith by appropriate proceedings and for which it has set aside reserves or made other adequate provision with respect thereto; and (ii) all lawful claims which, if unpaid, would by law become a Lien upon its property which is not a Permitted Lien. -54- SECTION 6.04 COMPLIANCE WITH LAWS. The Borrower will, and will cause each of its Restricted Subsidiaries to, comply in all material respects with all laws and regulations applicable to each of them and to the operation of their respective businesses, including without limitation those relating to environmental and health matters, and do all things necessary to maintain, renew and keep in full force and effect all rights, permits, licenses, certificates, satisfactory clearances and franchises necessary to enable them to continue their respective businesses, to the extent its failure to comply with or do any of the foregoing could result in a Material Adverse Effect. SECTION 6.05 ENVIRONMENTAL VIOLATIONS. The Borrower will promptly notify the Administrative Agent of any violation by it or any of its Subsidiaries of any Environmental Law; to the extent such violation would, in the reasonable judgment of the Borrower, have a Material Adverse Effect. SECTION 6.06 ERISA COMPLIANCE. To the extent necessary to prevent a Material Adverse Effect, the Borrower will, and will cause each of its Subsidiaries to, comply in all material respects with the applicable provisions of ERISA, the applicable provisions of the Code or other related Federal and state laws. SECTION 6.07 MAINTENANCE OF PROPERTIES. The Borrower will, and will cause each of its Restricted Subsidiaries to, (i) maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; and (ii) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. SECTION 6.08 MAINTENANCE OF INSURANCE. The Borrower will, and will cause each of its Restricted Subsidiaries to, maintain insurance with responsible insurance companies against loss or damage from hazards and the Borrower and its Restricted Subsidiaries will maintain public liability insurance, all in amounts reasonably consistent with the Borrower's current practice. SECTION 6.09 USE OF PROCEEDS. The Borrower will use the proceeds of the Credit Extensions for working capital and other general corporate purposes, including, without limitation, capital expenditures, not in contravention of any Law or of any Loan Document. SECTION 6.10 PLEDGED NOTES. If the Borrower pledges any new Pledged Note after the Closing Date, the Borrower will cause the initial principal amount of such Pledged Note to be established in good faith in an amount not to exceed the then-existing net asset value of the Pledged Note Issuer of such Pledged Note. Upon the occurrence of any transaction between Restricted Subsidiaries involving the transfer or disposition of non working capital-related assets in excess of the amount of $25,000,000, the Borrower will cause the principal amounts of the Pledged Notes issued by such Restricted Subsidiaries to be adjusted, in the Borrower's good faith determination, to reflect such transaction. ARTICLE VII NEGATIVE COVENANTS The Borrower agrees that so long as any Lender has any Commitment hereunder, any Obligation or other amount payable hereunder or under any Note or other Loan Document remains unpaid: SECTION 7.01 LIMITATION ON INDEBTEDNESS OF RESTRICTED SUBSIDIARIES. The Borrower will not cause or permit any Restricted Subsidiary to, directly or indirectly, incur, create, assume or permit to exist any Indebtedness except: -55- (i) Indebtedness of a Person existing at the time such Person becomes a Subsidiary of the Borrower (including any Indebtedness of a Person existing at the time such Person is merged with or into or consolidated with a Subsidiary of the Borrower, or at the time of a sale, lease or other disposition of all or substantially all of the properties of a Person to a Subsidiary of the Borrower); PROVIDED, that such Indebtedness was not incurred in connection with, or in anticipation of, such event; (ii) Indebtedness owing to the Borrower, any Restricted Subsidiary or Worthington Receivables Corporation (or any replacement or substitute thereof); (iii) Indebtedness existing as of the Closing Date evidenced by Existing Letters of Credit and other letters of credit issued from time to time after the Closing Date for the benefit of the Borrower or any Restricted Subsidiary; PROVIDED, that the sum of (A) the maximum amount which is, or at any time thereafter may become, available to be drawn under such Existing Letters of Credit or other letters of credit then outstanding and (B) the aggregate amount of all payments or disbursements not yet reimbursed by the Borrower or any Restricted Subsidiary to the applicable letter of credit issuer in respect of drawings under such Existing Letters of Credit or other letters of credit, shall not exceed $20,000,000 in the aggregate at any time; and (iv) other Indebtedness of the Restricted Subsidiaries of the Borrower in an aggregate principal amount at any time outstanding not in excess of 10% of Consolidated Net Tangible Assets. SECTION 7.02 RESTRICTION ON LIENS. The Borrower will not, and will cause its Restricted Subsidiaries to not, incur, create, assume, become or be liable in any way, or suffer to exist any mortgage, pledge, lien, charge, or other encumbrance of any nature whatsoever on any of its assets, now or hereafter owned, other than Permitted Liens. SECTION 7.03 INVESTMENTS. The Borrower will not, and will not cause or permit any of its Restricted Subsidiaries to, make or acquire, any Investment in any Person, except the following (such Investments described below being herein referred to as "PERMITTED INVESTMENTS"): (i) Investments other than those permitted by SUBSECTIONS (i) through (xii) existing on the date hereof and listed on SCHEDULE 7.03; (ii) Investments held by the Borrower or such Restricted Subsidiary in the form of Cash Equivalents; (iii) advances to officers, directors and employees of the Borrower and Subsidiaries for travel, entertainment, relocation and analogous ordinary business purposes; (iv) Investments of the Borrower in any Restricted Subsidiary or of any Restricted Subsidiary in the Borrower or another Restricted Subsidiary; (v) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss; -56- (vi) Guaranty Obligations permitted by SECTION 7.01; (vii) Investments permitted by SECTION 7.04; (viii) Investments consisting of capital expenditures or inventory for use by or in the business of the Borrower or a Restricted Subsidiary; (ix) Investments (including Investments made in connection with the acquisition of assets) in any Person of which the Borrower or any Restricted Subsidiary is, or becomes as a result of such Investment, the Controlling Person; PROVIDED, that as at the end of the immediately preceding fiscal quarter prior to and after giving effect to any such Investment, the Borrower is in pro forma compliance with the financial covenants set forth in SECTION 7.14; (x) Investments (including Investments made in connection with the acquisition of assets) in any Person of which the Borrower or any Restricted Subsidiary is not the Controlling Person; PROVIDED, that as at the end of the immediately preceding fiscal quarter prior to and after giving effect to any such Investment, the Borrower is in pro forma compliance with the financial covenants set forth in SECTION 7.14; PROVIDED FURTHER, that the initial amount (determined at the time made) of such Investments which are made after the Closing Date shall not exceed $100,000,000 in the aggregate; (xi) Investments in the nature of seller financing or other consideration received in a Disposition permitted under SECTION 7.05; (xii) additional Investments not exceeding $25,000,000 in the aggregate in any fiscal year of the Borrower. SECTION 7.04 MERGER. The Borrower will not, and will cause its Restricted Subsidiaries to not, merge or consolidate with or into any other Person except: (i) any Restricted Subsidiary or any other Person may merge or consolidate with the Borrower; PROVIDED, that (a) the Borrower is the surviving entity of such merger or consolidation and (b) such surviving entity has the majority of its property and assets within the continental limits of the United States of America; or (ii) the Borrower may merge or consolidate with any Restricted Subsidiary; PROVIDED, that (a) such Restricted Subsidiary is the surviving entity of such merger or consolidation, (b) such surviving entity is organized and existing under the laws of a state of the United States, (c) such surviving entity has the majority of its property and assets within the continental limits of the United States of America and (d) such surviving entity assumes in writing all of the obligations and liabilities of the Borrower under the Loan Documents; or (iii) any Restricted Subsidiary may merge or consolidate with any other Person; PROVIDED, that the surviving entity of such merger or consolidation is a Restricted Subsidiary after such merger or consolidation; or (iv) any merger may be consummated in furtherance of a Disposition permitted under SECTION 7.05; or (v) any Foreign Subsidiary may merge or consolidated into any Foreign Subsidiary; PROVIDED, that with respect to any merger or consolidation described in SUBSECTIONS (i) through (v) above, immediately prior to and after giving effect to any such transaction, no condition or event exists which constitutes a Default or an Event of Default shall have occurred and be continuing. SECTION 7.05 DISPOSITIONS. The Borrower will not, and will not cause or permit any of its Restricted Subsidiaries to, make any Disposition or enter into any agreement to make any Disposition of all or substantially all of the assets of the Borrower and its Subsidiaries on a consolidated basis. SECTION 7.06 ERISA. The Borrower will not, nor will it cause or permit any Subsidiary to, at any time engage in a transaction which could be subject to Section 4069 or 4212(c) of ERISA, or -57- permit any Plan to (i) engage in any non-exempt "prohibited transaction" (as defined in Section 4975 of the Code); (ii) fail to comply with ERISA or any other related applicable Laws; or (iii) incur any material "accumulated funding deficiency" (as defined in Section 302 of ERISA), which, with respect to each event listed above, could be reasonably expected to have a Material Adverse Effect. SECTION 7.07 DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES. (a) SCHEDULE 7.07 sets forth a complete and accurate list of the Borrower's Unrestricted Subsidiaries as of the Closing Date. From and after the Closing Date, the Borrower shall not designate any Restricted Subsidiary as an Unrestricted Subsidiary unless: (i) immediately prior to and after giving effect to such change in designation no Default or an Event of Default would exist and (ii) the designation of the Subsidiary as an Unrestricted Subsidiary would not have a Material Adverse Effect; PROVIDED, however, that Borrower may not designate any Restricted Subsidiaries as Unrestricted Subsidiaries if the aggregate operating income of the Restricted Subsidiaries so designated at that time would account for more than 30% of the consolidated operating income of the Borrower and its Consolidated Subsidiaries for the most recently completed four fiscal quarters. Thereafter for purposes of such calculation: (x) operating income of Unrestricted Subsidiaries will be excluded from the consolidated operating income of the Borrower and its Consolidated Subsidiaries and (y) fiscal quarters used previously will be excluded. (b) From and after the Closing Date, the Borrower shall not designate any Unrestricted Subsidiary which otherwise meets the definition of a Restricted Subsidiary, as a Restricted Subsidiary, unless if, and only if, immediately after giving effect to such change in designation: (i) any and all outstanding Indebtedness of such Subsidiary could then have been incurred in compliance with SECTION 7.01 and (ii) immediately prior to and after giving effect to such change in designation no Default or an Event of Default would exist; PROVIDED, however, that if Borrower has designated a Subsidiary which was previously treated as a Restricted Subsidiary as an Unrestricted Subsidiary during the term of this Agreement, Borrower may not again designate such Subsidiary as a Restricted Subsidiary without the consent of the Required Lenders. (c) Any change in designation pursuant to this SECTION 7.07 will be made by the Borrower giving written notice to the Administrative Agent not less than thirty nor more than sixty days prior to the date for such change in designation, in each case specifying such date and the name of the Subsidiary whose designation is to be so changed, which notice will be accompanied by an officer's certificate certifying that the conditions required for such change in designation will not be violated. The Administrative Agent will promptly provide a copy of such designation request to the Lenders. Notwithstanding the foregoing, if due to an acquisition or other event, in either case to the extent permitted by this Agreement, which would cause a Person which was not previously a Consolidated Subsidiary to become a Consolidated Subsidiary, Borrower may immediately elect to have such Person not become a Consolidated Subsidiary, but instead to be designated as an Unrestricted Subsidiary, without regard to the notice period set forth above. SECTION 7.08 CHANGE IN NATURE OF BUSINESS. The Borrower will not, and will cause each of its Restricted Subsidiaries not to, make any change in its business which would cause the type of business primarily conducted by the Borrower and its Restricted Subsidiaries, considered on a consolidated basis, to be materially different from the type of business primarily being conducted on the Effective Date. SECTION 7.09 TRANSACTIONS WITH AFFILIATES. The Borrower will not, nor will it cause or permit any of its Restricted Subsidiaries to, enter into any material transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service with any Affiliate of the Borrower (other than a Restricted Subsidiary), other than arm's-length transactions with Affiliates that are otherwise permitted hereunder. -58- SECTION 7.10 BURDENSOME AGREEMENTS. The Borrower will not, nor will it cause or permit any of its Restricted Subsidiaries to, enter into any Contractual Obligation that limits the ability of any Restricted Subsidiary to make Restricted Payments to the Borrower or to otherwise transfer property to the Borrower. SECTION 7.11 IMPAIRMENT OF COLLATERAL. The Borrower will not, nor will it permit any Pledged Note Issuer to, (i) take or omit to take any action which action or omission might or would impair the security interests in favor of the Collateral Agent with respect to the Pledged Notes or (ii) grant to any Person (other than the Collateral Agent or the Trustee for the benefit of the Secured Parties (as defined in the Pledge Agreement) pursuant to the Pledge Agreement or the Trust Agreement, as the case may be) any interest whatsoever in the Pledged Notes. SECTION 7.12 USE OF PROCEEDS. The Borrower will not, nor will it cause or permit any of its Restricted Subsidiaries to, use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the Board) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose. SECTION 7.13 GOVERNANCE DOCUMENTS. The Borrower will not amend or change its Articles of Incorporation or code of regulations in any manner which is materially adverse to the Lenders. SECTION 7.14 FINANCIAL COVENANTS. (a) LEVERAGE RATIO. The Leverage Ratio for any period of four consecutive fiscal quarters of the Borrower, in each case taken as a single accounting period, ending on a date set forth below will not be greater than the ratio set forth opposite such date: ==================================================== ================== FISCAL QUARTER ENDED RATIO - ---------------------------------------------------- ------------------ February 28, 2002 through February 28, 2003 3.75 to 1.0 - ---------------------------------------------------- ------------------ May 31, 2003 through August 31, 2003 3.50 to 1.0 - ---------------------------------------------------- ------------------ November 30, 2003 through February 28, 2005 3.25 to 1.0 - ---------------------------------------------------- ------------------ May 31, 2005 and Thereafter 3.00 to 1.0 ==================================================== ================== (b) CONSOLIDATED INDEBTEDNESS TO CAPITALIZATION. The ratio of the Borrower's Consolidated Indebtedness to the Borrower's Capitalization, calculated as of the end of each fiscal quarter of the Borrower, will not be greater than 55%. (c) MAINTENANCE COVENANTS WITH RESPECT TO PLEDGED NOTES. (i) The aggregate principal amount of the Pledged Notes shall not be less than an amount equal to 115% of the sum of (A) the Revolving Committed Amount PLUS (B) with respect to the Five Year Credit Agreement, the Revolving Committed Amount (as defined in the Five Year Credit Agreement) thereunder PLUS (C) the aggregate principal amount of Indebtedness outstanding under the Public Debt Indenture from time to time PLUS (D) the aggregate principal amount of the Additional Senior Indebtedness outstanding from time to time. (ii) As at the last day of any fiscal quarter of the Borrower, the Adjusted Consolidated Operating Income attributable to the Pledged Note Issuers for the four consecutive fiscal quarters ending on or most recently ended prior to such date shall not be less than an amount equal to 70% of the Adjusted Consolidated Operating Income for such period. -59- ARTICLE VIII DEFAULTS SECTION 8.01 EVENTS OF DEFAULT. An Event of Default shall exist upon the occurrence of any of the following specified events or conditions (each an "EVENT OF DEFAULT"): (a) PAYMENT. The Borrower shall fail to pay: (i) as and when due (whether by scheduled maturity, mandatory prepayment, acceleration or otherwise) any amount of principal of any Loan, any amount of interest on any Competitive Bid Loan; (ii) within 5 days of when due (whether by scheduled maturity, mandatory prepayment, acceleration or otherwise) any interest on any Committed Loan, any commitment facility, utilization or other fee due hereunder; or (iii) within 5 days after the same become due, any other amount payable hereunder or under any other Loan Document. (b) REPRESENTATION AND WARRANTIES. Any representation, warranty or statement made or deemed to be made by the Borrower herein, in any of the other Loan Documents or in any statement or certificate delivered or required to be delivered pursuant hereto or thereto shall prove untrue in any material respect on the date as of which it was made or deemed to have been made. (c) COVENANTS. The Borrower shall default in the due performance or observance by it of any other term, covenant or agreement contained in this Agreement and such default shall continue unremedied for a period of at least 30 days after the earlier of an executive officer of the Borrower becoming aware of such default or notice thereof given by the Administrative Agent. (d) BANKRUPTCY, ETC. WITH RESPECT TO THE BORROWER AND ACTIVE RESTRICTED SUBSIDIARIES. A Bankruptcy Event shall occur with respect to the Borrower or any of its Active Restricted Subsidiaries. (e) BANKRUPTCY, ETC. WITH RESPECT TO UNRESTRICTED SUBSIDIARIES. A Bankruptcy Event shall occur with respect to any of the Borrower's Unrestricted Subsidiaries and such event would reasonably be expected to have a Material Adverse Effect. (f) CROSS-DEFAULT. A default by the Borrower or any of its Subsidiaries with respect to any evidence of Indebtedness in excess of $5,000,000 by it for borrowed money (other than to the Lenders pursuant to this Agreement), if the effect of such default is to accelerate the maturity of such Indebtedness or to permit the holder thereof to cause such Indebtedness to become due prior to the stated maturity thereof, or if any Indebtedness of it in excess of $5,000,000 for borrowed money (other than to the Lenders pursuant to this Agreement) is not paid when due and payable, whether at the due date thereof or a date fixed for prepayment or otherwise (after the expiration of any applicable grace period). (g) JUDGMENTS. Unless adequately insured or bonded, the entry of a final judgment for the payment of money involving more than $10,000,000 against the Borrower or any of its Subsidiaries and the failure by the Borrower or any of its Subsidiaries: (i) to discharge the same, or cause it to be discharged, within thirty days from the date of the order, decree or process under which or pursuant to which such judgment was entered or (ii) to secure a stay of execution pending appeal of such judgment; or the entry of one or more final non-monetary judgments or orders against the Borrower or any of its Subsidiaries which, singly or in the aggregate, does or could reasonably be expected to cause a Material Adverse Effect. (h) OWNERSHIP. There shall occur a Change of Control of the Borrower. (i) PLEDGE AGREEMENT; TRUST AGREEMENT. At any time prior to the release of the Pledge Agreement or the Trust Agreement, either (i) the Pledge Agreement or the Trust Agreement shall -60- fail to be in full force and effect or to give the Collateral Agent or the Trustee, as the case may be, the rights, powers and privileges purported to be created thereby or the Borrower, or any Person acting on behalf of the Borrower, shall so state in writing, (ii) any security interest purported to be created by Pledge Agreement shall cease to be, or shall be asserted by the Borrower or the applicable Pledged Note Issuer not to be, a valid, perfected, first-priority security interest in the securities, assets or properties covered thereby, (iii) any Notice of Acceleration (as defined in the Trust Agreement) is delivered pursuant to the terms of the Trust Agreement, (iv) any default occurs in the due observance or performance by the Borrower of any covenant, condition or agreement contained in the Pledge Agreement or the Trust Agreement, and such default is not cured within any applicable cure or grace period, if any, or (v) any representation or warranty made by the Borrower in the Pledge Agreement or the Trust Agreement or any representation, warranty, statement or information contained in any certificate or financial statement furnished pursuant to the Pledge Agreement or the Trust Agreement, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished. SECTION 8.02 ACCELERATION; REMEDIES. Upon the occurrence of an Event of Default, and at any time thereafter unless and until such Event of Default has been waived in writing by the Required Lenders (or all Lenders as may be required pursuant to SECTION 10.01), the Administrative Agent shall, upon the request and direction of the Required Lenders, by written notice to the Borrower, take any of the following actions without prejudice to the rights of the Agents or any Lender to enforce its claims against the Borrower except as otherwise specifically provided for herein: (a) TERMINATION OF COMMITMENTS. Declare the Commitments terminated whereupon the Commitments shall be immediately terminated. (b) ACCELERATION OF LOANS. Declare the unpaid principal of and any accrued interest in respect of all Loans and any and all other indebtedness or obligations of any and every kind owing by the Borrower to any of the Lenders hereunder to be due whereupon the same shall be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. (c) ENFORCEMENT OF RIGHTS. Enforce any and all rights and interests created and existing under the Loan Documents, including, without limitation, delivery of a Notice of Acceleration (as defined in the Trust Agreement), and all rights of set-off, or applicable Law. Notwithstanding the foregoing, if an Event of Default specified in SECTION 8.01(d) OR (e) shall occur, then the Commitments shall automatically terminate and all Loans, all accrued interest in respect thereof and all accrued and unpaid fees and other indebtedness or obligations owing to the Lenders hereunder and under the other Loan Documents shall immediately become due and payable without the giving of any notice or other action by the Administrative Agent or the Lenders, which notice or other action is expressly waived by the Borrower. Notwithstanding the fact that enforcement powers reside primarily with the Administrative Agent, each Lender has, to the extent permitted by law, a separate right of payment and shall be considered a separate "creditor" holding a separate "claim" within the meaning of Section 101(5) of any Debtor Relief Law or any other insolvency statute. In case any one or more of the covenants and/or agreements set forth in this Agreement or any other Loan Document shall have been breached by the Borrower, then the Administrative Agent may proceed to protect and enforce the Lenders' rights either by suit in equity and/or by action at law, including an action for damages as a result of any such breach and/or an action for specific performance of any such covenant or agreement contained in this Agreement or such other Loan Document. Without -61- limitation of the foregoing, the Borrower agrees that failure to comply with any of the covenants contained herein will cause irreparable harm and that specific performance shall be available in the event of any breach thereof. ARTICLE IX AGENCY PROVISIONS SECTION 9.01 APPOINTMENT; AUTHORIZATION. (a) APPOINTMENT. Each Lender hereby designates and appoints PNC Bank, National Association as Administrative Agent and First Union Securities, Inc. and PNC Capital Markets, Inc. as Co-Syndication Agents of such Lender to act as specified herein and in the other Loan Documents, and each such Lender hereby authorizes the Agents, as the agents for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated by the terms hereof and of the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere herein and in the other Loan Documents, the Agents shall not have any duties or responsibilities, except those expressly set forth herein and therein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any of the other Loan Documents, or shall otherwise exist against the Agents. In performing its functions and duties under this Agreement and the other Loan Documents, each Agent shall act solely as an 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. Without limiting the generality of the foregoing two sentences, the use of the term "agent" herein and in the other Loan Documents with reference to any Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. The provisions of this ARTICLE IX (other than SECTION 9.09) are solely for the benefit of the Agents and the Lenders and the Borrower shall not have any rights as a third party beneficiary of the provisions hereof (other than SECTION 9.09). (b) CERTAIN OTHER AGENTS. First Union Securities, Inc. and PNC Capital Markets, Inc., in their capacity as Co-Syndication Agents, shall have no duties or obligations whatsoever under this Agreement or any of the other Loan Documents. SECTION 9.02 DELEGATION OF DUTIES. An Agent may execute any of its duties hereunder or under the other Loan Documents by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. An Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it in the absence of gross negligence or willful misconduct. SECTION 9.03 EXCULPATORY PROVISIONS. No Agent-Related Person shall be (i) liable for any action lawfully taken or omitted to be taken by any of them under or in connection herewith or in connection with any of the other Loan Documents or the transactions contemplated hereby or thereby (except for its own gross negligence or willful misconduct in connection with its duties expressly set forth herein) or (ii) responsible in any manner to any of the Lenders or participants for any recitals, statements, representations or warranties made by the Borrower contained herein or in any of the other Loan Documents or in any certificate, report, document, financial statement or other written or oral statement referred to or provided for in, or received by an Agent under or in connection herewith or in connection with the other Loan Documents, or enforceability or sufficiency therefor of any of the other Loan Documents, or for any failure of the Borrower to perform its obligations hereunder or thereunder or be -62- 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 or to inspect the properties, books or records of the Borrower. SECTION 9.04 RELIANCE ON COMMUNICATIONS. The Agents shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex, teletype or e-mail message, statement, order or other document or conversation believed by it 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, independent accountants and other experts selected by the Agents). The Agents may deem and treat each Lender as the owner of its interests hereunder for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent in accordance with SECTION 10.06(b). The Agents shall be fully justified in failing or refusing to take any action under this Agreement or under any of the other Loan Documents 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 Agents shall in all cases be fully protected in acting, or in refraining from acting, hereunder or under any of the other Loan Documents in accordance with a request of the Required Lenders (or to the extent specifically provided in SECTION 10.01, all the Lenders) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders (including their successors and assigns). Where this Agreement expressly permits or prohibits an action unless the Required Lenders otherwise determine, any Agent shall, and in all other instances an Agent may, but shall not be required to, initiate any solicitation for the consent or vote of the Lenders. SECTION 9.05 NOTICE OF DEFAULT. An Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder, unless such Agent has received written notice from a Lender or the Borrower referring to the Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". If 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, HOWEVER, that unless and until the Administrative Agent has received any such direction, 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 or it shall deem advisable or in the best interest of the Lenders, except to the extent that this Agreement expressly requires that such action be taken, or not taken, only with the consent or upon the authorization of the Required Lenders, or all of the Lenders, as the case may be. SECTION 9.06 CREDIT DECISION; DISCLOSURE OF INFORMATION BY ADMINISTRATIVE AGENT. Each Lender expressly acknowledges that no Agent-Related Person has made any representations or warranties to it and that no act by any Agent hereinafter taken, including any consent to and acceptance of any assignment or review of the affairs of the Borrower or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender as to any matter, including whether any Agent-Related Person has disclosed material information in its possession. Each Lender represents to the Agents that it has, independently and without reliance upon any Agent-Related Person 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 condition, prospects and creditworthiness of the Borrower, and all requirements of Law pertaining to the transaction contemplated by the Loan Documents, and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and -63- without reliance upon any Agent-Related Person 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 the other Loan Documents, 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. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, 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 or other conditions, prospects or creditworthiness of the Borrower or its Affiliates which may come into the possession of any Agent-Related Person. SECTION 9.07 INDEMNIFICATION. Whether or not the transactions contemplated hereby are consummated, the Lenders agree to indemnify each Agent-Related Person (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Commitments (or if the Commitments have expired or been terminated, in accordance with the respective principal amounts of outstanding Loans and Participation Interests of the Lenders), from and against any and all Indemnified Liabilities which may at any time (including, without limitation, at any time following payment in full of the Obligations) be imposed on, incurred by or asserted against an Agent in its capacity as such in any way relating to or arising out of this Agreement or the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by an Agent under or in connection with any of the foregoing; PROVIDED, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting from such Person's gross negligence or willful misconduct; PROVIDED, HOWEVER, that no action taken in accordance with the directions of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this SECTION 9.07. If any indemnity furnished to an Agent for any purpose shall, in the opinion of such Agent, be insufficient or become impaired, such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Borrower. The agreements in this SECTION 9.07 shall survive the payment of the Obligations and all other obligations and amounts payable hereunder and under the other Loan Documents. SECTION 9.08 AGENTS IN THEIR INDIVIDUAL CAPACITY. Each Agent and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire Equity Interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting and other business with the Borrower as though such Agent were not an Agent hereunder or under another Loan Document. The Lenders acknowledge that, pursuant to any such activities, an Agent or its Affiliates may receive information regarding the Borrower or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Borrower or such Affiliate) and acknowledge that no Agent shall be under any obligation to provide such information to them. With respect to the Loans made and all obligations owing to it, an Agent shall have the same rights and powers under this Agreement as any Lender and may exercise the same as though it was not an Agent, and the terms "Lender" and "Lenders" shall include each Agent in its individual capacity. -64- SECTION 9.09 SUCCESSOR AGENTS. Any Agent may, at any time, resign upon 30 days' written notice to the Lenders. If an Agent resigns under a Loan Document, the Required Lenders shall appoint from among the Lenders a successor Agent, which successor Agent shall be subject to the consent of the Borrower at all times other than during the existence of an Event of Default (which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment prior to the effective date of the resignation of the resigning Agent, then the resigning Agent shall have the right, after consulting with the Lenders and the Borrower, to appoint a successor Agents; PROVIDED, that such successor is a Lender hereunder or a commercial bank organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least $500,000,000. If no successor Agent is appointed prior to the effective date of the resignation of the resigning Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Borrower, a successor Agent from among the Lenders. Upon the acceptance of any appointment as an Agent hereunder by a successor, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations as an Agent, as appropriate, under this Agreement and the other Loan Documents and the provisions of this SECTION 9.09 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Agent under this Agreement. If no successor Administrative Agent has accepted appointment as Administrative Agent within sixty days after the retiring Administrative Agent's giving notice of resignation, the retiring Administrative Agent's resignation shall nevertheless become effective and the Lenders shall perform all duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. SECTION 9.10 CERTAIN OTHER AGENTS. None of the Lenders identified on the facing page or signature pages of this Agreement as a "syndication agent", "documentation agent", "co-agent", "book runner" or "lead manager" shall have any right, power, obligation, liability, responsibility or duty under the Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders or any such Person so identified shall have or be deemed to have any fiduciary relationship to any Lender or the Borrower. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. SECTION 9.11 AGENTS' FEES; ARRANGER FEE. The Borrower shall pay to the Administrative Agent for its own account fees in the amounts and at the times previously agreed upon between the Borrower and the Administrative Agent with respect to this Agreement, the other Loan Documents and the transactions contemplated hereby and thereby. ARTICLE X MISCELLANEOUS SECTION 10.01 AMENDMENTS, WAIVERS AND CONSENTS. Neither this Agreement nor any other Loan Document nor any of the terms hereof or thereof may be amended, changed, waived, discharged or terminated except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower, the Administrative Agent, and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Borrower and the Agents party thereto, as applicable; PROVIDED, that the foregoing shall not restrict the ability of the Required Lenders to waive any Event of Default prior to the time the Administrative Agent shall have declared, or the Required Lenders shall have requested the Administrative Agent to declare, the Loans immediately due and payable pursuant to ARTICLE VIII; PROVIDED, HOWEVER, that: -65- (i) no such amendment, change, waiver, discharge or termination shall, without the consent of each Lender affected thereby: (A) extend the final maturity of any Loan PROVIDED, that this CLAUSE (A) shall not restrict the ability of the Required Lenders to waive any Event of Default (other than an Event of Default the waiver of which would effectively result in any such extension or waiver), prior to the time the Administrative Agent shall have declared, or the Required Lenders shall have requested the Administrative Agent to declare, the Loans immediately due and payable pursuant to ARTICLE VIII; (B) reduce the rate, or extend the time of payment, of interest or change the manner of computation of any financial covenant used in determining the Applicable Margin that could result in the reduction of the rate of interest on any Loan (other than as a result of waiving the applicability of any post-default increase in interest rates) thereon or fees hereunder; (C) except to the extent set forth in SECTION 2.10(e) hereof, increase the Commitment of a Lender over the amount thereof in effect (it being understood and agreed that a waiver of any Default or Event of Default or a mandatory reduction in the Commitments shall not constitute a change in the terms of any Commitment of any Lender); (D) release the Borrower from its Obligations under the Loan Documents; (E) amend, modify or waive any provision of this SECTION 10.01 or reduce any percentage specified in, or otherwise modify, the definition of Required Lenders; or (F) consent to the assignment or transfer by the Borrower of any of its rights and obligations under (or in respect of) the Loan Documents to which it is a party, except as permitted thereby; (ii) no provision of ARTICLE IX may be amended without the consent of the Administrative Agent and no provision of SECTION 2.02(d) may be amended without the consent of the Swingline Lender. Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, (i) each Lender is entitled to vote as such Lender sees fit on any bankruptcy reorganization plan that affects the Loans, and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set forth herein and (ii) the Required Lenders may consent to allow the Borrower to use cash collateral in the context of a bankruptcy or insolvency proceeding. SECTION 10.02 NOTICES AND OTHER COMMUNICATIONS; FACSIMILE COPIES. (a) GENERAL. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission) and mailed, faxed or delivered, to the address, facsimile number or (subject to SUBSECTION (c) below) electronic mail address specified for notices on SCHEDULE 10.02; or, in the case of the Borrower, the Administrative Agent, the Swingline Lender, to such other address as shall be designated by such party in a notice to the -66- other parties, and in the case of any other party, to such other address as shall be designated by such party in a notice to the Borrower, the Administrative Agent and the Swingline Lender. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the intended recipient and (ii) (A) if delivered by hand or by courier, when signed for by the intended recipient; (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of SUBSECTION (c) below), when delivered; PROVIDED, HOWEVER, that notices and other communications to the Administrative Agent and the Swingline Lender pursuant to ARTICLE II shall not be effective until actually received by such Person. Any notice or other communication permitted to be given, made or confirmed by telephone hereunder shall be given, made or confirmed by means of a telephone call to the intended recipient at the number specified on SCHEDULE 10.02, it being understood and agreed that a voicemail message shall in no event be effective as a notice, communication or confirmation hereunder. (b) EFFECTIVENESS OF FACSIMILE DOCUMENTS AND SIGNATURES. Loan Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to requirements of Law, have the same force and effect as manually-signed originals and shall be binding on the Borrower, the Agents and the Lenders. The Administrative Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; PROVIDED, HOWEVER, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature. (c) LIMITED USE OF ELECTRONIC MAIL. Electronic mail and internet and intranet websites may be used only to distribute routine communications, such as financial statements and other information, and to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose. (d) RELIANCE BY ADMINISTRATIVE AGENT AND LENDERS. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify each Agent-Related Person and each Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower, except for such losses resulting from the Administrative Agent's or Lender's gross negligence or willful misconduct. All telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording. SECTION 10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of an Agent or any Lender in exercising any right, power or privilege hereunder or under any other Loan Document and no course of dealing between the Agents or any Lender and the Borrower shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Loan Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies provided herein are cumulative and not exclusive of any rights or remedies which the Agents or any Lender would otherwise have. 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 Agents or the Lenders to any other or further action in any circumstances without notice or demand. SECTION 10.04 ATTORNEY COSTS, EXPENSES AND TAXES. The Borrower agrees (i) to pay or reimburse the Administrative Agent for all costs and expenses incurred in connection with the -67- preparation, negotiation and execution of this Agreement and the other Loan Documents and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated hereby or thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs, and (ii) to pay or reimburse the Administrative Agent and each Lender for all costs and expenses incurred in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or the other Loan Documents (including all such costs and expenses incurred during any "workout" or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including all Attorney Costs. The foregoing costs and expenses shall include all search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto, and other reasonable and actual out-of-pocket expenses incurred by the Administrative Agent and the reasonable and actual cost of independent public accountants and other outside experts retained by the Administrative Agent or any Lender. The agreements in this SECTION 10.04 shall survive the termination of the Commitments and repayment of all the other Obligations. SECTION 10.05 INDEMNIFICATION. Whether or not the transactions contemplated hereby are consummated, the Borrower agrees to indemnify, save and hold harmless each Agent-Related Person, each Lender and their respective Affiliates, directors, officers, employees, counsel, agents and attorneys-in-fact (collectively the "INDEMNITEES") from and against: (i) any and all claims, demands, actions or causes of action that are asserted against any Indemnitee by any Person (other than the Administrative Agent or any Lender) relating directly or indirectly to a claim, demand, action or cause of action that such Person asserts or may assert against the Borrower, any Affiliate of the Borrower or any of their respective officers or directors; (ii) any and all claims, demands, actions or causes of action that may at any time (including at any time following repayment of the Obligations and the resignation or removal of any Agent or the replacement of any Lender) be asserted or imposed against any Indemnitee, arising out of or relating to, the Loan Documents, any predecessor loan documents, the Commitments, the use of or contemplated use of the proceeds of any Credit Extension, or the relationship of the Borrower, any Agent and the Lenders under this Agreement or any other Loan Document; (iii) any administrative or investigative proceeding by any Governmental Authority arising out of or related to a claim, demand, action or cause of action described in CLAUSE (i) or (ii) above; and (iv) any and all liabilities (including liabilities under indemnities), losses, costs or expenses (including Attorney Costs) that any Indemnitee suffers or incurs as a result of the assertion of any foregoing claim, demand, action, cause of action or proceeding, or as a result of the preparation of any defense in connection with any foregoing claim, demand, action, cause of action or proceeding, in all cases, and whether or not an Indemnitee is a party to such claim, demand, action, cause of action, or Proceeding (all the foregoing, collectively; the "INDEMNIFIED LIABILITIES"); PROVIDED, that no Indemnitee shall be entitled to indemnification for any claim caused by its own gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this SECTION 10.05 applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnitee or any other Person or any Indemnitee is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrower agrees not to assert any claim against any Agent, any Lender, any other Creditor, any of their Affiliates or any of their respective directors, officers, employees, attorneys, agents and advisers, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Loan Documents, any of the transactions contemplated herein or therein or the actual or proposed use of the proceeds of the Loans. Without prejudice to the survival of any other agreement of the Borrower hereunder and under the other Loan Documents, the agreements and obligations of the Borrower contained in this SECTION 10.05 shall survive the repayment of the Loans and other obligations under the Loan Documents and the termination of the Commitments hereunder. -68- SECTION 10.06 SUCCESSORS AND ASSIGNS. (a) GENERALLY. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; PROVIDED, that the Borrower may not assign or transfer any of its interests and obligations without the prior written consent of either the Required Lenders or the Lenders, as the terms set forth in SECTION 10.01 may require; (b) ASSIGNMENTS. Any Lender may assign all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Loans, its Notes, its Commitments and any Participation Interest in Swingline Loans held by it); PROVIDED, HOWEVER, that: (i) each such assignment shall be to an Eligible Assignee; (ii) except in the case of an assignment to another Lender, an Affiliate of an existing Lender or any Approved Fund the aggregate amount of the Revolving Commitment of the assigning Lender subject to such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not, without the consent of the Borrower and the Administrative Agent, be less than $5,000,000 and an integral multiple of $1,000,000 (or such lesser amount as shall equal the assigning Lender's entire Revolving Commitment); (iii) each such assignment by a Lender shall be of a constant, and not varying, percentage of all rights and obligations in respect of a particular Class of Commitments under this Agreement and the other Loan Documents; (iv) the parties to such assignment shall execute and deliver to the Administrative Agent its consent not to be unreasonably withheld an Assignment and Acceptance in the form of EXHIBIT C, together with any Note subject to such assignment and a processing fee of $3,500, payable or agreed between the assigning Lender and the assignee. Not later than the date any such executed Assignment and Acceptance is delivered to the Administrative Agent, the Administrative Agent shall provide the Borrower with notice of any such assignment. (c) ASSIGNMENT AND ACCEPTANCE. By executing and delivering an Assignment and Acceptance in accordance with this SECTION 10.06, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and the assignee warrants that it is an Eligible Assignee; (ii) except as set forth in CLAUSE (i) above, such assigning 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, any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto or the financial condition of the Borrower or the performance or observance by the Borrower or any Subsidiary of any of its obligations under this Agreement, any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (iii) such assignee represents and warrants that it is legally authorized to enter into such assignment agreement; (iv) such assignee confirms that it has received a copy of this Agreement, the other Loan Documents, together with copies of the most recent financial statements delivered pursuant to SECTION 6.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Administrative Agent, the Swingline Lender, such assigning -69- 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 and the other Loan Documents; (vi) such assignee appoints and authorizes the Administrative Agent to take such action on its behalf and to exercise such powers under this Agreement or any other Loan Document as are delegated to the Administrative Agent by the terms hereof or thereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement and the other Loan Documents are required to be performed by it as a Lender. Upon execution, delivery, and acceptance of such Assignment and Acceptance, the assignee thereunder shall be a party hereto and, to the extent of such assignment, have the obligations, rights, and benefits of a Lender hereunder and the assigning Lender shall, to the extent of such assignment, relinquish its rights and be released from its obligations under this Agreement. Upon the consummation of any assignment pursuant to this SECTION 10.06, the assignor, the Administrative Agent and the Borrower shall make appropriate arrangements so that, if required, new Notes are issued to the assignor and the assignee. If the assignee is not a United States person under Section 7701(a)(30) of the Code, it shall deliver to the Borrower and the Administrative Agent certification as to exemption from deduction or withholding of Taxes in accordance with SECTION 3.01. (d) REGISTER. The Borrower hereby designates the Administrative Agent to serve as the Borrower's agent, solely for purposes of this SUBSECTION 10.06(d), to (i) maintain a register (the "REGISTER") on which the Administrative Agent will record the Commitments from time to time of each Lender, the Loans made by each Lender and each repayment in respect of the principal amount of the Loans of each Lender and to (ii) retain a copy of each Assignment and Acceptance delivered to the Administrative Agent pursuant to this SECTION 10.06. Failure to make any such recordation, or any error in such recordation, shall not affect the Borrower's obligation in respect of such Loans. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person in whose name a Loan and the Note evidencing the same is registered as the owner thereof for all purposes of this Agreement, notwithstanding notice or any provision herein to the contrary. With respect to any Lender, the assignment or other transfer of the Commitments of such Lender and the rights to the principal of, and interest on, any Loan made and any Note issued pursuant to this Agreement shall not be effective until such assignment or other transfer is recorded on the Register and, except to the extent provided in this SUBSECTION 10.06(d), otherwise complies with this SECTION 10.06, and prior to such recordation all amounts owing to the transferring Lender with respect to such Commitments, Loans and Notes shall remain owing to the transferring Lender. The registration of assignment or other transfer of all or part of any Commitments, Loans and Notes for a Lender shall be recorded by the Administrative Agent on the Register only upon the acceptance by the Administrative Agent of a properly executed and delivered Assignment and Acceptance and payment of the administrative fee referred to in SECTION 10.06(b)(iv). The Register shall be available at the offices where kept by the Administrative Agent for inspection by the Borrower and any Lender at any reasonable time upon reasonable prior notice to the Administrative Agent, and the Administrative Agent shall provide a copy of the Register to any Lender requesting a copy thereof, but in no event more frequently then once per calendar quarter. (e) PARTICIPATIONS. Each Lender may, without the consent of the Borrower, the Swingline Lender or any Agent, sell participations to one or more Persons in all or a portion of its rights, obligations or rights and obligations under this Agreement (including all or a portion of its Commitment or the Loans owing to it and any Notice and participation in Swingline Loans held by it); PROVIDED, HOWEVER, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participant shall be entitled to the benefit of the right of setoff contained in SECTION 10.08 and the yield protection provisions contained in SECTIONS 3.01, 3.04 and 3.05 and to the same extent that the -70- Lender from which such participant acquired its participation would be entitled to the benefits of such yield protections; PROVIDED, that the Borrower shall not be required to reimburse any participant pursuant to SECTIONS 3.01, 3.04 or 3.05 in an amount which exceeds the amount that would have been payable thereunder to such Lender had such Lender not sold such participation and (iv) the Borrower, the Agents, the Swingline Lenders and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrower relating to the Obligations owing to such Lender and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing the amount of principal of or the rate at which interest is payable on such Loans or Notes, extending any scheduled principal payment date or date fixed for the payment of interest on such Loans or Notes or extending its Commitment). (f) OTHER ASSIGNMENTS. Any Lender may at any time (i) assign all or any portion of its rights under this Agreement and any Notes to a Federal Reserve Bank, (ii) pledge or assign a security interest in all or any portion of its interest and rights under this Agreement (including all or any portion of its Notes, if any) to secure obligations of such Lender and (iii) grant to an SPC referred to in SUBSECTION (h) below identified as such in writing from time to time by such Lender to the Administrative Agent the Borrower the option to provide to the Borrower all or any part of any Loans that such Lender would otherwise be obligated to make to the Borrower pursuant to the Agreement; PROVIDED, that no such assignment, option, pledge or security interest shall release a Lender from any of its obligations hereunder or substitute any such Federal Reserve Bank or other person to which such option, pledge or assignment has been made for such Lender as a party hereto. (g) INFORMATION. Any Lender may furnish any information concerning the Borrower or any of its Subsidiaries in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants), subject, however, to the provisions of SECTION 10.07. (h) OTHER FUNDING VEHICLES. Notwithstanding anything to the contrary contained herein, any Lender, (a "GRANTING LENDER") may grant to a special purpose funding vehicle (an "SPC") the option to fund all or any part of any Loan that such Granting Lender would otherwise be obligated to fund pursuant to this Agreement; PROVIDED, that (i) nothing herein shall constitute a commitment by any SPC to fund any Loan, (ii) if an SPC elects not to exercise such option or otherwise fails to fund all or any part of such Loan, the Granting Lender shall be obligated to fund such Loan pursuant to the terms hereof, (iii) no SPC shall have any voting rights pursuant to SECTION 10.01 and (iv) with respect to notices, payments and other matters hereunder, the Borrower, the Administrative Agent and the Lenders shall not be obligated to deal with an SPC, but may limit their communications and other dealings relevant to such SPC to the applicable Granting Lender. The funding of a Loan by an SPC hereunder shall utilize the Revolving Commitment of the Granting Lender to the same extent that, and as if, such Loan were funded by such Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or payment under this Agreement for which a Lender would otherwise be liable for so long as, and to the extent, the Granting Lender provides such indemnity or makes such payment. Notwithstanding anything to the contrary contained in this Agreement, any SPC may disclose on a confidential basis any non-public information relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any surety or guarantee to such SPC. This SUBSECTION (h) may not be amended without the prior written consent of each Granting Lender, all or any part of whose Loan is being funded by an SPC at the time of such amendment. SECTION 10.07 CONFIDENTIALITY. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) 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 -71- will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (ii) to the extent requested by any regulatory authority; (iii) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process; (iv) to any other party to this Agreement; (v) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder; (vi) subject to an agreement containing provisions substantially the same as those of this SECTION 10.07, to (A) any Eligible Assignee of or participant in, or any prospective Eligible Assignee of or participant in, any of its rights or obligations under this Agreement or (B) any direct or indirect contractual counterparty or prospective counterparty (or such contractual counterparty's or prospective counterparty's professional advisor) to any credit derivative transaction relating to obligations of the Borrower; (vii) with the consent of the Borrower; (viii) to the extent such information (A) becomes publicly available other than as a result of a breach of this SECTION 10.07 or (B) becomes available to an Agent or any Lender on a nonconfidential basis from a source other than the Borrower; or (ix) to the National Association of Insurance Commissioners or any other similar organization or any nationally recognized rating agency that requires access to information about a Lender's or its Affiliates' investment portfolio in connection with ratings issued with respect to such Lender or its Affiliates. For the purposes of this SECTION 10.07, "Information" means all information received from the Borrower relating to the Borrower or its 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 from the Borrower after the date hereof, such information is clearly identified in writing at the time of delivery as confidential. SECTION 10.08 SET-OFF. 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 (and each of its Affiliates) is authorized at any time and from time to time, without presentment, demand, protest or other notice of any kind (all of such rights being hereby expressly waived), to set-off and to appropriate and apply any and all deposits (general or specific) and any other indebtedness at any time held or owing by such Lender (including, without limitation, branches, agencies or Affiliates of such Lender wherever located) to or for the credit or the account of the Borrower against obligations and liabilities of the Borrower to the Lenders hereunder, under the Notes, under the other Loan Documents or otherwise, irrespective of whether the Administrative Agent or the Lenders shall have made any demand hereunder and although such obligations, liabilities or claims, or any of them, may be contingent or unmatured, and any such set-off shall be deemed to have been made immediately upon the occurrence of an Event of Default even though such charge is made or entered on the books of such Lender subsequent thereto. The Borrower hereby agrees that to the extent permitted by Law any Person purchasing a participation in the Loans and Commitments hereunder pursuant to SECTION 2.01(b), 2.13 or 10.06(e) may exercise all rights of set-off with respect to its participation interest as fully as if such Person were a Lender hereunder and any such set-off shall reduce the amount owed by the Borrower to the Lender (but without duplication). SECTION 10.09 INTEREST RATE LIMITATION. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the "MAXIMUM RATE"). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (i) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations. -72- SECTION 10.10 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. Delivery of an executed counterpart by facsimile shall be effective as an original executed counterpart and shall be deemed a representation that the original executed counterpart will be delivered. SECTION 10.11 INTEGRATION. This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; PROVIDED, that the inclusion of supplemental rights or remedies in favor of the Administrative Agent or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, put rather in accordance with the fair meaning thereof. SECTION 10.12 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or Event of Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation shall remain unpaid or unsatisfied. SECTION 10.13 SEVERABILITY. Any provision of this Agreement and the other Loan Documents to which the Borrower is a party that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 10.14 HEADINGS. The headings and captions of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. SECTION 10.15 GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN SUCH OTHER LOAN DOCUMENTS) AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES; PROVIDED, THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. Any legal action or proceeding with respect to this Agreement or any other Loan Document may be brought in the courts of the State of New York in New York County, or of the United States for the Southern District of New York or the Western District of North Carolina, and, by execution and delivery of this Agreement, the Borrower hereby irrevocably accepts for itself and in respect of its property, generally and unconditional, the nonexclusive jurisdiction of such courts. The Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or -73- hereafter have to the laying of the venue of any such proceeding brought in such court and any claim that any such proceeding brought in any such court has been brought in an inconvenient forum. (b) The Borrower hereby irrevocably appoints C.T. Corporation System its authorized agent to accept and acknowledge service of any and all process which may be served in any suit, action or proceeding of the nature referred to in this SECTION 10.15 and consents to process being served in any such suit, action or proceeding upon C.T. Corporation System (with a copy thereof being mailed by overnight courier to the Borrower's address referred to in SCHEDULE 10.02) in any manner or by the mailing of a copy thereof by registered or certified mail, postage prepaid, return receipt requested, to the Borrower's address referred to in SCHEDULE 10.02. The Borrower agrees that such service (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by law, be taken and held to be valid personal service upon and personal delivery to it. Nothing in this SECTION 10.15 shall affect the right of any Lender to serve process in any manner permitted by law or limit the right of any Lender to bring proceedings against the Borrower in the courts of any jurisdiction or jurisdictions. SECTION 10.16 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 10.16 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. SECTION 10.17 BINDING EFFECT. This Agreement shall become effective at such time when it shall have been executed by the Borrower, and the Administrative Agent, and the Administrative Agent shall have received copies hereof (telefaxed or otherwise) which, when taken together, bear the signatures of each Lender, and thereafter this Agreement shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent and each Lender and their respective successors and assigns; PROVIDED, HOWEVER, that unless the conditions set forth in SECTION 4.01 have been satisfied by the Borrower or waived by the Lenders on or before June 30, 2002, none of the Borrower, the Administrative Agent or the Lenders shall have any obligations under this Agreement. SECTION 10.18 CONFLICT. To the extent that there is a conflict or inconsistency between any provision hereof, on the one hand, and any provision of any other Loan Document, on the other hand, this Agreement shall control. [Signature Pages Follow] -74- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. BORROWER: WORTHINGTON INDUSTRIES, INC. By: /s/John T. Baldwin ----------------------------------------------- Name: John T. Baldwin Title: Vice President & Chief Financial Officer PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent By: /s/David B. Gookin ---------------------------------------------- Name: David B. Gookin Title: Vice President PNC BANK, NATIONAL ASSOCIATION as Swingline Lender By: /s/David B. Gookin ---------------------------------------------- Name: David B. Gookin Title: Vice President PNC BANK, NATIONAL ASSOCIATION, as a Lender By: /s/David B. Gookin ---------------------------------------------- Name: David B. Gookin Title: Vice President WACHOVIA BANK, NATIONAL ASSOCIATION, as a Lender By: /s/Steven M. Hamil ----------------------------------------------- Name: Steven M. Hamil Title: Vice President THE BANK OF NOVA SCOTIA, as a Lender By: /s/N. Bell ---------------------------------------------- Name N. Bell: Title: Senior Manager CREDIT SUISSE FIRST BOSTON CAYMAN ISLANDS BRANCH, as a Lender By: /s/Bill O'Daly/ /s/ Cassandra Droosan ---------------------------------------------- Name: Bill O'Daly Cassandra Droosan Title: Director Associate FIFTH THIRD BANK (CENTRAL OHIO), as a Lender By: /s/ John K. Beandsloe ---------------------------------------------- Name: John K. Beandsloe Title: Vice President FIRSTAR BANK, NA, as a Lender By: /s/Robert H. Friend ---------------------------------------------- Name: Robert H. Friend Title: Vice President CIBC, INC., as a Lender By: /s/George Knight --------------------------------------------- Name: George Knight Title: Managing Director COMERICA BANK, as a Lender By: /s/Ryan Oliver ---------------------------------------------- Name:Ryan Oliver Title: Account Officer THE HUNTINGTON NATIONAL BANK, as a Lender By: /s/Nancy J. Cracoica ---------------------------------------------- Name: Nancy J. Cracoica Title: Vice President JPMORGAN CHASE BANK, as a Lender By: /s/James H. Ramage ---------------------------------------------- Name: James H. Ramage Title: Managing Director NATIONAL CITY BANK, as a Lender By: /s/William J. Whitley ---------------------------------------------- Name: William J. Whitley Title: Senior Vice President WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender By: /s/Melissa Nanchman ---------------------------------------------- Name: Melissa Nachman Title: Vice President By: /s/Scott Miller ---------------------------------------------- Name: Scott Miller Title: Vice President MELLON BANK, NA, as a Lender By: /s/Paul F. Neel ---------------------------------------------- Name: Paul F. Neel Title: First Vice President TABLE OF CONTENTS
PAGE ---- ARTICLE I DEFINITIONS AND ACCOUNTING TERMS...............................................................1 Section 1.01 Defined Terms.....................................................................1 Section 1.02 Computation of Time Periods and Other Definitional Provisions....................23 Section 1.03 Accounting Terms and Determinations..............................................23 Section 1.04 Classes and Types of Borrowings..................................................23 ARTICLE II THE CREDIT FACILITIES.........................................................................24 Section 2.01 Commitments to Lend..............................................................24 Section 2.02 Notice of Committed Loan.........................................................26 Section 2.03 Competitive Bid Borrowings.......................................................27 Section 2.04 Notice to Lenders; Funding of Loans..............................................30 Section 2.05 Evidence of Loans................................................................31 Section 2.06 Interest.........................................................................32 Section 2.07 Extension and Conversion.........................................................34 Section 2.08 Scheduled Termination of Commitments; Mandatory Prepayments......................35 Section 2.09 Optional Prepayments.............................................................35 Section 2.10 Adjustment of Commitments........................................................36 Section 2.11 Fees.............................................................................40 Section 2.12 Pro-Rata Treatment...............................................................40 Section 2.13 Sharing of Payments..............................................................41 Section 2.14 Payments; Computations...........................................................41 ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY........................................................42 Section 3.01 Taxes............................................................................42 Section 3.02 Illegality.......................................................................44 Section 3.03 Basis for Determining Interest Rate Inadequate or Unfair.........................44 Section 3.04 Increased Costs and Reduced Return...............................................45 Section 3.05 Funding Losses...................................................................46 Section 3.06 Base Rate Loans Substituted for Affected Fixed Rate Loans........................47 ARTICLE IV CONDITIONS....................................................................................47 Section 4.01 Conditions to Closing............................................................47 Section 4.02 Conditions to All Credit Extensions..............................................49 ARTICLE V REPRESENTATIONS AND WARRANTIES................................................................50 Section 5.01 Organization.....................................................................50 Section 5.02 Financial Condition..............................................................50 Section 5.03 Litigation, Etc..................................................................50 Section 5.04 Taxes............................................................................50 Section 5.05 Authority........................................................................51 Section 5.06 Other Defaults...................................................................51 Section 5.07 Licenses, Etc....................................................................51 Section 5.08 ERISA............................................................................51 Section 5.09 Environmental Matters............................................................51 Section 5.10 Ownership of Property; Liens.....................................................51 Section 5.11 Insurance........................................................................51 Section 5.12 Subsidiaries.....................................................................52
-i- TABLE OF CONTENTS (continued)
PAGE ---- Section 5.13 Margin Regulation; Investment Company Act; Public Utility Holding Company Act....52 Section 5.14 Disclosure.......................................................................52 ARTICLE VI AFFIRMATIVE COVENANTS.........................................................................53 Section 6.01 Information......................................................................53 Section 6.02 Books and Records................................................................54 Section 6.03 Payment of Obligations...........................................................54 Section 6.04 Compliance with Laws.............................................................55 Section 6.05 Environmental Violations.........................................................55 Section 6.06 ERISA Compliance.................................................................55 Section 6.07 Maintenance of Properties........................................................55 Section 6.08 Maintenance of Insurance.........................................................55 Section 6.09 Use of Proceeds..................................................................55 Section 6.10 Pledged Notes....................................................................55 ARTICLE VII NEGATIVE COVENANTS............................................................................55 Section 7.01 Limitation on Indebtedness of Restricted Subsidiaries............................55 Section 7.02 Restriction on Liens.............................................................56 Section 7.03 Investments......................................................................56 Section 7.04 Merger...........................................................................57 Section 7.05 Dispositions.....................................................................57 Section 7.06 ERISA............................................................................57 Section 7.07 Designation of Restricted and Unrestricted Subsidiaries..........................58 Section 7.08 Change in Nature of Business.....................................................58 Section 7.09 Transactions with Affiliates.....................................................58 Section 7.10 Burdensome Agreements............................................................59 Section 7.11 Impairment of Collateral.........................................................59 Section 7.12 Use of Proceeds..................................................................59 Section 7.13 Governance Documents.............................................................59 Section 7.14 Financial Covenants..............................................................59 ARTICLE VIII DEFAULTS......................................................................................60 Section 8.01 Events of Default................................................................60 Section 8.02 Acceleration; Remedies...........................................................61 ARTICLE IX AGENCY PROVISIONS.............................................................................62 Section 9.01 Appointment; Authorization.......................................................62 Section 9.02 Delegation of Duties.............................................................62 Section 9.03 Exculpatory Provisions...........................................................62 Section 9.04 Reliance on Communications.......................................................63 Section 9.05 Notice of Default................................................................63 Section 9.06 Credit Decision; Disclosure of Information by Administrative Agent...............63 Section 9.07 Indemnification..................................................................64 Section 9.08 Agents in Their Individual Capacity..............................................64 Section 9.09 Successor Agents.................................................................65 Section 9.10 Certain Other Agents.............................................................65
-ii- TABLE OF CONTENTS (continued)
PAGE ---- Section 9.11 Agents' Fees; Arranger Fee.......................................................65 ARTICLE X MISCELLANEOUS.................................................................................65 Section 10.01 Amendments, Waivers and Consents.................................................65 Section 10.02 Notices and Other Communications; Facsimile Copies...............................66 Section 10.03 No Waiver; Cumulative Remedies...................................................67 Section 10.04 Attorney Costs, Expenses and Taxes...............................................67 Section 10.05 Indemnification..................................................................68 Section 10.06 Successors and Assigns...........................................................69 Section 10.07 Confidentiality..................................................................71 Section 10.08 Set-off..........................................................................72 Section 10.09 Interest Rate Limitation.........................................................72 Section 10.10 Counterparts.....................................................................73 Section 10.11 Integration......................................................................73 Section 10.12 Survival of Representations and Warranties.......................................73 Section 10.13 Severability.....................................................................73 Section 10.14 Headings.........................................................................73 Section 10.15 Governing Law; Submission to Jurisdiction........................................73 Section 10.16 Waiver of Jury Trial.............................................................74 Section 10.17 Binding Effect...................................................................74 Section 10.18 Conflict.........................................................................74
-iii- TABLE OF CONTENTS (continued) PAGE ---- SCHEDULES: Schedule 1.01A - Lenders and Commitments Schedule 5.12 - Subsidiaries Schedule 7.01 Existing Letters of Credit Schedule 7.07 - Unrestricted Subsidiaries Schedule 10.02 - Notices; Lending Offices EXHIBITS: Exhibit A-1 - Form of Notice of Syndicated Loan Exhibit A-2 - Form of Competitive Bid Request Exhibit A-3 - Form of Competitive Bid Exhibit A-4 - Form of Notice of Extension/Conversion Exhibit A-5 - Form of Swingline Loan Request Exhibit B-1 - Form of Revolving Note Exhibit B-2 - Form of Competitive Bid Note Exhibit B-3 - Form of Swingline Note Exhibit C - Form of Assignment and Acceptance Exhibit D - Form of Pledge Agreement Exhibit E - Form of Trust Agreement Exhibit F - Form of Opinion of Counsel for the Borrower -iv- EX-4.I.II 7 l95946aexv4wiwii.txt EX-4(I)(II) EXHIBIT 4(i)(ii) FORM OF REVOLVING NOTE Principal Sum: $[ ] Pittsburgh, Pennsylvania May 10, 2002 For value received, WORTHINGTON INDUSTRIES, INC., an Ohio corporation (the "Borrower"), hereby promises to pay to the order of [ ] (the "Lender") for the account of its Applicable Lending Office, at the office of PNC Bank, National Association (the "Administrative Agent") as set forth in that certain $155,000,000 5-Year Credit Agreement dated as of May 10, 2002 (as amended, restated, supplemented or otherwise modified, the "Credit Agreement") among the Borrower, the lending institutions party thereto from time to time and PNC Bank, National Association, as Administrative Agent, Issuing Lender and Swingline Lender, the Principal Sum set forth above (or such lesser amount as shall equal the aggregate unpaid principal amount of all Revolving Loans made by the Lender to the Borrower under the Credit Agreement), in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Revolving Loan, at such office, in like money and funds, for the period commencing on the date of such Revolving Loan until such Revolving Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, payable on demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the rates per annum set forth in the Credit Agreement. This Note is one of the Revolving Notes referred to in the Credit Agreement and evidences Revolving Loans made by the Lender thereunder. Capitalized terms used in this Revolving Note and not otherwise defined shall have the respective meanings assigned to them in the Credit Agreement and the terms and conditions of the Credit Agreement are expressly incorporated herein and made a part hereof. The Credit Agreement provides for the acceleration of the maturity of the Revolving Loans evidenced by this Revolving Note upon the occurrence of certain events (and for payment of collection costs in connection therewith) and for prepayments of Revolving Loans upon the terms and conditions specified therein. In the event this Revolving Note is not paid when due at any stated or accelerated maturity, the Borrower agrees to pay, in addition to the principal and interest, all costs of collection, including reasonable attorney fees. The date, amount, Type, interest rate and duration of Interest Period (if applicable) of each Revolving Loan made by the Lender to the Borrower, and each payment made on account of the principal thereof, shall be recorded by the Lender on its books and, if the Lender so elects in connection with any transfer or enforcement hereof, appropriate notations to evidence the foregoing information with respect to each Revolving Loan then outstanding shall be endorsed by the Lender on the schedule attached to and made a part hereof, PROVIDED that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of the Borrower to make a payment when due of any amount owing under the Credit Agreement or under this Revolving Note in respect of the Revolving Loans to be evidenced by this Revolving Note, and each such recordation or endorsement shall be prima facie evidence of such information. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. This Revolving Note and the Revolving Loans evidenced hereby may be transferred in whole or in part only by registration of such transfer on the Register maintained for such purpose by or on behalf of the Borrower as provided in SECTION 10.06(d) of the Credit Agreement. THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be executed as of the date first above written. WORTHINGTON INDUSTRIES, INC. By:/s/John T. Baldwin ----------------------------------------------- Name: John T Baldwin Title: Vice President & Chief Financial Officer EX-4.I.III 8 l95946aexv4wiwiii.txt EX-4(I)(III) EXHIBIT 4(i)(iii) SWINGLINE NOTE Pittsburgh, Pennsylvania May 10, 2002 FOR VALUE RECEIVED, the undersigned WORTHINGTON INDUSTRIES, INC., an Ohio corporation (the "Borrower"), hereby promises to the order of PNC BANK, NATIONAL ASSOCIATION (the "Swingline Lender"), on the date when due in accordance with the Credit Agreement referred to below, the aggregate principal amount of each Swingline Loan from time to time made by the Swingline Lender to the Borrower under that certain $155,000,000 5-Year Credit Agreement dated as May 10, 2002 (as amended, restated, supplemented or otherwise modified, the "Credit Agreement"; the terms defined therein being used herein as therein defined), among the Borrower, the lending institutions party thereto from time to time and PNC Bank, National Association, as Administrative Agent, Issuing Lender and Swingline Lender. The Borrower promises to pay interest on the unpaid principal amount of each Swingline Loan from the date of such Swingline Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement. All payments of principal and interest shall be made to the Swingline Lender in the applicable currency in immediately available funds at its Lending Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement. This Note is the Swingline Note referred to in the Credit Agreement, is entitled to the benefits thereof and is subject to optional prepayment in whole or in part as provided therein. Upon the occurrence of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement. Swingline Loans made by the Swingline Lender shall be evidenced by one or more loan accounts or records maintained by Swingline Lender in the ordinary course of business. The Swingline Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of the Swingline Loans and payments with respect thereto. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. WORTHINGTON INDUSTRIES, INC. By: /s/John T. Baldwin ----------------------------------------------- Name: John T Baldwin Title: Vice President & Chief Financial Officer EX-4.J.I 9 l95946aexv4wjwi.txt EX-4(J)(I) EXHIBIT 4(j)(i) EXECUTION COPY ================================================================================ $155,000,000 FIVE-YEAR REVOLVING CREDIT AGREEMENT DATED AS OF MAY 10, 2002 among WORTHINGTON INDUSTRIES, INC., THE LENDERS FROM TIME TO TIME PARTY HERETO, PNC BANK, NATIONAL ASSOCIATION, AS ISSUING LENDER, SWINGLINE LENDER AND ADMINISTRATIVE AGENT, and FIRST UNION SECURITIES, INC. and PNC CAPITAL MARKETS, INC., AS CO-SYNDICATION AGENTS FIRST UNION SECURITIES, INC. and PNC CAPITAL MARKETS, INC., AS CO-LEAD ARRANGERS ================================================================================ FIVE-YEAR REVOLVING CREDIT AGREEMENT This Five-Year Revolving Credit Agreement is dated as of May 10, 2002 and is among WORTHINGTON INDUSTRIES, INC., an Ohio corporation (the "BORROWER"), the banks and other financial institutions from time to time party hereto (the "LENDERS"), PNC BANK, NATIONAL ASSOCIATION, as Issuing Lender, Swingline Lender and Administrative Agent. The Borrower has requested the Lenders to provide a revolving credit facility to the Borrower in the aggregate principal amount of $155,000,000 for the purposes hereinafter set forth. The Lenders are willing to make the requested credit facility available to the Borrower on the terms and conditions set forth herein. Accordingly, in consideration of the mutual agreements set forth herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01 DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings set forth below: "ABSOLUTE RATE AUCTION" means a solicitation of Competitive Bids setting forth Competitive Bid Absolute Rates pursuant to SECTION 2.03 for Competitive Bid Loans. "ACTIVE RESTRICTED SUBSIDIARY" means a Restricted Subsidiary having a net worth in excess of $1,000,000. "ADDITIONAL SENIOR INDEBTEDNESS" means Indebtedness of the Borrower incurred after the Closing Date which is secured on a pari passu basis by the Collateral (as defined in the Pledge Agreement). "ADJUSTED CONSOLIDATED OPERATING INCOME" means, for any period, the consolidated operating income (or loss) of the Borrower and its Consolidated Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; PROVIDED, that there shall be excluded from the calculation of Adjusted Consolidated Operating Income (i) the income (or loss) of any consolidated joint venture, except to the extent that any such income is actually received by the Borrower or any such Consolidated Subsidiary in the form of dividends or other distributions during such period and (ii) any effect which would otherwise result from the Consolidation Plan. "ADMINISTRATIVE AGENT" means PNC Bank, National Association, in its capacity as administrative agent for the Lenders hereunder and under the other Loan Documents, and its successor or successors in such capacity. "ADMINISTRATIVE AGENT'S OFFICE" means the Administrative Agent's address and, as appropriate, account as set forth on SCHEDULE 10.02, or such other address and account as the Administrative Agent may from time to time notify to the Borrower and the Lenders. "AFFILIATE" means, as 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 be "controlled by" any other Person if such other Person possesses, directly or indirectly, power (i) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners or (ii) to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. "AGENT" means the Administrative Agent or the Co-Syndication Agents and any successors and assigns in such capacity, and "AGENTS" means any two or more of them. "AGENT-RELATED PERSONS" means any Agent, together with its Affiliates (including in the case of PNC Bank, National Association in its capacity as the Administrative Agent), and the officers, directors, employees, agents and attorneys-in-fact of such Person and its Affiliates. "AGREEMENT" means this Agreement, as amended, restated, supplemented or otherwise modified from time to time. "APPLICABLE INTERBANK OFFERED RATE" for any Eurodollar Loan for the Interest Period applicable thereto means: (i) the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on display page 3750 of the Telerate screen (or any successor thereto) that displays the average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period; or (ii) if the rate referenced in CLAUSE (i) above does not appear on such page or service or such page or service shall cease to be available, the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on such other page or service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 A.M. two Business Days prior to the first day of such Interest Period; or (iii) if the rates referenced in the preceding CLAUSES (i) and (ii) are not available, the rate per annum determined by the Administrative Agent as the rate of interest (rounded upwards to the next 1/100th of 1%) at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Loan being made, continued or converted with a term equivalent to such Interest Period would be offered by PNC Bank, National Association or one of its Affiliates to major banks in the offshore market for Dollars at their request at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period. "APPLICABLE LENDING OFFICE" means (i) with respect to any Lender and for each Class and Type of Loan, the "Lending Office" of such Lender (or of an Affiliate of such Lender) designated for such Class and Type of Loan on SCHEDULE 10.02 or such other office of such Lender (or of an Affiliate of such Lender) as such Lender may from time to time specify to the Administrative Agent and the Borrower as the office by which its Loans of such Class and Type are to be made and maintained; PROVIDED, that any Lender may from time to time by notice to the Borrower and the Administrative Agent (x) designate separate Eurodollar Lending Offices for loans in different currencies, in which case all references herein to the Applicable Lending Office of such Lender shall, with respect to its Eurodollar Loans, be deemed to refer to any or all of such offices, as the context may require, and (y) designate separate Competitive Bid Lending Offices for (A) its Competitive Bid LIBOR Loans, (B) its Competitive Bid Absolute Rate Loans and (C) its Competitive Bid Loans in different currencies, in which case all references herein to the Applicable Lending Office of such Lender shall, with respect to such Loans, be deemed to refer to any or all of such offices, as the context may require, and (ii) with respect to any Issuing Lender and for each Letter of Credit, the "Lending Office" of such Issuing Lender (or of an -2- Affiliate of such Issuing Lender) designated on SCHEDULE 10.02 or such other office of such Issuing Lender (or of an Affiliate of such Issuing Lender) as such Lender may from time to time specify to the Administrative Agent and the Borrower as the office by which its Letters of Credit are to be issued and maintained. "APPLICABLE MARGIN" means, for purposes of calculating (i) the applicable interest rate for any day for any Base Rate Loans or Eurodollar Loans, (ii) the applicable rate for the Facility Fee for any day for purposes of SECTION 2.12(a) or (iii) the applicable rate for the Utilization Fee for any day for purposes of SECTION 2.12(c), the appropriate applicable percentage set forth below corresponding to then current Worthington's Ratings:
Worthington's Applicable Applicable Applicable Percentage Ratings Percentage for Percentage for for Eurodollar (S&P/Moody's) Facility Fees Base Rate Loans Loans Category A: A-/A3 or higher .125% 0% .375% Category B: BBB+/Baa1 .150% 0% .475% Category C: BBB/Baa2 .175% 0% .575% Category D: BBB-/Baa3 .200% 0% .675% Category E: BB+/Ba1 or .300% 0% 1.20% lower or unrated
Applicable Percentage Applicable Percentage Worthington's for Utilization Fee: for Utilization Fee: Ratings Usage > 33% of Usage > 66% of (S&P/Moody's) Commitments Commitments Category A: A-/A3 or higher .125% .250% Category B: BBB+/Baa1 .125% .250% Category C: BBB/Baa2 .125% .250% Category D: BBB-/Baa3 .125% .250% Category E: BB+/Ba1 or .125% .250% lower or unrated
-3- Initially, the Applicable Margins for Base Rate Loans and Eurodollar Loans and the applicable rate for Facility Fees shall be based upon Worthington's Ratings specified in the certificate delivered pursuant to SECTION 4.01(d)(ii) of this Agreement. Thereafter, each change in the Applicable Margins for Base Rate Loans and Eurodollar Loans and the applicable rate for Facility Fees shall be effective during the period commencing on the date of a public announcement with respect to a change in Worthington's Ratings and ending on the date immediately preceding the effective date of the next such change, if any. In the event a rating differential of one level exists, Worthington's Ratings shall be deemed to be the higher of the two ratings. In the event a rating differential of more than one level exists, Worthington's Ratings shall be deemed to be one level below the higher rating. "APPROVED FUND" means (i) with respect to any Lender, an entity (whether a corporation, partnership, limited liability company, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is managed by such Lender or an Affiliate of such Lender, (ii) with respect to any Lender that is a fund that invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor and (iii) any special purpose funding vehicle described in SECTION 10.06(h). "ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance, substantially in the form of EXHIBIT C hereto, under which an interest of a Lender hereunder is transferred to an Eligible Assignee pursuant to SECTION 10.06(b). "ASSOCIATE" has the meaning given to it in Rule 12b-2 under the Exchange Act. "ATTORNEY COSTS" means all reasonable and actual fees and disbursements of any law firm or other external counsel. "BANKRUPTCY EVENT" means, with respect to any Person, (i) a court or governmental agency having appropriate jurisdiction shall enter a decree or order for relief in respect of such Person in an involuntary case under any Debtor Relief Law now or hereafter in effect, or appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of such Person or for any substantial part of its property or ordering the winding up or liquidation of its affairs, (ii) an involuntary case under any applicable Debtor Relief Law now or hereafter in effect is commenced against such Person and such petition remains unstayed and in effect for a period of 60 consecutive days, (iii) such Person shall commence a voluntary case under any applicable Debtor Relief Law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of such Person or any substantial part of its property or make any general assignment for the benefit of creditors or (iv) such Person shall admit in writing its inability to pay its debts generally as they become due or any definitive action shall be taken by such Person in preparation for any of the aforesaid. "BASE RATE" means, for any day, (a) a rate per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such day (any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Rate) or (b) exclusively for purposes of Swingline Loans, any other rate per annum that may be agreed upon between the Swingline Lender and the Borrower. -4- "BASE RATE LOAN" means a Committed Loan (Syndicated or Swingline) which bears interest at the Base Rate pursuant to the applicable Notice of Syndicated Loan, Swingline Loan Request, Notice of Extension/Conversion or the provisions of ARTICLE III. "BOARD" means the Board of Governors of the Federal Reserve System of the United States of America. "BORROWER" means Worthington Industries, Inc., an Ohio corporation, and its successors. "BORROWER'S 2001 FORM 10-K" means the Borrower's annual report on Form 10-K for the fiscal year ended May 31, 2001, as filed with the Securities and Exchange Commission pursuant to the Exchange Act. "BORROWER'S LATEST FORM 10-Q" means the Borrower's quarterly report on Form 10-Q for the quarter ended February 28, 2002, as filed with the Securities and Exchange Commission pursuant to the Exchange Act. "BORROWING" has the meaning set forth in SECTION 1.04. "BUSINESS DAY" means any day except a Saturday, Sunday or other day on which commercial banks are authorized or required to close, under the laws of, or are in fact closed in, the state where the Administrative Agent's Office is located, except that: (i) when used in SECTION 2.06 with respect to any action taken by or with respect to any Issuing Lender, or to the issuance of, drawing under, or reimbursement obligation arising in respect of, a Letter of Credit or a notice by the Borrower with respect to any such issuance, drawing or reimbursement obligation, the term "Business Day" shall not include any day on which commercial banks are authorized or required to close, under the laws of, or in fact closed in, the jurisdiction where such Issuing Lender's Applicable Lending Office is located; and (ii) if such day relates to a borrowing of, a payment or prepayment of principal of or interest on, or the Interest Period for, a Eurodollar Loan, or a notice by the Borrower with respect to any such borrowing, payment, prepayment or Interest Period, such day shall also be a day on which commercial banks are open for international business (including dealings in Dollar deposits) in London. "CAPITAL LEASE" of any Person means any lease of property (whether real, personal or mixed) by such Person as lessee which would, in accordance with GAAP, be required to be accounted for as a capital lease on the balance sheet of such Person. "CAPITAL LEASE OBLIGATIONS" means, with respect to any Person, all obligations of such Person as lessee under Capital Leases, in each case taken at the amount thereof accounted for as liabilities in accordance with GAAP. "CAPITALIZATION" means Consolidated Indebtedness plus Consolidated Net Worth. "CASH COLLATERALIZE" means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Issuing Lenders and the Lenders, as collateral for the LC Obligations, cash or deposit balances pursuant to documentation in form and substance satisfactory to the Administrative Agent and the Issuing Lenders (which documents are hereby consented to by the Lenders). Derivates of such term have a corresponding meaning. -5- "CASH EQUIVALENTS" means: (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (PROVIDED, that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition; (ii) Dollar-denominated certificates of deposit of (A) any Lender, (B) any United States commercial bank of recognized standing having capital and surplus in excess of $500,000,000 or (C) any bank whose (or whose parent company's) short-term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody's is at least P-1 or the equivalent thereof (any such bank being an "APPROVED LENDER"), in each case with maturities of not more than 270 days from the date of acquisition; (iii) commercial paper and variable or fixed rate notes issued by any Approved Lender (or by the parent company thereof) or any variable rate notes issued by, or guaranteed by, any domestic corporation not an Affiliate of the Borrower rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better by Moody's and maturing within six months of the date of acquisition; (iv) repurchase agreements with a bank or trust company (including any of the Lenders) or recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States of America in which the Borrower or one or more of its Subsidiaries shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations; and (v) Investments, classified in accordance with GAAP as current assets, in money market investment programs registered under the Investment Company Act of 1940, as amended, which are administered by reputable financial institutions having capital of at least $500,000,000 and the portfolios of which are limited to Investments of the character described in the foregoing CLAUSES (i) through (iv). "CHANGE OF CONTROL" means, with respect to any Person, an event or series of events by which: (i) any "person" or "group" (within the meaning of SECTION 13(d) and 14(d) of the Exchange Act) (other than John H. McConnell, John P. McConnell, their Affiliates, their Associates (as defined in Rule 12b-2 under the Exchange Act), or a group which the foregoing are a principal participant, or any profit sharing, employee stock ownership or other employee benefit plan of the Borrower or any Subsidiary of the Borrower or any trustee or fiduciary with respect to any such plan when acting in such capacity) has become the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have "beneficial ownership" of all securities that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), by way of merger, consolidation or otherwise, of 30% or more of the Equity Interests of such Person on a fully-diluted basis after giving effect to the conversion and exercise of all outstanding Equity Equivalents (whether or not such Equity Equivalents are then currently convertible or exercisable); or -6- (ii) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of such Person cease to be composed of individuals (A) who were members of that board or equivalent governing body on the first day of such period, (B) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in CLAUSE (ii)(A) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (C) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in CLAUSES (ii)(A) and (B) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body. "CLASS" has the meaning set forth in SECTION 1.04. "CLOSING DATE" means the date on or after the Effective Date when the conditions precedent in SECTION 4.01 are satisfied. "CODE" means the Internal Revenue Code of 1986, as amended, and any successor statute thereto, as interpreted by the rules and regulations issued thereunder, in each case as in effect from time to time. "COLLATERAL AGENT" means Wells Fargo Bank Minnesota, National Association, in its capacity as collateral agent under the Pledge Agreement, together with its successors and permitted assigns. "COMMITMENT" means (i) with respect to each Lender, its Revolving Commitment, (ii) with respect to each Issuing Lender, its LC Commitment and (iii) with respect to the Swingline Lender, the Swingline Commitment, in each case in the respective amount set forth on Schedule 1.01A or in the applicable Assignment and Acceptance as its Commitment of the applicable Class, as any such amount may be increased or decreased from time to time pursuant to this Agreement. "COMMITMENT INCREASE DATE" has the meaning set forth in SECTION 2.11(e). "COMMITTED LOAN" means a Syndicated Loan or a Swingline Loan. "COMPETITIVE BID" has the meaning set forth in SECTION 2.03(d). "COMPETITIVE BID ABSOLUTE RATE" has the meaning set forth in SECTION 2.03(d)(ii)(D). "COMPETITIVE BID ABSOLUTE RATE LOAN" means a Competitive Bid Loan made by a Lender pursuant to an Absolute Rate Auction. "COMPETITIVE BID LIBOR LOAN" means a Competitive Bid Loan made by a Lender pursuant to a LIBOR Auction (including such a Loan bearing interest at the Base Rate pursuant to Article III). "COMPETITIVE BID LOAN" means a Competitive Bid LIBOR Loan or a Competitive Bid Absolute Rate Loan. "COMPETITIVE BID MARGIN" has the meaning set forth in SECTION 2.03(d)(ii)(C). "COMPETITIVE BID NOTE" means a promissory note, substantially in the form of EXHIBIT B-2 hereto, evidencing the obligation of the Borrower to repay outstanding Competitive Bid -7- Loans, as such note may be amended, modified, supplemented, extended, renewed or replaced from time to time. "COMPETITIVE BID QUOTE" has the meaning set forth in SECTION 2.03(b)(iv). "COMPETITIVE BID REQUEST" has the meaning set forth in SECTION 2.03(b). "CONSOLIDATED EBITDA" means for any period the sum of (i) Consolidated Net Income for such period plus (ii) an amount which, in the determination of Consolidated Net Income for such period, has been deducted for (A) Consolidated Interest Expense, (B) provisions for Federal, state, local and foreign income, value added and similar taxes, (C) depreciation, amortization (including, without limitation, amortization of goodwill and other intangibles) and other non-cash expense, all determined in accordance with GAAP and (D) solely for the fiscal quarters ended May 31, 2002, August 31, 2002, November 30, 2002 and February 28, 2003, an amount not in excess of $90,000,000 in the aggregate with respect to the expense related to the Consolidation Plan, minus (iii) an amount which, in the determination of Consolidated Net Income for such period, has been added for (A) interest income and (B) any non-cash income or non-cash gains, all as determined in accordance with GAAP. If the Borrower or any Subsidiary makes an acquisition or a material divestiture, in either case to the extent permitted pursuant to this Agreement, during any period for which Consolidated EBITDA is measured, then for purposes of determining the Leverage Ratio, Consolidated EBITDA shall be adjusted for the period of time prior to the date of such acquisition or divesture by adding the historical financial results for such period of the Person or assets acquired (without taking account of cost savings or others synergies unless approved by the Required Lenders) or deleting that portion of the financial results of the Borrower and its Consolidated Subsidiaries for such period attributable to the Person or assets divested, all as reasonably determined by the Borrower and certified to the Administrative Agent and the Lenders. "CONSOLIDATED INDEBTEDNESS" means at any date the Indebtedness of the Borrower and its Subsidiaries, determined on a consolidated basis as of such date. "CONSOLIDATED INTEREST EXPENSE" means, for any period, the total interest expense, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments under Capital Lease Obligations and the implied interest component of Synthetic Lease Obligations (regardless of whether accounted for as interest expense under GAAP), all commissions, discounts and other fees and charges owed with respect to letters of credit, bankers' acceptances and asset securities and other similar off balance street transactions and net costs in respect of Derivatives Obligations constituting interest rate swaps, collars, caps or other arrangements requiring payments contingent upon interest rates of the Borrower and its Restricted Subsidiaries), determined on a consolidated basis for such period. "CONSOLIDATED NET INCOME" means, for any period, the net income (or net loss) after taxes of the Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; PROVIDED, that there shall be excluded from the calculation of Consolidated Net Income (i) the income (or loss) of any Person in which any other Person (other than the Borrower or any of its Wholly-Owned Subsidiaries) has an ownership interest, except to the extent that any such income is actually received by the Borrower or such Wholly-Owned Subsidiary in the form of dividends or other distributions 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. -8- "CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of determination, the sum of the amounts that would appear on a consolidated balance sheet of the Borrower and its Subsidiaries for the total assets (less accumulated depletion, depreciation or amortization, allowances for doubtful receivables, other applicable reserves and other properly deductible items) of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, after giving effect to purchase accounting and after deducting therefrom, to the extent included in total assets, in each case as determined on a consolidated basis in accordance with GAAP (without duplication): (i) the aggregate amount of liabilities of the Borrower and its Subsidiaries which may properly be classified as current liabilities (including taxes accrued as estimated); (ii) current Indebtedness and current maturities of long- term Indebtedness; (iii) minority interests in the Borrower's subsidiaries held by Persons other than the Borrower or a wholly-owned Subsidiary of the Borrower; and (iv) unamortized debt discount and expenses and other unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, licenses, organization or developmental expenses and other intangible items. "CONSOLIDATED NET WORTH" means at any time the consolidated stockholders' equity of the Borrower and its Subsidiaries calculated on a consolidated basis in accordance with GAAP as of such time. "CONSOLIDATED SUBSIDIARY" means with respect to any Person at any date any Subsidiary of such Person or other entity the accounts of which would be consolidated with those of such Person in its consolidated financial statements if such statements were prepared as of such date in accordance with GAAP. "CONSOLIDATION PLAN" means the consolidation plan and impairment reserve announced by the Borrower in a press release dated January 24, 2002 that will result in no more than $90,000,000 in one-time charges to net income during the fiscal quarter ended February 28, 2002. "CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any material security issued by such Person or of any material agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "CONTROLLING PERSON" means, with respect any Person, the beneficial owner of a percentage of the voting power of the Equity Interests of any such Person sufficient to approve an action of any such Person which requires a simple majority of the owners of such Equity Interest to vote to approve any such action; PROVIDED, that any such Person is a Consolidated Subsidiary of such Controlling Person. "CREDIT EXPOSURE" has the meaning set forth in the definition of "Required Lenders" in this SECTION 1.01. "CREDIT EXTENSION" means a Borrowing, a Competitive Bid Loan or the issuance, renewal or extension of a Letter of Credit or the purchase by a Lender of a Participation Interest. "CREDITOR" means each Lender, each Issuing Lender, each Agent and each Indemnitee and their respective successors and assigns, and "Creditors" means any two or more of such Creditors. "DEBTOR RELIEF LAWS" means the Bankruptcy Reform Act of 1978, as amended, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization or similar debtor relief laws of the United States of America or other applicable jurisdiction from time to time affecting the rights of creditors generally. -9- "DEFAULT" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "DEFAULTING LENDER" means at any time any Lender that, within one Business Day of when due, (i) has failed to make a Loan or purchase a Participation Interest in a Swingline Loan or LC Obligation required pursuant to the terms of this Agreement, (ii) other than as set forth in CLAUSE (i) above, has failed to pay to any Agent or any Lender an amount owed by such Lender pursuant to the terms of this Agreement or any other Loan Document or (iii) has been deemed insolvent or has become subject to a Bankruptcy Event. "DERIVATIVES AGREEMENT" means (i) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement and (ii) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement or any other master agreement. "DERIVATIVES OBLIGATIONS" of any Person means all obligations (including, without limitation, any amounts which accrue after the commencement of any Bankruptcy Event with respect to such Person, whether or not allowed or allowable as a claim under any applicable Debtor Relief Laws) of such Person in respect of any Derivatives Agreement, excluding any amounts which such Person is entitled to set-off against its obligations under applicable law. "DISPOSITION" or "DISPOSE" means the sale, transfer, license or other disposition (including any Sale/Leaseback Transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes, accounts receivable or payment intangible or any rights or claims associated therewith. "DOLLARS" and the sign "$" means lawful money of the United States of America. "EFFECTIVE DATE" means the date this Agreement becomes effective in accordance with SECTION 10.17. "ELIGIBLE ASSIGNEE" means (i) any Lender, (ii) any Affiliate of a Lender, (iii) any Approved Fund and (iv) any other Person (other than a natural Person) approved by (A) the Administrative Agent, (B) in the case of any assignment of a Revolving Commitment, the Issuing Lenders and the Swingline Lender and (C) unless (x) such Person is taking delivery of an assignment in connection with physical settlement of a credit derivatives transaction or (y) an Event of Default has occurred and is continuing at the time any assignment is effected pursuant to SECTION 10.06(b), the Borrower (each such approval not to be unreasonably withheld or delayed and any such approval required of the Borrower to be deemed given by the Borrower if no objection from the Borrower is received by the assigning Lender and the Administrative Agent within two Business Days after notice of such proposed assignment has been provided by the assigning Lender to the Borrower); PROVIDED, HOWEVER, that the Borrower and its Affiliates shall not qualify as Eligible Assignees. -10- "ENVIRONMENTAL LAWS" means any current or future legal requirement of any Governmental Authority pertaining to (i) the protection of health, safety, and the environment, (ii) the conservation, management or use of natural resources and wildlife, (iii) the protection or use of surface water and groundwater or (iv) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, release, threatened release, abatement, removal, remediation or handling of, or exposure to, any hazardous or toxic substance or material and includes, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USC 9601 et seq., Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendment of 1984, 42 USC 6901 et seq., Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 USC 1251 et seq., Clean Air Act of 1966, as amended, 42 USC 7401 et seq., Toxic Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous Materials Transportation Act, 49 USC App. 1801 et seq., Occupational Safety and Health Act of 1970, as amended, 29 USC 651 et seq., Oil Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning and Community Right-to-Know Act of 1986, 42 USC 11001 et seq., National Environmental Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking Water Act of 1974, as amended, 42 USC 300(f) et seq., any analogous implementing or successor law, and any amendment, rule, regulation, order or directive issued thereunder. "EQUITY EQUIVALENTS" means with respect to any Person any rights, warrants, options, convertible securities, exchangeable securities, indebtedness or other rights, in each case exercisable for or convertible or exchangeable into, directly or indirectly, Equity Interests of such Person or securities exercisable for or convertible or exchangeable into Equity Interests of such Person, whether at the time of issuance or upon the passage of time or the occurrence of some future event. "EQUITY INTERESTS" means all shares of capital stock, partnership interests (whether general or limited), limited liability company membership interests, beneficial interests in a trust and any other interest or participation that confers on a Person the right to receive a share of profits or losses, or distributions of assets, of an issuing Person, but excluding any debt securities convertible into such Equity Interests. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto, as interpreted by the rules and regulations issued thereunder, in each case as in effect from time to time. "ERISA AFFILIATE" means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of SECTION 414(b) or (c) of the Code (and SECTIONS 414(m) and (o) of the Code for purposes of provisions relating to SECTION 412 of the Code). "ERISA EVENT" means: (i) a Reportable Event with respect to a Pension Plan; (ii) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to SECTION 4063 of ERISA during a plan year in which it was a substantial employer (as defined in SECTION 4001(a)(2) of ERISA); (iii) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (iv) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under SECTIONS 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (v) an event or condition which might reasonably be expected to constitute grounds under SECTION 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (vi) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under SECTION 4007 of ERISA, upon the Borrower or any ERISA Affiliate. -11- "EURODOLLAR RATE" means, for each Interest Period for each Eurodollar Loan comprising the same Group, the quotient obtained (rounded upward, if necessary, to the next higher 1/100(th) of 1%) by dividing (i) the Applicable Interbank Offered Rate for Dollars for such Interest Period by (ii) 1.00 minus the Eurodollar Reserve Percentage. "EURODOLLAR RESERVE PERCENTAGE" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board (or any other entity succeeding to the functions currently performed thereby) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion Dollars in respect of "Eurodollar liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Eurodollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Lender to United States residents), whether or not a Lender has any Eurodollar liabilities subject to such reserve requirement at that time. Eurodollar Loans shall be deemed to constitute Eurodollar liabilities and as such shall be deemed subject to reserve requirements without benefits of credits for prorations, exceptions or offsets that may be available from time to time to a Lender. The Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Percentage. "EURODOLLAR LOAN" means a Syndicated Loan which bears interest at a Eurodollar Rate pursuant to the applicable Notice of Syndicated Loan or Notice of Extension/Conversion. "EVENT OF DEFAULT" has the meaning set forth in SECTION 8.01. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and any successor statute thereto, together with the rules and regulations promulgated thereunder. "EXISTING LETTERS OF CREDIT" means the letters of credit issued for the account of the Borrower and any Restricted Subsidiary before the Closing Date and described by date of issuance, letter of credit number, undrawn amount, name of beneficiary and date of expiry on SCHEDULE 7.01 hereto, without giving effect to any extension of the term thereof. "FACILITY FEE" has the meaning set forth in SECTION 2.12(a). "FAILED LOAN" has the meaning set forth in SECTION 2.04(e). "FEDERAL FUNDS RATE" means for any day the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; PROVIDED, that (i) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate quoted to the Administrative Agent on such day on such transactions as determined by the Administrative Agent. "FIXED RATE LOAN" means Eurodollar Loans or Competitive Bid Loans (excluding Competitive Bid LIBOR Loans bearing interest at the Base Rate) or any combination of the foregoing. "FOREIGN SUBSIDIARY" means with respect to any Person any Subsidiary of such Person that is organized outside the United States and conducts substantially all of its business outside the United States. -12- "GAAP" means at any time generally accepted accounting principles as then in effect in the United States, applied on a basis consistent (except for changes with which the Borrower's independent public accountants have concurred) with the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries previously delivered to the Lenders. "GOVERNMENTAL AUTHORITY" means any federal, state, local, provincial or foreign government, authority, agency, central bank, quasi-governmental or regulatory authority, court or other body or entity, and any arbitrator with authority to bind a party at law. "GROUP OF LOANS" means at any time a group of Loans consisting of (i) all Loans which are Base Rate Loans at such time or (ii) all Loans which are Eurodollar Loans having the same Interest Period at such time; PROVIDED, that if a Committed Loan of any particular Lender is converted to or made as a Base Rate Loan pursuant to ARTICLE III, such Loan shall be included in the same Group of Loans from time to time as it would have been had it not been so converted or made. "GUARANTY OBLIGATION" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or- pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); PROVIDED, HOWEVER, that the term "Guaranty Obligation" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guaranty" used as a verb has a corresponding meaning. The amount of any Guaranty Obligation hereunder shall (subject to any limitations set forth therein) be deemed to be an amount equal to the outstanding principal amount (or maximum principal amount, if larger) of the Indebtedness in respect of which such Guaranty Obligation is made. "HOLDER OF ADDITIONAL SENIOR INDEBTEDNESS" means a holder of the Additional Senior Indebtedness, or any Person acting in a representative capacity for any such holder, that executes and delivers a Joinder Agreement substantially in the form of Exhibit B to the Trust Agreement. "ICC" has the meaning set forth in SECTION 2.06(n). "INDEBTEDNESS" of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such person evidenced by bond, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee that are capitalized in accordance with GAAP, (v) all Guaranty Obligations, (vi) all contingent or non-contingent obligations of such Person to reimburse any bank or other Person in respect of amounts paid or payable (currently or in the future, on a contingent or non- contingent basis) under a letter of credit or similar instrument, (vii) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person to the extent of the value of such property (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business) and (viii) proceeds paid to such Person from asset securitization, synthetic sale/leaseback and other similar off balance sheet transactions. "INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION 10.05. "INDEMNITEE" has the meaning set forth in SECTION 10.05. -13- "INTEREST PAYMENT DATE" means (i) as to Base Rate Loans, the last day of each fiscal quarter of the Borrower and the Maturity Date and (ii) as to Eurodollar Loans, the last day of each applicable Interest Period and the Maturity Date, and, where the applicable Interest Period for a Eurodollar Loan is greater than three months, also the date three months from the beginning of the Interest Period and each three months thereafter. "INTEREST PERIOD" means: (i) with respect to each Eurodollar Loan, a period commencing on the date of borrowing specified in the applicable Notice of Borrowing or on the date specified in the applicable Notice of Extension/Conversion and ending one, two, three or six months thereafter, as the Borrower may elect in the applicable notice; PROVIDED, that: (A) any Interest Period (except an Interest Period determined pursuant to CLAUSE (i)(C) below) which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; (B) any Interest Period which begins on the last Business Day in a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to CLAUSE (C) below, end on the last Business Day of a calendar month; (C) any Interest Period which would otherwise end after the Maturity Date shall end on the Maturity Date; (ii) with respect to each Competitive Bid LIBOR Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending one, two, three or six months thereafter as the Borrower may elect in accordance with SECTION 2.03, PROVIDED, that: (A) any Interest Period (except an Interest Period determined pursuant to CLAUSE (ii)(C) below) which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; (B) any Interest Period which begins on the last Business Day in a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to CLAUSE (ii)(C) below, end on the last Business Day in a calendar month; and (C) any Interest Period which would otherwise end after the Maturity Date shall end on such Maturity Date; and (iii) with respect to each Competitive Bid Absolute Rate Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of days thereafter (but not less than seven) as the Borrower may elect in accordance with SECTION 2.03; PROVIDED, that: -14- (A) any Interest Period (except an Interest Period determined pursuant to CLAUSE (iii)(B) below) which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day; and (B) any Interest Period which would otherwise end after the Maturity Date shall end on such Maturity Date. "INVESTMENT" in any Person means (i) the acquisition (whether for cash, property, services, assumption of Indebtedness, securities or otherwise) of assets, shares of Capital Stock, bonds, notes, debentures, time deposits or other securities of such other Person, (ii) any deposit with, or advance, loan or other extension of credit to or for the benefit of such Person (other than deposits made in connection with the purchase of equipment or inventory in the ordinary course of business) or (iii) any other capital contribution to or investment in such Person, including by way of Guaranty Obligations of any obligation of such Person, any support for a letter of credit issued on behalf of such Person incurred for the benefit of such Person or in the case of any Restricted Subsidiary of the Borrower, any release, cancellation, compromise or forgiveness in whole or in part of any Indebtedness owing by such Restricted Subsidiary. "ISSUING LENDER" means (i) PNC Bank, National Association, in its capacity as issuer of Letters of Credit under SECTION 2.06(b), and its successor or successors in such capacity and (ii) any other Lender which the Borrower shall have designated as an "Issuing Lender" by notice to the Administrative Agent. "ISSUING LENDER FEES" has the meaning set forth in SECTION 2.12(b)(iii). "LAW" means any international, foreign, Federal, state or local statute, treaty, rule, guideline, regulation, ordinance, code, or administrative or judicial precedent or authority, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law. "LC COMMITMENT" means the commitment of an Issuing Lender to issue Letters of Credit in an aggregate face amount at any one time outstanding (together with the amounts of any unreimbursed drawings thereon and all LC Commitments of other Issuing Lenders) of up to the LC Committed Amount. "LC COMMITTED AMOUNT" has the meaning set forth in SECTION 2.06(b). "LC DISBURSEMENT" means a payment or disbursement made by an Issuing Lender pursuant to a Letter of Credit. "LC DOCUMENTS" means, with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (i) the rights and obligations of the parties concerned or at risk or (ii) any collateral security for such obligations. "LC OBLIGATIONS" means at any time, the sum of (i) the maximum amount which is, or at any time thereafter may become, available to be drawn under Letters of Credit then outstanding, assuming compliance with all requirements for drawings referred to in such Letters of Credit plus (ii) the aggregate amount of all LC Disbursements not yet reimbursed by the Borrower as provided in SECTION 2.06(h) to the -15- applicable Issuing Lenders in respect of drawings under Letters of Credit, including any portion of any such obligation to which a Lender has become subrogated pursuant to SECTION 2.06(i). "LENDER" means each bank or other lending institution listed on Schedule 1.01A, each Eligible Assignee that becomes a Lender pursuant to SECTION 10.06(b) and their respective successors and shall include, as the context may require, each Issuing Lender and/or the Swingline Lender, in each case in such capacity. "LETTER OF CREDIT" means any letter of credit issued hereunder by an Issuing Lender on or after the Closing Date. "LETTER OF CREDIT FEE" has the meaning set forth in SECTION 2.12(b)(i). "LETTER OF CREDIT REQUEST" has the meaning set forth in SECTION 2.06(c). "LEVERAGE RATIO" means on any date the ratio of (i) Consolidated Indebtedness as of such date to (ii) Consolidated EBITDA. "LIBOR AUCTION" means a solicitation of Competitive Bid Quotes setting forth Competitive Bid Margins based on the Applicable Interbank Offered Rate pursuant to SECTION 2.03. "LIEN" means, with respect to any asset, any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable Laws of any jurisdiction), including the interest of a purchaser of accounts receivable, chattel paper, payment intangibles or promissory notes. Solely for the avoidance of doubt, the filing of a Uniform Commercial Code financing statement that is a protective lease filing in respect of an operating lease that does not constitute a security interest in the leased property or otherwise give rise to a Lien does not constitute a Lien solely on account of being filed in a public office. "LOAN" means a Committed Loan or a Competitive Bid Loan, and "Loans" means Committed Loans or Competitive Bid Loans or both. "LOAN DOCUMENTS" means this Agreement, the Notes, the Pledge Agreement and the Trust Agreement, in each case as the same may be amended, restated, modified or supplemented from time to time. "MATERIAL ADVERSE CHANGE" has the meaning set forth in SECTION 5.02(c). "MATERIAL ADVERSE EFFECT" means an effect on the business, financial condition, assets or liabilities of the Borrower and its Restricted Subsidiaries, considered on a consolidated basis, which, when combined on a cumulative basis with other changes in the business, financial condition, assets and liabilities of the Borrower and its Consolidated Subsidiaries, considered on a consolidated basis: (i) would have a material adverse effect on the ability of the Borrower to perform its obligations under the Loan Documents or (ii) would result in a material adverse change in the financial condition of the Borrower and its Restricted Subsidiaries, considered on a consolidated basis. "MATURITY DATE" means May 9, 2007 or such later date to which the Maturity Date for any Loans or Lender may be extended pursuant to SECTION 2.11(d) or, if any such day is not a Business Day, the next preceding Business Day. -16- "MOODY'S" means Moody's Investors Service, Inc., a Delaware corporation, and its successors or, absent any such successor, such nationally recognized statistical rating organization as the Borrower and the Administrative Agent may select. "MULTIEMPLOYER PLAN" means any employee benefit plan of the type described in SECTION 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding three calendar years, has made or been obligated to make contributions. "NOTE" means a Revolving Note, a Competitive Bid Note or a Swingline Note and "Notes" means all of them, collectively. "NOTICE OF BORROWING" means a Notice of Syndicated Loan or a Notice of Competitive Bid Borrowing. "NOTICE OF COMPETITIVE BID BORROWING" has the meaning set forth in SECTION 2.03(f). "NOTICE OF EXTENSION/CONVERSION" has the meaning set forth in SECTION 2.08. "NOTICE OF SYNDICATED LOAN" has the meaning set forth in SECTION 2.02(a). "OBLIGATIONS" means, without duplication: (i) all principal of and interest (including, without limitation, any interest which accrues after the commencement of any Bankruptcy Event, whether or not allowed or allowable as a claim under any applicable Debtor Relief Law) on any Loan or LC Obligation under, or any Note issued pursuant to, this Agreement or any other Loan Document; (ii) all fees, expenses, indemnification obligations and other amounts of whatever nature now or hereafter payable by the Borrower (including, without limitation, any amounts which accrue after the commencement of any Bankruptcy Event, whether or not allowed or allowable as a claim under any applicable Debtor Relief Law) pursuant to this Agreement or any other Loan Document; (iii) all expenses of the Agents as to which one or more of the Agents have a right to reimbursement under SECTION 10.04 of this Agreement; and (iv) all Indemnified Liabilities and other amounts paid by any Indemnitee as to which such Indemnitee has the right to payment or reimbursement under SECTION 10.05 of this Agreement or under any other similar provision of any other Loan Document; together in each case with all renewals, modifications, consolidations or extensions thereof. "OPERATING LEASE" means, as applied to any Person, a lease (including a lease which may be terminated by the lessee at any time) of any property (whether real, personal or mixed) by such Person as lessee which is not a Capital Lease. "ORGANIZATION DOCUMENTS" means: (i) with respect to any corporation, the certificate or articles of incorporation and the bylaws; (ii) with respect to any limited liability company, the articles of formation and operating agreement; and (iii) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation with the -17- secretary of state or other department in the state of its formation, in each case as amended from time to time. "OTHER TAXES" has the meaning set forth in SECTION 3.01(b). "PARTICIPATION INTEREST" means a Credit Extension by a Lender by way of a purchase of a participation interest in Letters of Credit or LC Obligations as PROVIDED in SECTION 2.06(a) or (e), in Swingline Loans as PROVIDED in SECTION 2.01(b)(vi) or in any Loans as PROVIDED in SECTION 2.14. "PBGC" means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any entity succeeding to any or all of its functions under ERISA. "PENSION PLAN" means an "employee pension benefit plan" (as such term is defined in SECTION 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, in which in the case of a multiple employer plan (as described in SECTION 4064(a) of ERISA) has made contributions at any time during the immediately preceding five plan years. "PERMIT" means any license, permit, franchise, right or privilege, certificate of authority or order, or any waiver of the foregoing, issued or issuable by any Governmental Authority. "PERMITTED LIENS" means: (i) Liens securing the payment of taxes and special assessments, either not yet due or the validity of which is being contested by the Person being charged in good faith by appropriate proceedings, and as to which it has set aside on its books adequate reserves to the extent required by GAAP; (ii) deposits under workers' compensation, unemployment insurance and social security laws, or to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, or to secure statutory obligations or surety or appeal bonds, or to secure indemnity, performance or other similar bonds in the ordinary course of business; (iii) Liens imposed by law, such as carriers', warehousemen's or mechanics' liens and liens of landlords or mortgagees of landlords arising by operation of law on fixtures located on leased premises, incurred by it in good faith in the ordinary course of business; (iv) Liens incurred in connection with the lease or acquisition of fixed or capital assets limited to the specific assets acquired with such lease or financing or Capital Lease Obligation (subject to the acquisition of such assets and incurrence of such debt being otherwise permitted by the terms of this Agreement); (v) Liens existing on the date of this Agreement securing Indebtedness outstanding on the date of this Agreement in aggregate principal amount not exceeding $27,400,000; (vi) any Lien existing on any asset of any corporation at the time such corporation becomes a Subsidiary of the Borrower and not created in contemplation of such event; -18- (vii) any Lien on any asset of any corporation existing at the time such corporation is merged or consolidated with or into Borrower or a Subsidiary and not created in contemplation of such event; (viii) any Lien existing on any asset prior to the acquisition thereof by Borrower or a Subsidiary and not created in contemplation of such event; (ix) any Lien arising out of the refinancing, extension, renewal or refunding of any Indebtedness secured by any Lien permitted by any of the foregoing CLAUSES (iv), (v), (vi), (vii) or (viii) of this definition, provided that such Indebtedness is not increased and is not secured by any additional assets; (x) Liens incidental to the conduct of the business of the Borrower or its Subsidiaries or the ownership of their respective assets which (i) do not secure Indebtedness or Derivative Obligations, (ii) do not secure any obligation, or related series of obligations, in an amount exceeding $20,000,000 and (iii) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of the business of the Borrower or its Subsidiaries; (xi) Liens on cash and Cash Equivalents securing Derivative Obligations, PROVIDED that the aggregate amount of Cash Equivalents subject to such Liens may at no time exceed $20,000,000; (xii) any attachment Lien being contested in good faith and by proceedings promptly initiated and diligently conducted, unless the attachment giving rise thereto will not, within sixty days after the entry thereof, have been discharged or fully bonded or will not have been discharged within sixty days after the termination of any such bond; (xiii) any judgment Lien, unless the judgment it secures will not, within sixty days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or will not have been discharged within sixty days after the expiration of any such stay; (xiv) easements, rights-of-way, zoning restrictions and other restrictions, charges or encumbrances not materially interfering with the ordinary conduct of the business; (xv) any Lien on property of a Subsidiary securing Indebtedness of such Subsidiary owing to Borrower or a Restricted Subsidiary; (xvi) Liens to banks arising from the issuance of letters of credit issued by such banks ("issuing banks") on the following: (a) any and all shipping documents, warehouse receipts, policies or certificates of insurance and other document accompanying or relative to drafts drawn under any credit, and any draft drawn thereunder (whether or not such documents, goods or other property be released to or upon the order of the Borrower or any Subsidiary under a security agreement or trust or bailee receipt or otherwise), and the proceeds of each and all of the foregoing; (b) the balance of every deposit account, now or at any time hereafter existing, of the Borrower or any Subsidiary with the issuing banks, and any other claims of the Borrower or any Subsidiary against the issuing banks; and all property claims and demands and all rights and interests therein of the Borrower or any Subsidiary and all evidences thereof and all proceeds thereof which have been or at any time will be delivered to or otherwise come into the issuing bank's possession, custody or control, or into the possession, custody or control of any bailee for the issuing bank or of any of its agents or correspondents for the account of the issuing bank, for -19- any purpose, whether or not the express purpose of being used by the issuing bank as collateral security or for the safekeeping or for any other or different purpose, the issuing bank being deemed to have possession or control of all of such property actually in transit to or from or set apart for the issuing bank, any bailee for the issuing bank or any of its correspondents for others acting in its behalf, it being understood that the receipt at any time by the issuing bank, or any of its bailees, agents or correspondents, or other security, of whatever nature, including cash, will not be deemed a waiver of any of the issuing bank's rights or power hereunder; (c) all property shipped under or pursuant to or in connection with any credit or drafts drawn thereunder or in any way related thereto, and all proceeds thereof; (d) all additions to and substitutions for any of the property enumerated above in this subsection; (xvii) any Lien on accounts of the Borrower or any Subsidiary (which accounts arise in the ordinary course of business) in connection with the sale or purported sale of accounts to an Unrestricted Subsidiary or a bankruptcy-remote entity that purchases receivables in the ordinary course of its business; and (xviii) Liens in the Pledged Notes granted to the Collateral Agent pursuant to the Pledge Agreement. "PERSON" means an individual, a corporation, a partnership, an association, a limited liability company, a trust or an unincorporated association or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "PLEDGE AGREEMENT" means the Pledge Agreement, substantially in the form of EXHIBIT D hereto, dated as of the Closing Date, among the Borrower, the Collateral Agent, the Administrative Agent, the Public Debt Trustee and any Holder of Additional Senior Indebtedness, as the same may be amended, modified or supplemented from time to time. "PLEDGED NOTE ISSUERS" means, collectively, the Restricted Subsidiaries of the Borrower which are issuers of the Pledged Notes pledged pursuant to the Pledge Agreement from time to time; PROVIDED, that no Pledged Note Issuer shall be a Foreign Subsidiary. "PLEDGED NOTES" means the promissory notes, in form and substance reasonably satisfactory to the Administrative Agent, pledged by the Borrower pursuant to the Pledge Agreement. "PRIME RATE" means for any day the rate of interest publicly announced by PNC Bank, National Association (or such other principal office of the Administrative Agent as communicated in writing to the Borrower and the Lenders) from time to time as its Prime Rate for Dollars loaned in the United States. It is a rate set by PNC Bank, National Association based upon a variety of factors, including PNC Bank, National Association's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such announced rate. Any change in the interest rate resulting from a change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of such change. "PUBLIC DEBT INDENTURE" has the meaning set forth in the Trust Agreement. "PUBLIC DEBT TRUSTEE" has the meaning set forth in the Trust Agreement. "REAL PROPERTY" means, with respect to any Person, all of the right, title and interest of such Person in and to land, improvements and fixtures, including leaseholds. -20- "REFINANCED AGREEMENT" has the meaning set forth in SECTION 4.01(f). "REFUNDED SWINGLINE LOAN" has the meaning set forth in SECTION 2.01(b)(iii). "REGISTER" has the meaning set forth in SECTION 10.06(d). "REGULATION D, O, T, U OR X" means Regulation D, O, T, U or X, respectively, of the Board as amended, or any successor regulation, in each case together with all interpretations of staff opinions issued in connection therewith. "REMAINING LENDER" has the meaning set forth in SECTION 2.11(d)(i). "REPLACEMENT DATE" has the meaning set forth in SECTION 2.11(c). "REPLACEMENT LENDER" has the meaning set forth in SECTION 2.11(c). "REPORTABLE EVENT" means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30-day notice period has been waived. "REQUIRED LENDERS" means Revolving Lenders whose aggregate Credit Exposure (as hereinafter defined) constitutes more than 50% of the CREDIT EXPOSURE of all Revolving Lenders at such time. For purposes of the preceding sentence, the term "Credit Exposure" as applied to each Lender shall mean (i) at any time prior to the termination of the Commitments, the Revolving Commitment Percentage of such Lender multiplied by the Revolving Committed Amount, and (ii) at any time after the termination of the Commitments, the sum of (A) the principal amount of the outstanding Revolving Loans of such Lender plus (B) the principal amount such Lender's Participation Interests in all LC Obligations and Swingline Loans. For purposes of the foregoing, (i) the interest of any Lender holding a Loan in which any other Lender has a Participation Interest pursuant to SECTION 10.06(e) shall be calculated net of all such Participation Interests of other Lenders and (ii) the Participation Interest of any Lender pursuant to SECTION 10.06(e) in a Loan held by any other Lender shall be counted as if such Lender holding a Participation Interest under SECTION 10.06(e) held directly a proportionate part of the related Loan. "RESPONSIBLE OFFICER" means the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of the Borrower. Any document delivered hereunder that is signed by a Responsible Officer of the Borrower shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of the Borrower and such Responsible Officer shall be conclusively presumed to have acted on behalf of the Borrower. "RESTRICTED PAYMENT" means (i) any dividend or other distribution, direct or indirect, on account of any class of Equity Interests or Equity Equivalents of the Borrower or any Subsidiary, now or hereafter outstanding, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any class of Equity Interests or Equity Equivalents of the Borrower or any Subsidiary, now or hereafter outstanding or (iii) any payment made to retire, or to obtain the surrender of, any Equity Interests or Equity Equivalents of or now or hereafter outstanding. "RESTRICTED SUBSIDIARY" means with respect to any Person at any date any Subsidiary of such Person or other entity the accounts of which would be consolidated with those of such Person in its consolidated financial statements if such statements were prepared as of such date in accordance with GAAP, excluding, with respect to the Borrower at any date, all Unrestricted Subsidiaries designated as such pursuant to SECTION 7.07. -21- "REVOLVING BORROWING" means a Syndicated Loan comprised of Revolving Loans and identified as such in the Notice of Borrowing with respect thereto. "REVOLVING COMMITMENT" means, with respect to any Lender, the commitment of such Lender, in an aggregate principal amount at any time outstanding of up to such Lender's Revolving Commitment Percentage of the Revolving Committed Amount, (i) to make Revolving Loans in accordance with the provisions of SECTION 2.01(a), (ii) to purchase Participation Interests in Swingline Loans in accordance with the provisions of SECTION 2.01(b) and (iii) to purchase Participation Interests in Letters of Credit in accordance with the provisions of SECTION 2.06(e). "REVOLVING COMMITTED AMOUNT" means $155,000,000 or such greater or lesser amount to which the Revolving Committed Amount may be adjusted pursuant to SECTION 2.11. "REVOLVING COMMITMENT PERCENTAGE" means, for each Lender, the percentage identified as its Revolving Commitment Percentage on Schedule 1.01A hereto, as such percentage may be modified in connection with any assignment made in accordance with the provisions of SECTION 10.06(b). "REVOLVING LENDER" means each Lender identified in the SCHEDULE 1.01A as having a Revolving Commitment and each Eligible Assignee which acquires a Revolving Commitment or Revolving Loan pursuant to SECTION 10.06(b) and their respective successors. "REVOLVING LOAN" means a Committed Loan made under SECTION 2.01(a). "REVOLVING NOTE" means a promissory note, substantially in the form of EXHIBIT B-1 hereto, evidencing the obligation of the Borrower to repay outstanding Revolving Loans, as such Note may be amended, modified, supplemented, extended, renewed or replaced from time to time. "REVOLVING OUTSTANDINGS" means at any date the aggregate outstanding principal amount of all Revolving Loans and Swingline Loans plus the aggregate outstanding amount of all LC Obligations. "SALE/LEASEBACK TRANSACTION" means any direct or indirect arrangement with any Person or to which any such Person is a party providing for the leasing to the Borrower or any of its Subsidiaries of any property, whether owned by the Borrower or any of its Subsidiaries as of the Closing Date or later acquired, which has been or is to be sold or transferred by the Borrower or any of its Subsidiaries to such Person or to any other Person from whom funds have been, or are to be, advanced by such Person on the security of such property. "S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill, Inc., a New York corporation, and its successor or, absent any such successor, such nationally recognized statistical rating organization as the Borrower and the Administrative Agent may select. "SECURITIES ACT" means the Securities Act of 1933, as amended, and any successor statute thereto, together with the rules and regulations promulgated thereunder. "STANDBY LETTER OF CREDIT" has the meaning set forth in SECTION 2.06(b). "SUBSIDIARY" means with respect to any Person any corporation, partnership, limited liability company, association or other business entity of which (i) if a corporation, more than 50% of the total voting power of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a -22- partnership, limited liability company, association or business entity other than a corporation, more than 50% of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have more than 50% ownership interest in a partnership, limited liability company, association or other business entity if such Person or Persons shall be allocated more than 50% of partnership, association or other business entity gains or losses or shall be or control the managing director, manager or a general partner of such partnership, association or other business entity. Notwithstanding the foregoing, any Person that is not included as a "Consolidated Subsidiary" under GAAP shall not be a Subsidiary hereunder. "SWINGLINE COMMITMENT" means the agreement of the Swingline Lender to make Loans pursuant to SECTION 2.01(b). "SWINGLINE COMMITTED AMOUNT" means the lesser of (i) $20,000,000 or (ii) an amount which, when added to the aggregate principal amount of all other Loans then outstanding under this Agreement, does not exceed $155,000,000 or such greater or lesser amount as the Revolving Committed Amount may be adjusted pursuant to SECTION 2.11(e). "SWINGLINE LENDER" means PNC Bank, National Association, in its capacity as the Swingline Lender under SECTION 2.01(b), and its successor or successors in such capacity. "SWINGLINE LOAN" means a Base Rate Loan made by the Swingline Lender in Dollars pursuant to SECTION 2.01(b), and "Swingline Loans" means any two or more of such Base Rate Loans. "SWINGLINE LOAN REQUEST" has the meaning set forth in SECTION 2.02(b). "SWINGLINE NOTE" means a promissory note, substantially in the form of EXHIBIT B-3 hereto, evidencing the obligation of the Borrower to repay outstanding Swingline Loans, as such Note may be amended, modified, supplemented, extended, renewed or replaced from time to time. "SWINGLINE TERMINATION DATE" means the earlier of (i) May 9, 2007 (or, if such day is not a Business Day, the next preceding Business Day) or such earlier date upon which the Revolving Commitments shall have been terminated in their entirety in accordance with this Agreement and (ii) the date on which the Swingline Commitment is terminated in its entirety in accordance with the Agreement. "SYNDICATED LOAN" means a Committed Loan made by a Lender pursuant to SECTION 2.01(a); PROVIDED, that if any such Loan or Loans (or portions thereof) are combined or subdivided pursuant to a Notice of Extension/Conversion, the term "SYNDICATED LOAN" shall refer to the combined principal amount resulting from such combination or to each of the separate principal amounts resulting from such subdivision, as the case may be. "SYNTHETIC LEASE OBLIGATION" means the monetary obligation of a Person under (i) a so- called synthetic, off-balance sheet or tax retention lease or (ii) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such person (without regard to accounting treatment). "TAXES" has the meaning set forth in SECTION 3.01. "364-DAY CREDIT AGREEMENT" means the $155,000,000 364-Day Revolving Credit Agreement dated as of May 10, 2002 among the Borrower, the banks and other financial institutions from -23- time to time party thereto and PNC Bank, National Association, as Administrative Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time. "TRADE LETTER OF CREDIT" has the meaning set forth in SECTION 2.06(b). "TRUST AGREEMENT" means Trust Agreement, substantially in the form of EXHIBIT E hereto, dated as of the Closing Date, among the Borrower, the Trustee, the Administrative Agent, the Public Debt Trustee and any Holder of Additional Senior Indebtedness, as the same may be amended, modified or supplemented from time to time. "TRUSTEE" means Wells Fargo Bank Minnesota, National Association, in its capacity as trustee under the Trust Agreement, together with its successors and permitted assigns. "TYPE" has the meaning set forth in SECTION 1.04. "UCP" has the meaning set forth in SECTION 2.06(n). "UNITED STATES" means the United States of America, including the states and the District of Columbia, but excluding its territories and possessions. "UNRESTRICTED SUBSIDIARY" means any Subsidiary which would otherwise be a Consolidated Subsidiary, but which has been designated as an Unrestricted Subsidiary by the Borrower pursuant to the provisions of SECTION 7.07. "WORTHINGTON'S RATINGS" means the ratings from Moody's and S&P with respect to the senior, unsecured, long-term indebtedness for borrowed money of the Borrower that is not guaranteed by any other Person. "WHOLLY-OWNED SUBSIDIARY" means, with respect to any Person at any date, any Subsidiary of such Person all of the shares of capital stock or other ownership interests of which (except directors' qualifying shares) are at the time directly or indirectly owned by such Person. SECTION 1.02 COMPUTATION OF TIME PERIODS AND OTHER DEFINITIONAL PROVISIONS. For purposes of computation of periods of time hereunder, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". All references to time herein shall be references to Eastern Standard time or Eastern Daylight time, as the case may be, unless specified otherwise. References in this Agreement to Articles, Sections, Schedules, Appendices or Exhibits shall be to Articles, Sections, Schedules, Appendices or Exhibits of or to this Agreement unless otherwise specifically provided. The definitions in SECTION 1.01 shall apply equally to both the singular and plural forms of the terms defined. SECTION 1.03 ACCOUNTING TERMS AND DETERMINATIONS. Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall be prepared, in accordance with GAAP applied on a consistent basis. All financial statements delivered to the Lenders hereunder shall be accompanied by a statement from the Borrower that GAAP has not changed since the most recent financial statements delivered by the Borrower to the Lenders or, if GAAP has changed, describing such changes in detail and explaining how such changes affect the financial statements. All calculations made for the purposes of determining compliance with this Agreement shall (except as otherwise expressly provided herein) be made by application of GAAP applied on a basis consistent with the most recent annual or quarterly financial statements delivered pursuant to SECTION 6.01 (or, prior to the delivery of the first financial statements pursuant to SECTION 6.01, consistent with the -24- financial statements described in SECTION 5.02(a)). Any change in GAAP that effects the calculation of financial covenants will result in an adjustment in the affected covenant so that it is no more or less restrictive than on the Closing Date. SECTION 1.04 CLASSES AND TYPES OF BORROWINGS. The term "BORROWING" denotes the aggregation of Loans of one or more Lenders to be made to the Borrower pursuant to ARTICLE II on the same date, all of which Loans are of the same Class and Type (subject to ARTICLE III) and, except in the case of Base Rate Loans, have the same initial Interest Period. Loans hereunder are distinguished by "Class" and "Type". The "CLASS" of a Loan (or of a Commitment to make such a Loan or of a Borrowing comprised of such Loans) refers to whether such Loan is a Committed Loan (Syndicated or Swingline) or a Competitive Bid Loan. The "TYPE" of a Loan refers (i) in the case of Committed Loans, to whether such Loan is a Base Rate Loan or a Eurodollar Loan and (ii) in the case of Competitive Bid Loan, to whether such Loan is a Competitive Bid Absolute Rate Loan or a Competitive Bid LIBOR Loan. Identification of a Loan (or a Borrowing) by both Class and Type (e.g., a "Committed Eurodollar Loan") indicates that such Loan is a Loan of both such Class and such Type (e.g., both a Committed Loan and a Eurodollar Loan) or that such Borrowing is comprised of such Loans. In addition, Borrowings are classified by reference to the provisions of ARTICLE II under which participation therein is determined (i.e., a "Committed Loan" is a Syndicated Loan under SECTION 2.01(a) in which all Lenders participate in proportion to their Commitments or a Swingline Borrowing under SECTION 2.01(b) funded by the Swingline Lender, while a "Competitive Bid Borrowing" is a Borrowing under SECTION 2.03 in which the Lender participants are determined on the basis of their respective bids in accordance therewith). ARTICLE II THE CREDIT FACILITIES SECTION 2.01 COMMITMENTS TO LEND. (a) SYNDICATED LOANS. Each Revolving Lender severally agrees, on the terms and conditions set forth in this Agreement, to make Revolving Loans to the Borrower pursuant to this SUBSECTION 2.01(a) from time to time prior to the Maturity Date in amounts such that the aggregate of its Revolving Outstandings shall not exceed (after giving effect to all Revolving Loans and Competitive Bid Loans repaid, all reimbursements of LC Disbursements made, and all Refunded Swingline Loans paid, concurrently with the making of any Revolving Loans) its Revolving Commitment; PROVIDED, that immediately after giving effect to each such Revolving Loan, the aggregate of the Revolving Outstandings plus the aggregate principal amount of all Competitive Bid Loans shall not exceed the aggregate amount of the Revolving Commitments. Each Revolving Borrowing (other than a Borrowing to be used to repay Refunded Swingline Loans which shall be in an aggregate amount equal to such Refunded Swingline Loans) shall be in an aggregate principal amount of $5,000,000 or any larger multiple of $1,000,000 (except that any such Borrowing may be in the aggregate amount of the unused Revolving Commitments) and shall be made from the several Revolving Lenders ratably in proportion to their respective Revolving Commitments. Within the foregoing limits, the Borrower may borrow under this SUBSECTION 2.01(a), repay, or, to the extent permitted by SECTION 2.10, prepay, Revolving Loans and reborrow under this SUBSECTION 2.01(a). (b) SWINGLINE LOANS. (i) The Swingline Lender agrees, on the terms and subject to the conditions set forth herein, to make a portion of the Revolving Commitments available to the Borrower from time to time prior to the Swingline Termination Date by making Swingline Loans to the Borrower in Dollars (each such loan, a "SWINGLINE LOAN" and collectively, the "SWINGLINE LOANS"); PROVIDED, that (i) the aggregate principal amount of the Swingline Loans outstanding at any one -25- time shall not exceed the Swingline Committed Amount, (ii) with regard to each Lender individually (other than the Swingline Lender in its capacity as such), the principal amount of such Lender's outstanding Revolving Loans plus its Participation Interests in outstanding Swingline Loans plus its Participation Interests in outstanding LC Obligations shall not at any time exceed such Lender's Revolving Commitment Percentage of the Revolving Committed Amount, (iii) with regard to the Revolving Lenders collectively, the aggregate of the Revolving Outstandings shall not exceed the Revolving Committed Amount, (iv) the Swingline Committed Amount shall not exceed the aggregate of the Revolving Commitments then in effect and (v) no Swingline Loans (as defined in the 364-Day Credit Agreement) are outstanding under the 364- Day Credit Agreement. Swingline Loans may be repaid and reborrowed in accordance with the provisions hereof prior to the Swingline Termination Date. Swingline Loans may be made notwithstanding the fact that such Swingline Loans, when aggregated with the Swingline Lender's other Revolving Outstandings, exceeds its Revolving Commitment. The proceeds of a Swingline Borrowing may not be used, in whole or in part, to refund any prior Swingline Borrowing. (ii) The principal amount of all Swingline Loans shall be due and payable on the earliest of (A) the maturity date agreed to by the Swingline Lender and the Borrower with respect to such Swingline Loan (which maturity date shall not be a date more than 10 Business Days from the date of advance thereof), (B) the Swingline Termination Date, (C) the occurrence of a Bankruptcy Event with respect to the Borrower or (D) the acceleration of any Loan or the termination of the Revolving Commitments pursuant to SECTION 8.02. (iii) With respect to any Swingline Loans that have not been voluntarily prepaid by the Borrower or paid by the Borrower when due under CLAUSE (ii) above, the Swingline Lender (by request to the Administrative Agent) or Administrative Agent at any time may, and shall at any time Swingline Loans have been outstanding for more than 10 Business Days, on one Business Day's notice, require each Revolving Lender, including the Swingline Lender, and each such Lender hereby agrees, subject to the provisions of this SECTION 2.01(b), to make a Revolving Loan (which shall be initially funded as a Base Rate Loan) in an amount equal to such Lender's Revolving Commitment Percentage of the amount of the Swingline Loans ("REFUNDED SWINGLINE LOANS") outstanding on the date notice is given. (iv) In the case of Revolving Loans made by Lenders other than the Swingline Lender under CLAUSE (iii) above, each such Revolving Lender shall make the amount of its Revolving Loan available to the Administrative Agent, in Dollars in same day funds, at the Administrative Agent's Office, not later than 1:00 P.M. on the Business Day next succeeding the date such notice is given. The proceeds of such Revolving Loans shall be immediately delivered to the Swingline Lender (and not to the Borrower) and applied to repay the Refunded Swingline Loans. On the day such Revolving Loans are made, the Swingline Lender's Revolving Commitment Percentage of the Refunded Swingline Loans shall be deemed to be paid with the proceeds of a Revolving Loan made by the Swingline Lender and such portion of the Swingline Loans deemed to be so paid shall no longer be outstanding as Swingline Loans and shall instead be outstanding as Revolving Loans. The Borrower authorizes the Administrative Agent and the Swingline Lender to charge the Borrower's account with the Administrative Agent (up to the amount available in such account) in order to pay immediately to the Swingline Lender the amount of such Refunded Swingline Loans to the extent amounts received from the Revolving Lenders, including amounts deemed to be received from the Swingline Lender, are not sufficient to repay in full such Refunded Swingline Loans. If any portion of any such amount paid (or deemed to be paid) to the Swingline Lender should be recovered by or on behalf of any Borrower from the Swingline Lender in bankruptcy, by assignment for the benefit of creditors or otherwise, -26- the loss of the amount so recovered shall be ratably shared among all Revolving Lenders in the manner contemplated by SECTION 2.14. (v) A copy of each notice given by the Swingline Lender pursuant to this SECTION 2.01(b) shall be promptly delivered by the Swingline Lender to the Administrative Agent and the Borrower. Upon the making of a Revolving Loan by a Revolving Lender pursuant to this SECTION 2.01(b), the amount so funded shall no longer be owed in respect of its Participation Interest in the related Refunded Swingline Loans. (vi) If as a result of any Bankruptcy Event, Revolving Loans are not made pursuant to this SECTION 2.01(b) sufficient to repay any amounts owed to the Swingline Lender as a result of a nonpayment of outstanding Swingline Loans, each Revolving Lender agrees to purchase, and shall be deemed to have purchased, a participation in such outstanding Swingline Loans in an amount equal to its Revolving Commitment Percentage of the unpaid amount together with accrued interest thereon. Upon one Business Day's notice from the Swingline Lender, each Revolving Lender shall deliver to the Swingline Lender an amount in Dollars equal to its respective Participation Interest in such Swingline Loans in same day funds at the office of the Swingline Lender specified on SCHEDULE 10.02. In order to evidence such Participation Interest each Revolving Lender agrees to enter into a participation agreement at the request of the Swingline Lender in form and substance reasonably satisfactory to all parties. In the event any Revolving Lender fails to make available to the Swingline Lender the amount of such Revolving Lender's Participation Interest as provided in this SECTION 2.01(b)(vi), the Swingline Lender shall be entitled to recover such amount on demand from such Revolving Lender together with interest at the customary rate set by the Swingline Lender for correction of errors among banks in New York City for one Business Day and thereafter at the Base Rate plus the then Applicable Margin for Base Rate Loans. (vii) Each Revolving Lender's obligation to make Revolving Loans pursuant to CLAUSE (iv) above and to purchase Participation Interests in outstanding Swingline Loans pursuant to CLAUSE (vi) above shall be absolute and unconditional and shall not be affected by any circumstance, including (without limitation) (i) any set-off, counterclaim, recoupment, defense or other right which such Revolving Lender or any other Person may have against the Swingline Lender or the Borrower, (ii) the occurrence or continuance of a Default or an Event of Default or the termination or reduction in the amount of the Revolving Commitments after any such Swingline Loans were made, (iii) any adverse change in the condition (financial or otherwise) of the Borrower or any other Person, (iv) any breach of this Agreement or any other Loan Document by the Borrower or any other Lender, (v) whether any condition specified in ARTICLE IV is then satisfied or (vi) any other circumstance, happening or event whatsoever, whether or not similar to any of the forgoing; PROVIDED, that no Revolving Lender shall be obligated following the occurrence and during the continuance of any Default or Event of Default to make any payment to the Swingline Lender under this SUBSECTION (b) with respect to a Swingline Loan made by the Swingline Lender at a time when it had actual knowledge that a Default or Event of Default had occurred and was continuing. If such Lender does not pay such amount forthwith upon the Swingline Lender's demand therefor, and until such time as such Lender makes the required payment, the Swingline Lender shall be deemed to continue to have outstanding Swingline Loans in the amount of such unpaid Participation Interest for all purposes of the Loan Documents other than those provisions requiring the other Lenders to purchase a participation therein. Further, such Lender shall be deemed to have assigned any and all payments made of principal and interest on its Loans, and any other amounts due to it hereunder to the Swingline Lender to fund Swingline Loans in the amount of the Participation Interest in Swingline Loans that such Lender -27- failed to purchase pursuant to this SECTION 2.01(b)(vii) until such amount has been purchased (as a result of such assignment or otherwise). SECTION 2.02 NOTICE OF COMMITTED LOAN. (a) SYNDICATED LOANS. The Borrower shall give the Administrative Agent notice of each Syndicated Loan substantially in the form of Exhibit A-1 hereto (a "NOTICE OF SYNDICATED LOAN") not later than 11:00 A.M. on (i) the date of each Syndicated Base Rate Borrowing and (ii) the third Business Day before each Syndicated Eurodollar Borrowing. Each such notice shall be irrevocable and shall specify: (A) the date of such Borrowing, which shall be a Business Day; (B) the aggregate amount of such Borrowing; (C) whether the Loans comprising such Borrowing are to bear interest initially at the Base Rate or the Eurodollar Rate; and (D) in the case of a Eurodollar Borrowing, the duration of the initial Interest Period applicable thereto, subject to the provisions of the definition of Interest Period and to SECTION 2.07(a). (b) Swingline Borrowings. The Borrower shall request a Swingline Loan by written notice (or telephone notice promptly confirmed in writing) substantially in the form of EXHIBIT A-5 hereto (a "SWINGLINE LOAN REQUEST") to the Swingline Lender and the Administrative Agent not later than 2:00 P.M. on the Business Day of the requested Swingline Loan. Each such notice shall be irrevocable and shall specify (i) that a Swingline Loan is requested, (ii) the date of the requested Swingline Loan (which shall be a Business Day) and (iii) the principal amount of the Swingline Loan requested. Each Swingline Loan shall be made in Dollars as a Base Rate Loan and, subject to SECTION 2.01(b)(ii), shall have such maturity date as agreed to by the Swingline Lender and the Borrower upon receipt by the Swingline Lender of the Swingline Loan Request from the Borrower. SECTION 2.03 COMPETITIVE BID BORROWINGS. (a) COMPETITIVE BID OPTION. In addition to Committed Loans pursuant to SECTION 2.01, the Borrower may, so long as Worthington's Ratings are at least BBB/Baa2 from Moody's and S&P, respectively, and as set forth in this SECTION 2.03, request the Lenders to make offers to make Competitive Bid Loans to the Borrower from time to time prior to the Maturity Date. The Lenders may, but shall have no obligation to, make such offers and the Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this SECTION 2.03. After giving effect to any borrowing of Competitive Bid Loans, (i) the aggregate Revolving Outstandings plus the aggregate principal amount of all Competitive Bid Loans shall not exceed the aggregate amount of the Revolving Commitments and (ii) there shall not be more than five different Interest Periods in effect with respect to Competitive Bid Loans at any time. (b) COMPETITIVE BID REQUEST. When the Borrower wishes to request offers to make Competitive Bid Loans under this SECTION 2.03, it shall transmit to the Administrative Agent by telephone call followed promptly by facsimile transmission (a "COMPETITIVE BID REQUEST") substantially in the form of EXHIBIT A-2 hereto so as to be received by the Administrative Agent at the Administrative Agent's Office not later than 12:00 Noon on (x) the fourth Business Day before the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y) the Business Day next preceding the date of Borrowing -28- proposed therein, in the case of an Absolute Rate Auction, or, in any such case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Lenders not later than the date of the Competitive Bid Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective. Each such Competitive Bid Request shall specify: (i) the proposed date of Borrowing, which shall be a Business Day; (ii) the aggregate amount of such Borrowing, which shall be $5,000,000 in aggregate principal amount (or any larger multiple of $1,000,000); (iii) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period; and (iv) whether the Competitive Bid Borrowing quote requested (each, a "COMPETITIVE BID QUOTE") are to set forth a Competitive Bid Margin or a Competitive Bid Absolute Rate. The Borrower may request offers to make Competitive Bid Loans for more than one Interest Period in a single Competitive Bid Request. No more than two Competitive Bid Requests shall be given within five Business Days (or such other number of days as the Borrower and the Administrative Agent may agree) of any other Competitive Bid Request. (c) DELIVERY OF COMPETITIVE BIDS REQUESTS. The Administrative Agent shall promptly notify each Revolving Lender of each Competitive Bid Request received by it from the Borrower and the contents of such Competitive Bid Requests, which notice shall constitute an invitation by the Borrower to each Revolving Lender to submit Competitive Bids offering to make the Competitive Bid Loans to which such Competitive Bid Request relates in accordance with this SECTION 2.03. (d) SUBMISSION AND CONTENTS OF COMPETITIVE BIDS. (i) Each Lender may submit a competitive bid (a "COMPETITIVE BID") containing an offer or offers to make Competitive Bid Loans in response to any invitation for Competitive Bids. Each Competitive Bid must comply with the requirements of this SUBSECTION 2.03(d) and must be submitted to the Administrative Agent by telex or facsimile at the Administrative Agent's office not later than (x) 10:00 A.M. on the third Business Day before the proposed date of Borrowing, in the case of a LIBOR Auction or (y) 10:00 A.M. on the proposed date of Borrowing, in the case of an Absolute Rate Auction, or, in any such case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Lenders not later than the date of the Competitive Bid Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective; PROVIDED, that Competitive Bids submitted by the Administrative Agent (or any affiliate of the Administrative Agent) in the capacity of a Lender may be submitted, and may only be submitted, if the Administrative Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than 30 minutes before the deadline for the other Lenders. Subject to ARTICLES III and IV, any Competitive Bid so made shall not be revocable except with the written consent of the Administrative Agent given on the instructions of the Borrower. (ii) Each Competitive Bid shall be substantially in the form of EXHIBIT A-3 hereto and shall in any case specify: (A) the proposed date of Borrowing; -29- (B) the principal amount of the Competitive Bid Loan for which each such offer is being made, which principal amount (w) may be greater than or less than the Commitment of the quoting Lender, (x) must be in the principal amount of $5,000,000 (or any larger multiple of $1,000,000), (y) may not exceed the principal amount of Competitive Bid Loans for which offers were requested and (z) may be subject to an aggregate limitation as to the principal amount of Competitive Bid Loans for which offers being made by such quoting Lender may be accepted; (C) in the case of a LIBOR Auction, the margin above or below the Applicable Interbank Offered Rate (the "COMPETITIVE BID MARGIN") offered for each such Competitive Bid Loan, expressed as a percentage (specified to the nearest 1/1,00(th) of 1%) to be added to or subtracted from such base rate; (D) in the case of an Absolute Rate Auction, the rate of interest per annum (specified to the nearest 1/100(th) of 1%) (the "COMPETITIVE BID ABSOLUTE RATE") offered for each such Competitive Bid Loan; and (E) the identity of the quoting Lender. A Competitive Bid may set forth up to three separate offers by the quoting Lender with respect to each Interest Period specified in the related Invitation for Competitive Bids. (iii) Any Competitive Bid shall be disregarded if it: (A) is not substantially in conformity with EXHIBIT A-3 hereto or does not specify all of the information required by SUBSECTION 2.03(d)(ii) above; (B) contains qualifying, conditional or similar language; (C) proposes terms other than or in addition to those set forth in the applicable Invitation for Competitive Bids; or (D) arrives after the time set forth in SUBSECTION 2.03(d)(i). (e) NOTICE TO THE BORROWER. The Administrative Agent shall promptly notify the Borrower, but using its best efforts in no event later than 11:00 A.M. of the terms of (i) any Competitive Bid submitted by a Lender that is in accordance with SUBSECTION 2.03(d) and (ii) any Competitive Bid that amends, modifies or is otherwise inconsistent with a previous Competitive Bid submitted by such Lender with respect to the same Competitive Bid Request. Any such subsequent Competitive Bid shall be disregarded by the Administrative Agent unless such subsequent Competitive Bid is submitted solely to correct a manifest error in such former Competitive Bid. The Administrative Agent's notice to the Borrower shall specify (A) the aggregate principal amount of Competitive Bid Loans for which offers have been received for each Interest Period specified in the related Competitive Bid Request, (B) the respective principal amounts and Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be, so offered and (C) if applicable, limitations on the aggregate principal amount of Competitive Bid Loans for which offers in any single Competitive Bid may be accepted. (f) ACCEPTANCE AND NOTICE BY THE BORROWER. The Borrower shall notify the Administrative Agent of its acceptance or non-acceptance of the offers notified to it pursuant to SUBSECTION 2.03(e) at the Administrative Agent's Office not later than 11:00 A.M. on (x) the third Business Day before the proposed date of Borrowing, in the case of a LIBOR Auction in Dollars or (y) -30- the proposed date of Borrowing, in the case of an Absolute Rate Auction, or, in any such case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Lenders not later than the date of the Competitive Bid Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective. In the case of acceptance, such notice (a "NOTICE OF COMPETITIVE BID BORROWING") shall specify the aggregate principal amount of offers for each Interest Period that are accepted. The Borrower may accept any Competitive Bid in whole or in part; provided, that: (i) the aggregate principal amount of each Competitive Bid Borrowing may not exceed the applicable amount set forth in the related Competitive Bid Request; (ii) the aggregate principal amount of each Competitive Bid Borrowing must be in the amount of $5,000,000 (or any larger multiple of $1,000,000); (iii) acceptance of offers may only be made on the basis of ascending Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be; and (iv) the Borrower may not accept any offer that is described in SUBSECTION 2.03(d)(iii) or that otherwise fails to comply with the requirements of this Agreement. (g) ALLOCATION BY ADMINISTRATIVE AGENT. If offers are made by two or more Lenders with the same Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Competitive Bid Loans in respect of which such offers are accepted shall be allocated by the Administrative Agent among such Lenders as nearly as possible (in multiples of $1,000,000) in proportion to the aggregate principal amounts of such offers. Determinations by the Administrative Agent of the amounts of Competitive Bid Loans shall be conclusive in the absence of manifest error. After each Absolute Rate Auction and LIBOR Auction pursuant to this SECTION 2.03, the Administrative Agent shall notify each Lender that submitted a Competitive Bid in such auction of the range of bids submitted (without the bidder's name) and accepted for each Competitive Bid Loan and the aggregate principal amount of each Competitive Bid Borrowing resulting from such auction. SECTION 2.04 NOTICE TO LENDERS; FUNDING OF LOANS. (a) NOTICE TO LENDERS. Upon receipt of a Notice of Borrowing, the Administrative Agent shall promptly notify each Lender of such Lender's ratable share (if any) of the Borrowing referred to therein, and such Notice of Borrowing shall not thereafter be revocable by the Borrower. (b) FUNDING OF LOANS. (i) On the date of each Borrowing, each Lender participating therein shall make available its share of such Borrowing not later than 2:00 P.M., in Federal or other funds immediately available, to the Administrative Agent at the Administrative Agent's Office. Unless the Administrative Agent determines that any applicable condition specified in Article IV has not been satisfied, the Administrative Agent will make the funds so received from the Lenders available to the Borrower in the Borrower's account established at the Administrative Agent's Office; PROVIDED, HOWEVER, that if on the date of any Syndicated Loan there are outstanding Swingline Loans or LC Disbursements, then the funds so received shall be applied, FIRST, to the payment of such LC Disbursements, SECOND, to the repayment of such Swingline Loans and THIRD, to the Borrower as provided above. -31- (ii) Not later than 3:00 P.M. on the date of each Swingline Borrowing, the Swingline Lender shall, unless the Administrative Agent shall have notified the Swingline Lender that any applicable condition specified in ARTICLE IV has not been satisfied, make available the amount of such Swingline Borrowing, in Federal or other immediately available funds, to the Borrower in the Borrower's account established at the Swingline Lender's address referred to in SCHEDULE 10.02. (c) FUNDING BY THE ADMINISTRATIVE AGENT IN ANTICIPATION OF AMOUNTS DUE FROM THE LENDERS. Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing (except in the case of a Base Rate Borrowing, in which case prior to the time of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender's share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available to the Administrative Agent on the date of such Borrowing in accordance with SECTION 2.04(b) above, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such share available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount, together with interest thereon for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent at (i) a rate per annum equal to the higher of the Federal Funds Rate (if such Borrowing is in Dollars) or the rate then applicable to such Loan in accordance with SECTION 2.07, in the case of the Borrower, and (ii) the Federal Funds Rate, in the case of such Lender. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender's Loan included in such Borrowing for purposes of this Agreement. (d) OBLIGATIONS OF LENDERS SEVERAL. The failure of any Lender to make a Loan required to be made by it as part of any Borrowing hereunder shall not relieve any other Lender of its obligation, if any, hereunder to make any Loan on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on such date of Borrowing. (e) FAILED LOANS. If any Lender shall fail to make any Loan (a "FAILED LOAN") which such Lender is otherwise obligated hereunder to make to the Borrower on the date of Borrowing thereof, and the Administrative Agent shall not have received notice from the Borrower or such Lender that any condition precedent to the making of the Failed Loan has not been satisfied, then, until such Lender shall have made or be deemed to have made (pursuant to the last sentence of this SUBSECTION (e)) the Failed Loan in full or the Administrative Agent shall have received notice from the Borrower or such Lender that any condition precedent to the making of the Failed Loan was not satisfied at the time the Failed Loan was to have been made, whenever the Administrative Agent shall receive any amount from the Borrower for the account of such Lender, (i) the amount so received (up to the amount of such Failed Loan) will, upon receipt by the Administrative Agent, be deemed to have been paid to the Lender in satisfaction of the obligation for which paid, without actual disbursement of such amount to the Lender, (ii) the Lender will be deemed to have made the same amount available to the Administrative Agent for disbursement as a Loan to the Borrower (up to the amount of such Failed Loan) and (iii) the Administrative Agent will disburse such amount (up to the amount of the Failed Loan) to the Borrower or, if the Administrative Agent has previously made such amount available to the Borrower on behalf of such Lender pursuant to the provisions hereof, reimburse itself (up to the amount of the amount made available to the Borrower); PROVIDED, HOWEVER, that the Administrative Agent shall have no obligation to disburse any such amount to the Borrower or otherwise apply it or deem it applied as provided herein unless the Administrative Agent shall have determined in its sole discretion that to so disburse such amount will not violate any law, rule, regulation or requirement applicable to the Administrative Agent. Upon any such disbursement by the Administrative Agent, such Lender shall be deemed to have made a -32- Base Rate Loan of the same Class as the Failed Loan to the Borrower in satisfaction, to the extent thereof, of such Lender's obligation to make the Failed Loan. SECTION 2.05 EVIDENCE OF LOANS. (a) LENDER ACCOUNTS. Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness owed by the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (b) ADMINISTRATIVE AGENT RECORDS. The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Class and Type of each Loan made and the Interest Period, if any, applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Agent hereunder from the Borrower and each Lender's share thereof. (c) EVIDENCE OF DEBT. The entries made in the accounts maintained pursuant to SUBSECTIONS (a) and (b) of this SECTION 2.05 shall be prima facie evidence of the existence and amounts of the obligations therein recorded; PROVIDED, HOWEVER, 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 obligations of the Borrower to repay the Loans in accordance with their terms. (d) NOTES. Notwithstanding any other provision of this Agreement, if any Lender shall request and receive a Note or Notes as provided in SECTION 10.06 or otherwise, then the Loans of such Lender shall be evidenced by Notes of the applicable Class, in each case, substantially in the form of EXHIBIT B-1 or B-2, as applicable, and payable to the order of such Lender for the account of its Applicable Lending Office in an amount equal to the aggregate unpaid principal amount of such Lender's Revolving Loans or Competitive Bid Loans, as applicable. If requested by the Swingline Lender, the Swingline Loans shall be evidenced by a single Swingline Note, substantially in the form of Exhibit B-3, and payable to the order of the Swingline Lender in an amount equal to the aggregate unpaid principal amount of the Swingline Loans. (e) NOTES FOR LOANS OF DIFFERENT TYPES. Each Lender may, by notice to the Borrower and the Administrative Agent, request that its Loans of a particular Type be evidenced by separate Notes in an amount equal to the aggregate unpaid principal amount of such Loans. Each such Note shall be in substantially the form of EXHIBIT B-1 or B-2 hereto with appropriate modifications to reflect the fact that it evidences solely Loans of the relevant Type. Each reference in this Agreement to such Lender's "Note" of a particular Class shall be deemed to refer to and include any or all of such Notes, as the context may require. (f) NOTE ENDORSEMENTS. Each Lender having one or more Notes shall record the date, amount, Class and Type of each Loan made by it and the date and amount of each payment of principal made by the Borrower with respect thereto, and may, if such Lender so elects in connection with any transfer or enforcement of any Note, endorse on the reverse side or on the schedule, if any, forming a part thereof appropriate notations to evidence the foregoing information with respect to each outstanding Loan evidenced thereby; PROVIDED, that the failure of any Lender to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under any such Note. Each Lender is hereby irrevocably authorized by the Borrower so to endorse each of its Notes and to attach to and make a part of each of its Notes a continuation of any such schedule as and when required. -33- SECTION 2.06 LETTERS OF CREDIT. (a) LETTERS OF CREDIT. Each Issuing Lender agrees, on the terms and conditions set forth in this Agreement, to issue Letters of Credit from time to time before the Maturity Date for the account, and upon the request, of the Borrower and in support of (i) trade obligations of the Borrower and/or its Subsidiaries, which shall be payable at sight (each such letter of credit, a "TRADE LETTER OF CREDIT" and, collectively, the "TRADE LETTERS OF CREDIT") and (ii) such other obligations of the Borrower that are acceptable to the Lenders (each such letter of credit, a "STANDBY LETTER OF CREDIT" and, collectively, the "STANDBY LETTERS OF CREDIT"); PROVIDED, that immediately after each Letter of Credit is issued, (i) the aggregate amount of the LC Obligations shall not exceed $20,000,000 (the "LC COMMITTED AMOUNT"), (ii) the aggregate of the Revolving Outstandings shall not exceed the aggregate amount of the Revolving Commitments and (iii) with respect to each individual Revolving Lender, the aggregate outstanding principal amount of the Revolving Lender's Revolving Loans plus its Participation Interest in outstanding LC Obligations plus its (other than the Swingline Lender's in its capacity as such) Participation Interests in outstanding Swingline Loans shall not exceed such Revolving Lender's Revolving Commitment Percentage of the Revolving Committed Amount. (b) METHOD OF ISSUANCE OF LETTERS OF CREDIT; AMENDMENT OF LETTERS OF CREDIT. The Borrower shall give the applicable Issuing Lender notice (with a copy to the Administrative Agent) substantially in the form of EXHIBIT A-6 hereto and, to the extent required by the Issuing Lender, the Issuing Lender's then current application for a letter of credit (collectively, a "LETTER OF CREDIT REQUEST") of the requested issuance or amendment of a Letter of Credit prior to 1:00 P.M. on the proposed date of the issuance or amendment of Trade Letters of Credit (which shall be a Business Day) and at least three Business Days before the proposed date of issuance or extension of Standby Letters of Credit (which shall be a Business Day) (or such shorter period as may be agreed by the applicable Issuing Lender in any particular instance). In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Request shall specify in form and detail satisfactory to the Issuing Lender: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the Issuing Lender may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Request shall specify in form and detail satisfactory to the Issuing Lender: (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the Issuing Lender may require. The extension or renewal of any Letter of Credit shall be deemed to be an issuance of such Letter of Credit. No Letter of Credit shall have a term of more than one year or shall have a term extending or be extendible beyond the fifth Business Day before the Maturity Date. Promptly after receipt of any Letter of Credit Request, the Issuing Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Request from the Borrower and, if not, the Issuing Lender will provide the Administrative Agent with a copy thereof. Upon receipt by the Issuing Lender of confirmation from the Administrative Agent that the requested issuance or amendment is permitted in accordance with the terms hereof, then, subject to the terms and conditions thereof, the Issuing Lender shall, on the requested date, issue a Letter of Credit for the account of the Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with the Issuing Lender's usual and customary business practices. Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the Issuing Lender will also deliver -34- to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment. (c) CONDITIONS TO ISSUANCE OF LETTERS OF CREDIT. The issuance by an Issuing Lender of each Letter of Credit shall, in addition to the conditions precedent set forth in SECTION 4.02, be subject to the conditions precedent that (i) such Letter of Credit shall be satisfactory in form and substance to the applicable Issuing Lender, (ii) the Borrower shall have executed and delivered such other instruments and agreements relating to such Letter of Credit as the Issuing Lender shall have reasonably requested, (iii) the Issuing Lender shall have confirmed with the Administrative Agent on the date of (and after giving effect to) such issuance that (A) the aggregate amount of all LC Obligations will not exceed the LC Committed Amount and (B) the aggregate Revolving Outstandings will not exceed the aggregate amount of the Revolving Commitments and (iv) the Issuing Lender shall not have been notified by the Administrative Agent that any condition specified in SECTION 4.02(b) or (c) is not satisfied on the date such Letter of Credit is to be issued. Notwithstanding any other provision of this SECTION 2.06, no Issuing Lender shall be under any obligation to issue any Letter of Credit if: (i) any order, judgment or decree of any Governmental Authority shall by its terms purport to enjoin or restrain the Issuing Lender from issuing such Letter of Credit, or any requirement of Law applicable to such Issuing Lender or any request or directive (whether or not having a force of Law) from any Governmental Authority with jurisdiction over such Issuing Lender shall prohibit, or request that such Issuing Lender refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Issuing Lender with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such Issuing Lender is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon such Issuing Lender any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which such Issuing Lender in good faith deems material to it; or (ii) the issuance of such Letter of Credit shall violate any applicable general policies of such Issuing Lender. (d) PURCHASE AND SALE OF LETTER OF CREDIT PARTICIPATIONS. Upon the issuance by an Issuing Lender of a Letter of Credit, such Issuing Lender shall be deemed, without further action by any party hereto, to have sold to each Revolving Lender, and each Revolving Lender shall be deemed, without further action by any party hereto, to have purchased from such Issuing Lender, without recourse or warranty, an undivided participation interest in such Letter of Credit and the related LC Obligations in the proportion its Revolving Commitment Percentage bears to the Revolving Committed Amount (although any fronting fee payable under SECTION 2.12 shall be payable directly to the Administrative Agent for the account of the applicable Issuing Lender, and the Lenders (other than such Issuing Lender) shall have no right to receive any portion of any such fronting fee) and any security therefor or guaranty pertaining thereto. Upon any change in the Revolving Commitments pursuant to SECTION 10.06, there shall be an automatic adjustment to the Participation Interests in all outstanding Letters of Credit and all LC Obligations to reflect the adjusted Revolving Commitments of the assigning and assignee Lenders or of all Lenders having Revolving Commitments, as the case may be. (e) DRAWINGS UNDER LETTERS OF CREDIT. Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the applicable Issuing Lender shall determine in accordance with the terms of such Letter of Credit whether such drawing should be honored. If the Issuing Lender determines that any such drawing shall be honored, such Issuing Lender shall make available to such beneficiary in accordance with the terms of such Letter of Credit the amount of the drawing and shall notify the Borrower and the Administrative Agent as to the amount to be paid as a result of such drawing and the payment date. (f) DUTIES OF ISSUING LENDERS TO REVOLVING LENDERS; RELIANCE. In determining whether to pay under any Letter of Credit, the relevant Issuing Lender shall not have any obligation relative to the Revolving Lenders participating in such Letter of Credit or the related LC Obligations other -35- than to determine that any document or documents required to be delivered under such Letter of Credit have been delivered and that they substantially comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by an Issuing Lender under or in connection with any Letter of Credit shall not create for the Issuing Lender any resulting liability if taken or omitted in the absence of gross negligence or willful misconduct. Each Issuing Lender shall be entitled (but not obligated) to rely, and shall be fully protected in relying, on the representation and warranty by the Borrower set forth in the last sentence of SECTION 4.02 to establish whether the conditions specified in PARAGRAPHS (b) and (c) of SECTION 4.02 are met in connection with any issuance or extension of a Letter of Credit. Each Issuing Lender shall be entitled to rely, and shall be fully protected in relying, upon advice and statements of legal counsel, independent accountants and other experts selected by such Issuing Lender and upon any Letter of Credit, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopier, telex or teletype message, statement, order or other document 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 may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary unless the beneficiary and the Borrower shall have notified such Issuing Lender that such documents do not comply with the terms and conditions of the Letter of Credit. Each Issuing Lender shall be fully justified in refusing to take any action requested of it under this SECTION 2.06 in respect of any Letter of Credit unless it shall first have received such advice or concurrence of the Required Revolving Lenders as it reasonably deems appropriate or it shall first be indemnified to its reasonable satisfaction by the Revolving Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take, or omitting or continuing to omit, any such action. Notwithstanding any other provision of this SECTION 2.06, each Issuing Lender shall in all cases be fully protected in acting, or in refraining from acting, under this SECTION 2.06 in respect of any Letter of Credit in accordance with a request of the Required Revolving Lenders, and such request and any action taken or failure to act pursuant hereto shall be binding upon all Revolving Lenders and all future holders of participations in such Letter of Credit. (g) REIMBURSEMENT OBLIGATIONS. The Borrower shall be irrevocably and unconditionally obligated forthwith to reimburse each Issuing Lender for any amounts paid by such Issuing Lender in accordance with Section 2.06(e) and (f) of this Agreement upon any drawing under any Letter of Credit, together with any and all reasonable charges and expenses which the Issuing Lender may pay or incur relative to such drawing and interest on the amount drawn at the rate applicable to Revolving Base Rate Loans for each day from and including the date such amount is drawn to but excluding the date such reimbursement payment is due and payable. Such reimbursement payment shall be due and payable (i) at or before 1:00 P.M. on the date the Issuing Lender notifies the Borrower of such drawing, if such notice is given at or before 10:00 A.M. on such date or (ii) at or before 10:00 A.M. on the next succeeding Business Day if such notice is given after 10:00 A.M. on the immediately preceding Business Day; PROVIDED, that no payment otherwise required by this sentence to be made by the Borrower at or before 1:00 P.M. on any day shall be overdue hereunder if arrangements for such payment satisfactory to the Issuing Lender, in its reasonable discretion, shall have been made by the Borrower at or before 1:00 P.M. on such day and such payment is actually made at or before 3:00 P.M. on such day. In addition, the Borrower agrees to pay to the Issuing Lender interest, payable on demand, on any and all amounts not paid by the Borrower to the Issuing Lender when due under this SUBSECTION (g), for each day from and including the date when such amount becomes due to but excluding the date such amount is paid in full, whether before or after judgment, at a rate per annum equal to the sum of 2% plus the rate applicable to Revolving Base Rate Loans for such day. Subject to the satisfaction of all applicable conditions set forth in ARTICLE IV, the Borrower may, at its option, utilize the Swingline Commitment or the Revolving Commitments, or make other arrangements for payment satisfactory to the Issuing Lender, for the reimbursement of all LC Disbursements as required by this SUBSECTION (g). Each reimbursement payment to be made by the Borrower pursuant to this SUBSECTION (g) shall be made to the Issuing Lender in Federal or other funds immediately available to it at its address referred to SCHEDULE 10.02. -36- (h) OBLIGATIONS OF REVOLVING LENDERS TO REIMBURSE ISSUING LENDER FOR UNPAID LC DISBURSEMENTS. If the Borrower shall not have reimbursed an Issuing Lender in full for any LC Disbursement as required pursuant to SUBSECTION (g) of this SECTION 2.06, the Issuing Lender shall promptly notify the Administrative Agent, and the Administrative Agent shall promptly notify each Revolving Lender (other than the relevant Issuing Lender) of (x) the date of drawing under the related Letter of Credit, (y) the amount of the unreimbursed LC Disbursement and (z) such Revolving Lender's pro-rata share of the LC Disbursement). Upon receipt of notice from the Administrative Agent pursuant to this CLAUSE (h), each such Revolving Lender shall promptly and unconditionally pay to the Administrative Agent, for the account of such Issuing Lender, such Revolving Lender's pro-rata share of the amount of each LC Disbursement which is the subject of such notice (determined by the proportion its Revolving Commitment Percentage bears to the aggregate Revolving Committed Amount) in Dollars in Federal or other immediately available funds; PROVIDED, HOWEVER, that no Revolving Lender shall be obligated to pay to the Administrative Agent its pro-rata share of such unreimbursed amount for any wrongful payment made by the relevant Issuing Lender under a Letter of Credit as a result of acts or omissions constituting willful misconduct or gross negligence by such Issuing Lender. Such payment from the Revolving Lender shall be due (i) at or before 1:00 P.M. on the date the Administrative Agent so notifies a Revolving Lender, if such notice is given at or before 10:00 A.M. on such date or (ii) at or before 10:00 A.M. on the next succeeding Business Day, together with interest on such amount for each day from and including the date of such drawing to but excluding the day such payment is due from such Revolving Lender at the Federal Funds Rate for such day (which funds the Administrative Agent shall promptly remit to the applicable Issuing Lender). The failure of any Revolving Lender to make available to the Administrative Agent for the account of an Issuing Lender its pro-rata share of any unreimbursed LC Disbursement shall not relieve any other Revolving Lender of its obligation hereunder to make available to the Administrative Agent for the account of such Issuing Lender its pro-rata share of any payment made under any Letter of Credit on the date required, as specified above, but no such Lender shall be responsible for the failure of any other Lender to make available to the Administrative Agent for the account of the Issuing Lender such other Lender's pro-rata share of any such payment. Upon payment in full of all amounts payable by a Lender under this SUBSECTION (h), such Lender shall be subrogated to the rights of the Issuing Lender against the Borrower to the extent of such Lender's pro-rata share of the related LC Obligation so paid (including interest accrued thereon). If any Revolving Lender fails to pay any amount required to be paid by it pursuant to this SUBSECTION (h) on the date on which such payment is due, interest shall accrue on such Lender's obligation to make such payment, for each day from and including the date such payment became due to but excluding the date such Lender makes such payment, whether before or after judgment, at a rate per annum equal to (i) for each day from the date such payment is due to the third succeeding Business Day, inclusive, the Federal Funds Rate for such day as determined by the relevant Issuing Lender and (ii) for each day thereafter, the sum of 2% plus the rate applicable to its Revolving Base Rate Loans for such day. Any payment made by any Lender after 3:00 P.M. on any Business Day shall be deemed for purposes of the preceding sentence to have been made on the next succeeding Business Day. (i) FUNDS RECEIVED FROM THE BORROWER IN RESPECT OF DRAWN LETTERS OF CREDIT. Whenever an Issuing Lender receives a payment of an LC Obligation as to which the Administrative Agent has received for the account of such Issuing Lender any payments from the Lenders pursuant to SUBSECTION (i) above, such Issuing Lender shall pay the amount of such payment to the Administrative Agent, and the Administrative Agent shall promptly pay to each Lender which has paid its pro-rata share thereof, in Dollars in Federal or other immediately available funds, an amount equal to such Lender's pro- rata share of the principal amount thereof and interest thereon for each day after relevant date of payment at the Federal Funds Rate. (j) OBLIGATIONS IN RESPECT OF LETTERS OF CREDIT UNCONDITIONAL. The obligations of the Borrower under SECTION 2.06(g) above shall be absolute, unconditional and irrevocable, and shall be -37- performed strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including, without limitation, the following circumstances: (i) any lack of validity or enforceability of this Agreement or any Letter of Credit or any document related hereto or thereto; (ii) any amendment or waiver of or any consent to departure from all or any of the provisions of this Agreement or any Letter of Credit or any document related hereto or thereto; (iii) the use which may be made of the Letter of Credit by, or any acts or omission of, a beneficiary of a Letter of Credit (or any Person for whom the beneficiary may be acting); (iv) the existence of any claim, set-off, defense or other rights that the Borrower may have at any time against a beneficiary of a Letter of Credit (or any Person for whom the beneficiary may be acting), any Issuing Lender or any other Person, whether in connection with this Agreement or any Letter of Credit or any document related hereto or thereto or any unrelated transaction; (v) any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect whatsoever; PROVIDED, that the relevant Issuing Lender's determination that documents presented under such Letter of Credit comply with the terms thereof shall not have constituted gross negligence or willful misconduct of such Issuing Lender; (vi) payment under a Letter of Credit against presentation to an Issuing Lender of a draft or certificate that does not comply with the terms of such Letter of Credit; PROVIDED, that the relevant Issuing Lender's determination that documents presented under such Letter of Credit comply with the terms thereof shall not have constituted gross negligence or willful misconduct of such Issuing Lender; or (vii) any other act or omission to act or delay of any kind by any Issuing Lender or any other Person or any other event or circumstance whatsoever that might, but for the provisions of this SUBSECTION (vii), constitute a legal or equitable discharge of the Borrower's obligations hereunder. (k) DESIGNATION OF SUBSIDIARIES AS ACCOUNT PARTIES. Notwithstanding anything to the contrary set forth in this Agreement, a Letter of Credit issued hereunder may contain a statement to the effect that such Letter of Credit is issued for the account of a Subsidiary of the Borrower; PROVIDED, that notwithstanding such statement, the Borrower shall be the actual account party for all purposes of this Agreement for such Letter of Credit and such statement shall not affect the Borrower's reimbursement obligations hereunder with respect to such Letter of Credit. (l) MODIFICATION AND EXTENSION. The issuance of any supplement, modification, amendment, renewal, or extensions to any Letter of Credit shall, for purposes hereof, be treated in all respects the same as a Credit Extension hereunder. (m) INTERNATIONAL STANDBY PRACTICES; UNIFORM CUSTOMS AND PRACTICES. Unless otherwise expressly agreed by the Issuing Lender and the Borrower when a Letter of Credit is issued, (i) the rules of the "International Standby Practices 1998" published by the Institute of International -38- Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance) shall apply to each Standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits (collectively, the "UCP"), as most recently published by the International Chamber of Commerce (the "ICC") at the time of issuance shall apply to each Trade Letter of Credit. (n) RESPONSIBILITY OF ISSUING LENDERS. It is expressly understood and agreed that the obligations of the Issuing Lenders hereunder to the Revolving Lenders are only those expressly set forth in this Agreement and that the Issuing Lender shall be entitled to assume that the conditions precedent set forth in SECTION 4.02 have been satisfied unless it shall have acquired actual knowledge that any such condition precedent has not been satisfied; PROVIDED, HOWEVER, that nothing set forth in this SECTION 2.06 shall be deemed to prejudice the right of any Revolving Lender to recover from the Issuing Lender any amounts made available by such Revolving Lender to the Issuing Lender pursuant to this SECTION 2.06 in the event that it is determined by a court of competent jurisdiction that the payment with respect to a Letter of Credit constituted gross negligence or willful misconduct on the part of the Issuing Lender. (o) CONFLICT WITH LC DOCUMENTS. In the event of any conflict between this Agreement and any LC Document, this Agreement shall govern. (p) INDEMNIFICATION OF ISSUING LENDERS. (i) In addition to its other obligations under this Agreement, the Borrower hereby agrees to protect, indemnify, pay and save each Issuing Lender harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable and actual attorneys' fees) that such Issuing Lender may incur or be subject to as a consequence, direct or indirect, of (A) the issuance of any Letter of Credit or (B) the failure of such Issuing Lender to honor a drawing under a Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority (all such acts or omissions, herein called "GOVERNMENT ACTS"). (ii) As between the Borrower and each Issuing Lender, the Borrower shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. The Issuing Lender shall not be responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason; (C) failure of the beneficiary of a Letter of Credit to comply fully with conditions required in order to draw upon a Letter of Credit; (D) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay in the transmission or otherwise of any documents required in order to make a drawing under a Letter of Credit or of the proceeds thereof; and (G) any consequences arising from causes beyond the control of the Issuing Lender, including, without limitation, any Government Acts. None of the above shall affect, impair, or prevent the vesting of the Issuing Lender's rights or powers hereunder. (iii) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by an Issuing Lender, under or in connection with any Letter of Credit or the related certificates, if taken or omitted in good faith, shall not put the Issuing Lender under any resulting liability to the Borrower. It is the intention of -39- the parties that this Agreement shall be construed and applied to protect and indemnify the Issuing Lenders against any and all risks involved in the issuance of any Letter of Credit, all of which risks are hereby assumed by the Borrower, including, without limitation, any and all risks of the acts or omissions, whether rightful or wrongful, of any present or future Government Acts. The Issuing Lenders shall not, in any way, be liable for any failure by the Issuing Lenders or anyone else to pay any drawing under any Letter of Credit as a result of any Government Acts or any other cause beyond the control of the Issuing Lenders. (iv) Nothing in this SUBSECTION (p) is intended to limit the reimbursement obligation of the Borrower contained in this SECTION 2.06. The obligations of the Borrower under this SUBSECTION (p) shall survive the termination of this Agreement. No act or omission of any current or prior beneficiary of a Letter of Credit shall in any way affect or impair the rights of any Issuing Lender to enforce any right, power or benefit under this Agreement. (v) Notwithstanding anything to the contrary contained in this SUBSECTION (p), the Borrower shall have no obligation to indemnify any Issuing Lender in respect of any liability incurred by the Issuing Lender arising solely out of the gross negligence or willful misconduct of the Issuing Lender, as determined by a court of competent jurisdiction. Nothing in this Agreement shall relieve any Issuing Lender of any liability to the Borrower in respect of any action taken by the Issuing Lender which action constitutes gross negligence or willful misconduct of the Issuing Lender or a violation of the UCP or Uniform Commercial Code, as applicable, as determined by a court of competent jurisdiction. (q) CASH COLLATERAL. If the Borrower is required pursuant to the terms of this Agreement or any other Loan Document to Cash Collateralize any LC Obligations, the Borrower shall deposit in an account with the Administrative Agent an amount in cash equal to 100% of the amount of such LC Obligations. Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the LC Obligations. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. The Administrative Agent will, at the request of the Borrower, invest amounts deposited in such account in Cash Equivalents; PROVIDED, HOWEVER, that (i) the Administrative Agent shall not be required to make any investment that, in its sole judgment, would require or cause the Administrative Agent to be in, or would result in any, violation of any Law, (ii) such Cash Equivalents shall be subjected to a first priority perfected security interest in favor of the Administrative Agent and (iii) if an Event of Default shall have occurred and be continuing, the selection of such Cash Equivalents shall be in the sole discretion of the Administrative Agent. The Borrower shall indemnify the Administrative Agent for any losses relating to such investments in Cash Equivalents. Other than any interest or profits earned on such investments, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Lender immediately for drawings under Letters of Credit and, if the maturity of the Loans has been accelerated, to satisfy the LC Obligations. If the Borrower is required to provide an amount of cash collateral hereunder as a result of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived. Any moneys remaining in such account after the Obligations have been indefeasibly paid in full in cash shall be returned to the Borrower. (r) RESIGNATION OF AN ISSUING LENDER. (a) An Issuing Lender may resign at any time by giving 60 days' notice to the Administrative Agent, the Lenders and the Borrower. Upon any such resignation, the Borrower shall (within 60 days after such notice of resignation) either appoint a successor, or terminate the unutilized LC Commitment of such Issuing Lender; PROVIDED, HOWEVER, that, if the Borrower elects to terminate such unutilized LC Commitment, the Borrower may at any time -40- thereafter that the Revolving Credit Commitments are in effect reinstate such LC Commitment in connection with the appointment of another Issuing Lender. Subject to subsection (s) below, upon the acceptance of any appointment as an Issuing Lender hereunder by a successor Issuing Lender, such successor shall succeed to and become vested with all the interests, rights and obligations of the retiring Issuing Lender, and the retiring Issuing Lender shall be discharged from its obligations to issue Letters of Credit hereunder. The acceptance of any appointment as Issuing Lender hereunder by a successor Issuing Lender shall be evidenced by an agreement entered into by such successor, in a form reasonably satisfactory to the Borrower and the Administrative Agent, and, from and after the effective date of such agreement, (i) such successor shall be a party hereto and have all the rights and obligations of an Issuing Lender under this Agreement and the other Loan Documents and (ii) references herein and in the other Loan Documents to the "Issuing Lender" shall be deemed to refer to such successor or to any previous Issuing Lender, or to such successor and all previous Issuing Lenders, as the context shall require. (s) RIGHTS WITH RESPECT TO OUTSTANDING LETTER OF CREDIT. After the resignation of an Issuing Lender hereunder, the retiring Issuing Lender shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Lender under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation, but shall not be required to issue Letters of Credit. SECTION 2.07 INTEREST. (a) RATE OPTIONS APPLICABLE TO LOANS. Each Committed Loan shall be comprised of Base Rate Loans or (except in the case of Swingline Loans which shall be made and maintained as Base Rate Loans) Eurodollar Loans, as the Borrower may request pursuant to SECTION 2.02 or 2.03, as applicable. Borrowings of more than one Type may be outstanding at the same time; PROVIDED, HOWEVER, that the Borrower may not request any Borrowing that, if made, would result in an aggregate of more than five separate Groups of Eurodollar Loans being outstanding hereunder at any one time. For this purpose, Loans having different Interest Periods, regardless of whether commencing on the same date, shall be considered separate Groups. (b) BASE RATE LOANS. Each Loan of a Class which is made as, or converted into, a Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made as, or converted into, a Base Rate Loan until it becomes due or is converted into a Loan of any other Type or repaid in full, at a rate per annum equal to the Applicable Margin for Base Rate Loans of such Class for such day plus the Base Rate for such day. Such interest shall be payable quarterly in arrears on each Interest Payment Date and, with respect to the principal amount of any Base Rate Loan converted to a Eurodollar Loan, on the date such Base Rate Loan is so converted. Any overdue principal of or interest on any Base Rate Loan of any Class shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the rate otherwise applicable to Base Rate Loans of the same Class for such day. (c) EURODOLLAR LOANS. Each Eurodollar Loan shall bear interest on the outstanding principal amount thereof, for each day during the Interest Period applicable thereto, at a rate per annum equal to the sum of the Applicable Margin for Eurodollar Loans for such day plus the Eurodollar Rate; PROVIDED, that if any Eurodollar Loan or any portion thereof shall, as a result of the definition of Interest Period, have an Interest Period of less than one month, such portion shall bear interest during such Interest Period at the rate applicable to Base Rate Loans during such period. Such interest shall be payable for each Interest Period on each Interest Payment Date. Any overdue principal amount of or interest on any Eurodollar Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the higher of (i) the sum of 2% plus the Applicable Margin for Eurodollar Loans for such day plus the Eurodollar Rate applicable to such Loan at the date such payment was due and (ii) the -41- sum of 2% plus the Applicable Margin for Eurodollar Loans for such day plus the quotient obtained (rounded upward, if necessary, to the nearest 1/100(th) of 1%) by dividing (x) the Applicable Interbank Offered Rate for one day (or if such amount due remains unpaid more than three Business Days, then for such other period of time not longer than six months as the Administrative Agent may select) deposits in Dollars in an amount approximately equal to such overdue payment by (y) 1.00 minus the Eurodollar Reserve Percentage (or, if the circumstances described in SECTION 3.02 shall exist, at a rate per annum equal to the sum of 2% plus the rate applicable to Revolving Base Rate Loans for such day). (d) COMPETITIVE BID LOANS. Subject to ARTICLE III, the unpaid principal amount of each Competitive Bid LIBOR Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the Eurodollar Rate for such Interest Period (determined in accordance with SECTION 2.07(c) as if the related Competitive Bid LIBOR Borrowing were a Eurodollar Borrowing) plus (or minus) the Competitive Bid Margin quoted by the Lender making such Loan. The unpaid principal amount of each Competitive Bid Absolute Rate Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Competitive Bid Absolute Rate quoted by the Lender making such Loan. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. Any overdue principal of or interest on any Competitive Bid Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the Base Rate for such day. (e) DETERMINATION AND NOTICE OF INTEREST RATES. The Administrative Agent shall determine each interest rate applicable to the Loans hereunder. The Administrative Agent shall give prompt notice to the Borrower and the participating Lenders of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error. Any notice with respect to Eurodollar Loans shall, without the necessity of the Administrative Agent so stating in such notice, be subject to adjustments in the Applicable Margin applicable to such Loans after the beginning of the Interest Period applicable thereto. When during an Interest Period any event occurs that causes an adjustment in the Applicable Margin applicable to Loans to which such Interest Period is applicable, the Administrative Agent shall give prompt notice to the Borrower and the Lenders of such event and the adjusted rate of interest so determined for such Loans, and its determination thereof shall be conclusive in the absence of manifest error. (f) DEFAULT INTEREST. Upon the occurrence and during the continuance of an Event of Default and regardless of whether or not any judgment has been entered thereon, the principal amount of and, to the extent permitted by law, interest on the Loans and any other amounts owing herein or under the other Loan Documents shall bear interest, payable on demand, at a per annum rate equal to (i) in the case of principal of any Loan, the rate otherwise applicable to such Loan during such period pursuant to this SECTION 2.07 plus 2.00% (without duplication of any amount owing in respect of Base Rate Loans under the third sentence of SECTION 2.07(b), in respect of Eurodollar Loans under the third sentence of SECTION 2.07(c) or in respect of any Competitive Bid Loan under the fourth sentence of SECTION 2.07(d)), (ii) in the case of interest on any Loan the Base Rate plus the Applicable Margin for Loans of such Class on such day plus 2.00% and (iii) in the case of any other amount, the Base Rate plus the Applicable Margin for Revolving Base Rate Loans plus 2.00%. SECTION 2.08 EXTENSION AND CONVERSION. (a) CONTINUATION CONVERSION OPTIONS. The Loans included in each Syndicated Loan shall bear interest initially at the type of rate specified by the Borrower in the applicable Notice of Syndicated Loan. Thereafter, the Borrower shall have the option, on any Business Day, to elect to change -42- or continue the type of interest rate borne by each Group of Syndicated Loans (subject in each case to the provisions of Article III and subsection 2.08(d)), as follows: (i) if such Loans are Base Rate Loans, the Borrower may elect to convert such Loans to Eurodollar Loans as of any Business Day; and (ii) if such Loans are Eurodollar Loans, the Borrower may elect to convert such Loans to Base Rate Loans or elect to continue such Loans as Eurodollar Loans for an additional Interest Period, subject to SECTION 3.05 in the case of any such conversion or continuation effective on any day other than the last day of the then current Interest Period applicable to such Loans. Each such election shall be made by delivering a notice, substantially in the form of EXHIBIT A-4 hereto (a "NOTICE OF EXTENSION/CONVERSION") to the Administrative Agent not later than 12:00 Noon on the third Business Day before the conversion or continuation selected in such notice is to be effective. A Notice of Extension/Conversion may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans, PROVIDED, that (i) such portion is allocated ratably among the Loans comprising such Group and (ii) the portion to which such Notice applies, and the remaining portion to which it does not apply, are each $5,000,000 or any larger multiple of $1,000,000. (b) CONTENTS OF NOTICE OF EXTENSION/CONVERSION. Each Notice of Extension/ Conversion shall specify: (i) the Group of Loans (or portion thereof) to which such notice applies; (ii) the date on which the conversion or continuation selected in such notice is to be effective, which shall comply with the applicable clause of subsection 2.08(a) above; (iii) if the Loans comprising such Group are to be converted, the new type of Loans and, if the Loans being converted are to be Eurodollar Loans, the duration of the next succeeding Interest Period applicable thereto; and (iv) if such Loans are to be continued as Eurodollar Loans for an additional Interest Period, the duration of such additional Interest Period. Each Interest Period specified in a Notice of Interest Rate Election shall comply with the provisions of the definition of the term "Interest Period". (c) NOTIFICATION TO LENDERS. Upon receipt of a Notice of Extension/Conversion from the Borrower pursuant to SUBSECTION 2.08(a) above, the Administrative Agent shall promptly notify each Lender of the contents thereof and such notice shall not thereafter be revocable by the Borrower. If no Notice of Extension/Conversion is timely received prior to the end of an Interest Period for any Group of Eurodollar Loans, the Borrower shall be deemed to have elected that such Group be converted to Base Rate Loans as of the last day of such Interest Period. (d) LIMITATION ON CONVERSION/CONTINUATION OPTIONS. The Borrower shall not be entitled to elect to convert any Syndicated Loans to, or continue any Syndicated Loans for an additional Interest Period as, Eurodollar Loans if (i) the aggregate principal amount of any Group of Eurodollar Loans created or continued as a result of such election would be less than $5,000,000 or (ii) a Default shall have occurred and be continuing when the Borrower delivers notice of such election to the Administrative Agent. -43- (e) CERTAIN MANDATORY CONVERSIONS AND PREPAYMENTS OF EURODOLLAR LOANS. On the date in which the aggregate unpaid principal amount of Eurodollar Loans comprising any Group of Loans shall be reduced, by payment or prepayment or otherwise, to less than $5,000,000, such Loans shall, on the last day of the then current Interest Period therefor, automatically be converted into Base Rate Syndicated Loans. Upon the occurrence and during the continuance of any Event of Default, (i) each Eurodollar Loan shall automatically, on the last day of the then current Interest Period therefor, be converted into a Syndicated Base Rate Loan and (ii) the obligation of the Lenders to make, or to continue or convert Syndicated Loans into, Eurodollar Loans shall be suspended. (f) ACCRUED INTEREST. Accrued interest on a Loan (or portion thereof) being extended or converted shall be paid by the Borrower (i) with respect to any Base Rate Loan being converted to a Eurodollar Loan, on the last day of the first fiscal quarter of the Borrower ending on or after the date of conversion and (ii) otherwise, on the date of extension or conversion. SECTION 2.09 SCHEDULED TERMINATION OF COMMITMENTS; MANDATORY PREPAYMENTS. The Commitments shall terminate on the Maturity Date, and any Loans then outstanding (together with accrued interest thereon) shall be due and payable on the Maturity Date. If on any date the aggregate of all Revolving Outstandings plus the aggregate principal amount of Competitive Bid Loans exceeds the aggregate amount of the Revolving Commitments or the aggregate amount of all LC Obligations exceeds the LC Committed Amount, the Borrower shall, within five Business Days, prepay outstanding Loans (as selected by the Borrower and notified to the Revolving Lenders through the Administrative Agent not less than three Business Days prior to the date of such payment) and/or Cash Collateralize outstanding Letters of Credit to the extent necessary to eliminate any such excess. SECTION 2.10 OPTIONAL PREPAYMENTS. (a) Subject in the case of any Fixed Rate Loan to SECTION 3.05, the Borrower may (i) with notice by 12:00 Noon on the date of such prepayment, prepay any Group of Base Rate Loans, any Swingline Borrowing or any Competitive Bid Borrowing bearing interest at the Base Rate pursuant to SECTION 3.02, in each case in whole at any time, or from time to time in part in an aggregate principal amount of $5,000,000 or any larger multiple of $1,000,000, or (ii) upon at least three Business Days' notice to the Administrative Agent, prepay any Group of Eurodollar Loans in whole at any time, or from time to time in part in an aggregate principal amount of $5,000,000 or any larger multiple of $1,000,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. Each such optional prepayment shall be applied to prepay ratably the Loans of the several Lenders included in such Group or Borrowing. (b) Except as provided in SUBSECTION 2.10(a) above, the Borrower may not prepay all or any portion of the principal amount of any Competitive Bid Loan prior to the maturity thereof. (c) Upon receipt of a notice of prepayment pursuant to this Section, the Administrative Agent shall promptly notify each Lender of the contents thereof and of such Lender's ratable share (if any) of such prepayment and such notice shall not thereafter be revocable by the Borrower. SECTION 2.11 ADJUSTMENT OF COMMITMENTS. (a) OPTIONAL TERMINATION OR REDUCTION OF REVOLVING COMMITTED AMOUNT. The Borrower may from time to time terminate in full or permanently reduce the Revolving Committed Amount upon five Business Days' prior written or telecopied notice to the Administrative Agent; PROVIDED, HOWEVER, that (i) no such termination or reduction shall be made which would cause the -44- Revolving Outstandings plus the aggregate principal amount of Competitive Bid Loans (after giving effect to any concurrent repayment of Revolving Loans, Competitive Bid Loans or Swingline Loans or Cash Collateralization of LC Obligations) to exceed the Revolving Committed Amount as so reduced, and (ii) any such partial reduction shall be in a minimum aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess thereof (or, if less, the full remaining amount of the then applicable Revolving Committed Amount). The Administrative Agent shall promptly notify each affected Lender of the receipt by the Administrative Agent of any notice from the Borrower pursuant to this SECTION 2.11(a). Any partial reduction of the Revolving Committed Amount pursuant to this SECTION 2.11(a) shall be applied to the Revolving Commitments of the Lenders pro-rata based upon their respective Revolving Commitment Percentages. The Borrower shall pay to the Administrative Agent for the account of the Lenders in accordance with the terms of SECTION 2.12, on the date of each termination or reduction of the Revolving Committed Amount, any fees accrued through the date of such termination or reduction on the amount of the Revolving Committed Amount so terminated or reduced. (b) AUTOMATIC TERMINATION AT MATURITY. The Revolving Commitments of the Lenders and the LC Commitments of the Issuing Lenders shall terminate automatically on the Maturity Date. The Swingline Commitment of the Swingline Lender shall terminate automatically on the Swingline Termination Date. (c) OPTIONAL REPLACEMENT OF LENDERS, NON-PRO-RATA TERMINATION OF COMMITMENTS. If (i) any Lender has demanded compensation or indemnification pursuant to SECTION 3.01 or SECTION 3.04, (ii) the obligation of any Lender to make Eurodollar Loans has been suspended pursuant to SECTION 3.02, (iii) any Lender is a Defaulting Lender or (iv) any Lender has failed to consent to a proposed amendment, waiver, discharge or termination which pursuant to the terms of SECTION 10.01 or any other provision of any Loan Document requires the consent of all of the Lenders and with respect to which the Required Lenders shall have granted their consent, the Borrower shall have the right, if no Default or Event of Default then exists, to (i) remove such Lender by terminating such Lender's Commitment in full or (ii) replace such Lender by causing such Lender to assign its Commitment (without payment of any assignment fee) to one or more existing Lenders or Eligible Assignees (each a "REPLACEMENT LENDER") pursuant to SECTION 10.06; PROVIDED, HOWEVER, that if the Borrower elects to exercise such right with respect to any Lender pursuant to CLAUSE (i) or (ii) above, it shall be obligated to remove or replace, as the case may be, all Lenders that have made similar requests for compensation pursuant to SECTION 3.01 or 3.04 or whose obligation to make Eurodollar Loans has been similarly suspended. The replacement of a Lender pursuant to this SECTION 2.11(c) shall be effective on the tenth Business Day (the "REPLACEMENT DATE") following the date of notice of such replacement to the Lenders through the Administrative Agent, subject to the satisfaction of the following conditions: (i) each Replacement Lender, and each Lender subject to replacement, shall have satisfied the conditions to an Assignment and Acceptance set forth in SECTION 10.06(b) and, in connection therewith, the Replacement Lender(s) shall pay: (A) to each Lender subject to replacement an amount equal in the aggregate to the sum of (x) the principal amount of, and all accrued but unpaid interest on, its outstanding Loans, (y) all LC Disbursements that have been funded by (and not reimbursed to) it under SECTION 2.06, together with all accrued but unpaid interest with respect thereto, and (z) all accrued but unpaid fees owing to it pursuant to SECTION 2.12; and (B) to the Issuing Lenders an amount equal to the aggregate amount owing by the replaced Lenders to the Issuing Lenders as reimbursement pursuant to -45- SECTION 2.06, to the extent such amount was not theretofore funded by such replaced Lenders; and (ii) the Borrower shall have paid to the Administrative Agent for the account of each replaced Lender an amount equal to all obligations owing to such replaced Lenders by the Borrower pursuant to this Agreement and the other Loan Documents (other than those obligations of the Borrower referred to in clause (i)(A) above). In the case of the removal of a Lender pursuant to this SECTION 2.11(c), upon (i) payment by the Borrower to the Administrative Agent for the account of the Lender subject to such removal of an amount equal to the sum of (A) the aggregate principal amount of all Loans and LC Obligations held by such Lender and (B) all accrued interest, fees and other amounts owing to such Lender hereunder, including, without limitation, all amounts payable by the Borrower to such Lender under ARTICLE III or SECTIONS 10.04 and 10.05, and (ii) provision by the Borrower to the Swingline Lender and each Issuing Lender of appropriate assurances and indemnities (which may include letters of credit) as each may reasonably require with respect to any continuing obligation of such removed Lender to purchase Participation Interests in any LC Obligations or Swingline Loans then outstanding, such Lender shall cease to constitute a Lender hereunder; provided, that the provisions of this Agreement (including, without limitation, the provisions of ARTICLE III and SECTIONS 10.04 and 10.05) shall continue to govern the rights and obligations of a removed Lender with respect to any Loans made, any Letters of Credit issued or any other actions taken by such removed Lender while it was a Lender. (d) OPTIONAL EXTENSIONS OF COMMITMENTS. (i) If the Borrower shall request, by notice to the Administrative Agent not less than 30 days prior to the Maturity Date then in effect, that the availability period for Revolving Loans be extended until the first anniversary of such Maturity Date, then the Administrative Agent shall promptly notify each Revolving Lender of such request, and each Revolving Lender shall notify the Borrower and the Administrative Agent not more than 15 Business Days after the date on which the Administrative Agent shall have received the Borrower's request (which date shall be set forth in the notice of such request given by the Administrative Agent) of its election so to extend (in such case, each a "REMAINING LENDER") or not extend the availability period for Revolving Loans. Any Lender which shall not timely notify the Administrative Agent of such election shall be deemed to have elected not to extend such availability period. (ii) If one or more Lenders shall timely notify the Administrative Agent pursuant to CLAUSE (d)(i) of this SECTION 2.11 of its election not to extend the availability period for Revolving Loans or shall be deemed to have elected not to extend the availability period for Revolving Loans by virtue of having not timely notified the Administrative Agent of its election to extend such availability period, then the Administrative Agent shall so advise the Borrower and the Remaining Lenders, and the Remaining Lenders or any of them shall have the right (but not the obligation), upon notice to the Administrative Agent not later than 10 Business Days immediately preceding the applicable Maturity Date, to increase their respective Revolving Commitments by an amount equal in the aggregate to the Revolving Commitments of the Lenders who have, or have been deemed to have, elected not to extend the availability period for Revolving Loans. Each Lender electing to increase its Revolving Commitment hereunder shall specify in its notice to the Administrative Agent the amount by which it is willing to increase its Revolving Commitment. Each increase in the Revolving Commitment of a Lender hereunder shall be evidenced by a written instrument executed by such Lender, the Administrative Agent -46- and the Borrower and shall take effect on the Maturity Date in effect for the Lenders who have, or have been deemed to have, elected not to extend the availability period for Revolving Loans. (iii) If the aggregate Revolving Commitments of the Lenders prior to any adjustment under this SECTION 2.10 shall exceed the aggregate Revolving Commitments of the Remaining Lenders that have agreed to increase their Revolving Commitments pursuant to SUBSECTION (d)(ii) of this SECTION 2.11, the Borrower may, with the approval of the Administrative Agent, such approval not to be unreasonably withheld, designate one or more Eligible Assignees willing to extend Revolving Commitments until the first anniversary of the Maturity Date in effect for the Lenders who have, or have been deemed to have, elected not to extend the availability period for Revolving Loans in an aggregate amount not greater than such excess. Any such Eligible Assignee shall, on or prior to the Maturity Date in effect for the Lenders who have, or have been deemed to have, elected not to extend the availability period for Revolving Loans, execute and deliver to the Borrower, the Administrative Agent and each Remaining Lender an instrument, satisfactory to the Borrower and the Administrative Agent, setting forth the amount of its Revolving Commitment and containing its agreement to become, and to perform all the obligations of, a Lender hereunder. The Revolving Commitment of such Eligible Assignee shall become effective, and such Eligible Assignee shall become a Lender hereunder, on the Maturity Date then in effect for the Lenders who have, or have been deemed to have, elected not to extend the availability period for Revolving Loans. (iv) The Borrower shall deliver to each Eligible Assignee and each Lender who has increased its Revolving Commitment pursuant to SECTION 2.10(d)(ii), on the Maturity Date in effect for the Lenders who have, or have been deemed to have, elected not to extend the availability period for Revolving Loans, a Revolving Note evidencing the Borrower's obligation to pay Revolving Loans made by such Eligible Assignee or such Lender pursuant to this Agreement. (v) If some or all of the Lenders shall have elected to extend the availability period for Revolving Loans as provided in this SECTION 2.11(d), then (A) the availability period with respect to the Revolving Commitments of such Lenders and any which becomes a Lender hereunder shall continue until the first anniversary of the Maturity Date in effect prior to such election and, as to such Lenders, the term "Maturity Date", as used herein, shall mean such first anniversary; (B) the Revolving Commitments of the Lenders who have, or have been deemed to have, elected not to extend the availability period for Revolving Loans shall continue in effect until the Maturity Date in effect prior to such extension and shall then terminate, and, as to such Lenders, the term "Maturity Date", as used herein, shall continue to mean such Maturity Date and the Borrower shall repay all such Revolving Loans on such date; and (C) on the Maturity Date in effect prior to such extension, each Lender who has, or has been deemed to have, elected not to extend the availability period for Revolving Loans Lender shall cease to be a Lender hereunder upon payment in full of all Revolving Loans, accrued interest, fees, costs and expenses due to such Lender hereunder; PROVIDED, that the provisions of this Agreement (including, without limitation, the provisions of ARTICLE III and SECTIONS 10.04 and 10.05) shall continue to govern the rights and obligations of such Lender with respect to any Loans made, any Letters of Credit issued or any other actions taken by such Lender while it was a Lender. (vi) If some or all of the Lenders shall have elected to extend the availability period for Revolving Loans as provided in this SECTION 2.11(d), the availability period for Swingline Loans shall, automatically without action on the part of the Borrower, continue until the date to which the Maturity Date has been extended, and the term "Swingline Termination Date", as used herein, shall mean such date. The foregoing notwithstanding (i) in the event that -47- the Swingline Lender is also a Lender who has not extended its Revolving Commitment hereunder, the Borrower's right to so extend the Swingline Termination Date shall be subject to the appointment of a successor Swingline Lender hereunder; and (ii) to the extent the Swingline Lender's Revolving Commitment has been reduced in connection with any such extension or there has been the appointment of a successor Swingline Lender whose Revolving Commitment is less than the Swingline Commitment existing immediately preceding such appointment, then the Swingline Termination Date may only be extended with respect to such lesser amount. (e) OPTIONAL INCREASE OF REVOLVING COMMITMENTS. (i) The Borrower shall have the right at any time prior to August 31, 2002 to increase the Revolving Committed Amount hereunder by an amount not to exceed $50,000,000 by causing one or more Eligible Assignees to become a Revolving Lender under this Agreement or by causing one or more existing Lenders to increase the amount of such Lender's Revolving Commitment; provided that the Revolving Commitment of each Eligible Assignee and any increase in the amount of the Revolving Commitment of each existing Lender shall be in an amount equal to $5,000,000 or any larger multiple of $1,000,000 and provided, further, that no Lender shall at any time be required to agree to a request of the Borrower to increase its Revolving Commitment or other obligations hereunder. (ii) Any increase in the aggregate Revolving Committed Amount pursuant to subsection (e)(i) shall be effective only upon the execution and delivery by each Eligible Assignee or existing Lender, as the case may be, to the Borrower and the Administrative Agent at least five Business Days before any such increase is to become effective of an instrument satisfactory to the Borrower and the Administrative Agent: (A) in the case of an Eligible Assignee, setting forth the amount of its Revolving Commitment and the date upon which it is to become effective (the "Commitment Increase Date") and containing its agreement to become, and to perform all the obligations of, a Lender hereunder; and (B) in the case of an existing Lender, setting forth the amount by which its Revolving Commitment hereunder is to be increased and the Commitment Increase Date applicable thereto. (iii) Any increase in the Revolving Committed Amount pursuant to subsection (e)(i) shall not be effective unless: (A) no Default or Event of Default shall have occurred and be continuing on the Commitment Increase Date; (B) each of the representations and warranties of the Borrower contained in this Agreement and the other Loan Documents shall be true and correct on and as of the Commitment Increase Date; (C) immediately after giving effect to such increase, the aggregate Revolving Committed Amount shall not exceed $205,000,000; and (D) each Lender (including each Eligible Assignee which becomes a Lender pursuant to this Section 2.11(e)) shall have received a certificate of the secretary -48- or assistant secretary of the Borrower as to the taking of any corporate action necessary in connection with such increase. (iv) From and after the Commitment Increase Date, the term "Lenders", as used herein, shall include all Eligible Assignees which become Lenders pursuant to this Section 2.11(e). SECTION 2.12 FEES. (a) FACILITY FEE. The Borrower shall pay to the Administrative Agent for the account of each Revolving Lender a fee (the "FACILITY FEE") on such Lender's Revolving Commitment Percentage of the daily Revolving Committed Amount, computed at a per annum rate for each day at a rate equal to the Applicable Margin then in effect. The Facility Fee shall commence to accrue on the Closing Date and shall be due and payable in arrears on last Business Day of each March, June, September and December (and any date that the Revolving Committed Amount is reduced as provided in SECTION 2.10(a) or (b) and the Maturity Date) for the calendar quarter or portion thereof ending on each such date, beginning with the first of such dates to occur after the Closing Date. (b) LETTER OF CREDIT FEES. (i) LETTER OF CREDIT FEES. The Borrower shall pay to the Administrative Agent for the account of each Lender a fee (the "LETTER OF CREDIT FEE") on such Lender's Revolving Commitment Percentage of the average daily maximum amount available to be drawn under each such Letter of Credit computed at a per annum rate for each day from the date of issuance to the date of expiration equal to the Applicable Margin in respect of Eurodollar Revolving Loans in effect from time to time. The Letter of Credit Fee will be payable quarterly in arrears on the last Business Day of each March, June, September and December for the immediately preceding quarter (or portion thereof), beginning with the first of such dates to occur after the date of issuance of such Letter of Credit and on the Maturity Date. If there is a change in the Applicable Margins during any period, the actual amount of each Letter of Credit shall be computed and multiplied by the Applicable Margins separately for each period during which such Applicable Margins are in effect. (ii) FRONTING FEES. The Borrower shall pay directly to each Issuing Lender for its own account a fronting fee in the amount (A) with respect to each Trade Letter of Credit, equal to .125% of the amount of such Trade Letter of Credit, due and payable upon the issuance thereof and (B) with respect to each Standby Letter of Credit, equal to .125% per annum on the daily maximum amount available to be drawn thereunder, due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date after the issuance of such letter of credit and on the Maturity Date. (iii) ISSUING LENDER FEES. In addition to the Letter of Credit Fee payable pursuant to CLAUSE (i) above and any fronting fees payable pursuant to CLAUSE (ii) above, the Borrower promises to pay to the Issuing Lender for its own account without sharing by the other Lenders the letter of credit fronting and negotiation fees agreed to by the Borrower and the Issuing Lender from time to time and the customary charges from time to time of the Issuing Lender with respect to the issuance, amendment, transfer, administration, cancellation and conversion of, and drawings under, such Letters of Credit (collectively, the "ISSUING LENDER FEES"). -49- (c) UTILIZATION FEE. The Borrower shall pay to the Administrative Agent for the account of each Revolving Lender a fee (the "UTILIZATION FEE") on such Lender's Revolving Commitment Percentage of the actual daily aggregate Revolving Outstandings with respect to each day on which the principal amount of all Loans and LC Obligations then outstanding exceeds 33% or 66%, as the case may be, of the aggregate Revolving Commitments (each such day a "UTILIZATION FEE DAY"). Such fee shall be computed with respect to each Utilization Fee Day at a rate equal to the Applicable Margin then in effect, and shall accrue with respect to each Utilization Fee Day occurring on and after the Closing Date to the later to occur of (i) the Maturity Date and (ii) the date on which all Loans and LC Obligations and interest thereon are paid in full and the commitments hereunder are terminated and, to the extent accrued during such period, shall be due and payable, quarterly in arrears, on the last Business Day of each March, June, September and December, beginning on the first of such dates to occur after the Closing Date. (d) AGENCY FEES. The Borrower shall pay an agency fee to the Administrative Agent's own account, in amounts and at times specified in the letter agreement dated May 8, 2002 among the Borrower and the Administrative Agent. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever. SECTION 2.13 PRO-RATA TREATMENT. Except to the extent otherwise provided herein: (a) Loans. Each Syndicated Loan, each payment or prepayment of principal of or interest on any Syndicated Loan, each payment of fees (other than the Issuing Lender Fees retained by the Issuing Lender for its own account and the fees retained by the Agents for their own account), each reduction of the Revolving Committed Amount and each conversion or continuation of any Syndicated Loan, shall be allocated pro-rata among the relevant Lenders in accordance with the respective Revolving Commitment Percentages, of such Lenders (or, if the Commitments of such Lenders have expired or been terminated, in accordance with the respective principal amounts of the outstanding Loans of the applicable Class and Participation Interests of such Lenders); PROVIDED, that in the event any amount paid to any Lender pursuant to this SUBSECTION (a) is rescinded or must otherwise be returned by the Administrative Agent, each Lender shall, upon the request of the Administrative Agent, repay to the Administrative Agent the amount so paid to such Lender, with interest for the period commencing on the date such payment is returned by the Administrative Agent until the date the Administrative Agent receives such repayment at a rate per annum equal to, during the period to but excluding the date two Business Days after such request, the Federal Funds Rate, and thereafter, the Base Rate plus two percent (2%) per annum. (b) LETTERS OF CREDIT. Each payment of LC Obligations shall be allocated to each Revolving Lender pro-rata in accordance with its Revolving Commitment Percentage; PROVIDED, that if any Revolving Lender shall have failed to pay its applicable pro-rata share of any LC Disbursement, then any amount to which such Revolving Lender would otherwise be entitled pursuant to this SUBSECTION (b) shall instead be payable to the Issuing Lender; PROVIDED, FURTHER, that in the event any amount paid to any Revolving Lender pursuant to this SUBSECTION (b) is rescinded or must otherwise be returned by the Issuing Lender, each Revolving Lender shall, upon the request of the Issuing Lender, repay to the Administrative Agent for the account of the Issuing Lender the amount so paid to such Revolving Lender, with interest for the period commencing on the date such payment is returned by the Issuing Lender until the date the Issuing Lender receives such repayment at a rate per annum equal to, during the period to but excluding the date two Business Days after such request, the Federal Funds Rate, and thereafter, the Base Rate plus two percent (2%) per annum. SECTION 2.14 SHARING OF PAYMENTS. The Lenders agree among themselves that, except to the extent otherwise provided herein, if any Lender shall obtain payment in respect of any Loan, unreimbursed LC Disbursements or any other obligation owing to such Lender under this Agreement -50- through the exercise of a right of setoff, banker's lien or counterclaim, or pursuant to a secured claim under Section 506 of the Bankruptcy Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, in excess of its pro-rata share of such payment as provided for in this Agreement, such Lender shall promptly pay in cash or purchase from the other Lenders a participation in such Loans, unreimbursed LC Disbursements, and other obligations in such amounts, and make such other adjustments from time to time, as shall be equitable to the end that all Lenders share such payment in accordance with their respective ratable shares as provided for in this Agreement; PROVIDED, that nothing in this SECTION 2.14 shall impair the right of any Lender to exercise any right of set-off or counterclaim it may have for payment of indebtedness of the Borrower other than its indebtedness hereunder. The Lenders further agree among themselves that if payment to a Lender obtained by such Lender through the exercise of a right of setoff, banker's lien, counterclaim or other event as aforesaid shall be rescinded or must otherwise be restored, each Lender which shall have shared the benefit of such payment shall, by payment in cash or a repurchase of a participation theretofore sold, return its share of that benefit (together with its share of any accrued interest payable with respect thereto) to each Lender whose payment shall have been rescinded or otherwise restored. The Borrower agrees that any Lender so purchasing such a participation may, to the fullest extent permitted by law, exercise all rights of payment, including setoff, banker's lien or counterclaim, with respect to such participation as fully as if such Lender were a holder of such Loan, LC Obligation or other obligation in the amount of such participation. Except as otherwise expressly provided in this Agreement, if any Lender or the Administrative Agent shall fail to remit to the Administrative Agent or any other Lender an amount payable by such Lender or the Administrative Agent to the Administrative Agent or such other Lender pursuant to this Agreement on the date when such amount is due, such payments shall be made together with interest thereon if paid within two Business Days of the date when such amount is due at a per annum rate equal to the Federal Funds Rate and thereafter at a per annum rate equal to the Base Rate until the date such amount is paid to the Administrative Agent or such other Lender. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this SECTION 2.14 applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders under this SECTION 2.14 to share in the benefits of any recovery on such secured claim. SECTION 2.15 PAYMENTS; COMPUTATIONS. (a) PAYMENTS BY THE BORROWER. Each payment of principal of and interest on Loans, LC Obligations and fees hereunder (other than fees payable directly to the Issuing Lenders or the Agents) shall be paid not later than 2:00 P.M. on the date when due, in funds immediately available to the Administrative Agent at the Administrative Agent's Office. Each such payment shall be made irrespective of any set-off, counterclaim or defense to payment which might in the absence of this provision be asserted by the Borrower or any Affiliate against any Agent or any Lender. Except as otherwise provided herein, payments received after 2:00 P.M. shall be deemed to have been received on the next Business Day. The Borrower shall, at the time it makes any payments under this Agreement, specify to the Administrative Agent the Loan, Letters of Credit, fees or other amounts payable by the Borrower hereunder to which such payment is to be applied (and if it fails so to specify or if such application would be inconsistent with the terms hereof, the Administrative Agent shall, subject to SECTION 2.13, distribute such payment to the Lenders in such manner as the Administrative Agent may deem appropriate). The Administrative Agent will distribute such payments in like funds to the applicable Lenders on the date of receipt thereof, if such payment is received prior to 2:00 P.M.; otherwise the Administrative Agent will distribute such payment to the applicable Lenders on the next succeeding Business Day. Whenever any payment hereunder shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day unless (in the case of Eurodollar Loans) such Business Day falls in another calendar month, in which case the -51- date for payment thereof shall be the next preceding Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. The Borrower hereby authorizes and directs the Administrative Agent to debit any account maintained by the Borrower with the Administrative Agent to pay when due any amounts required to be paid from time to time under this Agreement. (b) DISTRIBUTIONS BY THE ADMINISTRATIVE AGENT. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date, and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate. (c) COMPUTATIONS. Except for Base Rate Loans, in which case interest shall be computed on the basis of a 365 or 366 day year as the case may be (unless the Base Rate is determined by reference to the Federal Funds Rate), all computations of interest and fees hereunder shall be made on the basis of the actual number of days elapsed over a year of 360 days. Interest shall accrue from and include the date of borrowing (or continuation or conversion) but excluding the date of payment. ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY SECTION 3.01 TAXES. (a) PAYMENTS NET OF CERTAIN TAXES. Any and all payments by the Borrower to or for the account of any Lender or any Agent hereunder or under any other Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender (or its Applicable Lending Office) and each Agent, taxes imposed on its income, and franchise taxes imposed on it, by: (i) the jurisdiction under the laws of which such Lender (or its Applicable Lending Office) or such Agent (as the case may be) is incorporated or organized or any political subdivision thereof, (ii) the jurisdiction in which its principal executive office is located or (iii) reason of any connection between it and the jurisdiction imposing such tax other than a connection arising from its having executed, delivered or performed its obligations under, or received payment under or enforced, this Agreement (all such non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "TAXES"). If the Borrower or the Administrative Agent shall be required by law to deduct or withhold any Taxes from or in respect of any sum payable under this Agreement or any other Loan Document to any Lender or any other Agent, (i) the sum payable shall be increased as necessary so that after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this SECTION 3.01) such Lender or such Agent receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and withholdings, (iii) the Borrower shall pay the full amount deducted or withheld to the relevant taxation Governmental Authority or other authority in accordance with applicable law and (iv) the Borrower shall furnish to the Administrative Agent, at the office of the Administrative Agent specified in SCHEDULE 10.02, the original or a certified copy of a receipt evidencing payment thereof. -52- (b) OTHER TAXES. In addition, the Borrower agrees to pay any and all present or future stamp or documentary, excise or property taxes or similar levies (including mortgage recording taxes) which arise from any payment made under this Agreement or any other Loan Document or from the execution or delivery of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as "OTHER TAXES"). (c) ADDITIONAL TAXES. If the Borrower fails to pay Taxes or Other Taxes in accordance with the provisions of SECTIONS 3.01(a) or (b), the Borrower agrees to indemnify each Lender and each Agent for the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this SECTION 3.01) paid by such Lender or such Agent (as the case may be) and any liability (including penalties, interest and expenses) arising from such failure or with respect thereto. (d) TAX FORMS AND CERTIFICATES. Each Lender (or its Applicable Lending Office) organized under the laws of a jurisdiction outside the United States (a "NON-U.S. LENDER"), on or prior to the date of its execution and delivery of this Agreement in the case of each Lender listed on the signature pages hereof and on or prior to the date on which it becomes a Lender in the case of each other Lender, and from time to time thereafter as required by law, shall provide the Borrower and the Administrative Agent with (i) Internal Revenue Service Form W-8 BEN or W-8 ECI, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces or eliminates the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States, (ii) Internal Revenue Service Form W-8 or W-9, as appropriate, or any successor form prescribed by the Internal Revenue Service and (iii) any other form or certificate required by any taxing authority (including any certificate required by Sections 871(h) and 881(c) of the Internal Revenue Code), certifying that such Lender is entitled to an exemption from tax on payments pursuant to this Agreement or any of the other Loan Documents. (e) FAILURE TO PROVIDE TAX FORMS AND CERTIFICATES. For any period with respect to which a Lender (or its Applicable Lending Office) has failed to provide the Borrower and the Administrative Agent with the appropriate form pursuant to SECTION 3.01(d) (unless such failure is due to a change in treaty, law or regulation occurring subsequent to the date on which a form originally was required to be provided), such Lender shall not be entitled to indemnification under SECTION 3.01(a) or 3.01(b) with respect to Taxes imposed by the United States; PROVIDED, HOWEVER, that should a Lender, which is otherwise exempt from withholding tax, become subject to Taxes because of its failure to deliver a form required to be delivered hereunder, the Borrower shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Taxes. (f) OBLIGATIONS IN RESPECT OF NON-U.S. LENDERS. The Borrower shall not be required to indemnify any Non-U.S. Lender or to pay any additional amounts to any Non-U.S. Lender, in respect of United States Federal withholding tax pursuant to SUBSECTIONS (a) or (b) above to the extent that the obligation to withhold amounts with respect to United States Federal withholding tax existed on the date such Non-U.S. Lender became a party to this Agreement (or, in the case of a participant, on the date such participant acquired its participation interest) or, with respect to payments to a new Applicable Lending Office, the date such Non-U.S. Lender designated such new Applicable Lending Office with respect to a Loan; PROVIDED, HOWEVER, that this SUBSECTION (f) shall not apply (i) to any participant or new Applicable Lending Office that becomes a participant or new Applicable Lending Office as a result of an assignment, participation, transfer or designation made at the request of the Borrower and (ii) to the extent the indemnity payment or additional amounts any participant, or any Lender acting through a new Applicable Lending Office, would be entitled to receive (without regard to this SUBSECTION (f)) do not exceed the -53- indemnity payment or additional amounts that the Person making the assignment, participation or transfer to such participant, or Lender (or participant) making the designation of such new Applicable Lending Office, would have been entitled to receive in the absence of such assignment, participation, transfer or designation. (g) MITIGATION. If the Borrower is required to pay additional amounts to or for the account of any Lender (or its Applicable Lending Office) pursuant to this SECTION 3.01, then such Lender will agree to use reasonable efforts to change the jurisdiction of its Applicable Lending Office so as to eliminate or reduce any such additional payment which may thereafter accrue if such change, in the judgment of such Lender, is not otherwise disadvantageous to such Lender. (h) TAX RECEIPTS. Within thirty days after the date of any payment of Taxes, the Borrower shall furnish to the Agent the original or a certified copy of a receipt evidencing such payment (to the extent one is so provided). SECTION 3.02 ILLEGALITY. If, on or after the date of this Agreement, the adoption of any applicable Law, or any change in any applicable Law, 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 Lender (or its Applicable Lending Office) with any request or directive (whether or not having the force of Law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Lender (or its Applicable Lending Office) to make, maintain or fund any of its Eurodollar Loans and such Lender shall so notify the Administrative Agent, the Administrative Agent shall forthwith give notice thereof to the other Lenders and the Borrower, whereupon until such Lender notifies the Borrower and the Administrative Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Lender to make Eurodollar Loans, or to convert outstanding Loans into Eurodollar Loans, shall be suspended. Before giving any notice to the Administrative Agent pursuant to this SECTION 3.02, such Lender shall designate a different Applicable Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. If such notice is given, each Eurodollar Loan of such Lender then outstanding shall be converted to a Base Rate Loan either (i) on the last day of the then current Interest Period applicable to such Eurodollar Loan if such Lender may lawfully continue to maintain and fund such Loan to such day or (ii) immediately if such Lender shall determine that it may not lawfully continue to maintain and fund such Loan to such day. SECTION 3.03 BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR. If on or prior to the first day of any Interest Period for any Eurodollar Loan or Competitive Bid LIBOR Loan: (i) the Administrative Agent determines (which determination shall be conclusive) that by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the applicable Eurodollar Rate for such Interest Period; or (ii) in the case of Eurodollar Loans, Lenders having 50% or more of the aggregate amount of the Commitments advise the Administrative Agent that the Applicable Interbank Offered Rate as determined by the Administrative Agent will not adequately and fairly reflect the cost to such Lenders of funding their Eurodollar Loans for such Interest Period; the Administrative Agent shall forthwith give notice thereof to the Borrower and the Lenders, whereupon until the Administrative Agent notifies the Borrower that the circumstances giving rise to such suspension no longer exist, (i) the obligations of the Lenders to make Eurodollar Loans, or to continue or convert outstanding Loans as or into Eurodollar Loans, shall be suspended and (ii) each outstanding Eurodollar -54- Loan shall be converted into a Base Rate Loan on the last day of the then current Interest Period applicable thereto. Unless the Borrower notifies the Administrative Agent at least two Business Days before the date of any Fixed Rate Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a Syndicated Loan, such Borrowing shall instead be made as a Base Rate Borrowing in the same aggregate principal amount as the requested Borrowing and (ii) if such affected Borrowing is a Competitive Bid LIBOR Borrowing, the Competitive Bid LIBOR Loans comprising such Borrowing shall be made in the same aggregate principal amount as the requested Borrowing and shall bear interest for each day from and including the first day to but excluding the last day of the Interest Period applicable thereto at the rate applicable to Revolving Base Rate Loans for such day. SECTION 3.04 INCREASED COSTS AND REDUCED RETURN. (a) If on or after (x) the date hereof, in the case of any Committed Loan or Letter of Credit or any obligation to make Committed Loans or issue or participate in any Letter of Credit or (y) the date of any related Competitive Bid, the adoption of or any change in any applicable Law or in the interpretation or application thereof applicable to any Lender (or its Applicable Lending Office), or compliance by any Lender (or its Applicable Lending Office) with any request or directive (whether or not having the force of Law) from any central bank or other Governmental Authority: (i) shall subject such Lender (or its Applicable Lending Office) to any tax of any kind whatsoever with respect to any Letter of Credit, any Eurodollar Loans made by it or any of its Notes or its obligation to make Eurodollar Loans or to participate in Letters of Credit, or change the basis of taxation of payments to such Lender (or its Applicable Lending Office) in respect thereof (except for (A) Taxes and Other Taxes covered by SECTION 3.01 (including Taxes imposed solely by reason of any failure of such Lender to comply with its obligations under SECTION 3.01(d)) and (B) changes in taxes measured by or imposed upon the overall net income, or franchise tax (imposed in lieu of such net income tax), of such Lender or its Applicable Lending Office, branch or any affiliate thereof)); (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender (or its Applicable Lending Office) which is not otherwise included in the determination of the Eurodollar Rate hereunder; or (iii) shall impose on such Lender (or its Applicable Lending Office) any other condition (excluding any tax of any kind whatsoever); and the result of any of the foregoing is to increase the cost to such Lender (or its Applicable Lending Office) of making, converting into, continuing or maintaining any Fixed Rate Loans or issuing or participating in Letters of Credit or to reduce any amount receivable hereunder in respect thereof, then, in any such case, upon notice to the Borrower from such Lender, through the Administrative Agent, in accordance herewith, the Borrower shall be obligated to promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender on an after-tax basis (after taking into account applicable deductions and credits in respect of the amount indemnified) for such increased cost or reduced amount receivable. (b) If any Lender shall have determined that the adoption or the becoming effective of, or any change in, or any change by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof in the interpretation or administration of, any applicable Law, regarding capital adequacy, or compliance by such Lender, or its parent corporation, with -55- any request or directive regarding capital adequacy (whether or not having the force of Law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender's (or parent corporation's) capital or assets as a consequence of its 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 parent corporation's) policies with respect to capital adequacy), then, upon notice from such Lender to the Borrower, the Borrower shall be obligated to pay to such Lender such additional amount or amounts as will compensate such Lender on an after-tax basis (after taking into account applicable deductions and credits in respect of the amount indemnified) for such reduction. Each determination by any such Lender of amounts owing under this SECTION 3.04 shall, absent manifest error, be conclusive and binding on the parties hereto; PROVIDED, that the Borrower shall not be required to compensate any Lender pursuant to SUBSECTION (a) above or this SUBSECTION (b) for any additional costs or reductions suffered more than 180 days prior to the date such Lender notifies the Borrower of the circumstances giving rise to such additional costs or reductions and of such Lender's intentions to claim compensation therefor, and PROVIDED FURTHER that, if the change in Law or in the interpretation or administration thereof giving rise to such additional costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. (c) A certificate of each Lender setting forth such amount or amounts as shall be necessary to compensate such Lender or its holding company as specified in SUBSECTION (a) or (b) above, as the case may be, shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay each Lender or the Issuing Lender the amount shown as due on any such certificate delivered by it within 10 Business Days after receipt of the same. (d) Promptly after any Lender becomes aware of any circumstance that will, in its sole judgment, result in a request for increased compensation pursuant to this SECTION 3.04, such Lender shall notify the Borrower thereof. Failure on the part of any Lender so to notify the Borrower or to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital with respect to any period shall not constitute a waiver of such Lender's right to demand compensation with respect to such period or any other period. The protection of this SECTION 3.04 shall be available to each Lender regardless of any possible contention of the invalidity or inapplicability of the law, rule, regulation, guideline or other change or condition which shall have occurred or been imposed. SECTION 3.05 FUNDING LOSSES. The Borrower shall indemnify each Lender against any loss or reasonable expense (including any loss of anticipated profits) which such Lender may sustain or incur as a consequence of (i) any failure by the Borrower to fulfill on the date of any Borrowing hereunder the applicable conditions set forth in ARTICLE IV, so long as any such failure is not solely due to the failure of the Agent or any Lender to comply with its obligations hereunder in all material respects, (ii) any failure by the Borrower to borrow or to refinance, convert or continue any Loan hereunder after irrevocable notice of such Borrowing, refinancing, conversion or continuation has been given pursuant to SECTION 2.02 or 2.08, so long as any such failure is not solely due to the failure of the Agent or any Lender to comply with its obligations hereunder in all material respects, (iii) any payment, prepayment or conversion of a Fixed Rate Loan, whether voluntary or involuntary, pursuant to any other provision of this Agreement or otherwise made on a date other than the last day of the Interest Period applicable thereto, so long as any such payment, prepayment or conversion is not solely due to the failure of the Agent or any Lender to comply with its obligations hereunder in all material respects, (iv) any default in payment or prepayment of the principal amount of any Loan or any part thereof or interest accrued thereon, as and when due and payable (at the due date thereof, by irrevocable notice of prepayment or otherwise), or (v) the occurrence of any Event of Default, including, in each such case, any loss or reasonable expense sustained or incurred or to be sustained or incurred in liquidating or employing -56- deposits from third parties acquired to effect or maintain such Loan or any part thereof as a Fixed Rate Loan. Such loss or reasonable expense shall include an amount equal to the excess, if any, as reasonably determined by such Lender, of (i) its cost of obtaining the funds for the Loan being paid, prepaid, converted or not borrowed (based on the applicable Eurodollar Rate), for the period from the date of such payment, prepayment, conversion or failure to borrow, convert or continue to the last day of the Interest Period for such Loan (or, in the case of a failure to borrow, the Interest Period for such Loan which would have commenced on the date of such failure to borrow, convert or continue) over (ii) the amount of interest (as reasonably determined by such Lender) that would be realized by such Lender in reemploying the funds so paid, prepaid, converted or not borrowed, converted or continued for such period or Interest Period, as the case may be. A certificate of any Lender setting forth any amount or amounts which such Lender is entitled to receive pursuant to this Section 3.05 shall be delivered to the Borrower and shall be conclusive absent manifest error. SECTION 3.06 BASE RATE LOANS SUBSTITUTED FOR AFFECTED FIXED RATE LOANS. If (i) the obligation of any Lender to make, or to continue or convert outstanding Loans as or to, Eurodollar Loans has been suspended pursuant to SECTION 3.02 or (ii) any Lender has demanded compensation under SECTION 3.01 or 3.04 with respect to its Eurodollar Loans, and in any such case the Borrower shall, by at least five Business Days' prior notice to such Lender through the Administrative Agent, have elected that the provisions of this SECTION 3.06 shall apply to such Lender, then, unless and until such Lender notifies the Borrower that the circumstances giving rise to such suspension or demand for compensation no longer exist, all Loans which would otherwise be made by such Lender as (or continued as or converted to) Eurodollar Loans shall instead be Base Rate Loans (on which interest and principal shall be payable contemporaneously with the related Eurodollar Loans of the other Lenders). If such Lender notifies the Borrower that the circumstances giving rise to such suspension or demand for compensation no longer exist, the principal amount of each such Base Rate Loan shall be converted into a Eurodollar Loan on the first day of the next succeeding Interest Period applicable to the related Eurodollar Loans of the other Lenders. ARTICLE IV CONDITIONS SECTION 4.01 CONDITIONS TO CLOSING. The obligation of each Lender to make a Loan or issue a Letter of Credit on the Closing Date is subject to the satisfaction of the following conditions: (a) EXECUTED LOAN DOCUMENTS. Receipt by the Administrative Agent of duly executed copies of: (i) this Agreement; (ii) the Notes, if any, (iii) the Pledge Agreement and (iv) the Trust Agreement, each of which shall be in full force and effect. (b) LEGAL MATTERS. All legal matters incident to this Agreement and the borrowings hereunder shall be satisfactory to the Administrative Agent and to Mayer, Brown, Rowe & Maw, counsel for the Administrative Agent. (c) ORGANIZATION DOCUMENTS. The Administrative Agent shall have received: (i) a copy of the Organization Documents of the Borrower, certified as of a recent date by the Secretary of State of its respective state of organization, and a certificate as to the good standing of the Borrower, from such Secretary of State, as of a recent date; (ii) a certificate of the Secretary or Assistant Secretary of the Borrower dated the Closing Date and certifying (A) that the Organization Documents of the Borrower have not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to CLAUSE (i) above; (B) that attached thereto is a true and complete copy of the code of regulations of the Borrower as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in CLAUSE (C) below, (C) that attached thereto is a true and -57- complete copy of resolutions duly adopted by the board of directors of the Borrower authorizing the execution, delivery and performance of the Loan Documents and the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect; and (D) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of the Borrower; (iii) a certificate of another officer of the Borrower as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to CLAUSE (ii) above; and (iv) such other documents as the Administrative Agent or Mayer, Brown, Rowe & Maw, counsel for the Administrative Agent, may reasonably request. (d) OFFICER'S CERTIFICATE. The Agent shall have received a certificate, dated the Closing Date and signed by a Responsible Officer of the Borrower, (i) confirming compliance with the conditions precedent set forth in PARAGRAPHS (b) and (c) of Section 4.02 and (ii) certifying the current Worthington's Ratings. (e) OPINIONS OF COUNSEL. On the Closing Date, the Administrative Agent shall have received a favorable written opinion of Vorys, Sater, Seymour and Pease LLP, special counsel to the Borrower or, as appropriate or customary, of in-house counsel of the Borrower, addressed to the Administrative Agent and each Lender, dated the Closing Date, substantially in the form of EXHIBIT F hereto and covering such additional matters incident to the transactions contemplated hereby as the Administrative Agent or the Required Lenders may reasonably request. (f) REPAYMENT OF REFINANCED AGREEMENT. The Administrative Agent shall be satisfied that no later than as of the Closing Date, the commitments under the Second Amended and Restated Loan Agreement dated as of October 14, 1998, as amended through the Closing Date, among the Borrower, the Lenders party thereto and The Bank of Nova Scotia and PNC Bank, National Association, as Agents for the Lenders (the "REFINANCED AGREEMENT"), shall be terminated, all loans outstanding under the Refinanced Agreement shall be repaid in full, together with accrued interest thereon (including, without limitation, any prepayment premium), and all other amounts owing pursuant to the Refinanced Agreement shall be repaid in full. (g) FINANCIAL STATEMENTS. The Administrative Agent and each Lender shall have received and be satisfied with the (i) the audited consolidated financial statements of each of the Borrower for the fiscal year ending May 31, 2001, audited by Ernst & Young, or other nationally recognized independent public accountants, and containing an opinion of such firm that such financial statements present fairly, in all material respects, the financial position and results of operations of the Borrower and its Consolidated Subsidiaries and are prepared in conformity with GAAP, and (ii) unaudited, consolidated, interim financial statements of the Borrower and its Consolidated Subsidiaries for the fiscal quarter ending February 28, 2002. (h) CONSENTS. All necessary governmental (domestic or foreign), regulatory and third party approvals, if any, in connection with the transactions contemplated by this Agreement and the other Loan Documents shall have been obtained and remain in full force and effect, in each case without any action being taken by any competent authority which could restrain or prevent such transaction or impose, in the reasonable judgment of the Administrative Agent, materially adverse conditions upon the consummation of such transactions. (i) PAYMENT OF FEES. All costs, fees and expenses due to the Administrative Agent and the Lenders on or before the Closing Date shall have been paid. -58- (j) COUNSEL FEES. The Administrative Agent shall have received full payment from the Borrower of the reasonable and actual fees and expenses of Mayer, Brown, Rowe & Maw described in SECTION 10.04 which are billed through the Closing Date. (k) DELIVERY OF PLEDGED NOTES. All of the Pledged Notes, which Pledged Notes shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, with signatures appropriately guaranteed, if necessary, all in form and substance satisfactory to the Collateral Agent, shall have been delivered to the Collateral Agent. All corporate and legal proceedings and instruments and agreements relating to the transactions contemplated by this Agreement or in any other document delivered in connection herewith or therewith shall be satisfactory in form and substance to the Administrative Agent and its counsel, and the Administrative Agent shall have received all information and copies of all documents and papers, including records of corporate proceedings, governmental approvals, good standing certificates and bring- down telegrams, if any, which the Administrative Agent reasonably may have requested in connection therewith, such documents and papers where appropriate to be certified by proper corporate or Governmental Authorities. The documents referred to in this SECTION 4.01 shall be delivered to the Administrative Agent no later than the Closing Date. The certificates and opinions referred to in this SECTION shall be dated the Closing Date. Promptly upon the satisfaction of each of the conditions contained in this SECTION 4.01, the Administrative Agent shall notify the Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding on all parties hereto. If the Closing does not occur before 5:00 P.M. on June 30, 2002, the Commitments shall terminate at the close of business on such date and all unpaid facility fees accrued to such date shall be due and payable on such date. SECTION 4.02 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of any Lender to make a Loan on the occasion of any Borrowing, and the obligation of any Issuing Lender to issue (or renew or extend the term of) any Letter of Credit, is subject to the satisfaction of the following conditions: (a) NOTICE. The Borrower shall have delivered (i) in the case of any Revolving Loan, to the Administrative Agent, an appropriate Notice of Borrowing, duly executed and completed, by the time specified in SECTION 2.02 or 2.03, (ii) in the case of any Letter of Credit, to the Issuing Lender, an appropriate Letter of Credit Request duly executed and completed in accordance with the provisions of SECTION 2.06, and (iii) in the case of any Swingline Loan, to the Swingline Lender, a Swingline Loan Request, duly executed and completed, by the time specified in SECTION 2.02. (b) REPRESENTATIONS AND WARRANTIES. The representations and warranties made by the Borrower in any Loan Document are true and correct in all material respects at and as if made as of such date except to the extent they expressly relate to an earlier date. (c) No Default or Event of Default shall exist or be continuing either prior to or after giving effect thereto. (d) AVAILABILITY. Immediately after giving effect to the making of a Loan (and the application of the proceeds thereof) or to the issuance of a Letter of Credit, as the case may be, (i) the Revolving Outstandings plus the aggregate principal amount of Competitive Bid Loans shall not exceed the Revolving Committed Amount, (ii) the sum of LC Obligations outstanding shall not exceed the LC Committed Amount, (iii) the sum of Swingline Loans outstanding shall not exceed the Swingline Committed Amount and (iv) the principal amount of all Competitive Bid Loans shall not exceed the Revolving Committed Amount. -59- The delivery of each Notice of Borrowing, Swingline Loan Request, notice requesting an extension of the availability period for Revolving Loans pursuant to SECTION 2.11(d) and each request for a Letter of Credit shall constitute a representation and warranty by the Borrower of the correctness of the matters specified in subSECTIONs (b) and (c) above. ARTICLE V REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants to the Agents and the Lenders that: SECTION 5.01 ORGANIZATION. The Borrower and each of its Active Restricted Subsidiaries is a corporation duly organized and in good standing under the laws of the state of its incorporation, is duly qualified in all jurisdictions where required by the conduct of its business or ownership of its assets, except where the failure to so qualify would not have a Material Adverse Effect, and has the power and authority to own and operate its assets and to conduct its business as is now done. SECTION 5.02 FINANCIAL CONDITION. (a) AUDITED FINANCIAL STATEMENTS. The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of May 31, 2001 and the related consolidated statements of income and cash flows for the fiscal year then ended, reported on by Ernst & Young and set forth in the Borrower's 2001 Form 10-K, a copy of which has been delivered to each of the Lenders, fairly present, in conformity with GAAP, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year. (b) INTERIM FINANCIAL STATEMENTS. The unaudited consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of February 28, 2002 and the related unaudited consolidated statements of income and cash flows for the six months then ended, set forth in the Borrower's Latest Form 10-Q, a copy of which has been delivered to each of the Lenders, fairly present, in conformity with GAAP applied on a basis consistent with the financial statements referred to in subSECTION (a) of this SECTION 5.02, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such six-month period (subject to normal year-end audit adjustments). (c) MATERIAL ADVERSE CHANGE. Since May 31, 2001, except as reflected in the interim financial statements through February 28, 2002, there has been no change in the business, assets, financial condition or operations of the Borrower and its Consolidated Subsidiaries, considered as a whole, but excluding the impact of the Consolidation Plan, that would materially and adversely affect the Borrower's ability to perform any of its respective obligations under this Agreement or the other Loan Documents (a "Material Adverse Change"), and no event or development has occurred which could reasonably be expected to result in a Material Adverse Effect. (d) POST-CLOSING FINANCIAL STATEMENTS. The financial statements delivered to the Lenders pursuant to SECTION 6.01(a)(i) , (a)(iii) , (b) and (c), if any, (i) have been prepared in accordance with GAAP (except as may otherwise be permitted under SECTION 6.01(a), (b) and (c)) and (ii) present fairly (on the basis disclosed in the footnotes to such financial statements, if any) the consolidated financial condition, results of operations and cash flows of the Borrower and its Consolidated Subsidiaries as of the respective dates thereof and for the respective periods covered thereby. SECTION 5.03 LITIGATION, ETC. As of the date hereof, there are no actions, suits, proceedings or governmental investigations pending, or, to its knowledge, threatened against the -60- Borrower or any of its Subsidiaries which, in the reasonable judgment of the Borrower, would result in a Material Adverse Effect. SECTION 5.04 TAXES. United States Federal income tax returns of the Borrower and its Consolidated Subsidiaries have been examined and closed through the fiscal year ended May 31, 1990 and for the fiscal years ended May 31, 1996 through May 31, 1998. Such returns for the fiscal years ended May 31, 1991 through May 31, 1995 are currently on appeal with the IRS. The Borrower and its Restricted Subsidiaries have filed all United States Federal income tax returns and all other material tax returns which are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Borrower or any Restricted Subsidiary. The charges, accruals and reserves on the books of the Borrower and its Restricted Subsidiaries in respect of taxes or other governmental charges are, in the opinion of the Borrower, adequate. SECTION 5.05 AUTHORITY. The Borrower has full power and authority to enter into the transactions provided for in this Agreement. The documents to be executed by it in connection with this Agreement, when executed and delivered by it will constitute the legal, valid and binding obligations of it enforceable in accordance with their respective terms except as such enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or similar laws in effect from time to time affecting the rights of creditors generally and except as such enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). SECTION 5.06 OTHER DEFAULTS. There does not now exist any material default or violation by the Borrower or any Restricted Subsidiary of or under any of the terms, conditions or obligations of: (i) its Articles or Certificate of Incorporation and Regulations or Bylaws, as applicable, (ii) any indenture, mortgage, deed of trust, franchise, permit, contract, agreement, or other instrument to which it is a party or by which it is bound or (iii) any law, regulation, ruling, order, injunction, decree, condition or other requirement applicable to or imposed upon it by any law or by any governmental authority, court or agency; and the transactions contemplated by this Agreement and the other Loan Documents will not result in any such default or violation. As used herein, a material default or violation will mean one which would result in a Material Adverse Effect. SECTION 5.07 LICENSES, ETC. The Borrower and each of its Restricted Subsidiaries has obtained any and all licenses, permits, franchises, or other governmental authorizations necessary for the ownership of its properties and the conduct of its business, except where failure to obtain any such item would not cause a Material Adverse Effect. SECTION 5.08 ERISA. The Borrower and each of its Subsid iaries is in compliance with the applicable provisions of ERISA, the applicable provisions of the Code and other related Federal and state laws and the regulations and published interpretations thereunder, to the extent necessary to avoid a Material Adverse Effect. SECTION 5.09 ENVIRONMENTAL MATTERS. The Borrower and its Subsidiaries are in material compliance with Environmental Laws and neither the Borrower nor any of its Subsidiaries are subject to any liability or obligation under any Environmental Laws which would have a Material Adverse Effect. SECTION 5.10 OWNERSHIP OF PROPERTY; LIENS. The Borrower and each Restricted Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as would not, individually or in the aggregate, have a Material Adverse Effect. As of the Effective Date, the -61- property of the Borrower and its Restricted Subsidiaries is subject to no Liens, other than Liens permitted by SECTION 7.02. SECTION 5.11 INSURANCE. The properties of the Borrower and its Restricted Subsidiaries are insured with responsible insurance companies against loss or damage from hazards and the Borrower and its Restricted Subsidiaries maintain public liability insurance, all in amounts reasonably consistent with the Borrower's current practices. SECTION 5.12 SUBSIDIARIES. Schedule 5.12 sets forth a complete and accurate list as of the Closing Date of all Restricted Subsidiaries of the Borrower. Schedule 5.12 sets forth as of the Closing Date the jurisdiction of formation of each such Restricted Subsidiary, the number of authorized shares of each class of Equity Interests of each such Restricted Subsidiary, the number of outstanding shares of each class of Equity Interests, the number and percentage of outstanding shares of each class of Equity Interests of each such Restricted Subsidiary owned (directly or indirectly) by any Person and the number and effect, if exercised, of all Equity Equivalents with respect to Capital Stock of each such Restricted Subsidiary. SECTION 5.13 MARGIN REGULATION; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. (a) None of the Borrower and its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying "margin stock" within the meaning of Regulation U. No part of the Letters of Credit or proceeds of the Loans will be used, directly, or indirectly, for the purpose of purchasing or carrying any "margin stock" within the meaning of Regulation U. If requested by any Lender or the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form U-1 referred to in Regulation U. No indebtedness being reduced or retired out of the proceeds of the Loans was or will be incurred for the purpose of purchasing or carrying any margin stock within the meaning of Regulation U or any "margin security" within the meaning of Regulation T. "Margin stock" within the meaning of Regulation U does not constitute more than 25% of the value of the consolidated assets of the Borrower and its Consolidated Subsidiaries. None of the transactions contemplated by this Agreement (including the direct or indirect use of the proceeds of the Loans) will violate or result in a violation of the Securities Act, as amended, the Exchange Act or regulations issued pursuant thereto, or Regulation T, U or X. (b) None of the Borrower and its Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act or the Investment Company Act of 1940, each as amended. In addition, none of the Borrower and its Subsidiaries is (i) an "investment company" registered or required to be registered under the Investment Company Act of 1940, as amended, (ii) controlled by such a company, or (iii) a "holding company", a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1934, as amended. (c) No director, executive officer or principal holder of any Equity Interest of the Borrower or any of its Subsidiaries is a director, executive officer or principal shareholder of any Lender. For the purposes hereof, the terms "director", "executive officer" and "principal shareholder" (when used with reference to any Lender) have the respective meanings assigned thereto in Regulation O. SECTION 5.14 DISCLOSURE. No statement, information, report, representation, or warranty made by the Borrower in any Loan Document or furnished to the Administrative Agent or any Lender by or on behalf of the Borrower in connection with any Loan Document contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. -62- ARTICLE VI AFFIRMATIVE COVENANTS The Borrower agrees that so long as any Lender has any Commitment hereunder, any Obligation or other amount payable hereunder or under any Note or other Loan Document or any LC Obligation remains unpaid or any Letter of Credit remains in effect: SECTION 6.01 INFORMATION. The Borrower will furnish, or cause to be furnished, to the Administrative Agent and each of the Lenders: (a) CERTAIN SEC FILINGS AND SHAREHOLDER REPORTS. As soon as available, and in any event within 14 days of the filing or distribution thereof, (i) copies of all periodic reports on Forms 10-K and 10-Q, (ii) copies of all current reports on Form 8-K, and (iii) its annual reports to its shareholders (in all cases as filed with the Securities and Exchange Commission). (b) ANNUAL FINANCIAL STATEMENTS. If the Borrower is not required to file 10-K filings with the Securities and Exchange Commission or does not file the same within 90 days after the end of each fiscal year, as soon as available, and in any event within 90 days after the end of each fiscal year of the Borrower, a consolidated balance sheet and income statement of the Borrower and its Consolidated Subsidiaries, as of the end of such fiscal year, and the related consolidated statements of operations and retained earnings and cash flows for such fiscal year, setting forth in comparative form consolidated figures for the preceding fiscal year, all such financial statements to be in reasonable form and detail and audited by independent certified public accountants of recognized national standing reasonably acceptable to the Administrative Agent and accompanied by an opinion of such accountants (which shall not be subject to any qualifications or exceptions as to the scope of the audit nor to any qualifications or exceptions not reasonably acceptable to the Required Lenders) to the effect that such consolidated financial statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP the consolidated financial position and consolidated results of operations and cash flows of the Borrower and its Consolidated Subsidiaries in accordance with GAAP consistently applied (except for changes with which such accountants concur). (c) QUARTERLY FINANCIAL STATEMENTS. If the Borrower is not required to file 10-Q filings with the Securities and Exchange Commission or does not file the same within 45 days after the end of each fiscal year, as soon as available, and in any event within 45 days after the end of each of the first three fiscal quarters in each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal quarter, together with related consolidated statements of operations and retained earnings and cash flows for such fiscal quarter and the then elapsed portion of such fiscal year, setting forth in comparative form consolidated figures for the corresponding periods of the preceding fiscal year, all such financial statements to be in form and detail and reasonably acceptable to the Administrative Agent, and accompanied by a certificate of the chief financial officer of the Borrower to the effect that such quarterly financial statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP in all material respects the consolidated financial position and consolidated results of operations and cash flows of the Borrower and its Consolidated Subsidiaries in accordance with GAAP consistently applied, subject to changes resulting from normal year-end audit adjustments and the absence of footnotes required by GAAP. (d) OFFICER'S CERTIFICATE. At the time of delivery of the financial statements provided for in SECTIONS 6.01(a), 6.01(b) and 6.01(c) above, a certificate of the chief financial officer of the Borrower (i) demonstrating compliance with the financial covenants contained in SECTION 7.14 by calculation thereof as of the end of the fiscal period covered by such financial statements, (ii) stating that no Default or Event of Default exists, or if any Default or Event of Default does exist, specifying the -63- nature and extent thereof and what action the Borrower proposes to take with respect thereto, (iii) stating whether, since the date of the most recent financial statements delivered hereunder, there has been any material change in the GAAP applied in the preparation of the financial statements of the Borrower and its Consolidated Subsidiaries, and, if so, describing such change. (e) REPORTS. Promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the Securities and Exchange Commission under SECTION 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto. (f) NOTICES. Prompt notice of: (i) the occurrence of any Default or Event of Default; (ii) breach or non-performance of, or any default under, a material Contractual Obligation of the Borrower or any Subsidiary; (iii) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Subsidiary and any Governmental Authority; (iv) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any applicable Environmental Law; (v) the occurrence of any ERISA Event; (vi) any material change in accounting policies or financial reporting practice by the Borrower or any Restricted Subsidiary; and (vii) of any public announcement by Moody's or S&P of any change or possible change in Worthington's Ratings; PROVIDED, that in the case of the events set forth in SUB CLAUSES (ii) through (v), of this CLAUSE (f), any such event has had, or the Borrower reasonably expects such event will have, a Material Adverse Effect. Each notice pursuant to this SECTION 6.01(g) shall (i) be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto and (ii) describe with particularity any and all provisions of this Agreement or other Loan Document that have been breached. (g) Other Information. With reasonable promptness upon request therefor, such other information regarding the business, properties or financial condition of the Borrower or any Restricted Subsidiary as the Administrative Agent or the Required Lenders may reasonably request. SECTION 6.02 BOOKS AND RECORDS. The Borrower will, and will cause each of its Restricted Subsidiaries to, maintain proper books of account and other records and enter therein complete and accurate entries and records of all of its transactions and give representatives of the Agents, at the Lenders' expense, reasonable access thereto at all reasonable times, including permission to examine, copy and make abstracts from any of such books and records and such other information as it may from time to time reasonably request. In addition, it will be available to the Agents, or cause its officers to be available from time to time upon reasonable notice to discuss the status of the Loans, its business and any statements, records or documents furnished or made available to the Agents in connection with this Agreement. SECTION 6.03 PAYMENT OF OBLIGATIONS. The Borrower will, and will cause each of its Restricted Subsidiaries to, pay and discharge as the same shall become due and payable, all its obligations and liabilities the non-payment of which could reasonably be expected to have a Material Adverse Effect, including: (i) material taxes, assessments, charges, levies and other similar material liabilities imposed upon it, its income, profits, property or business, except those which currently are being contested in good faith by appropriate proceedings and for which it has set aside reserves or made other adequate provision with respect thereto; and (ii) all lawful claims which, if unpaid, would by law become a Lien upon its property which is not a Permitted Lien. -64- SECTION 6.04 COMPLIANCE WITH LAWS. The Borrower will, and will cause each of its Restricted Subsidiaries to, comply in all material respects with all laws and regulations applicable to each of them and to the operation of their respective businesses, including without limitation those relating to environmental and health matters, and do all things necessary to maintain, renew and keep in full force and effect all rights, permits, licenses, certificates, satisfactory clearances and franchises necessary to enable them to continue their respective businesses, to the extent its failure to comply with or do any of the foregoing could result in a Material Adverse Effect. SECTION 6.05 ENVIRONMENTAL VIOLATIONS. The Borrower will promptly notify the Administrative Agent of any violation by it or any of its Subsidiaries of any Environmental Law; to the extent such violation would, in the reasonable judgment of the Borrower, have a Material Adverse Effect. SECTION 6.06 ERISA COMPLIANCE. To the extent necessary to prevent a Material Adverse Effect, the Borrower will, and will cause each of its Subsidiaries to, comply in all material respects with the applicable provisions of ERISA, the applicable provisions of the Code or other related Federal and state laws. SECTION 6.07 MAINTENANCE OF PROPERTIES. The Borrower will, and will cause each of its Restricted Subsidiaries to, (i) maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; and (ii) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. SECTION 6.08 MAINTENANCE OF INSURANCE. The Borrower will, and will cause each of its Restricted Subsidiaries to, maintain insurance with responsible insurance companies against loss or damage from hazards and the Borrower and its Restricted Subsidiaries will maintain public liability insurance, all in amounts reasonably consistent with the Borrower's current practice. SECTION 6.09 USE OF PROCEEDS. The Borrower will use the proceeds of the Credit Extensions for working capital and other general corporate purposes, including, without limitation, capital expenditures, not in contravention of any Law or of any Loan Document. SECTION 6.10 PLEDGED NOTES. If the Borrower pledges any new Pledged Note after the Closing Date, the Borrower will cause the initial principal amount of such Pledged Note to be established in good faith in an amount not to exceed the then-existing net asset value of the Pledged Note Issuer of such Pledged Note. Upon the occurrence of any transaction between Restricted Subsidiaries involving the transfer or disposition of non working capital-related assets in excess of the amount of $25,000,000, the Borrower will cause the principal amounts of the Pledged Notes issued by such Restricted Subsidiaries to be adjusted, in the Borrower's good faith determination, to reflect such transaction. ARTICLE VII NEGATIVE COVENANTS The Borrower agrees that so long as any Lender has any Commitment hereunder, any Obligation or other amount payable hereunder or under any Note or other Loan Document or any LC Obligation remains unpaid or any Letter of Credit remains unexpired: SECTION 7.01 LIMITATION ON INDEBTEDNESS OF RESTRICTED SUBSIDIARIES. The Borrower will not cause or permit any Restricted Subsidiary to, directly or indirectly, incur, create, assume or permit to exist any Indebtedness except: -65- (i) Indebtedness of a Person existing at the time such Person becomes a Subsidiary of the Borrower (including any Indebtedness of a Person existing at the time such Person is merged with or into or consolidated with a Subsidiary of the Borrower, or at the time of a sale, lease or other disposition of all or substantially all of the properties of a Person to a Subsidiary of the Borrower); PROVIDED, that such Indebtedness was not incurred in connection with, or in anticipation of, such event; (ii) Indebtedness owing to the Borrower, any Restricted Subsidiary or Worthington Receivables Corporation (or any replacement or substitute thereof); (iii) Indebtedness existing as of the Closing Date evidenced by Existing Letters of Credit and other letters of credit issued from time to time after the Closing Date for the benefit of the Borrower or any Restricted Subsidiary other than pursuant to SECTION 2.06 of this Agreement; PROVIDED, that the sum of (A) the maximum amount which is, or at any time thereafter may become, available to be drawn under such Existing Letters of Credit or other letters of credit then outstanding and (B) the aggregate amount of all payments or disbursements not yet reimbursed by the Borrower or any Restricted Subsidiary to the applicable letter of credit issuer in respect of drawings under such Existing Letters of Credit or other letters of credit, shall not exceed $20,000,000 in the aggregate at any time; and (iv) other Indebtedness of the Restricted Subsidiaries of the Borrower in an aggregate principal amount at any time outstanding not in excess of 10% of Consolidated Net Tangible Assets. SECTION 7.02 RESTRICTION ON LIENS. The Borrower will not, and will cause its Restricted Subsidiaries to not, incur, create, assume, become or be liable in any way, or suffer to exist any mortgage, pledge, lien, charge, or other encumbrance of any nature whatsoever on any of its assets, now or hereafter owned, other than Permitted Liens. SECTION 7.03 INVESTMENTS. The Borrower will not, and will not cause or permit any of its Restricted Subsidiaries to, make or acquire, any Investment in any Person, except the following (such Investments described below being herein referred to as "PERMITTED INVESTMENTS"): (i) Investments other than those permitted by SUBSECTIONS (i) through (xii) existing on the date hereof and listed on SCHEDULE 7.03; (ii) Investments held by the Borrower or such Restricted Subsidiary in the form of Cash Equivalents; (iii) advances to officers, directors and employees of the Borrower and Subsidiaries for travel, entertainment, relocation and analogous ordinary business purposes; (iv) Investments of the Borrower in any Restricted Subsidiary or of any Restricted Subsidiary in the Borrower or another Restricted Subsidiary; (v) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss; -66- (vi) Guaranty Obligations permitted by SECTION 7.01; (vii) Investments permitted by SECTION 7.04; (viii) Investments consisting of capital expenditures or inventory for use by or in the business of the Borrower or a Restricted Subsidiary; (ix) Investments (including Investments made in connection with the acquisition of assets) in any Person of which the Borrower or any Restricted Subsidiary is, or becomes as a result of such Investment, the Controlling Person; PROVIDED, that as at the end of the immediately preceding fiscal quarter prior to and after giving effect to any such Investment, the Borrower is in pro forma compliance with the financial covenants set forth in SECTION 7.14; (x) Investments (including Investments made in connection with the acquisition of assets) in any Person of which the Borrower or any Restricted Subsidiary is not the Controlling Person; PROVIDED, that as at the end of the immediately preceding fiscal quarter prior to and after giving effect to any such Investment, the Borrower is in pro forma compliance with the financial covenants set forth in SECTION 7.14; PROVIDED further, that the initial amount (determined at the time made) of such Investments which are made after the Closing Date shall not exceed $100,000,000 in the aggregate; (xi) Investments in the nature of seller financing or other consideration received in a Disposition permitted under SECTION 7.05; (xii) additional Investments not exceeding $25,000,000 in the aggregate in any fiscal year of the Borrower. SECTION 7.04 MERGER. The Borrower will not, and will cause its Restricted Subsidiaries to not, merge or consolidate with or into any other Person except: (i) any Restricted Subsidiary or any other Person may merge or consolidate with the Borrower; PROVIDED, that (a) the Borrower is the surviving entity of such merger or consolidation and (b) such surviving entity has the majority of its property and assets within the continental limits of the United States of America; or (ii) the Borrower may merge or consolidate with any Restricted Subsidiary; PROVIDED, that (a) such Restricted Subsidiary is the surviving entity of such merger or consolidation, (b) such surviving entity is organized and existing under the laws of a state of the United States, (c) such surviving entity has the majority of its property and assets within the continental limits of the United States of America and (d) such surviving entity assumes in writing all of the obligations and liabilities of the Borrower under the Loan Documents; or (iii) any Restricted Subsidiary may merge or consolidate with any other Person; PROVIDED, that the surviving entity of such merger or consolidation is a Restricted Subsidiary after such merger or consolidation; or (iv) any merger may be consummated in furtherance of a Disposition permitted under SECTION 7.05; or (v) any Foreign Subsidiary may merge or consolidated into any Foreign Subsidiary; PROVIDED, that with respect to any merger or consolidation described in SUBSECTIONS (i) through (v) above, immediately prior to and after giving effect to any such transaction, no condition or event exists which constitutes a Default or an Event of Default shall have occurred and be continuing. SECTION 7.05 DISPOSITIONS. The Borrower will not, and will not cause or permit any of its Restricted Subsidiaries to, make any Disposition or enter into any agreement to make any Disposition of all or substantially all of the assets of the Borrower and its Subsidiaries on a consolidated basis. SECTION 7.06 ERISA. The Borrower will not, nor will it cause or permit any Subsidiary to, at any time engage in a transaction which could be subject to SECTION 4069 or 4212(c) of ERISA, or -67- permit any Plan to (i) engage in any non-exempt "prohibited transaction" (as defined in SECTION 4975 of the Code); (ii) fail to comply with ERISA or any other related applicable Laws; or (iii) incur any material "accumulated funding deficiency" (as defined in SECTION 302 of ERISA), which, with respect to each event listed above, could be reasonably expected to have a Material Adverse Effect. SECTION 7.07 DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES. (a) SCHEDULE 7.07 sets forth a complete and accurate list of the Borrower's Unrestricted Subsidiaries as of the Closing Date. From and after the Closing Date, the Borrower shall not designate any Restricted Subsidiary as an Unrestricted Subsidiary unless: (i) immediately prior to and after giving effect to such change in designation no Default or an Event of Default would exist and (ii) the designation of the Subsidiary as an Unrestricted Subsidiary would not have a Material Adverse Effect; PROVIDED, however, that Borrower may not designate any Restricted Subsidiaries as Unrestricted Subsidiaries if the aggregate operating income of the Restricted Subsidiaries so designated at that time would account for more than 30% of the consolidated operating income of the Borrower and its Consolidated Subsidiaries for the most recently completed four fiscal quarters. Thereafter for purposes of such calculation: (x) operating income of Unrestricted Subsidiaries will be excluded from the consolidated operating income of the Borrower and its Consolidated Subsidiaries and (y) fiscal quarters used previously will be excluded. (b) From and after the Closing Date, the Borrower shall not designate any Unrestricted Subsidiary which otherwise meets the definition of a Restricted Subsidiary, as a Restricted Subsidiary, unless if, and only if, immediately after giving effect to such change in designation: (i) any and all outstanding Indebtedness of such Subsidiary could then have been incurred in compliance with SECTION 7.01 and (ii) immediately prior to and after giving effect to such change in designation no Default or an Event of Default would exist; PROVIDED, however, that if Borrower has designated a Subsidiary which was previously treated as a Restricted Subsidiary as an Unrestricted Subsidiary during the term of this Agreement, Borrower may not again designate such Subsidiary as a Restricted Subsidiary without the consent of the Required Lenders. (c) Any change in designation pursuant to this SECTION 7.07 will be made by the Borrower giving written notice to the Administrative Agent not less than thirty nor more than sixty days prior to the date for such change in designation, in each case specifying such date and the name of the Subsidiary whose designation is to be so changed, which notice will be accompanied by an officer's certificate certifying that the conditions required for such change in designation will not be violated. The Administrative Agent will promptly provide a copy of such designation request to the Lenders. Notwithstanding the foregoing, if due to an acquisition or other event, in either case to the extent permitted by this Agreement, which would cause a Person which was not previously a Consolidated Subsidiary to become a Consolidated Subsidiary, Borrower may immediately elect to have such Person not become a Consolidated Subsidiary, but instead to be designated as an Unrestricted Subsidiary, without regard to the notice period set forth above. SECTION 7.08 CHANGE IN NATURE OF BUSINESS. The Borrower will not, and will cause each of its Restricted Subsidiaries not to, make any change in its business which would cause the type of business primarily conducted by the Borrower and its Restricted Subsidiaries, considered on a consolidated basis, to be materially different from the type of business primarily being conducted on the Effective Date. SECTION 7.09 TRANSACTIONS WITH AFFILIATES. The Borrower will not, nor will it cause or permit any of its Restricted Subsidiaries to, enter into any material transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service with any Affiliate of the Borrower (other than a Restricted Subsidiary), other than arm's-length transactions with Affiliates that are otherwise permitted hereunder. -68- SECTION 7.10 BURDENSOME AGREEMENTS. The Borrower will not, nor will it cause or permit any of its Restricted Subsidiaries to, enter into any Contractual Obligation that limits the ability of any Restricted Subsidiary to make Restricted Payments to the Borrower or to otherwise transfer property to the Borrower. SECTION 7.11 IMPAIRMENT OF COLLATERAL. The Borrower will not, nor will it permit any Pledged Note Issuer to, (i) take or omit to take any action which action or omission might or would impair the security interests in favor of the Collateral Agent with respect to the Pledged Notes or (ii) grant to any Person (other than the Collateral Agent or the Trustee for the benefit of the Secured Parties (as defined in the Pledge Agreement) pursuant to the Pledge Agreement or the Trust Agreement, as the case may be) any interest whatsoever in the Pledged Notes. SECTION 7.12 USE OF PROCEEDS. The Borrower will not, nor will it cause or permit any of its Restricted Subsidiaries to, use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the Board) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose. SECTION 7.13 GOVERNANCE DOCUMENTS. The Borrower will not amend or change its Articles of Incorporation or code of regulations in any manner which is materially adverse to the Lenders. SECTION 7.14 FINANCIAL COVENANTS. (a) LEVERAGE RATIO. The Leverage Ratio for any period of four consecutive fiscal quarters of the Borrower, in each case taken as a single accounting period, ending on a date set forth below will not be greater than the ratio set forth opposite such date: Fiscal Quarter Ended Ratio -------------------- ----- February 28, 2002 through February 28, 2003 3.75 to 1.0 May 31, 2003 through August 31, 2003 3.50 to 1.0 November 30, 2003 through February 28, 2005 3.25 to 1.0 May 31, 2005 and Thereafter 3.00 to 1.0 (b) CONSOLIDATED INDEBTEDNESS TO CAPITALIZATION. The ratio of the Borrower's Consolidated Indebtedness to the Borrower's Capitalization, calculated as of the end of each fiscal quarter of the Borrower, will not be greater than 55%. (c) MAINTENANCE COVENANTS WITH RESPECT TO PLEDGED NOTES. (i) The aggregate principal amount of the Pledged Notes shall not be less than an amount equal to 115% of the sum of (A) the Revolving Committed Amount plus (B) with respect to the 364-Day Credit Agreement, the Revolving Committed Amount (as defined in the 364-Day Credit Agreement) thereunder plus (C) the aggregate principal amount of Indebtedness outstanding under the Public Debt Indenture from time to time plus (D) the aggregate principal amount of the Additional Senior Indebtedness outstanding from time to time. (ii) As at the last day of any fiscal quarter of the Borrower, the Adjusted Consolidated Operating Income attributable to the Pledged Note Issuers for the four consecutive fiscal quarters ending on or most recently ended prior to such date shall not be less than an amount equal to 70% of the Adjusted Consolidated Operating Income for such period. -69- ARTICLE VIII DEFAULTS SECTION 8.01 EVENTS OF DEFAULT. An Event of Default shall exist upon the occurrence of any of the following specified events or conditions (each an "Event of Default"): (a) PAYMENT. The Borrower shall fail to pay: (i) as and when due (whether by scheduled maturity, mandatory prepayment, acceleration or otherwise) any amount of principal of any Loan, any amount of interest on any Competitive Bid Loan or any LC Obligation; (ii) within 5 days of when due (whether by scheduled maturity, mandatory prepayment, acceleration or otherwise) any interest on any Committed Loan or LC Obligation, any commitment facility, utilization or other fee due hereunder; or (iii) within 5 days after the same become due, any other amount payable hereunder or under any other Loan Document. (b) REPRESENTATION AND WARRANTIES. Any representation, warranty or statement made or deemed to be made by the Borrower herein, in any of the other Loan Documents or in any statement or certificate delivered or required to be delivered pursuant hereto or thereto shall prove untrue in any material respect on the date as of which it was made or deemed to have been made. (c) COVENANTS. The Borrower shall default in the due performance or observance by it of any other term, covenant or agreement contained in this Agreement and such default shall continue unremedied for a period of at least 30 days after the earlier of an executive officer of the Borrower becoming aware of such default or notice thereof given by the Administrative Agent. (d) BANKRUPTCY, ETC. WITH RESPECT TO THE BORROWER AND ACTIVE RESTRICTED SUBSIDIARIES. A Bankruptcy Event shall occur with respect to the Borrower or any of its Active Restricted Subsidia ries. (e) Bankruptcy, etc. with respect to Unrestricted Subsidiaries. A Bankruptcy Event shall occur with respect to any of the Borrower's Unrestricted Subsidiaries and such event would reasonably be expected to have a Material Adverse Effect. (f) CROSS-DEFAULT. A default by the Borrower or any of its Subsidiaries with respect to any evidence of Indebtedness in excess of $5,000,000 by it for borrowed money (other than to the Lenders pursuant to this Agreement), if the effect of such default is to accelerate the maturity of such Indebtedness or to permit the holder thereof to cause such Indebtedness to become due prior to the stated maturity thereof, or if any Indebtedness of it in excess of $5,000,000 for borrowed money (other than to the Lenders pursuant to this Agreement) is not paid when due and payable, whether at the due date thereof or a date fixed for prepayment or otherwise (after the expiration of any applicable grace period). (g) JUDGMENTS. Unless adequately insured or bonded, the entry of a final judgment for the payment of money involving more than $10,000,000 against the Borrower or any of its Subsidiaries and the failure by the Borrower or any of its Subsidiaries: (i) to discharge the same, or cause it to be discharged, within thirty days from the date of the order, decree or process under which or pursuant to which such judgment was entered or (ii) to secure a stay of execution pending appeal of such judgment; or the entry of one or more final non-monetary judgments or orders against the Borrower or any of its Subsidiaries which, singly or in the aggregate, does or could reasonably be expected to cause a Material Adverse Effect. (h) OWNERSHIP. There shall occur a Change of Control of the Borrower. -70- (i) PLEDGE AGREEMENT; TRUST AGREEMENT. At any time prior to the release of the Pledge Agreement or the Trust Agreement, either (i) the Pledge Agreement or the Trust Agreement shall fail to be in full force and effect or to give the Collateral Agent or the Trustee, as the case may be, the rights, powers and privileges purported to be created thereby or the Borrower, or any Person acting on behalf of the Borrower, shall so state in writing, (ii) any security interest purported to be created by Pledge Agreement shall cease to be, or shall be asserted by the Borrower or the applicable Pledged Note Issuer not to be, a valid, perfected, first-priority security interest in the securities, assets or properties covered thereby, (iii) any Notice of Acceleration (as defined in the Trust Agreement) is delivered pursuant to the terms of the Trust Agreement, (iv) any default occurs in the due observance or performance by the Borrower of any covenant, condition or agreement contained in the Pledge Agreement or the Trust Agreement, and such default is not cured within any applicable cure or grace period, if any, or (v) any representation or warranty made by the Borrower in the Pledge Agreement or the Trust Agreement or any representation, warranty, statement or information contained in any certificate or financial statement furnished pursuant to the Pledge Agreement or the Trust Agreement, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished. SECTION 8.02 ACCELERATION; REMEDIES. Upon the occurrence of an Event of Default, and at any time thereafter unless and until such Event of Default has been waived in writing by the Required Lenders (or all Lenders as may be required pursuant to SECTION 10.01), the Administrative Agent shall, upon the request and direction of the Required Lenders, by written notice to the Borrower, take any of the following actions without prejudice to the rights of the Agents or any Lender to enforce its claims against the Borrower except as otherwise specifically provided for herein: (a) TERMINATION OF COMMITMENTS. Declare the Commitments terminated whereupon the Commitments shall be immediately terminated. (b) ACCELERATION OF LOANS. Declare the unpaid principal of and any accrued interest in respect of all Loans, any reimbursement obligations arising from drawings under Letters of Credit and any and all other indebtedness or obligations of any and every kind owing by the Borrower to any of the Lenders hereunder to be due whereupon the same shall be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. (c) CASH COLLATERAL. Direct the Borrower to pay (and the Borrower agrees that upon receipt of such notice, or upon the occurrence of an Event of Default under SECTION 8.01(d) or (e), it will immediately pay) to the Administrative Agent additional cash, to be held by the Administrative Agent, for the benefit of the Lenders, in a cash collateral account as additional security for the LC Obligations in respect of subsequent drawings under all then outstandin g Letters of Credit in an amount equal to the maximum aggregate amount which may be drawn under all Letters of Credits then outstanding. (d) ENFORCEMENT OF RIGHTS. Enforce any and all rights and interests created and existing under the Loan Documents, including, without limitation, delivery of a Notice of Acceleration (as defined in the Trust Agreement), and all rights of set-off, or applicable Law. Notwithstanding the foregoing, if an Event of Default specified in SECTION 8.01(d) or (e) shall occur, then the Commitments shall automatically terminate and all Loans, all reimbursement obligations under Letters of Credit, all accrued interest in respect thereof and all accrued and unpaid fees and other indebtedness or obligations owing to the Lenders hereunder and under the other Loan Documents shall immediately become due and payable without the giving of any notice or other action by the Administrative Agent or the Lenders, which notice or other action is expressly waived by the Borrower. -71- Notwithstanding the fact that enforcement powers reside primarily with the Administrative Agent, each Lender has, to the extent permitted by law, a separate right of payment and shall be considered a separate "creditor" holding a separate "claim" within the meaning of SECTION 101(5) of any Debtor Relief Law or any other insolvency statute. In case any one or more of the covenants and/or agreements set forth in this Agreement or any other Loan Document shall have been breached by the Borrower, then the Administrative Agent may proceed to protect and enforce the Lenders' rights either by suit in equity and/or by action at law, including an action for damages as a result of any such breach and/or an action for specific performance of any such covenant or agreement contained in this Agreement or such other Loan Document. Without limitation of the foregoing, the Borrower agrees that failure to comply with any of the covenants contained herein will cause irreparable harm and that specific performance shall be available in the event of any breach thereof. ARTICLE IX AGENCY PROVISIONS SECTION 9.01 APPOINTMENT; AUTHORIZATION. (a) APPOINTMENT. Each Lender hereby designates and appoints PNC Bank, National Association as Administrative Agent and First Union Securities, Inc. and PNC Capital Markets, Inc. as Co-Syndication Agents of such Lender to act as specified herein and in the other Loan Documents, and each such Lender hereby authorizes the Agents, as the agents for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated by the terms hereof and of the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere herein and in the other Loan Documents, the Agents shall not have any duties or responsibilities, except those expressly set forth herein and therein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any of the other Loan Documents, or shall otherwise exist against the Agents. In performing its functions and duties under this Agreement and the other Loan Documents, each Agent shall act solely as an 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. Without limiting the generality of the foregoing two sentences, the use of the term "agent" herein and in the other Loan Documents with reference to any Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. The provisions of this Article IX (other than SECTION 9.09) are solely for the benefit of the Agents and the Lenders and the Borrower shall not have any rights as a third party beneficiary of the provisions hereof (other than SECTION 9.09). (b) CERTAIN OTHER AGENTS. First Union Securities, Inc. and PNC Capital Markets, Inc., in their capacity as Co-Syndication Agents, shall have no duties or obligations whatsoever under this Agreement or any of the other Loan Documents. SECTION 9.02 DELEGATION OF DUTIES. An Agent may execute any of its duties hereunder or under the other Loan Documents by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. An Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it in the absence of gross negligence or willful misconduct. -72- SECTION 9.03 EXCULPATORY PROVISIONS. No Agent-Related Person shall be (i) liable for any action lawfully taken or omitted to be taken by any of them under or in connection herewith or in connection with any of the other Loan Documents or the transactions contemplated hereby or thereby (except for its own gross negligence or willful misconduct in connection with its duties expressly set forth herein) or (ii) responsible in any manner to any of the Lenders or participants for any recitals, statements, representations or warranties made by the Borrower contained herein or in any of the other Loan Documents or in any certificate, report, document, financial statement or other written or oral statement referred to or provided for in, or received by an Agent under or in connection herewith or in connection with the other Loan Documents, or enforceability or sufficiency therefor of any of the other Loan Documents, or for any failure of the Borrower to perform its obligations hereunder or thereunder 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 the use of the Letters of Credit or of the existence or possible existence of any Default or Event of Default or to inspect the properties, books or records of the Borrower. SECTION 9.04 RELIANCE ON COMMUNICATIONS. The Agents shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex, teletype or e-mail message, statement, order or other document or conversation believed by it 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, independent accountants and other experts selected by the Agents). The Agents may deem and treat each Lender as the owner of its interests hereunder for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent in accordance with SECTION 10.06( b). The Agents shall be fully justified in failing or refusing to take any action under this Agreement or under any of the other Loan Documents 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 Agents shall in all cases be fully protected in acting, or in refraining from acting, hereunder or under any of the other Loan Documents in accordance with a request of the Required Lenders (or to the extent specifically provided in SECTION 10.01, all the Lenders) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders (including their successors and assigns). Where this Agreement expressly permits or prohibits an action unless the Required Lenders otherwise determine, any Agent shall, and in all other instances an Agent may, but shall not be required to, initiate any solicitation for the consent or vote of the Lenders. SECTION 9.05 NOTICE OF DEFAULT. An Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder, unless such Agent has received written notice from a Lender or the Borrower referring to the Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". If 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, HOWEVER, that unless and until the Administrative Agent has received any such direction, 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 or it shall deem advisable or in the best interest of the Lenders, except to the extent that this Agreement expressly requires that such action be taken, or not taken, only with the consent or upon the authorization of the Required Lenders, or all of the Lenders, as the case may be. SECTION 9.06 CREDIT DECISION; DISCLOSURE OF INFORMATION BY ADMINISTRATIVE AGENT. Each Lender expressly acknowledges that no Agent-Related Person has made any representations or -73- warranties to it and that no act by any Agent hereinafter taken, including any consent to and acceptance of any assignment or review of the affairs of the Borrower or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender as to any matter, including whether any Agent-Related Person has disclosed material information in its possession. Each Lender represents to the Agents that it has, independently and without reliance upon any Agent-Related Person 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 condition, prospects and creditworthiness of the Borrower, and all requirements of Law pertaining to the transaction contemplated by the Loan Documents, 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 any Agent-Related Person 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 the other Loan Documents, 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. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, 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 or other conditions, prospects or creditworthiness of the Borrower or its Affiliates which may come into the possession of any Agent-Related Person. SECTION 9.07 INDEMNIFICATION. Whether or not the transactions contemplated hereby are consummated, the Lenders agree to indemnify each Agent-Related Person (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Commitments (or if the Commitments have expired or been terminated, in accordance with the respective principal amounts of outstanding Loans and Participation Interests of the Lenders), from and against any and all Indemnified Liabilities which may at any time (including, without limitation, at any time following payment in full of the Obligations) be imposed on, incurred by or asserted against an Agent in its capacity as such in any way relating to or arising out of this Agreement or the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by an Agent under or in connection with any of the foregoing; PROVIDED, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting from such Person's gross negligence or willful misconduct; PROVIDED, however, that no action taken in accordance with the directions of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this SECTION 9.07. If any indemnity furnished to an Agent for any purpose shall, in the opinion of such Agent, be insufficient or become impaired, such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such addit ional indemnity is furnished. Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Borrower. The agreements in this SECTION 9.07 shall survive the payment of the Obligations and all other obligations and amounts payable hereunder and under the other Loan Documents. SECTION 9.08 Agents in Their Individual Capacity. Each Agent and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire Equity Interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting and other business -74- with the Borrower as though such Agent were not an Agent hereunder or under another Loan Document. The Lenders acknowledge that, pursuant to any such activities, an Agent or its Affiliates may receive information regarding the Borrower or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Borrower or such Affiliate) and acknowledge that no Agent shall be under any obligation to provide such information to them. With respect to the Loans made and Letters of Credit issued and all obligations owing to it, an Agent shall have the same rights and powers under this Agreement as any Lender and may exercise the same as though it was not an Agent, and the terms "Lender" and "Lenders" shall include each Agent in its individual capacity. SECTION 9.09 SUCCESSOR AGENTS. Any Agent may, at any time, resign upon 30 days' written notice to the Lenders. If an Agent resigns under a Loan Document, the Required Lenders shall appoint from among the Lenders a successor Agent, which successor Agent shall be subject to the consent of the Borrower at all times other than during the existence of an Event of Default (which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment prior to the effective date of the resignation of the resigning Agent, then the resigning Agent shall have the right, after consulting with the Lenders and the Borrower, to appoint a successor Agents; PROVIDED, that such successor is a Lender hereunder or a commercial bank organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least $500,000,000. If no successor Agent is appointed prior to the effective date of the resignation of the resigning Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Borrower, a successor Agent from among the Lenders. Upon the acceptance of any appointment as an Agent hereunder by a successor, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations as an Agent, as appropriate, under this Agreement and the other Loan Documents and the provisions of this SECTION 9.09 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Agent under this Agreement. If no successor Administrative Agent has accepted appointment as Administrative Agent within sixty days after the retiring Administrative Agent's giving notice of resignation, the retiring Administrative Agent's resignation shall nevertheless become effective and the Lenders shall perform all duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor Administrative Agent as PROVIDED for above. SECTION 9.10 CERTAIN OTHER AGENTS. None of the Lenders identified on the facing page or signature pages of this Agreement as a "syndication agent", "documentation agent", "co-agent", "book runner" or "lead manager" shall have any right, power, obligation, liability, responsibility or duty under the Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders or any such Person so identified shall have or be deemed to have any fiduciary relationship to any Lender or the Borrower. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. SECTION 9.11 AGENTS' FEES; ARRANGER FEE. The Borrower shall pay to the Administrative Agent for its own account fees in the amounts and at the times previously agreed upon between the Borrower and the Administrative Agent with respect to this Agreement, the other Loan Documents and the transactions contemplated hereby and thereby. ARTICLE X MISCELLANEOUS SECTION 10.01 AMENDMENTS, WAIVERS AND CONSENTS. Neither this Agreement nor any other Loan Document nor any of the terms hereof or thereof may be amended, changed, waived, -75- discharged or terminated except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower, the Administrative Agent, and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Borrower and the Agents party thereto, as applicable; PROVIDED, that the foregoing shall not restrict the ability of the Required Lenders to waive any Event of Default prior to the time the Administrative Agent shall have declared, or the Required Lenders shall have requested the Administrative Agent to declare, the Loans immediately due and payable pursuant to Article VIII; PROVIDED, HOWEVER, that: (i) no such amendment, change, waiver, discharge or termination shall, without the consent of each Lender affected thereby: (A) extend the final maturity of any Loan or the time of payment of any reimbursement obligation, or any portion thereof, arising from drawings under Letters of Credit, PROVIDED, that this CLAUSE (A) shall not restrict the ability of the Required Lenders to waive any Event of Default (other than an Event of Default the waiver of which would effectively result in any such extension or waiver), prior to the time the Administrative Agent shall have declared, or the Required Lenders shall have requested the Administrative Agent to declare, the Loans immediately due and payable pursuant to ARTICLE VIII; (B) reduce the rate, or extend the time of payment, of interest or change the manner of computation of any financial covenant used in determining the Applicable Margin that could result in the reduction of the rate of interest on any Loan (other than as a result of waiving the applicability of any post-default increase in interest rates) thereon or fees hereunder; (C) reduce or waive the principal amount of any Loan or any LC Disbursement; (D) except to the extent set forth in SECTION 2.11(e) hereof, increase the Commitment of a Lender over the amount thereof in effect (it being understood and agreed that a waiver of any Default or Event of Default or a mandatory reduction in the Commitments shall not constitute a change in the terms of any Commitment of any Lender); (E) release the Borrower from its Obligations under the Loan Documents; (F) amend, modify or waive any provision of this SECTION 10.01 or reduce any percentage specified in, or otherwise modify, the definition of Required Lenders; or (G) consent to the assignment or transfer by the Borrower of any of its rights and obligations under (or in respect of) the Loan Documents to which it is a party, except as permitted thereby; (ii) no provision of ARTICLE IX may be amended without the consent of the Administrative Agent, no provision of SECTION 2.06 may be amended without the consent of each Issuing Lender and no provision of SECTION 2.02(d) may be amended without the consent of the Swingline Lender. -76- Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, (i) each Lender is entitled to vote as such Lender sees fit on any bankruptcy reorganization plan that affects the Loans or the Letters of Credit, and each Lender acknowledges that the provisions of SECTION 1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set forth herein and (ii) the Required Lenders may consent to allow the Borrower to use cash collateral in the context of a bankruptcy or insolvency proceeding. SECTION 10.02 NOTICES AND OTHER COMMUNICATIONS; FACSIMILE COPIES. (a) GENERAL. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission) and mailed, faxed or delivered, to the address, facsimile number or (subject to SUBSECTION (c) below) electronic mail address specified for notices on SCHEDULE 10.02; or, in the case of the Borrower, the Administrative Agent, any Issuing Lender or the Swingline Lender, to such other address as shall be designated by such party in a notice to the other parties, and in the case of any other party, to such other address as shall be designated by such party in a notice to the Borrower, the Administrative Agent, any Issuing Lender and the Swingline Lender. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the intended recipient and (ii) (A) if delivered by hand or by courier, when signed for by the intended recipient; (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of SUBSECTION (c) below), when delivered; PROVIDED, HOWEVER, that notices and other communications to the Administrative Agent, any Issuing Lender and the Swingline Lender pursuant to ARTICLE II shall not be effective until actually received by such Person. Any notice or other communication permitted to be given, made or confirmed by telephone hereunder shall be given, made or confirmed by means of a telephone call to the intended recipient at the number specified on SCHEDULE 10.02, it being understood and agreed that a voicemail message shall in no event be effective as a notice, communication or confir mation hereunder. (b) EFFECTIVENESS OF FACSIMILE DOCUMENTS AND SIGNATURES. Loan Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to requirements of Law, have the same force and effect as manually-signed originals and shall be binding on the Borrower, the Agents and the Lenders. The Administrative Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature. (c) LIMITED USE OF ELECTRONIC MAIL. Electronic mail and internet and intranet websites may be used only to distribute routine communications, such as financial statements and other information, and to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose. (d) RELIANCE BY ADMINISTRATIVE AGENT AND LENDERS. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify each Agent-Related Person and each Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower, except for such losses resulting from the Administrative Agent's or Lender's gross negligence or willful misconduct. All -77- telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording. SECTION 10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of an Agent or any Lender in exercising any right, power or privilege hereunder or under any other Loan Document and no course of dealing between the Agents or any Lender and the Borrower shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Loan Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies provided herein are cumulative and not exclusive of any rights or remedies which the Agents or any Lender would otherwise have. 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 Agents or the Lenders to any other or further action in any circumstances without notice or demand. SECTION 10.04 ATTORNEY COSTS, EXPENSES AND TAXES. The Borrower agrees (i) to pay or reimburse the Administrative Agent for all costs and expenses incurred in connection with the preparation, negotiation and execution of this Agreement and the other Loan Documents and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated hereby or thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs, and (ii) to pay or reimburse the Administrative Agent and each Lender for all costs and expenses incurred in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or the other Loan Documents (including all such costs and expenses incurred during any workout" or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including all Attorney Costs. The foregoing costs and expenses shall include all search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto, and other reasonable and actual out-of-pocket expenses incurred by the Administrative Agent and the reasonable and actual cost of independent public accountants and other outside experts retained by the Administrative Agent or any Lender. The agreements in this SECTION 10.04 shall survive the termination of the Commitments and repayment of all the other Obligations. SECTION 10.05 INDEMNIFICATION. Whether or not the transactions contemplated hereby are consummated, the Borrower agrees to indemnify, save and hold harmless each Agent-Related Person, each Lender and their respective Affiliates, directors, officers, employees, counsel, agents and attorneys- in-fact (collectively the "INDEMNITEES") from and against: (i) any and all claims, demands, actions or causes of action that are asserted against any Indemnitee by any Person (other than the Administrative Agent or any Lender) relating directly or indirectly to a claim, demand, action or cause of action that such Person asserts or may assert against the Borrower, any Affiliate of the Borrower or any of their respective officers or directors; (ii) any and all claims, demands, actions or causes of action that may at any time (including at any time following repayment of the Obligations and the resignation or removal of any Agent or the replacement of any Lender) be asserted or imposed against any Indemnitee, arising out of or relating to, the Loan Documents, any predecessor loan documents, the Commitments, the use of or contemplated use of the proceeds of any Credit Extension, or the relationship of the Borrower, any Agent and the Lenders under this Agreement or any other Loan Document; (iii) any administrative or investigative proceeding by any Governmental Authority arising out of or related to a claim, demand, action or cause of action described in CLAUSE (i) or (ii) above; and (iv) any and all liabilities (including liabilities under indemnities), losses, costs or expenses (including Attorney Costs) that any Indemnitee suffers or incurs as a result of the assertion of any foregoing claim, demand, action, cause of action or proceeding, or as a result of the preparation of any defense in connection with any foregoing claim, demand, action, cause of action or proceeding, in all cases, and whether or not an Indemnitee is a party to such claim, demand, action, cause of action, or Proceeding (all the foregoing, collectively; the -78- "Indemnified Liabilities"); PROVIDED, that no Indemnitee shall be entitled to indemnification for any claim caused by its own gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this SECTION 10.05 applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnitee or any other Person or any Indemnitee is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrower agrees not to assert any claim against any Agent, any Lender, any other Creditor, any of their Affiliates or any of their respective directors, officers, employees, attorneys, agents and advisers, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Loan Documents, any of the transactions contemplated herein or therein or the actual or proposed use of the proceeds of the Loans or of the Letters of Credit. Without prejudice to the survival of any other agreement of the Borrower hereunder and under the other Loan Documents, the agreements and obligations of the Borrower contained in this SECTION 10.05 shall survive the repayment of the Loans, LC Obligations and other obligations under the Loan Documents and the termination of the Commitments hereunder. SECTION 10.06 SUCCESSORS AND ASSIGNS. (a) GENERALLY. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; provided, that the Borrower may not assign or transfer any of its interests and obligations without the prior written consent of either the Required Lenders or the Lenders, as the terms set forth in SECTION 10.01 may require; (b) ASSIGNMENTS. Any Lender may assign all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Loans, its Notes, its Commitments and any Participation Interest in Letters of Credit and Swingline Loans held by it); provided, however, that: (i) each such assignment shall be to an Eligible Assignee; (ii) except in the case of an assignment to another Lender, an Affiliate of an existing Lender or any Approved Fund the aggregate amount of the Revolving Commitment of the assigning Lender subject to such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not, without the consent of the Borrower and the Administrative Agent, be less than $5,000,000 and an integral multiple of $1,000,000 (or such lesser amount as shall equal the assigning Lender's entire Revolving Commitment); (iii) each such assignment by a Lender shall be of a constant, and not varying, percentage of all rights and obligations in respect of a particular Class of Commitments under this Agreement and the other Loan Documents; (iv) the parties to such assignment shall execute and deliver to the Administrative Agent and with respect to the assignment of all or a portion of the Revolving Committed Amount the Issuing Lenders for their consent not to be unreasonably withheld an Assignment and Acceptance in the form of EXHIBIT C, together with any Note subject to such assignment and a processing fee of $3,500, payable or agreed between the assigning Lender and the assignee. Not later than the date any such executed Assignment and Acceptance is delivered to the Administrative Agent, the Administrative Agent shall provide the Borrower with notice of any such assignment. -79- (c) ASSIGNMENT AND ACCEPTANCE. By executing and delivering an Assignment and Acceptance in accordance with this SECTION 10.06, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and the assignee warrants that it is an Eligible Assignee; (ii) except as set forth in CLAUSE (i) above, such assigning 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, any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto or the financial condition of the Borrower or the performance or observance by the Borrower or any Subsidiary of any of its obligations under this Agreement, any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (iii) such assignee represents and warrants that it is legally authorized to enter into such assignment agreement; (iv) such assignee confirms that it has received a copy of this Agreement, the other Loan Documents, together with copies of the most recent financial statements delivered pursuant to SECTION 6.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Administrative Agent, any Issuing Lender, the Swingline Lender, such assigning 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 and the other Loan Documents; (vi) such assignee appoints and authorizes the Administrative Agent to take such action on its behalf and to exercise such powers under this Agreement or any other Loan Document as are delegated to the Administrative Agent by the terms hereof or thereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement and the other Loan Documents are required to be performed by it as a Lender. Upon execution, delivery, and acceptance of such Assignment and Acceptance, the assignee thereunder shall be a party hereto and, to the extent of such assignment, have the obligations, rights, and benefits of a Lender hereunder and the assigning Lender shall, to the extent of such assignment, relinquish its rights and be released from its obligations under this Agreement. Upon the consummation of any assignment pursuant to this SECTION 10.06, the assignor, the Administrative Agent and the Borrower shall make appropriate arrangements so that, if required, new Notes are issued to the assignor and the assignee. If the assignee is not a United States person under SECTION 7701(a)(30) of the Code, it shall deliver to the Borrower and the Administrative Agent certification as to exemption from deduction or withholding of Taxes in accordance with SECTION 3.01. (d) REGISTER. The Borrower hereby designates the Administrative Agent to serve as the Borrower's agent, solely for purposes of this SUBSECTION 10.06(d), to (i) maintain a register (the "Register") on which the Administrative Agent will record the Commitments from time to time of each Lender, the Loans made by each Lender and each repayment in respect of the principal amount of the Loans of each Lender and to (ii) retain a copy of each Assignment and Acceptance delivered to the Administrative Agent pursuant to this SECTION 10.06. Failure to make any such recordation, or any error in such recordation, shall not affect the Borrower's obligation in respect of such Loans. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent, the Issuing Lenders and the Lenders shall treat each Person in whose name a Loan and the Note evidencing the same is registered as the owner thereof for all purposes of this Agreement, notwithstanding notice or any provision herein to the contrary. With respect to any Lender, the assignment or other transfer of the Commitments of such Lender and the rights to the principal of, and interest on, any Loan made and any Note issued pursuant to this Agreement shall not be effective until such assignment or other transfer is recorded on the Register and, except to the extent provided in this SUBSECTION 10.06(d), -80- otherwise complies with this SECTION 10.06, and prior to such recordation all amounts owing to the transferring Lender with respect to such Commitments, Loans and Notes shall remain owing to the transferring Lender. The registration of assignment or other transfer of all or part of any Commitments, Loans and Notes for a Lender shall be recorded by the Administrative Agent on the Register only upon the acceptance by the Administrative Agent of a properly executed and delivered Assignment and Acceptance and payment of the administrative fee referred to in SECTION 10.06(b)(iv). The Register shall be available at the offices where kept by the Administrative Agent for inspection by the Borrower and any Lender at any reasonable time upon reasonable prior notice to the Administrative Agent, and the Administrative Agent shall provide a copy of the Register to any Lender requesting a copy thereof, but in no event more frequently then once per calendar quarter. (e) PARTICIPATIONS. Each Lender may, without the consent of the Borrower, the Issuing Lenders, the Swingline Lender or any Agent, sell participations to one or more Persons in all or a portion of its rights, obligations or rights and obligations under this Agreement (including all or a portion of its Commitment or the Loans owing to it and any Notice and participation in Letters of Credit and Swingline Loans held by it); PROVIDED, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participant shall be entitled to the benefit of the right of setoff contained in SECTION 10.08 and the yield protection provisions contained in SECTIONs 3.01, 3.04 and 3.05 and to the same extent that the Lender from which such participant acquired its participation would be entitled to the benefits of such yield protections; PROVIDED, that the Borrower shall not be required to reimburse any participant pursuant to SECTIONs 3.01, 3.04 or 3.05 in an amount which exceeds the amount that would have been payable thereunder to such Lender had such Lender not sold such participation and (iv) the Borrower, the Agents, the Issuing Lenders, the Swingline Lenders and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrower relating to the Obligations owing to such Lender and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing the amount of principal of or the rate at which interest is payable on such Loans or Notes, extending any scheduled principal payment date or date fixed for the payment of interest on such Loans or Notes or extending its Commitment). (f) OTHER ASSIGNMENTS. Any Lender may at any time (i) assign all or any portion of its rights under this Agreement and any Notes to a Federal Reserve Bank, (ii) pledge or assign a security interest in all or any portion of its interest and rights under this Agreement (including all or any portion of its Notes, if any) to secure obligations of such Lender and (iii) grant to an SPC referred to in SUBSECTION (h) below identified as such in writing from time to time by such Lender to the Administrative Agent the Borrower the option to provide to the Borrower all or any part of any Loans that such Lender would otherwise be obligated to make to the Borrower pursuant to the Agreement; PROVIDED, that no such assignment, option, pledge or security interest shall release a Lender from any of its obligations hereunder or substitute any such Federal Reserve Bank or other person to which such option, pledge or assignment has been made for such Lender as a party hereto. (g) INFORMATION. Any Lender may furnish any information concerning the Borrower or any of its Subsidiaries in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants), subject, however, to the provisions of SECTION 10.07. (h) OTHER FUNDING VEHICLES. Notwithstanding anything to the contrary contained herein, any Lender, (a "GRANTING LENDER") may grant to a special purpose funding vehicle (an "SPC") the option to fund all or any part of any Loan that such Granting Lender would otherwise be obligated to fund pursuant to this Agreement; PROVIDED, that (i) nothing herein shall constitute a commitment by any SPC to -81- fund any Loan, (ii) if an SPC elects not to exercise such option or otherwise fails to fund all or any part of such Loan, the Granting Lender shall be obligated to fund such Loan pursuant to the terms hereof, (iii) no SPC shall have any voting rights pursuant to SECTION 10.01 and (iv) with respect to notices, payments and other matters hereunder, the Borrower, the Administrative Agent and the Lenders shall not be obligated to deal with an SPC, but may limit their communications and other dealings relevant to such SPC to the applicable Granting Lender. The funding of a Loan by an SPC hereunder shall utilize the Revolving Commitment of the Granting Lender to the same extent that, and as if, such Loan were funded by such Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or payment under this Agreement for which a Lender would otherwise be liable for so long as, and to the extent, the Granting Lender provides such indemnity or makes such payment. Notwithstanding anything to the contrary contained in this Agreement, any SPC may disclose on a confidential basis any non-public information relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any surety or guarantee to such SPC. This subSECTION (h) may not be amended without the prior written consent of each Granting Lender, all or any part of whose Loan is being funded by an SPC at the time of such amendment. SECTION 10.07 CONFIDENTIALITY. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) 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 Information and instructed to keep such Information confidential); (ii) to the extent requested by any regulatory authority; (iii) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process; (iv) to any other party to this Agreement; (v) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder; (vi) subject to an agreement containing provisions substantially the same as those of this SECTION 10.07, to (A) any Eligible Assignee of or participant in, or any prospective Eligible Assignee of or participant in, any of its rights or obligations under this Agreement or (B) any direct or indirect contractual counterparty or prospective counterparty (or such contractual counterparty's or prospective counterparty's professional advisor) to any credit derivative transaction relating to obligations of the Borrower; (vii) with the consent of the Borrower; (viii) to the extent such information (A) becomes publicly available other than as a result of a breach of this SECTION 10.07 or (B) becomes available to an Agent or any Lender on a nonconfidential basis from a source other than the Borrower; or (ix) to the National Association of Insurance Commissioners or any other similar organization or any nationally recognized rating agency that requires access to information about a Lender's or its Affiliates' investment portfolio in connection with ratings issued with respect to such Lender or its Affiliates. For the purposes of this SECTION 10.07, "INFORMATION" means all information received from the Borrower relating to the Borrower or its 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 from the Borrower after the date hereof, such information is clearly identified in writing at the time of delivery as confidential. SECTION 10.08 SET-OFF. 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 (and each of its Affiliates) is authorized at any time and from time to time, without presentment, demand, protest or other notice of any kind (all of such rights being hereby expressly waived), to set-off and to appropriate and apply any and all deposits (general or specific) and any other indebtedness at any time held or owing by such Lender (including, without limitation, branches, agencies or Affiliates of such Lender wherever located) to or for the credit or the account of the Borrower against obligations and liabilities of the Borrower to the Lenders hereunder, under the Notes, under the other Loan Documents or otherwise, irrespective of whether the -82- Administrative Agent or the Lenders shall have made any demand hereunder and although such obligations, liabilities or claims, or any of them, may be contingent or unmatured, and any such set-off shall be deemed to have been made immediately upon the occurrence of an Event of Default even though such charge is made or entered on the books of such Lender subsequent thereto. The Borrower hereby agrees that to the extent permitted by Law any Person purchasing a participation in the Loans, Commitments and LC Obligations hereunder pursuant to SECTION 2.01(b), 2.06(a) or (e), 2.14 or 10.06(e) may exercise all rights of set-off with respect to its participation interest as fully as if such Person were a Lender hereunder and any such set-off shall reduce the amount owed by the Borrower to the Lender (but without duplication). SECTION 10.09 INTEREST RATE LIMITATION. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the "Maximum Rate"). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (i) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations. SECTION 10.10 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. Delivery of an executed counterpart by facsimile shall be effective as an original executed counterpart and shall be deemed a representation that the original executed counterpart will be delivered. SECTION 10.11 INTEGRATION. This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; provided, that the inclusion of supplemental rights or remedies in favor of the Administrative Agent or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, put rather in accordance with the fair meaning thereof. SECTION 10.12 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relie d upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or Event of Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding. SECTION 10.13 SEVERABILITY. Any provision of this Agreement and the other Loan Documents to which the Borrower is a party that is prohibited or unenforceable in any jurisdiction shall, -83- as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 10.14 HEADINGS. The headings and captions of the SECTIONs and subSECTIONs hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. SECTION 10.15 GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND OTHER THAN AS EXPRESSLY SET FORTH IN SUCH OTHER LOAN DOCUMENTS) AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES; PROVIDED, THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 AND, AS TO MATTERS NOT GOVERNED BY SUCH UNIFORM CUSTOMS, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. Any legal action or proceeding with respect to this Agreement or any other Loan Document may be brought in the courts of the State of New York in New York County, or of the United States for the Southern District of New York or the Western District of North Carolina, and, by execution and delivery of this Agreement, the Borrower hereby irrevocably accepts for itself and in respect of its property, generally and unconditional, the nonexclusive jur isdiction of such courts. The Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such court and any claim that any such proceeding brought in any such court has been brought in an inconvenient forum. (b) The Borrower hereby irrevocably appoints C.T. Corporation System its authorized agent to accept and acknowledge service of any and all process which may be served in any suit, action or proceeding of the nature referred to in this SECTION 10.15 and consents to process being served in any such suit, action or proceeding upon C.T. Corporation System (with a copy thereof being mailed by overnight courier to the Borrower's address referred to in SCHEDULE 10.02) in any manner or by the mailing of a copy thereof by registered or certified mail, postage prepaid, return receipt requested, to the Borrower's address referred to in SCHEDULE 10.02. The Borrower agrees that such service (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by law, be taken and held to be valid personal service upon and personal delivery to it. Nothing in this SECTION 10.15 shall affect the right of any Lender to serve process in any manner permitted by law or limit the right of any Lender to bring proceedings against the Borrower in the courts of any jurisdiction or jurisdictions. SECTION 10.16 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY -84- CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 10.16 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. SECTION 10.17 BINDING EFFECT. This Agreement shall become effective at such time when it shall have been executed by the Borrower, and the Administrative Agent, and the Administrative Agent shall have received copies hereof (telefaxed or otherwise) which, when taken together, bear the signatures of each Lender, and thereafter this Agreement shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent and each Lender and their respective successors and assigns; PROVIDED, HOWEVER, that unless the conditions set forth in SECTION 4.01 have been satisfied by the Borrower or waived by the Lenders on or before June 30, 2002, none of the Borrower, the Administrative Agent or the Lenders shall have any obligations under this Agreement. SECTION 10.18 CONFLICT. To the extent that there is a conflict or inconsistency between any provision hereof, on the one hand, and any provision of any other Loan Document, on the other hand, this Agreement shall control. [Signature Pages Follow] -85- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized officers as of the day and year first above written. BORROWER: WORTHINGTON INDUSTRIES, INC. By: /s/ John T. Baldwin ------------------------------------------------- Name: John T. Baldwin Title: Vice President and Chief Financial Officer -i- PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent By: /s/ David B. Gookin --------------------------- Name: David B. Gookin Title: Vice President PNC BANK, NATIONAL ASSOCIATION as Swingline Lender By: /s/ David B. Gookin --------------------------- Name: David B. Gookin Title: Vice President PNC BANK, NATIONAL ASSOCIATION, as a Lender By: /s/ David B. Gookin --------------------------- Name: David B. Gookin Title: Vice President -ii- WACHOVIA BANK, NATIONAL ASSOCIATION, as a Lender By: /s/ Steven M. Hamjil --------------------------------- Name: Steven M. Hamjil Title: Vice President -iii- THE BANK OF NOVA SCOTIA, as a Lender By: /s/ N. Bell --------------------------- Name: N. Bell Title: Senior Manager -iv- CREDIT SUISSE FIRST BOSTON CAYMAN ISLANDS BRANCH, as a Lender By: /s/ Bill O'Daly /s/ Cassandra Drodgan ------------------------------------------- Name: Bill O'Daly Cassandra Drodgan Title: Director Associate -v- FIFTH THIRD BANK (CENTRAL OHIO), as a Lender By: /s/ John K. Beandslow -------------------------------- Name: John K. Beandslow Title: Vice President -vi- FIRSTAR BANK, NA, as a Lender By: /s/ Robert H. Friend -------------------------------- Name: Robert H. Friend Title: Vice President -vii- CIBC, INC., as a Lender By: /s/ George Knight ---------------------------------- Name: George Knight Title: Managing Director -viii- COMERICA BANK, as a Lender By: /s/ Ryan Oliver ------------------------------------ Name: Ryan Oliver Title: Account Officer -ix- THE HUNTINGTON NATIONAL BANK, as a Lender By: /s/ Nancy J. Cracolice ------------------------------ Name: Nancy J. Cracolice Title: Vice President -x- JPMORGAN CHASE BANK, as a Lender By: /s/ William J. Whitley ------------------------------------ Name: William J. Whitley Title: Senior Vice President -xi- NATIONAL CITY BANK, as a Lender By: /s/ James H. Ramage ----------------------------------- Name: James H. Ramage Title: Managing Director -xii- WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender By: /s/ Melissa Nachman ------------------------------------ Name: Melissa Nachman Title: Vice President By: /s/ Scott Miller ----------------------------------- Name: Scott Miller Title: Vice President -xiii- MELLON BANK, NA, as a Lender By: /s/ Paul F. Neel ----------------------------------- Name: Paul F. Neel Title: First Vice President -xiv- TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS AND ACCOUNTING TERMS .............................................. 1 Section 1.01 Defined Terms ....................................................... 1 Section 1.02 Computation of Time Periods and Other Definitional Provisions ....... 24 Section 1.03 Accounting Terms and Determinations ................................. 24 Section 1.04 Classes and Types of Borrowings ..................................... 25 ARTICLE II THE CREDIT FACILITIES ......................................................... 25 Section 2.01 Commitments to Lend ................................................. 25 Section 2.02 Notice of Committed Loan ............................................ 28 Section 2.03 Competitive Bid Borrowings .......................................... 28 Section 2.04 Notice to Lenders; Funding of Loans ................................. 31 Section 2.05 Evidence of Loans ................................................... 33 Section 2.06 Letters of Credit ................................................... 34 Section 2.07 Interest ............................................................ 41 Section 2.08 Extension and Conversion ............................................ 42 Section 2.09 Scheduled Termination of Commitments; Mandatory Prepayments ......... 44 Section 2.10 Optional Prepayments ................................................ 44 Section 2.11 Adjustment of Commitments ........................................... 44 Section 2.12 Fees ................................................................ 49 Section 2.13 Pro-Rata Treatment .................................................. 50 Section 2.14 Sharing of Payments ................................................. 50 Section 2.15 Payments; Computations .............................................. 51 ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY ........................................ 52 Section 3.01 Taxes ............................................................... 52 Section 3.02 Illegality .......................................................... 54 Section 3.03 Basis for Determining Interest Rate Inadequate or Unfair ............ 54 Section 3.04 Increased Costs and Reduced Return .................................. 55 Section 3.05 Funding Losses ...................................................... 56 Section 3.06 Base Rate Loans Substituted for Affected Fixed Rate Loans ........... 57 ARTICLE IV CONDITIONS .................................................................... 57 Section 4.01 Conditions to Closing ............................................... 57 Section 4.02 Conditions to All Credit Extensions ................................. 59 ARTICLE V REPRESENTATIONS AND WARRANTIES ................................................ 60 Section 5.01 Organization ........................................................ 60 Section 5.02 Financial Condition ................................................. 60 Section 5.03 Litigation, Etc ..................................................... 60 Section 5.04 Taxes ............................................................... 61 Section 5.05 Authority ........................................................... 61 Section 5.06 Other Defaults ...................................................... 61 Section 5.07 Licenses, Etc ....................................................... 61
-i- TABLE OF CONTENTS (continued)
PAGE Section 5.08 ERISA ............................................................... 61 Section 5.09 Environmental Matters ............................................... 61 Section 5.10 Ownership of Property; Liens ........................................ 61 Section 5.11 Insurance ........................................................... 62 Section 5.12 Subsidiaries ........................................................ 62 Section 5.13 Margin Regulation; Investment Company Act; Public Utility Holding Company Act ................................................. 62 Section 5.14 Disclosure .......................................................... 62 ARTICLE VI AFFIRMATIVE COVENANTS .......................................................... 63 Section 6.01 Information ......................................................... 63 Section 6.02 Books and Records ................................................... 64 Section 6.03 Payment of Obligations .............................................. 64 Section 6.04 Compliance with Laws ................................................ 65 Section 6.05 Environmental Violations ............................................ 65 Section 6.06 ERISA Compliance .................................................... 65 Section 6.07 Maintenance of Properties ........................................... 65 Section 6.08 Maintenance of Insurance ............................................ 65 Section 6.09 Use of Proceeds ..................................................... 65 Section 6.10 Pledged Notes ....................................................... 65 ARTICLE VII NEGATIVE COVENANTS ............................................................. 65 Section 7.01 Limitation on Indebtedness of Restricted Subsidiaries ............... 65 Section 7.02 Restriction on Liens ................................................ 66 Section 7.03 Investments ......................................................... 66 Section 7.04 Merger .............................................................. 67 Section 7.05 Dispositions ........................................................ 67 Section 7.06 ERISA ............................................................... 67 Section 7.07 Designation of Restricted and Unrestricted Subsidiaries ............. 68 Section 7.08 Change in Nature of Business ........................................ 68 Section 7.09 Transactions with Affiliates ........................................ 68 Section 7.10 Burdensome Agreements ............................................... 69 Section 7.11 Impairment of Collateral ............................................ 69 Section 7.12 Use of Proceeds ..................................................... 69 Section 7.13 Governance Documents ................................................ 69 Section 7.14 Financial Covenants ................................................. 69 ARTICLE VIII DEFAULTS ....................................................................... 70 Section 8.01 Events of Default ................................................... 70 Section 8.02 Acceleration; Remedies .............................................. 71 ARTICLE IX AGENCY PROVISIONS .............................................................. 72 Section 9.01 Appointment; Authorization .......................................... 72 Section 9.02 Delegation of Duties ................................................ 72
-ii- TABLE OF CONTENTS (continued)
PAGE Section 9.03 Exculpatory Provisions .............................................. 73 Section 9.04 Reliance on Communications .......................................... 73 Section 9.05 Notice of Default ................................................... 73 Section 9.06 Credit Decision; Disclosure of Information by Administrative Agent .. 73 Section 9.07 Indemnification ..................................................... 74 Section 9.08 Agents in Their Individual Capacity ................................. 74 Section 9.09 Successor Agents .................................................... 75 Section 9.10 Certain Other Agents ................................................ 75 Section 9.11 Agents' Fees; Arranger Fee .......................................... 75 ARTICLE X MISCELLANEOUS .................................................................. 75 Section 10.01 Amendments, Waivers and Consents .................................... 75 Section 10.02 Notices and Other Communications; Facsimile Copies .................. 77 Section 10.03 No Waiver; Cumulative Remedies ...................................... 78 Section 10.04 Attorney Costs, Expenses and Taxes .................................. 78 Section 10.05 Indemnification ..................................................... 78 Section 10.06 Successors and Assigns .............................................. 79 Section 10.07 Confidentiality ..................................................... 82 Section 10.08 Set-off ............................................................. 82 Section 10.09 Interest Rate Limitation ............................................ 83 Section 10.10 Counterparts ........................................................ 83 Section 10.11 Integration ......................................................... 83 Section 10.12 Survival of Representations and Warranties .......................... 83 Section 10.13 Severability ........................................................ 83 Section 10.14 Headings ............................................................ 84 Section 10.15 Governing Law; Submission to Jurisdiction ........................... 84 Section 10.16 Waiver of Jury Trial ................................................ 84 Section 10.17 Binding Effect ...................................................... 85 Section 10.18 Conflict ............................................................ 85
-iii- TABLE OF CONTENTS (continued) PAGE Schedules: Schedule 1.01A - Lenders and Commitments Schedule 5.12 - Subsidiaries Schedule 7.01 Existing Letters of Credit Schedule 7.03 - Investments Schedule 7.07 - Unrestricted Subsidiaries Schedule 10.0 2 - Notices; Lending Offices Exhibits: Exhibit A-1 - Form of Notice of Syndicated Loan Exhibit A-2 - Form of Competitive Bid Request Exhibit A-3 - Form of Competitive Bid Exhibit A-4 - Form of Notice of Extension/Conversion Exhibit A-5 - Form of Swingline Loan Request Exhibit A-6 - Form of Letter of Credit Request Exhibit B-1 - Form of Revolving Note Exhibit B-2 - Form of Competitive Bid Note Exhibit B-3 - Form of Swingline Note Exhibit C - Form of Assignment and Acceptance Exhibit D - Form of Pledge Agreement Exhibit E - Form of Trust Agreement Exhibit F - Form of Opinion of Counsel for the Borrower -iv- EX-4.J.II 10 l95946aexv4wjwii.txt EX-4(J)(II) EXHIBIT 4(j)(ii) FORM OF REVOLVING NOTE Principal Sum: $[ ] Pittsburgh, Pennsylvania May 10, 2002 For value received, WORTHINGTON INDUSTRIES, INC., an Ohio corporation (the "Borrower"), hereby promises to pay to the order of [ ] (the "Lender") for the account of its Applicable Lending Office, at the office of PNC Bank, National Association (the "Administrative Agent") as set forth in that certain $155,000,000 5-Year Credit Agreement dated as of May 10, 2002 (as amended, restated, supplemented or otherwise modified, the "Credit Agreement") among the Borrower, the lending institutions party thereto from time to time and PNC Bank, National Association, as Administrative Agent, Issuing Lender and Swingline Lender, the Principal Sum set forth above (or such lesser amount as shall equal the aggregate unpaid principal amount of all Revolving Loans made by the Lender to the Borrower under the Credit Agreement), in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Revolving Loan, at such office, in like money and funds, for the period commencing on the date of such Revolving Loan until such Revolving Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, payable on demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the rates per annum set forth in the Credit Agreement. This Note is one of the Revolving Notes referred to in the Credit Agreement and evidences Revolving Loans made by the Lender thereunder. Capitalized terms used in this Revolving Note and not otherwise defined shall have the respective meanings assigned to them in the Credit Agreement and the terms and conditions of the Credit Agreement are expressly incorporated herein and made a part hereof. The Credit Agreement provides for the acceleration of the maturity of the Revolving Loans evidenced by this Revolving Note upon the occurrence of certain events (and for payment of collection costs in connection therewith) and for prepayments of Revolving Loans upon the terms and conditions specified therein. In the event this Revolving Note is not paid when due at any stated or accelerated maturity, the Borrower agrees to pay, in addition to the principal and interest, all costs of collection, including reasonable attorney fees. The date, amount, Type, interest rate and duration of Interest Period (if applicable) of each Revolving Loan made by the Lender to the Borrower, and each payment made on account of the principal thereof, shall be recorded by the Lender on its books and, if the Lender so elects in connection with any transfer or enforcement hereof, appropriate notations to evidence the foregoing information with respect to each Revolving Loan then outstanding shall be endorsed by the Lender on the schedule attached to and made a part hereof, PROVIDED that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of the Borrower to make a payment when due of any amount owing under the Credit Agreement or under this Revolving Note in respect of the Revolving Loans to be evidenced by this Revolving Note, and each such recordation or endorsement shall be prima facie evidence of such information. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. This Revolving Note and the Revolving Loans evidenced hereby may be transferred in whole or in part only by registration of such transfer on the Register maintained for such purpose by or on behalf of the Borrower as provided in SECTION 10.06(d) of the Credit Agreement. THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be executed as of the date first above written. WORTHINGTON INDUSTRIES, INC. By: /s/John T. Baldwin ------------------------------------------------ Name: John T Baldwin Title: Vice President & Chief Financial Officer EX-4.J.III 11 l95946aexv4wjwiii.txt EX-4(J)(III) EXHIBIT 4(j)(iii) SWINGLINE NOTE Pittsburgh, Pennsylvania May 10, 2002 FOR VALUE RECEIVED, the undersigned WORTHINGTON INDUSTRIES, INC., an Ohio corporation (the "Borrower"), hereby promises to the order of PNC BANK, NATIONAL ASSOCIATION (the "Swingline Lender"), on the date when due in accordance with the Credit Agreement referred to below, the aggregate principal amount of each Swingline Loan from time to time made by the Swingline Lender to the Borrower under that certain $155,000,000 5-Year Credit Agreement dated as May 10, 2002 (as amended, restated, supplemented or otherwise modified, the "Credit Agreement"; the terms defined therein being used herein as therein defined), among the Borrower, the lending institutions party thereto from time to time and PNC Bank, National Association, as Administrative Agent, Issuing Lender and Swingline Lender. The Borrower promises to pay interest on the unpaid principal amount of each Swingline Loan from the date of such Swingline Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement. All payments of principal and interest shall be made to the Swingline Lender in the applicable currency in immediately available funds at its Lending Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement. This Note is the Swingline Note referred to in the Credit Agreement, is entitled to the benefits thereof and is subject to optional prepayment in whole or in part as provided therein. Upon the occurrence of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement. Swingline Loans made by the Swingline Lender shall be evidenced by one or more loan accounts or records maintained by Swingline Lender in the ordinary course of business. The Swingline Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of the Swingline Loans and payments with respect thereto. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. WORTHINGTON INDUSTRIES, INC. By: /s/John T. Baldwin ------------------------------------------------ Name: John T Baldwin Title: Vice President & Chief Financial Officer EX-4.K 12 l95946aexv4wk.txt EX-4(K) EXHIBIT 4(k) PLEDGE AGREEMENT ---------------- THIS PLEDGE AGREEMENT (this "PLEDGE AGREEMENT"), dated as of May 10, 2002, made by WORTHINGTON INDUSTRIES, INC., an Ohio corporation (the "PLEDGOR"), in favor of WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Collateral Agent (as defined below) for the Secured Parties (as defined in the Trust Agreement referred to below). STATEMENT OF PURPOSE: -------------------- Pursuant to the Trust Agreement, dated as of May 10, 2002 (as amended, restated, supplemented or otherwise modified from time to time, the "TRUST AGREEMENT"; capitalized terms used but not defined herein have the respective meanings assigned thereto in the Trust Agreement), Wells Fargo Bank Minnesota, National Association has agreed to act as trustee (together with any successor(s) thereto in such capacity, the "TRUSTEE") on behalf of the Secured Parties. The Pledgor has agreed to grant to the Collateral Agent, for the benefit of the Secured Parties, a security interest in certain of its assets as more fully described below. NOW THEREFORE, for good and valuable consideration the receipt of which is hereby acknowledged, the Pledgor agrees, for the benefit of each Secured Party, as set out below. ARTICLE I DEFINITIONS SECTION 1.1 CERTAIN TERMS. The following terms when used in this Pledge Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof): "COLLATERAL" is defined in SECTION 2.1. "COLLATERAL AGENT" means Wells Fargo Bank Minnesota, National Association, as collateral agent for the benefit of the Secured Parties hereunder, together with its successors and permitted assigns. "CREDIT AGREEMENTS" means, collectively, (i) the 364-Day Revolving Credit Agreement, dated as of May 10, 2002, among the Pledgor, as Borrower, the Lenders party thereto and PNC Bank, National Association, in its capacity as Issuing Lender, Swingline Lender and Administrative Agent, and (ii) the Five Year Revolving Credit Agreement, dated as of May 10, 2002, among the Pledgor, as Borrower, the Lenders party thereto and PNC Bank, National Association, in its capacity as Administrative Agent, in each case as the same may be amended, restated, supplemented or otherwise modified from time to time. "PLEDGE AGREEMENT" is defined in the PREAMBLE. "PLEDGED NOTE ISSUER" means each Person identified on SCHEDULE A hereto as the issuer of the Pledged Note identified opposite the name of such Person. "PLEDGED NOTES" means all promissory notes of any Pledged Note Issuer in the form or substantially the form of EXHIBIT A hereto which are delivered by the Pledgor to the Collateral Agent as Pledged Property hereunder, as such promissory notes, in accordance with SECTION 4.3, are amended, modified or supplemented from time to time and together with any promissory note of any Pledged Note Issuer taken in extension or renewal thereof or substitution therefor. "PLEDGED PROPERTY" means all Pledged Notes, and all other pledged promissory notes, all other securities, all amounts due or to become due under the Pledged Notes, all other instruments which are now being delivered by the Pledgor to the Collateral Agent or may from time to time hereafter be delivered by the Pledgor to the Collateral Agent for the purpose of pledge under this Pledge Agreement, and all proceeds of any of the foregoing. "PLEDGOR" is defined in the PREAMBLE. "SECURED OBLIGATIONS" means collectively (i) the Public Debt Obligations, (ii) the Credit Agreement Obligations, (iii) all sums payable by the Company under the Trust Agreement or this Pledge Agreement (including, without limitation, Trustee Fees) and (iv) all sums payable by the Company in connection with the Indebtedness and the obligations of the Company with respect to the Additional Senior Indebtedness. "SECURED PARTIES" means collectively (i) the Holders and the Public Debt Trustee, (ii) the Lenders and the Administrative Agent, (iii) the Collateral Agent, (iv) the Trustee and (v) the Holders of Additional Senior Indebtedness. "SECURITIES ACT" is defined in SECTION 6.2. "U.C.C." means the Uniform Commercial Code as in effect in the State of New York. SECTION 1.2 U.C.C. DEFINITIONS. Unless otherwise defined herein or the context otherwise requires, terms for which meanings are provided in the U.C.C. are used in this Pledge Agreement, including its preamble and recitals, with such meanings. ARTICLE II PLEDGE SECTION 2.1 GRANT OF SECURITY INTEREST. The Pledgor hereby pledges, hypothecates, assigns, charges, mortgages, delivers, and transfers to the Collateral Agent, for the equal and ratable benefit of each of the Secured Parties, a continuing security interest in, all of the following property (the "COLLATERAL"): (a) all Pledged Notes identified on SCHEDULE A hereto; (b) all other Pledged Notes issued from time to time; 2 (c) all other Pledged Property, whether now or hereafter delivered to the Collateral Agent in connection with this Pledge Agreement; (d) all principal, interest and other payments and rights with respect to any Pledged Property; and (e) all proceeds of any of the foregoing. SECTION 2.2 SECURITY FOR OBLIGATIONS. This Pledge Agreement secures the payment in full of all Secured Obligations of the Pledgor now or hereafter existing. SECTION 2.3 DELIVERY OF PLEDGED PROPERTY. All certificates or instruments representing or evidencing any Collateral, including all Pledged Notes, shall be delivered to and held by or on behalf of (and endorsed to the order of) the Collateral Agent pursuant hereto, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary instruments of transfer or assignment, duly executed in blank. SECTION 2.4 VOTING RIGHTS, PAYMENTS, ETC. (a) Notwithstanding the provisions of SECTION 5.1, so long as neither the Administrative Agent nor the Public Debt Trustee has given the notice referred to in PARAGRAPH (b) below: (i) Subject to SECTION 2.4(b), the Pledgor shall be entitled to exercise any and all voting or consensual rights and powers relating or pertaining to the Collateral or any part thereof for any purpose; PROVIDED that the Pledgor agrees that it will not exercise any such right or power in any manner which would have a material adverse effect on the Collateral Agent's or any other Secured Party's rights with respect to any material portion of the Collateral. (ii) Subject to SECTION 2.4(b), the Pledgor shall be entitled to receive and retain any and all principal and interest payments made in cash by any Pledged Note Issuer, but all distributions in respect of the Collateral or any part thereof made in shares of stock or securities or other property or representing any return of capital, whether resulting from a subdivision, combination or reclassification of Collateral or any part thereof or received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any Pledged Note Issuer may be a party or otherwise or as a result of any exercise of any stock purchase or subscription right, shall be and become part of the Collateral hereunder and, if received by the Pledgor, shall be forthwith delivered to the Collateral Agent in due form for transfer (i.e., endorsed in blank or accompanied by stock or bond powers executed in blank) to be held for the purposes of this Pledge Agreement. (iii) The Collateral Agent shall execute and deliver, or cause to be executed and delivered, to the Pledgor, all such powers of attorney and other instruments as the Pledgor may reasonably request for the purpose of enabling the Pledgor to exercise the rights and powers which it is entitled to exercise pursuant to CLAUSE (i) above and to receive the payments which it is authorized to retain pursuant to CLAUSE (ii) above. 3 (b) When a Notice of Acceleration is in effect, and so long as the same shall be continuing, all rights and powers which the Pledgor is entitled to exercise pursuant to SECTION 2.4(a)(i), and all rights of the Pledgor to receive and retain payments pursuant to SECTION 2.4(a)(ii), shall forthwith cease, and all such rights and powers shall thereupon become vested in the Collateral Agent which shall have, when a Notice of Acceleration is in effect, the sole and exclusive authority to exercise such rights and powers and to receive such payments. Any and all money and other property paid over to or received by the Collateral Agent pursuant to this PARAGRAPH (b) shall be retained by the Collateral Agent as additional Collateral hereunder and applied in accordance with the provisions hereof and the Trust Agreement. SECTION 2.5 CONTINUING SECURITY INTEREST; TRANSFER OF NOTE. This Pledge Agreement shall create a continuing pledge of and security interest in the Collateral and shall: (a) Subject to SECTION 7.7 of this Pledge Agreement, remain in full force and effect until payment in full of all Secured Obligations and the termination of all Commitments (as defined in the Credit Agreements); (b) be binding upon the Pledgor and its successors, transferees and assigns; and (c) inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent and each other Secured Party. Without limiting the foregoing CLAUSE (c), any Lender, Holder or Holder of Additional Senior Indebtedness may assign or otherwise transfer (in whole or in part) any Loan (as defined in the Credit Agreements) or securities representing any Public Debt Security held by it or instruments evidencing any Additional Senior Indebtedness held by it to any other Person or entity, and such other Person or entity shall thereupon become vested with all the rights and benefits in respect thereof granted to such (i) Lender under any Loan Document (as defined in the Credit Agreements), (ii) Holder under the Indenture or (iii) Holder of Additional Senior Indebtedness, in each case including this Pledge Agreement, subject, however, to any contrary provisions in such assignment or transfer, and to the provisions of SECTION 10.06 of the Credit Agreement with respect to the Lenders and SECTION 2.07 of the Indenture with respect to the Holders of Public Debt Securities. Upon the earlier to occur of (i) payment in full of all Secured Obligations and the termination of all Commitments (as defined in the Credit Agreements) or (ii) the termination of this Pledge Agreement pursuant to SECTION 6.9 of the Trust Agreement, the security interest granted herein shall terminate and all rights to the Collateral shall revert to the Pledgor. Upon any such termination, the Collateral Agent will, at the Pledgor's sole expense, deliver to the Pledgor, without any representations, warranties or recourse of any kind whatsoever, all certificates and instruments representing or evidencing all Pledged Notes, together with all other Collateral held by the Collateral Agent hereunder, and execute and deliver to the Pledgor such documents as the Pledgor shall reasonably request to evidence such termination. 4 ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.1 WARRANTIES, ETC. The Pledgor represents and warrants unto each Secured Party, as at the date of each pledge and delivery hereunder (including each pledge and delivery of a Pledged Note) by the Pledgor to the Collateral Agent of any Collateral, as set forth in this Article III. SECTION 3.2 OWNERSHIP, NO LIENS, ETC. The Pledgor is the legal and beneficial owner of, and has title to (and has full right and authority to pledge and assign) such Collateral, free and clear of all liens, security interests, options, or other charges or encumbrances, except any lien or security interest granted pursuant hereto in favor of the Collateral Agent. SECTION 3.3 VALID SECURITY INTEREST. The possession of such Collateral by the Collateral Agent is effective to create a valid, perfected, first priority security interest securing the Secured Obligations in such Collateral and all proceeds thereof. No filing or other action is or will be necessary to perfect, continue or protect such security interest. SECTION 3.4 AS TO PLEDGED NOTES. In the case of each Pledged Note, all of such Pledged Notes have been duly authorized, executed, endorsed, issued and delivered, and are the legal, valid and binding obligations of the respective Pledged Note Issuers, and are not in default. SECTION 3.5 AUTHORIZATION, APPROVAL, ETC. No authorization, approval, or other action by, and no notice to or filing with, any governmental authority, regulatory body or any other Person is required either: (a) for the pledge by the Pledgor of any Collateral pursuant to this Pledge Agreement or for the execution, delivery, and performance of this Pledge Agreement by the Pledgor, or (b) for the exercise by the Collateral Agent of the rights provided for in this Pledge Agreement or any remedies in respect of the Collateral pursuant to this Pledge Agreement or under applicable law. SECTION 3.6 COMPLIANCE WITH LAWS. The Pledgor is in compliance with the requirements of all applicable laws, rules, regulations and orders of every governmental authority, the non-compliance with which might materially adversely affect the business, properties, assets, operations, condition (financial or otherwise) or prospects of the Pledgor or the value of the Collateral or the worth of the Collateral as collateral security. 5 ARTICLE IV COVENANTS SECTION 4.1 PROTECT COLLATERAL; FURTHER ASSURANCES, ETC. The Pledgor will not (i) sell, assign, transfer, pledge, or encumber in any other manner the Collateral (except in favor of the Collateral Agent hereunder), (ii) perform any act which would prevent the Collateral Agent from enforcing any of the terms and conditions of this Pledge Agreement or would limit the Collateral Agent in any such enforcement or (iii) become a party to or otherwise bound by any agreement, other than this Pledge Agreement and the Trust Agreement, which restricts in any manner the rights of the Collateral Agent with respect to the Collateral. The Pledgor will warrant and defend the right and title herein granted unto the Collateral Agent in and to the Collateral (and all right, title, and interest represented by the Collateral) against the claims and demands of all Persons whomsoever. The Pledgor agrees that at any time, and from time to time, at the expense of the Pledgor, the Pledgor will promptly execute and deliver all further instruments (including, without limitation, Uniform Commercial Code financing statements), and take all further action, that may be necessary or desirable, or that the Collateral Agent may reasonably request, in order to perfect, continue and protect any security interest or pledge granted or purported to be granted hereby or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. SECTION 4.2 CONTINUOUS PLEDGE. Subject to SECTION 2.4 AND 7.7 of this Agreement and SECTION 6.9 of the Trust Agreement, the Pledgor will, at all times, keep pledged to the Collateral Agent pursuant hereto all Pledged Notes, all interest, principal and other proceeds received by the Collateral Agent with respect to the Pledged Notes, and all other Collateral and other securities, instruments, proceeds, and rights from time to time received by or distributable to the Pledgor in respect of any Collateral. SECTION 4.3 ADDITIONAL UNDERTAKINGS. The Pledgor will not, without the prior written consent of the Collateral Agent (except as otherwise provided in the Credit Agreements): (a) enter into any agreement amending, supplementing, or waiving any provision of any Pledged Note or compromising or releasing or extending the time for payment of any obligation of the maker thereof; or (b) except in connection with complying with the terms and provisions of the Pledged Notes prior to a Notice of Acceleration being in effect, take or omit to take any action the taking or the omission of which would result in any impairment or alteration under any obligation of the maker of any Pledged Note or other instrument constituting Collateral. 6 ARTICLE V THE COLLATERAL AGENT SECTION 5.1 COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. The Pledgor hereby irrevocably appoints the Collateral Agent the Pledgor's attorney-in-fact, with full authority in the place and stead of the Pledgor and in the name of the Pledgor or otherwise, from time to time in the Collateral Agent's discretion, to take any action and to execute any instrument which the Collateral Agent may deem necessary or advisable to accomplish the purposes of this Pledge Agreement, including without limitation: (a) during the effectiveness of a Notice of Acceleration, to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; (b) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper, in connection with CLAUSE (a) above; and (c) during the effectiveness of a Notice of Acceleration, to file any claims or take any action or institute any proceedings which the Collateral Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Collateral Agent with respect to any of the Collateral. The Pledgor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section is irrevocable and coupled with an interest. SECTION 5.2 COLLATERAL AGENT MAY PERFORM. If the Pledgor fails to perform any agreement contained herein, the Collateral Agent may itself perform, or cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by the Pledgor pursuant to SECTION 6.4. SECTION 5.3 COLLATERAL AGENT HAS NO DUTY. The powers conferred on the Collateral Agent hereunder are solely to protect its interest (on behalf of the Secured Parties) in the Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable care of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Property or Collateral, whether or not the Collateral Agent has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Pledged Property or Collateral. SECTION 5.4 REASONABLE CARE. The Collateral Agent is required to exercise reasonable care in the custody and preservation of any of the Collateral in its possession; PROVIDED, HOWEVER, the Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of any of the Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own property. 7 ARTICLE VI REMEDIES SECTION 6.1 CERTAIN REMEDIES. Whenever a Notice of Acceleration is in effect: (a) Subject to the Trust Agreement, the Collateral Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the U.C.C. (whether or not the U.C.C. applies to the affected Collateral) and also may, without notice except as specified below, (i) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Collateral Agent may deem commercially reasonable, and (ii) bid for and purchase any or all of the Collateral at any such public sale. The Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten days' prior notice to the Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. (b) The Collateral Agent may: (i) transfer all or any part of the Collateral into the name of the Collateral Agent or its nominee, with or without disclosing that such Collateral is subject to the pledge and the lien and security interest hereunder, (ii) notify the parties obligated on any of the Collateral to make payment to the Collateral Agent of any amount due or to become due thereunder, (iii) enforce collection of any of the Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any obligations of any nature of any party with respect thereto, (iv) endorse any checks, drafts, or other writings in the Pledgor's name to allow collection of the Collateral, (v) take control of any proceeds of the Collateral, and (vi) execute (in the name, place and stead of the Pledgor) endorsements, assignments, stock powers and other instruments of conveyance or transfer with respect to all or any of the Collateral. 8 SECTION 6.2 SECURITIES LAWS. If the Collateral Agent shall determine to exercise its right to sell all or any of the Collateral pursuant to SECTION 6.1, the Pledgor agrees that, upon request of the Collateral Agent, the Pledgor will, at its own expense: (a) execute and deliver, and cause each Pledged Note Issuer with respect to the Collateral contemplated to be sold and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the opinion of the Collateral Agent, advisable to register such Collateral under the provisions of the Securities Act of 1933, as from time to time amended (the "SECURITIES ACT") or procure any exemption from such registration deemed potentially applicable by the Collateral Agent, and to cause the registration statement or exemption relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus which, in the opinion of the Collateral Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto; (b) use its best efforts to qualify the Collateral under the state securities or "Blue Sky" laws and to obtain all necessary governmental approvals for the sale of the Collateral, as requested by the Collateral Agent; (c) cause each such Pledged Note Issuer to make available to its security holders, as soon as practicable, an earnings statement that will satisfy the provisions of Section 11(a) of the Securities Act; and (d) do or cause to be done all such other acts and things as may be necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law. The Pledgor further acknowledges the impossibility of ascertaining the amount of damages that would be suffered by the Collateral Agent or the Secured Parties by reason of the failure by the Pledgor to perform any of the covenants contained in this SECTION 6.2 and, consequently, agrees that, if the Pledgor shall fail to perform any of such covenants, it shall pay, as liquidated damages and not as a penalty, an amount equal to the value (as determined by the Collateral Agent) of the Collateral on the date the Collateral Agent shall demand compliance with this Section. SECTION 6.3 COMPLIANCE WITH RESTRICTIONS. The Pledgor agrees that in any sale of any of the Collateral during the effectiveness of a Notice of Acceleration, the Collateral Agent is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable law (including compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers to persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any governmental regulatory authority or official, and the Pledgor further agrees 9 that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Collateral Agent be liable nor accountable to the Pledgor for any discount allowed by the reason of the fact that such Collateral is sold in compliance with any such limitation or restriction. SECTION 6.4 APPLICATION OF PROCEEDS. All cash proceeds received by the Collateral Agent in respect of any sale of, collection from, or other realization upon, all or any part of the Collateral may, in the discretion of the Secured Parties, be held by the Collateral Agent as additional collateral security for, or then or at any time thereafter be applied in accordance with the provisions of the Trust Agreement. SECTION 6.5 INDEMNITY AND EXPENSES. The Pledgor hereby indemnifies and holds harmless the Collateral Agent from and against any and all claims, losses, and liabilities arising out of or resulting from this Pledge Agreement (including enforcement of this Pledge Agreement), except claims, losses, or liabilities resulting from the Collateral Agent's gross negligence or willful misconduct. Upon demand, the Pledgor will pay to the Collateral Agent the amount of any and all reasonable expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which the Collateral Agent may incur in connection with: (a) the administration of this Pledge Agreement, the Credit Agreement or the Indenture; (b) the custody, preservation, use, or operation of, or the sale of, collection from, or other realization upon, any of the Collateral; (c) the exercise or enforcement of any of the rights of the Collateral Agent hereunder; or (d) the failure by the Pledgor to perform or observe any of the provisions hereof. ARTICLE VII MISCELLANEOUS PROVISIONS SECTION 7.1 BENEFIT OF AGREEMENT. This Pledge Agreement shall (unless otherwise expressly indicated herein) be construed, administered and applied for the benefit of the Secured Parties. Nothing in this Pledge Agreement shall amend, supplement or modify, expressly or by implication, the Indenture or alter adversely any of the rights or benefits of the Trustee or Holders of Public Debt Securities or alter the duties or obligations of the Company thereunder, all of which shall be and remain in full force and effect. SECTION 7.2 AMENDMENTS, ETC. No amendment to or waiver of any provision of this Pledge Agreement nor consent to any departure by the Pledgor herefrom shall in any event be effective unless the same shall be in writing and signed by the parties hereto, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given. 10 SECTION 7.3 PROTECTION OF COLLATERAL. The Collateral Agent may from time to time, at its option, perform any act which the Pledgor agrees hereunder to perform and which the Pledgor shall fail to perform after being requested in writing so to perform (it being understood that no such request need be given during the effectiveness of a Notice of Acceleration) and the Collateral Agent may from time to time take any other action which the Collateral Agent reasonably deems necessary for the maintenance, preservation or protection of any of the Collateral or of its security interest therein. SECTION 7.4 ADDRESSES FOR NOTICES. All notices and other communications provided for hereunder shall be in writing (including telegraphic communication) and, if to the Pledgor, mailed or telegraphed or delivered to it at the address set forth below its signature hereto, if to the Collateral Agent, mailed or delivered to it, addressed to it at the address set forth below its signature hereto or, as to either party, at such other address as shall be designated by such party in a written notice to each other party complying as to delivery with the terms of this Section. All such notices and other communications shall, when mailed or telegraphed, respectively, be effective when deposited in the mails or delivered to the telegraph company, respectively, addressed as aforesaid. SECTION 7.5 SECTION CAPTIONS. Section captions used in this Pledge Agreement are for convenience of reference only, and shall not affect the construction of this Pledge Agreement. SECTION 7.6 SEVERABILITY. Wherever possible each provision of this Pledge Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Pledge Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Pledge Agreement. SECTION 7.7 RELEASE OF COLLATERAL. The Collateral Agent shall release any Collateral from the liens hereunder as permitted by, and pursuant to the terms of, SECTION 6.9 of the Trust Agreement. SECTION 7.8 GOVERNING LAW, ENTIRE AGREEMENT, ETC. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF OHIO, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF OHIO. THIS PLEDGE AGREEMENT, THE TRUST AGREEMENT, THE INDENTURE AND THE CREDIT AGREEMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO. SECTION 7.9 WAIVER OF JURY TRIAL. THE SECURED PARTIES AND THE PLEDGOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF 11 ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS PLEDGE AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE SECURED PARTIES OR THE PLEDGOR. THE PLEDGOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE SECURED PARTIES ENTERING INTO THE CREDIT AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS PLEDGE AGREEMENT, NOTHING IN THIS PLEDGE AGREEMENT SHALL BE DEEMED OR CONSTRUED TO RESTRICT OR LIMIT ANY OF THE RIGHTS OF THE HOLDERS OF THE PUBLIC DEBT SECURITIES. 12 IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the day and year first above written. WORTHINGTON INDUSTRIES, INC., as Pledgor By /s/John T. Baldwin ------------------------------------------------- Name: John T. Baldwin Title: Vice President & Chief Financial Officer Worthington Industries, Inc. 1205 Dearborn Drive Columbus, Ohio 43085 Attention: General Counsel WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Collateral Agent By /s/Michael G. Slade ------------------------------------------------- Name: Michael G. Slade Title: Corporate Trust Officer Wells Fargo Bank Minnesota, N.A. Corporate Trust Services MAC N9303-110 Sixth and Marquette Avenue Minneapolis, Minnesota 55479 Attention: Michael G. Slade 13 AGREED AND ACCEPTED this 10th day of May, 2002 PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent By: /s/David B. Gookin --------------------------------------- Name: David B. Gookin Title: Vice President J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION (SUCCESSOR TO CHASE MANHATTAN TRUST COMPANY, N.A.), as Public Debt Trustee By: /s/Ronald J. Mckenna --------------------------------------- Name: Ronald J. McKenna Title: Vice President 14 SCHEDULE A to Pledge Agreement PLEDGED NOTES PLEDGED NOTE ISSUER NOTE AMOUNT: - -------------------------------------------------------------------------------- Worthington Steel of Michigan, Inc. (MI) $ 18,992,659 Worthington Steel Company (OH) $203,435,022 Worthington Cylinder Corp. (OH) $ 50,413,352 Worthington Steel Company of Kentucky, LLC (KY) $ 2,520,330 Worthington Acetylene Cylinders, Inc. (AL) $ 4,647,752 Worthington Steel Company of Decatur, LLC (AL) $198,633,794 Gerstenslager Co.(OH) $ 66,665,361 Dietrich Industries, Inc. (PA) $192,435,278 Worthington Steel Company (DE) $ 19,530,498 Worthington Steel Company (NC) $ 7,600,739 EX-4.L 13 l95946aexv4wl.txt EX-4(L) EXHIBIT 4(l) EXECUTION COPY TRUST AGREEMENT Dated as of May 10, 2002 among WORTHINGTON INDUSTRIES, INC., J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, SUCCESSOR TO CHASE MANHATTAN TRUST COMPANY, N.A., as Public Debt Trustee, WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Collateral Agent, PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent, and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee TABLE OF CONTENTS
Page ---- PREAMBLE ......................................................................................................1 DECLARATION OF TRUST:..........................................................................................1 SECTION 1. DEFINED TERMS.....................................................................................2 1.1 Definitions..................................................................................2 SECTION 2. ACCELERATION OF SECURED OBLIGATIONS...............................................................5 2.1 Notices of Acceleration........................................................................5 2.2 General Authority of the Trustee over the Collateral...........................................6 2.3 Right to Initiate Judicial Proceedings.........................................................6 2.4 Right to Appoint a Receiver....................................................................6 2.5 Exercise of Powers; Instructions of the Administrative Agent and the Public Debt Trustee............................................................................7 2.6 Remedies Not Exclusive.........................................................................8 2.7 Waiver and Estoppel............................................................................8 2.8 Limitation on Trustee's Duty in Respect of Collateral..........................................9 2.9 Limitation by Law..............................................................................9 2.10 Rights of Secured Parties under Secured Instruments ...........................................9 SECTION 3. COLLATERAL ACCOUNT; DISTRIBUTIONS.................................................................9 3.1 The Collateral Account..........................................................................9 3.2 Control of Collateral Account..................................................................10 3.3 Investment of Funds Deposited in Collateral Account ...........................................10 3.4 Application of Moneys..........................................................................10 3.5 Application of Moneys Distributable to Public Debt Trustee.....................................12 3.6 Trustee's Calculations.........................................................................12 3.7 Pro Rata Sharing...............................................................................12 SECTION 4. AGREEMENTS WITH TRUSTEE............................................................... ...........13 4.1 Delivery of Secured Instruments................................................................13 4.2 Information as to Secured Parties, Administrative Agent and Public Debt Trustee........................................................................................13 4.3 Compensation and Expenses......................................................................13 4.4 Stamp and Other Similar Taxes .................................................................14 4.5 Filing Fees, Excise Taxes, Etc.................................................................14 4.6 Indemnification................................................................................14 4.7 Trustee's Lien.................................................................................15 4.8 Further Assurances.............................................................................15
i SECTION 5. THE TRUSTEE.......................................................................................15 5.1 Acceptance of Trust............................................................................15 5.2 Exculpatory Provisions.........................................................................15 5.3 Delegation of Duties...........................................................................16 5.4 Reliance by Trustee............................................................................17 5.5 Limitations on Duties of Trustee...............................................................18 5.6 Moneys to be Held in Trust ....................................................................18 5.7 Resignation and Removal of the Trustee ........................................................18 5.8 Status of Successor Trustee....................................................................19 5.9 Merger of the Trustee..........................................................................19 5.10 Co-Trustee; Separate Trustee...................................................................19 5.11 Treatment of Payee or Endorsee by Trustee; Representatives of Secured Parties........................................................................................21 SECTION 6. MISCELLANEOUS.....................................................................................21 6.1 Notices........................................................................................21 6.2 No Waivers.....................................................................................22 6.3 Amendments, Supplements and Waivers............................................................22 6.4 Headings.......................................................................................22 6.5 Severability...................................................................................22 6.6 Successors and Assigns.........................................................................22 6.7 Governing Law..................................................................................23 6.8 Counterparts...................................................................................23 6.9 Termination....................................................................................23 6.10 Inspection by Regulatory Agencies..............................................................24 6.11 Confidentiality................................................................................24 6.12 Submission to Jurisdiction; Waivers............................................................24 6.13 WAIVERS OF JURY TRIAL .........................................................................25 6.14 Indenture......................................................................................25
ii EXHIBITS A Form of Notice of Acceleration B Form of Joinder Agreement iii TRUST AGREEMENT, dated as of May 10, 2002, among WORTHINGTON INDUSTRIES, INC., an Ohio corporation (the "COMPANY"), WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, (SUCCESSOR TO CHASE MANHATTAN TRUST COMPANY, N.A.), PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent, and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as trustee (the "TRUSTEE"). WITNESSETH: WHEREAS, pursuant to the Pledge Agreement, dated as of May 10, 2002 (as amended, restated, supplemented or otherwise modified from time to time, the "PLEDGE AGREEMENT"), between the Company and Wells Fargo Bank Minnesota, National Association, as collateral agent for the Secured Parties thereunder (in such capacity, the "COLLATERAL AGENT"), the Company has granted to the Collateral Agent, for the benefit of the Secured Parties thereunder, a security interest in certain of its assets as more fully described in the Pledge Agreement; WHEREAS, the Trustee has agreed to hold the Pledge Agreement and the Collateral provided for therein as security for the Secured Obligations for the benefit of the Secured Parties on an equal and ratable basis; NOW, THEREFORE, the parties hereto agree as follows: DECLARATION OF TRUST: In order to secure the payment of the Secured Obligations (such term and certain other capitalized terms used hereinafter being defined in subsection 1.1) and in consideration of the premises and the mutual agreements set forth herein, the Trustee does hereby declare that it holds and will hold as trustee in trust under this Trust Agreement all of its right, title and interest in, to and under the Pledge Agreement and the Collateral granted to the Trustee thereunder whether now existing or hereafter arising (and the Company does hereby consent thereto). TO HAVE AND TO HOLD the Pledge Agreement and the entire Collateral (the right, title and interest of the Trustee in the Pledge Agreement and the Collateral being hereinafter referred to as the "TRUST ESTATE") unto the Trustee and its successors in trust under this Trust Agreement and its assigns forever. IN TRUST NEVERTHELESS, under and subject to the conditions herein set forth and for the benefit of the Secured Parties, and for the enforcement of the payment of all Secured Obligations, and as security for the payment and performance of and compliance with the covenants and conditions of this Trust Agreement, each of the Secured Instruments and the Pledge Agreement. PROVIDED, HOWEVER, that these presents are upon the condition that if the Company, its successors or assigns, shall satisfy the conditions set forth in subsection 6.9(a), then this Trust Agreement, and the estates and rights hereby assigned, shall cease, determine and be void; otherwise they shall remain and be in full force and effect. 1 IT IS HEREBY FURTHER COVENANTED AND DECLARED, that the Trust Estate is to be held and applied by the Trustee, subject to the further covenants, conditions and trusts hereinafter set forth. SECTION 1. DEFINED TERMS 1.1 Definitions. (a) Unless otherwise defined herein, capitalized terms used herein which are defined in the Credit Agreements shall have the meanings given to them in the Credit Agreements. (b) The following terms shall have the respective meanings set forth below: "ADDITIONAL INDEBTEDNESS AGENT" shall mean any Person acting in a representative capacity for the Holders of Additional Senior Indebtedness. "ADDITIONAL SENIOR INDEBTEDNESS OBLIGATIONS" shall mean the unpaid principal of, and premium, if any, and interest on, any Additional Senior Indebtedness and all other fees, expenses, indemnification obligations and other amounts of whatever nature now or hereafter payable by the Borrower under any Secured Instrument evidencing the Additional Senior Indebtedness. "BUSINESS DAY" shall have the meaning assigned thereto in the Credit Agreements. "ADMINISTRATIVE AGENT" shall mean, collectively, (i) PNC Bank, National Association, in its capacity as administrative agent under the 364-Day Revolving Credit Agreement and (ii) PNC Bank, National Association, in its capacity as administrative agent under the Five Year Revolving Credit Agreement, and in either case any successor administrative agent appointed thereunder. "CASH EQUIVALENTS" shall have the meaning assigned thereto in the Credit Agreements. "COLLATERAL" shall have the meaning assigned thereto in the Pledge Agreement. "COLLATERAL ACCOUNT" shall have the meaning assigned in subsection 3.1. "CREDIT AGREEMENTS" shall mean, collectively, the 364-Day Revolving Credit Agreement and the Five Year Revolving Credit Agreement. "CREDIT AGREEMENT OBLIGATIONS" shall mean, collectively, with respect to each Credit Agreement, as applicable, the Obligations (as defined in the applicable Credit Agreement) outstanding under each Credit Agreement, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreements, this Trust Agreement, the Pledge Agreement, any Note (as defined in the applicable Credit Agreement), any Letter of Credit (as defined in the applicable Credit Agreement) or any other Loan Document (as defined in the applicable Credit Agreement) or any other document made, delivered or given in connection therewith. 2 "DISTRIBUTION DATE" shall mean each date fixed by the Trustee pursuant to the terms of this Trust Agreement for a distribution to the Secured Parties of funds held in the Collateral Account. "EVENT OF DEFAULT" has the meaning assigned thereto in each Credit Agreement or in the Indenture. "FIRST SUPPLEMENTAL INDENTURE" shall mean the First Supplemental Indenture, dated as of February 27, 1997, between the Company and the Public Debt Trustee, as amended, restated, supplemented or otherwise modified from time to time. "FIVE YEAR REVOLVING CREDIT AGREEMENT" shall mean the Five Year Revolving Credit Agreement, dated as of May 10, 2002, among the Company, the Lenders and PNC Bank, National Association, in its capacities as Issuing Lender, Swingline Lender and Administrative Agent, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time. "FOURTH SUPPLEMENTAL INDENTURE" shall mean the Fourth Supplemental Indenture, dated as of May 10, 2002, between the Company and the Public Debt Trustee, as amended, restated, supplemented or otherwise modified from time to time. "GOVERNMENTAL AUTHORITY" shall have the meaning assigned thereto in the Credit Agreements. "HOLDER REPRESENTATIVE" shall mean (i) in respect of the Public Debt Obligations, the relevant Public Debt Trustee, (ii) in respect of the Credit Agreement Obligations, the Administrative Agent and (iii) in respect of the Additional Senior Indebtedness, the Additional Indebtedness Agent. "HOLDERS" shall mean the holders of the Public Debt Securities (including the relevant Public Debt Trustee acting on behalf of such holders). "INDENTURE" shall mean, collectively, the Indenture, dated as of May 15, 1996, between the Company and the Public Debt Trustee, as amended by the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture and the Fourth Supplemental Indenture, as the same shall be further amended, modified or supplemented from time to time. "LENDER" shall mean any Lender referred to in the Credit Agreements. "JOINDER AGREEMENT" means a Joinder Agreement among the Company and a Holder of Additional Senior Indebtedness, substantially in the form of EXHIBIT B hereto. "NOTICE OF ACCELERATION" shall mean a notice delivered to the Trustee by (i) the Administrative Agent with respect to the Credit Agreement Obligations, stating that (a) any Credit Agreement Obligations have not been paid in full at the stated final maturity thereof and any applicable grace period has expired or (b) an Event of Default (as defined in the applicable Credit Agreement) has occurred under the provisions of the applicable Credit Agreement or in any Loan Documents (as defined in such applicable Credit Agreement) related thereto and, as a 3 result thereof, all Credit Agreement Obligations outstanding under such Secured Instrument have become immediately due and payable and have not been paid, or (ii) the Public Debt Trustee with respect to the Public Debt Obligations, stating that (a) any Public Debt Obligations have not been paid in full at the stated final maturity thereof and any applicable grace period has expired or (b) an Event of Default (as defined in the Indenture) has occurred under the provisions of the Indenture and, as a result thereof, all Public Debt Obligations outstanding under such Secured Instrument have become or been declared to be immediately due and payable and have not been paid. Each Notice of Acceleration shall be in substantially the form of Exhibit A to this Trust Agreement. "OPINION OF COUNSEL" shall mean an opinion in writing signed by legal counsel satisfactory to the Trustee, who may be counsel regularly retained by the Trustee. "PROCEEDS" shall mean all "proceeds" as such term is defined in Section 9-102(64) of the Uniform Commercial Code in effect in the State of Ohio on the date hereof. "PUBLIC DEBT OBLIGATIONS" shall mean the unpaid principal of, and premium, if any, and interest on, the Public Debt Securities (including, without limitation, interest accruing at the then applicable rate provided in the instruments governing the Public Debt Securities after the maturity of the Public Debt Securities and interest accruing at the then applicable rate provided in such instruments after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Company, whether or not a claim for post- filing or post-petition interest is allowed in such proceeding), together with all indebtedness, liabilities and obligations, including but not limited to all fees, expenses, indemnification obligations and all other amounts of whatever nature now or hereafter payable by the Borrower, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, whic h may arise under, out of or in connection with the Indenture or any Public Debt Securities or any other document made, delivered or given in connection therewith. "PUBLIC DEBT SECURITIES" shall mean, collectively, Debt Securities as defined in the Indenture. "PUBLIC DEBT TRUSTEE" shall mean J.P. Morgan Trust Company, National Association (successor to Chase Manhattan Trust Company, N.A.), as successor to PNC Bank, Ohio, National Association, as trustee under the Indenture, and any successor trustee appointed under the Indenture. "SECOND SUPPLEMENTAL INDENTURE" shall mean the Second Supplemental Indenture, dated as of December 12, 1997, between the Company and the Public Debt Trustee, as amended, restated, supplemented or otherwise modified from time to time. "SECURED INSTRUMENTS" shall mean at any time (i) the Indenture and the Public Debt Securities, (ii) the Credit Agreements and the Notes and (iii) any credit agreement, note or similar instrument evidencing Additional Senior Indebtedness. "SECURED OBLIGATIONS" shall mean, collectively (i) the Public Debt Obligations, (ii) the Credit Agreement Obligations, (iii) all sums payable by the Company under this Trust 4 Agreement or the Pledge Agreement (including, without limitation, Trustee Fees) and (iv) all sums payable by the Company in connection with the Indebtedness and the obligations of the Company with respect to the Additional Senior Indebtedness. "SECURED PARTIES" shall mean, collectively (i) the Holders and the Public Debt Trustee, (ii) the Lenders and the Administrative Agent, (iii) the Collateral Agent, (iv) the Trustee and (v) the Holders of Additional Senior Indebtedness and the Additional Indebtedness Agent. "364-DAY REVOLVING CREDIT AGREEMENT" shall mean the 364-Day Revolving Credit Agreement, dated as of May 10, 2002, among the Borrower, the Lenders and PNC Bank, National Association, in its capacity as Administrative Agent, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time. "THIRD SUPPLEMENTAL INDENTURE" shall mean the Third Supplemental Indenture, dated as of October 15, 1998, between the Company and the Public Debt Trustee, as amended, restated, supplemented or otherwise modified from time to time. "TRUST AGREEMENT" shall mean this Trust Agreement as the same may from time to time be amended, modified, supplemented, extended or renewed. "TRUST EFFECTIVE DATE" shall mean May 10, 2002. "TRUST ESTATE" shall have the meaning assigned in this Declaration of Trust in this Trust Agreement. "TRUSTEE" shall mean Wells Fargo Bank Minnesota, National Association, in its capacity as trustee under this Trust Agreement, and any successor trustee appointed thereunder. "TRUSTEE FEES" shall mean all fees, costs and expenses of the Trustee of the types described in subsections 4.3, 4.4, 4.5 and 4.6. (c) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Trust Agreement shall refer to this Trust Agreement as a whole and not to any particular provision of this Trust Agreement, and Section and subsection references are to this Trust Agreement unless otherwise specified. SECTION 2. ACCELERATION OF SECURED OBLIGATIONS 2.1 NOTICES OF ACCELERATION. (a) Upon receipt by the Trustee of a Notice of Acceleration, the Trustee shall immediately notify the Company, the Administrative Agent and the Public Debt Trustee and each other Secured Party, if any, of the receipt and contents thereof. So long as such Notice of Acceleration is in effect, the Trustee shall exercise the rights and remedies provided in this Trust Agreement and in the Pledge Agreement subject to the joint direction of the Administrative Agent and the Public Debt Trustee as provided herein. Except as otherwise provided in the last sentence of subsection 2.2, the Trustee is not empowered to exercise any remedy hereunder or thereunder unless a Notice of Acceleration is in effect. 5 (b) A Notice of Acceleration delivered by the Administrative Agent or the Public Debt Trustee shall become effective upon receipt thereof by the Trustee. A Notice of Acceleration, once effective, shall remain in effect unless and until it is cancelled as provided in subsection 2.1(c). (c) The Administrative Agent or the Public Debt Trustee, as the case may be, shall be entitled to cancel its own Notice of Acceleration by delivering a written notice of cancellation to the Trustee (i) before the Trustee takes any action to exercise any remedy with respect to the Collateral or (ii) thereafter, if the Trustee believes that all actions it has taken to exercise any remedy or remedies with respect to the Collateral can be reversed without undue difficulty; PROVIDED that no Notice of Acceleration shall be cancelled more than 60 days after it is received by the Trustee. The Trustee shall immediately notify the Company, the Administrative Agent, the Public Debt Trustee and each other Secured Party, if any, in writing as to the receipt and contents of any such notice of cancellation. 2.2 GENERAL AUTHORITY OF THE TRUSTEE OVER THE COLLATERAL. The Company hereby irrevocably constitutes and appoints the Trustee and any officer or agent thereof, with full power of substitution, as its true and lawful attorney- in-fact with full power and authority in its or his own name, from time to time in the Trustee's discretion, subject to subsections 2.1 and 2.5(b), so long as any Notice of Acceleration is in effect, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to carry out the terms of this Trust Agreement and the Pledge Agreement and accomplish the purposes hereof and thereof and, without limiting the generality of the foregoing, the Company hereby acknowledges that the Trustee shall have all powers and remedies set forth in the Pledge Agreement, subject to subsection 2.1. Notwithstanding the foregoing, so long as no Notice of Acceleration is in effect, the Trustee shall take such actions and exercise such remedies as are permitted by the Pledge Agreement in accordance with the instructions of the Administrative Agent or the Public Debt Trustee delivered to the Trustee. In the event that, pursuant to the terms of the Pledge Agreement, the Credit Agreements or the Indenture, the Administrative Agent or the Public Debt Trustee shall only be entitled to direct the Trustee upon a Notice of Acceleration becoming effective, the Administrative Agent or the Public Debt Trustee, as the case may be, shall certify in such direction that a Notice of Acceleration is in effect. 2.3 RIGHT TO INITIATE JUDICIAL PROCEEDINGS. If a Notice of Acceleration is in effect, the Trustee, subject to the provisions of subsection 2.5(b) and Section 5 and upon receipt of a joint written direction from the Administrative Agent and the Public Debt Trustee, (i) shall have the right and power to institute and maintain such suits and proceedings as it may deem appropriate to protect and enforce the rights vested in it by this Trust Agreement and the Pledge Agreement and (ii) may proceed by suit or suits at law or in equity to enforce such rights and to foreclose upon the Collateral and to sell all or, from time to time, any of the Collateral under the judgment or decree of a court of competent jurisdiction, in each case for the equal and ratable benefit of the Secured Parties. 2.4 RIGHT TO APPOINT A RECEIVER. If a Notice of Acceleration is in effect, upon the filing of a bill in equity or other commencement of judicial proceedings to enforce the rights of the Trustee under this Trust Agreement or the Pledge Agreement, the Trustee shall, to the extent permitted by law, with notice to the Company, the Administrative Agent, the Public Debt 6 Trustee and each other Secured Party, if any, but without notice to any party claiming through the Company, without regard to the solvency or insolvency at the time of any Person then liable for the payment of any of the Secured Obligations, without regard to the then value of the Trust Estate, and without requiring any bond from any complainant in such proceedings, be entitled as a matter of right to the appointment of a receiver or receivers of the Trust Estate, or any part thereof, and of the rents, issues, tolls, profits, royalties, revenues and other income thereof, pending such proceedings, with such powers as the court making such appointment shall confer, and to the entry of an order directing that the rents, issues, tolls, profits, royalties, revenues and other income of the property constituting the whole or any part of the Trust Estate be segregated, sequestered and impounded for the benefit of the Trustee and the Secured Parties, and the Company irrevocably consents to the appointments of such receiver or receivers and to the entry of such order; PROVIDED that, notwithstanding the appointment of any receiver, the Trustee shall be entitled to retain possession and control of the Collateral, including, without limitation, all cash and Cash Equivalents held by or deposited with it pursuant to this Trust Agreement or the Pledge Agreement; PROVIDED FURTHER that, if the Notice of Acceleration in effect when any such receiver or receivers is or are, as the case may be, appointed pursuant to this subsection 2.4 is cancelled in accordance with subsection 2.1(c), the Trustee shall promptly after any such cancellation remove any such receiver or receivers. 2.5 EXERCISE OF POWERS; INSTRUCTIONS OF THE ADMINISTRATIVE AGENT AND THE PUBLIC DEBT TRUSTEE. (a) All of the powers, remedies and rights of the Trustee as set forth in this Trust Agreement may be exercised by the Trustee in respect of the Pledge Agreement as though set forth in full therein and all of the powers, remedies and rights of the Secured Parties as set forth in the Pledge Agreement may be exercised from time to time as herein and therein provided. (b) While a Notice of Acceleration is in effect, the Administrative Agent and the Public Debt Trustee shall have the right, by one or more instruments in writing executed and delivered jointly by the Administrative Agent and the Public Debt Trustee to the Trustee, to direct the time, method and place of conducting any proceeding for any right or remedy available to the Trustee, or of exercising any trust or power conferred on the Trustee, or for the appointment of a receiver, or to direct the taking or the refraining from taking of any action authorized by this Trust Agreement or the Pledge Agreement; PROVIDED THAT (i) such direction shall not conflict with any provision of law or of this Trust Agreement or of the Pledge Agreement and (ii) the Trustee shall be adequately secured and indemnified as provided in subsection 5.4(d). Nothing in this subsection 2.5(b) shall impair the right of the Trustee in its discretion to take any action which it deems proper and which is not inconsistent with such joint direction by the Administrative Agent and the Public Debt Trustee. In the absence of such direction, the Trustee shall have no duty to take or refrain from taking any action unless explicitly required herein. (c) If, within 60 days after the Trustee receives a Notice of Acceleration which has not been cancelled, the Trustee shall not have received joint written directions from the Administrative Agent and the Public Debt Trustee pursuant to subsection 2.5(b) for the exercise of rights or remedies by the Trustee, the Trustee shall, until the Trustee receives joint written directions from the Administrative Agent and the Public Debt Trustee with respect to the exercise of the remedies set forth in the Pledge Agreement, (i) notify each of the Pledged Note Issuers (as defined in the Pledge Agreement) to direct payment of interest, principal and all other 7 amounts payable in respect of any Collateral directly to the Trustee, (ii) deposit any such amounts received in respect of the Collateral in the Collateral Account (as defined below) pursuant to Section 3.1 of this Trust Agreement and (iii) distribute any such amounts pursuant to Section 3.4 of this Trust Agreement. 2.6 REMEDIES NOT EXCLUSIVE. (a) No remedy conferred upon or reserved to the Trustee herein or in the Pledge Agreement is intended to be exclusive of any other remedy or remedies, but every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or in the Pledge Agreement or now or hereafter existing at law or in equity or by statute. (b) No delay or omission by the Trustee to exercise any right, remedy or power hereunder or under the Pledge Agreement shall impair any such right, remedy or power or shall be construed to be a waiver thereof, and every right, power and remedy given by this Trust Agreement or the Pledge Agreement to the Trustee may be exercised from time to time and as often as may be deemed expedient by the Trustee. (c) If the Trustee shall have proceeded to enforce any right, remedy or power under this Trust Agreement or the Pledge Agreement and the proceeding for the enforcement thereof shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee, then the Company, the Trustee and the Secured Parties shall, subject to any determination in such proceeding, severally and respectively be restored to their former positions and rights hereunder or thereunder with respect to the Trust Estate and in all other respects, and thereafter all rights, remedies and powers of the Trustee shall continue as though no such proceeding had been taken. (d) All rights of action and of asserting claims upon or under this Trust Agreement and the Pledge Agreement may be enforced by the Trustee without the possession of any Secured Instrument or instrument evidencing any Secured Obligation or the production thereof at any trial or other proceeding relative thereto, and any suit or proceeding instituted by the Trustee shall be, subject to subsections 5.5(c) and 5.10(b)(ii), brought in its name as Trustee and any recovery of judgment shall be held as part of the Trust Estate. 2.7 WAIVER AND ESTOPPEL. (a) The Company agrees, to the extent it may lawfully do so, that it will not at any time in any manner whatsoever claim, or take the benefit or advantage of, any appraisement, valuation, stay, extension, moratorium, turnover or redemption law, or any law permitting it to direct the order in which the Collateral shall be sold, now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance or enforcement of this Trust Agreement or the Pledge Agreement and hereby waives all benefit or advantage of all such laws and covenants that it will not hinder, delay or impede the execution of any power granted to the Trustee in this Trust Agreement or the Pledge Agreement but will suffer and permit the execution of every such power as though no such law were in force; PROVIDED that nothing contained in this subsection 2.7(a) shall be construed as a waiver of any rights of the Company under any applicable federal bankruptcy law or state insolvency law. (b) The Company, to the extent it may lawfully do so, on behalf of itself and all who may claim through or under it, including without limitation any and all subsequent creditors 8 (other than any Secured Party), vendees, assignees and lienors, waives and releases all rights to demand or to have any marshalling of the Collateral upon any sale, whether made under any power of sale granted herein or in the Pledge Agreement or pursuant to judicial proceedings or upon any foreclosure or any enforcement of this Trust Agreement or the Pledge Agreement and consents and agrees that all the Collateral may at any such sale be offered and sold as an entirety. (c) The Company waives, to the extent permitted by applicable law, presentment, demand, protest and any notice of any kind (except notices explicitly required hereunder or under the Pledge Agreement) in connection with this Trust Agreement and the Pledge Agreement and any action taken by the Trustee with respect to the Collateral. 2.8 LIMITATION ON TRUSTEE'S DUTY IN RESPECT OF COLLATERAL. Beyond its duties as to the custody thereof expressly provided herein or in the Pledge Agreement and to account to the Secured Parties and the Company for moneys and other property received by it hereunder or under the Pledge Agreement, the Trustee shall not have any duty to the Company or to the Secured Parties as to any Collateral in its possession or control or in the possession or control of any of its agents or nominees, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. 2.9 LIMITATION BY LAW. All rights, remedies and powers provided in this Trust Agreement or the Pledge Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions hereof are intended to be subject to all applicable mandatory provisions of law which may be controlling and to be limited to the extent necessary so that they will not render this Trust Agreement invalid, unenforceable in whole or in part or not entitled to be recorded, registered or filed under the provisions of any applicable law. 2.10 RIGHTS OF SECURED PARTIES UNDER SECURED INSTRUMENTS. Notwithstanding any other provision of this Trust Agreement or the Pledge Agreement, the right of each Secured Party to receive payment of the Secured Obligations held by such Secured Party when due (whether at the stated maturity thereof, by acceleration or otherwise) as expressed in the related Secured Instrument or other instrument evidencing or agreement governing a Secured Obligation or to institute suit for the enforcement of such payment on or after such due date, and the obligation of the Company to pay such Secured Obligation when due, shall not be impaired or affected without the consent of such Secured Party given in the manner prescribed by the Secured Instrument under which such Secured Obligation is outstanding. SECTION 3. COLLATERAL ACCOUNT; DISTRIBUTIONS 3.1 THE COLLATERAL ACCOUNT. On the Trust Effective Date there was established and, at all times thereafter until the trusts created by this Trust Agreement shall have terminated, there shall be maintained with the Trustee at the office of the Trustee's corporate trust division an account which is entitled the "Worthington Industries Collateral Account" (the "COLLATERAL ACCOUNT"). All moneys which are required by this Trust Agreement or the Pledge Agreement to be delivered to the Trustee while a Notice of Acceleration is in effect or which are received by the Trustee or any agent or nominee of the Trustee in respect of the Collateral, whether in 9 connection with the exercise of the remedies provided in this Trust Agreement or the Pledge Agreement or otherwise, while a Notice of Acceleration is in effect shall be deposited in the Collateral Account and held by the Trustee as part of the Trust Estate and applied in accordance with the terms of this Trust Agreement. Upon the cancellation of all Notices of Acceleration pursuant to subsection 2.1(c), the Trustee shall (subject to subsection 3.4(a)) cause all funds on deposit in the Collateral Account to be paid over to the Company. 3.2 CONTROL OF COLLATERAL ACCOUNT. All right, title and interest in and to the Collateral Account shall vest in the Trustee for the benefit of the Secured Parties, and funds on deposit in the Collateral Account shall constitute part of the Trust Estate. The Collateral Account shall be subject to the exclusive dominion and control of the Trustee. 3.3 INVESTMENT OF FUNDS DEPOSITED IN COLLATERAL ACCOUNT. The Trustee shall invest and reinvest moneys on deposit in the Collateral Account at any time in Cash Equivalents. All such investments and the interest and income received thereon and the net proceeds realized on the sale or redemption thereof shall be held in the Collateral Account as part of the Trust Estate. The Trustee shall not be responsible for any diminution in funds resulting from such investments or any liquidation prior to maturity. In the absence of such directions, the Trustee shall have no obligation to invest or reinvest moneys. 3.4 APPLICATION OF MONEYS. (a) All moneys held by the Trustee in the Collateral Account or received by the Trustee with respect to the Collateral while a Notice of Acceleration is in effect shall, to the extent available for distribution (it being understood that the Trustee may liquidate investments prior to maturity in order to make a distribution pursuant to this subsection 3.4), be distributed (subject to the provisions of subsections 3.5 and 3.6) by the Trustee on each Distribution Date in the following order of priority (with such distributions being made by the Trustee to the respective Holder Representatives, if applicable, for the Secured Parties entitled thereto as provided in subsection 3.4(c), and each such Holder Representative shall be responsible for insuring that amounts distributed to it are distributed to its Secured Parties in the order of priority set forth below): FIRST: to the Trustee for any unpaid Trustee Fees and then to any Secured Party, which has theretofore advanced or paid any Trustee Fees constituting administrative expenses allowable under Section 503(b) of the Bankruptcy Code, an amount equal to the amount thereof so advanced or paid by such Secured Party and for which such Secured Party has not been reimbursed prior to such Distribution Date, and, if such moneys shall be insufficient to pay such amounts in full, then ratably (without priority of any one over any other) to such Secured Parties in proportion to the amounts of such Trustee Fees advanced by the respective Secured Parties and remaining unpaid on such Distribution Date; SECOND: to any Secured Party which has theretofore advanced or paid any Trustee Fees other than such administrative expenses, an amount equal to the amount thereof so advanced or paid by such Secured Party and for which such Secured Party has not been reimbursed prior to such Distribution Date, and, if such moneys shall be insufficient to pay such amounts in full, then ratably (without priority of any one over any other) to such Secured Parties in proportion to the 10 amounts of such Trustee Fees advanced by the respective Secured Parties and remaining unpaid on such Distribution Date; THIRD: to the Secured Parties in an amount equal to the unpaid principal (or, in the case of Public Debt Obligations that are Original Issue Discount Securities (as defined in the Indenture), such portion of the principal amount of such Public Debt Obligations as may be specified by the Public Debt Trustee) and unpaid interest on such Secured Obligations then outstanding whether or not then due and payable, and, if such moneys shall be insufficient to pay such amounts in full, then ratably (without priority of any one over any other) to the Secured Parties in proportion to the unpaid amounts thereof on such Distribution Date; provided, that if any amounts distributed pursuant to this clause in respect of Credit Agreement Obligations shall be insufficient to pay all principal and interest owing in respect of the Credit Agreement Obligations, such amount shall be distributed to the Administrative Agent with respect to each Credit Agreement ratably (without priority of any one over any other) in proportion to the unpaid amounts of Credit Agreement Obligations; FOURTH: to the Secured Parties, amounts equal to all other sums which constitute Secured Obligations, including without limitation the costs and expenses of the Secured Parties and their representatives which are due and payable under the relevant Secured Instruments and which constitute Secured Obligations as of such Distribution Date, and, if such moneys shall be insufficient to pay such amounts in full, then ratably to the Secured Parties in proportion to the unpaid amounts thereof on such Distribution Date; and FIFTH: any surplus then remaining shall be paid to the Company or its successors or assigns or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. (b) The term "unpaid" as used in clause THIRD of subsections 3.4(a) refers: (i) in the absence of a bankruptcy proceeding with respect to the Company, to all amounts of Public Debt Obligations, Credit Agreement Obligations or Additional Senior Indebtedness Obligations, as the case may be, outstanding as of a Distribution Date (and for the purpose of this provision, the amount of the Credit Agreement Obligations then outstanding shall include the undrawn face amount of, and any unreimbursed drawings under, any Letter of Credit issued under the Credit Agreements), and (ii) during the pendency of a bankruptcy proceeding with respect to the Company, to amounts allowed by the bankruptcy court in respect of Public Debt Obligations or Credit Agreement Obligations, as the case may be, as a basis for distribution (including estimated amounts, if any, allowed in respect of contingent claims), to the extent that prior distributions (whether actually distributed or set aside pursuant to subsection 3.5) have not been made in respect thereof. 11 (c) The Trustee shall make all payments and distributions under this subsection 3.4: (i) on account of Credit Agreement Obligations to the Administrative Agent, pursuant to directions of the Administrative Agent, for re-distribution in accordance with the provisions of the Credit Agreement; (ii) on account of Public Debt Obligations (subject to subsection 3.5) to the Public Debt Trustee, pursuant to directions of the Public Debt Trustee, for redistribution in accordance with the provisions of the Indenture; and (iii) on account of Additional Senior Indebtedness Obligations, pursuant to directions of the Additional Indebtedness Agent (or Holders of Additional Senior Indebtedness if no Additional Indebtedness Agent exists), for redistribution in accordance with the provisions of the Secured Instruments evidencing the Additional Senior Indebtedness. 3.5 APPLICATION OF MONEYS DISTRIBUTABLE TO PUBLIC DEBT TRUSTEE. If at any time any moneys collected or received by the Trustee pursuant to this Trust Agreement are distributable pursuant to subsection 3.4 to the Public Debt Trustee, and if the Public Debt Trustee shall notify the Trustee in writing that no provision is made under the Indenture for the application by such Public Debt Trustee of such moneys (whether because the Secured Obligations issued under the Public Debt Indenture have not become due and payable or otherwise) and that the Indenture does not effectively provide for the receipt and the holding by the Public Debt Trustee of such moneys pending the application thereof, then the Trustee, after receipt of such notification, shall, at the direction of such Public Debt Trustee, invest such amounts in Cash Equivalents maturing within 90 days after they are acquired by the Trustee or, in the absence of such direction, hold such moneys uninvested and shall hold all such amounts so distributable and all such investments and the net proceeds thereof in trust solely for such Public Debt Trustee (in its capacity as trustee) and for no other purpose until such time as such Public Debt Trustee shall request in writing the delivery thereof by the Trustee for application pursuant to such Indenture. 3.6 TRUSTEE'S CALCULATIONS. In making the determinations and allocations required by subsection 3.4, the Trustee may conclusively rely upon information supplied by the Public Debt Trustee as to the amounts of unpaid principal and interest and other amounts outstanding with respect to the Public Debt Obligations in respect of the Indenture under which such Public Debt Trustee is trustee, information supplied by the Administrative Agent as to the amounts of unpaid principal and interest and other amounts outstanding with respect to the Credit Agreement Obligations, information supplied by the Additional Indebtedness Agent as to the amounts of unpaid principal and interest and other amounts outstanding with respect to the Additional Senior Indebtedness Obligations, and the Trustee shall have no liability to any of the Secured Parties for actions taken in reliance on such information; PROVIDED that nothing in this sentence shall prevent the Company from contesting any amounts claimed by any Secured Party in any information so supplied. All distributions made by the Trustee pursuant to subsection 3.4 shall be (subject to any decree of any court of competent jurisdiction) final (absent manifest error), and the Trustee shall have no duty to inquire as to the application by the Administrative Agent, or the Public Debt Trustee of any amounts distributed to them. 3.7 PRO RATA SHARING. If, through the operation of any bankruptcy, reorganization, insolvency or other laws or otherwise, the Trustee's security interest hereunder and under the Pledge Agreement is enforced with respect to some, but not all, of the Secured Obligations then outstanding, the Trustee shall nonetheless apply the proceeds of the Collateral for the benefit of the holders of all Secured Obligations in the proportions and subject to the priorities specified 12 herein. To the extent that the Trustee distributes Proceeds collected with respect to Secured Obligations held by one holder to or on behalf of Secured Obligations held by a second holder, the first holder shall be deemed to have purchased a participation in the Secured Obligations held by the second holder, or shall be subrogated to the rights of the second holder to receive any subsequent payments and distributions made with respect to the portion thereof paid or to be paid by the application of such Proceeds. SECTION 4. AGREEMENTS WITH TRUSTEE 4.1 DELIVERY OF SECURED INSTRUMENTS. On the Trust Effective Date, the Company delivered to the Trustee true and complete copies of (i) the Public Indentures and all amendments thereto, (ii) each of the Credit Agreements, (iii) the Pledge Agreement and (iv) the other Secured Instruments, in each case as in effect on the Trust Effective Date. The Company shall deliver to the Trustee, promptly upon the execution thereof, a true and complete copy of all amendments, modifications or supplements to any Secured Instrument entered into after the Trust Effective Date. 4.2 INFORMATION AS TO SECURED PARTIES, ADMINISTRATIVE AGENT AND PUBLIC DEBT TRUSTEE. The Company delivered to the Trustee, on the Trust Effective Date, and shall deliver to the Trustee on each anniversary of the Trust Effective Date, and from time to time upon request of the Trustee, a list setting forth as of a date not more than 30 days prior to the date of such delivery, (i) the aggregate unpaid principal amount of Credit Agreement Obligations outstanding and the name and address of the Administrative Agent, (ii) the aggregate unpaid principal amount of Public Debt Obligations outstanding and the name and address of each Public Debt Trustee and (iii) the aggregate unpaid amount of Additional Senior Indebtedness Obligations outstanding and the name and address of the Additional Indebtedness Agent, if any. In addition, the Company will promptly notify the Trustee of each change in the identity of the Administrative Agent, the Public Debt Trustee or any Additional Indebtedness Agent. On or prior to the Trust Effective Date, the Company will request each of the Administrative Agent, and the Public Debt Trustee to deliver to the Trustee the names of the officers of each thereof authorized to give directions hereunder on behalf of such parties. The Company will request that each of the Administrative Agent, the Pub lic Debt Trustee and any Additional Indebtedness Agent notify the Trustee of any changes of the officers of each thereof authorized to give directions hereunder on behalf of such parties prior to the date of any such changes. If the Trustee does not receive the names of the officers of the Administrative Agent, the Public Debt Trustee or any Additional Indebtedness Agent authorized to give directions hereunder on behalf of such parties, the Trustee may rely on any person purporting to be authorized to give directions hereunder on behalf of such parties. If the Trustee is not informed of changes of the officers of the Administrative Agent, the Public Debt Trustee or any Additional Indebtedness Agent authorized to give directions hereunder on behalf of such parties, the Trustee may rely on the information previously provided to the Trustee. 4.3 COMPENSATION AND EXPENSES. The Company agrees to pay to the Trustee, from time to time upon demand, (i) reasonable compensation (which shall not be limited by any provision of law in regard to compensation of fiduciaries or of a trustee of an express trust) for its services hereunder and under the Pledge Agreement and for administering the Trust Estate 13 and (ii) all of the fees, costs and expenses of the Trustee (including, without limitation, the reasonable fees and disbursements of its counsel, advisors and agents) (A) arising in connection with the preparation, execution, delivery, modification, and termination of this Trust Agreement and the Pledge Agreement or the enforcement of any of the provisions hereof or thereof, (B) incurred or required to be advanced in connection with the administration of the Trust Estate, the sale or other disposition of Collateral pursuant to the Pledge Agreement and the preservation, protection or defense of the Trustee's rights under this Trust Agreement and the Pledge Agreement and in and to the Collateral and the Trust Estate or (C) incurred by the Trustee in connection with the removal of the Trustee pursuant to subsection 5.7(a). Such fees, costs and expenses are intended to constitute expenses of administration under any bankruptcy law relating to creditors rights generally. The obligations of the Company under this subsection 4.3 shall survive the termination of the other provisions of this Trust Agreement and the resignation or removal of the Trustee hereunder. 4.4 STAMP AND OTHER SIMILAR TAXES. The Company agrees to indemnify and hold harmless the Trustee, the Administrative Agent, the Public Debt Trustee and each Secured Party from any present or future claim for liability for any stamp or any other similar tax, and any penalties or interest with respect thereto, which may be assessed, levied or collected by any jurisdiction in connection with this Trust Agreement, the Pledge Agreement, the Trust Estate or any Collateral. The obligations of the Company under this subsection 4.4 shall survive the termination of the other provisions of this Trust Agreement and the resignation or removal of the Trustee hereunder. 4.5 FILING FEES, EXCISE TAXES, ETC. The Company agrees to pay or to reimburse the Trustee for any and all payments made by the Trustee in respect of all search, filing, recording and registration fees, taxes, excise taxes and other similar imposts which may be payable or determined to be payable in respect of the execution and delivery of this Trust Agreement and the Pledge Agreement. The obligations of the Company under this subsection 4.5 shall survive the termination of the other provisions of this Trust Agreement and the resignatio n or removal of the Trustee hereunder. 4.6 INDEMNIFICATION. The Company agrees to pay, indemnify, and hold the Trustee, the Administrative Agent, the Public Debt Trustee and each other Secured Party (and their respective directors, officers, agents and employees) harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including, without limitation, the reasonable fees and expenses of counsel, advisors and agents) or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Trust Agreement and the Pledge Agreement, unless arising from the gross negligence or willful misconduct of the indemnified party, including for taxes in any jurisdiction in which the Trustee is subject to tax by reason of actions hereunder or under the Pledge Agreement, unless such taxes are imposed on or measured by compensation paid to the Trustee under subsection 4.3. In any suit, proceeding or action brought by the Trustee under or with respect to any contract, agreement, interest or obligation constituting part of the Collateral for any sum owing thereunder, or to enforce any provisions thereof, the Company will save, indemnify and keep the Trustee, the Administrative Agent, the Public Debt Trustee and the Secured Parties harmless from and against all expense, loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction of 14 liability whatsoever of the obligor thereunder, arising out of a breach by the Company of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such obligor or its successors from the Company, and all such obligations of the Company shall be and remain enforceable against and only against the Company and shall not be enforceable against the Trustee, the Administrative Agent, the Public Debt Trustee or any Secured Party. The agreements in this subsection 4.6 shall survive the termination of the other provisions of this Trust Agreement and the resignation or removal of the Trustee hereunder. 4.7 TRUSTEE'S LIEN. Notwithstanding anything to the contrary in this Trust Agreement, as security for the payment of Trustee Fees (i) the Trustee is hereby granted an equal and ratable lien upon all Collateral and (ii) the Trustee shall have the right to use and apply any of the funds held by the Trustee in the Collateral Account to cover such Trustee Fees. 4.8 FURTHER ASSURANCES. At any time and from time to time, upon the written request of the Administrative Agent, the Public Debt Trustee or the Trustee, and at the expense of the Company, the Company will promptly execute and deliver any and all such further instruments and documents and take such further action as is necessary or reasonably requested further to perfect, or to protect the perfection of, the liens and security interests granted under the Pledge Agreement, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code in effect in any jurisdiction. In addition to the foregoing, at any time and from time to time, upon the written request of the Trustee (which shall be made only upon the written direction of the Administrative Agent or the Public Debt Trustee), and at the expense of the Company, the Company will promptly execute and deliver any and all such further instruments and documents and take such further action as the Trustee has been so directed is necessary or reasonably requested to obtain the full benefits of this Trust Agreement and the Pledge Agreement and of the rights and powers herein and therein granted, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code in effect in any jurisdiction with respect to the liens and security interests granted by the Pledge Agreement. The Company also hereby authorizes the Trustee to sign and the Administrative Agent, the Public Debt Trustee or the Trustee to file any such financing or continuation statements without the signature of the Company to the extent permitted by applicable law. Notwithstanding the foregoing, in no event shall the Trustee have any obligation to monitor the perfection or continuation of perfection or the sufficiency or validity of any security interest in or related to the Collateral. SECTION 5. THE TRUSTEE 5.1 ACCEPTANCE OF TRUST. The Trustee, for itself and its successors, hereby accepts the trusts created by this Trust Agreement upon the terms and conditions hereof. 5.2 EXCULPATORY PROVISIONS. (a) The Trustee shall not be responsible in any manner whatsoever for the correctness of any recitals, statements, representations or warranties herein, all of which are made solely by the Company. The Trustee makes no representations as to the value or condition of the Trust Estate or any part thereof, or as to the title of the Company thereto or as to the security afforded by this Trust Agreement or the Pledge Agreement, or as to the validity, execution (except its execution), enforceability, legality or sufficiency of this Trust 15 Agreement, the Pledge Agreement or the Secured Obligation, and the Trustee shall incur no liability or responsibility in respect of any such matters. (b) The Trustee shall not be required to ascertain or inquire as to the performance by the Company of any of the covenants or agreements contained herein or in the Pledge Agreement or Secured Instrument. Whenever it is necessary, or in the opinion of the Trustee advisable, for the Trustee to ascertain the amount of Secured Obligations then held by Secured Parties, the Trustee may rely on a certificate of the Public Debt Trustee, in the case of Public Debt Obligations, a certificate of the Administrative Agent, in the case of Credit Agreement Obligations, or a certificate of the Additional Indebtedness Agent, in the case of Additional Senior Indebtedness Obligations and, if the Public Debt Trustee, the Administrative Agent or any Additional Indebtedness Agent shall not give such information to the Trustee, it shall not be entitled to receive distributions hereunder (in which case distributions to those Persons who have supplied such information to the Trustee shall be calculated by the Trustee using, for those Persons who have not supplied such information, the list then most recently delivered by the Company pursuant to subsection 4.2 or such Person, whichever is most recent), and the amount so calculated to be distributed to the Person who fails to give such information shall be held in trust for such Person until such Person does supply such information to the Trustee, whereupon on the next Distribution Date the amount distributable to such Person shall be recalculated using such information and distributed to it. Nothing in the preceding sentence shall prevent the Company from contesting any amounts claimed by any Secured Party in any certificate so supplied. (c) The Trustee shall be under no obligation or duty to take any action under this Trust Agreement or the Pledge Agreement if taking such action (i) would subject the Trustee to a tax in any jurisdiction where it is not then subject to a tax or (ii) would require the Trustee to qualify to do business in any jurisdiction where it is not then so qualified, unless the Trustee receive security or indemnity satisfactory to it against such tax (or equivalent liability), or any liability resulting from such qualification, in each case as results from the taking of such action under this Trust Agreement or the Pledge Agreement. (d) The Trustee shall have the same rights with respect to any Secured Obligation held by it as any other Secured Party and may exercise such rights as though it were not the Trustee hereunder, and may accept deposits from, lend money to, and generally engage in any kind of banking or trust business with, the Company as if it were not the Trustee. (e) The Trustee shall not be liable for any action taken or omitted to be taken in accordance with this Trust Agreement or the Pledge Agreement except for its own gross negligence or willful misconduct. 5.3 DELEGATION OF DUTIES. The Trustee may execute any of the trusts or powers hereof and perform any duty hereunder either directly or by or through agents or attorneys- in-fact. The Trustee shall be entitled to advice of counsel concerning all matters pertaining to such trusts, powers and duties. The Trustee shall not be responsible for the negligence or misconduct of any agents or attorneys- in-fact selected by it without gross negligence or willful misconduct. 16 5.4 RELIANCE BY TRUSTEE. (a) Whenever in the administration of this Trust Agreement or the Pledge Agreement the Trustee shall deem it necessary or desirable that a factual matter be proved or established in connection with the Trustee taking, suffering or omitting any action hereunder or thereunder, such matter (unless other evidence in respect thereof is herein specifically prescribed) may be deemed to be conclusively proved or established by a certificate of a Responsible Officer delivered to the Trustee, and such certificate shall be full warrant to the Trustee for any action taken, suffered or omitted in reliance thereon, subject, however, to the provisions of subsection 5.5. (b) The Trustee may consult with counsel, and any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder or under the Pledge Agreement in accordance therewith. The Trustee shall have the right at any time to seek instructions concerning the administration of this Trust Agreement and the Pledge Agreement from any court of competent jurisdiction. (c) The Trustee may rely, and shall be fully protected in acting, upon any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order, bond or other paper or document which it has no reason to believe to be other than genuine and to have been signed or presented by the proper party or parties or, in the case of cables, telecopies and telexes, to have been sent by the proper party or parties. In the absence of its own gross negligence or willful misconduct, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Trust Agreement. (d) The Trustee shall not be under any obligation to exercise any of the rights or powers vested in the Trustee by this Trust Agreement and the Pledge Agreement, at the request or direction of the Administrative Agent or the Public Debt Trustee pursuant to this Trust Agreement or otherwise, unless the Trustee shall have been provided adequate security and indemnity against the costs, expenses and liabilities which may be incurred by the Trustee in comp liance with such request or direction, including such reasonable advances as may be requested by the Trustee. (e) Upon any application or demand by the Company (except any such application or demand which is expressly permitted to be made orally) to the Trustee to take or permit any action under any of the provisions of this Trust Agreement or the Pledge Agreement, the Company shall furnish to the Trustee a certificate of a Responsible Officer stating that all conditions precedent, if any, provided for in this Trust Agreement, in the Pledge Agreement or in the Credit Agreements or in the Indenture relating to the proposed action have been complied with, and in the case of any such application or demand as to which the furnishing of any document is specifically required by any provision of this Trust Agreement or the Pledge Agreement relating to such particular application or demand, such additional document shall also be furnished. (f) Any Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate of a Responsible Officer or representations made by a Responsible Officer in a writing filed with the Trustee. 17 5.5 LIMITATIONS ON DUTIES OF TRUSTEE. (a) Unless a Notice of Acceleration is in effect, the Trustee shall be obligated to perform such duties and only such duties as are specifically set forth in this Trust Agreement and the Pledge Agreement, and no implied covenants or obligations shall be read into this Trust Agreement or the Pledge Agreement against the Trustee. If and so long as a Notice of Acceleration is in effect, the Trustee may, subject to the provisions of subsection 2.5(b), exercise the rights and powers vested in the Trustee by this Trust Agreement and the Pledge Agreement, and shall not be liable with respect to any action taken, or omitted to be taken, in accordance with the direction of the Administrative Agent or the Public Debt Trustee. (b) Except as herein otherwise expressly provided, the Trustee shall not be under any obligation to take any action which is discretionary with the Trustee under the provisions hereof or of the Pledge Agreement except upon the written request of the Administrative Agent or the Public Debt Trustee. The Trustee shall make available for inspection and copying by the Administrative Agent and the Public Debt Trustee each certificate or other paper furnished to the Trustee by the Company under or in respect of this Trust Agreement or any of the Collateral. (c) No provision of this Trust Agreement or of the Pledge Agreement shall be deemed to impose any duty or obligation on the Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the Trustee shall be unqualified or incompetent, to perform any such act or acts or to exercise any such right, power, duty or obligation or if such performance or exercise would constitute doing business by the Trustee in such jurisdiction or impose a tax on the Trustee by reason thereof or to risk its own funds or otherwise incur any financial liability in the performance of its duties hereunder. 5.6 MONEYS TO BE HELD IN TRUST. All moneys received by the Trustee under or pursuant to any provision of this Trust Agreement or the Pledge Agreement (except Trustee Fees) shall be held in trust for the purposes for which they were paid or are held. 5.7 RESIGNATION AND REMOVAL OF THE TRUSTEE. (a) The Trustee may at any time, by giving written notice to the Company, the Administrative Agent, the Public Debt Trustee and each other Secured party, if any, resign and be discharged of the responsibilities hereby created, such resignation to become effective upon (i) the appointment of a successor Trustee, (ii) the acceptance of such appointment by such successor Trustee and (iii) the approval of such successor Trustee evidenced by one or more instruments signed by the Administrative Agent and the Public Debt Trustee. If no successor Trustee shall be appointed and shall have accepted such appointment wit hin 90 days after the Trustee gives the aforesaid notice of resignation, the Trustee, the Company, the Administrative Agent, the Public Debt Trustee or any Secured Party may apply to any court of competent jurisdiction to appoint a successor Trustee to act until such time, if any, as a successor Trustee shall have been appointed as provided in this subsection 5.7. Any successor so appointed by such court shall immediately and without further act be superseded by any successor Trustee appointed by the Administrative Agent as provided in subsection 5.7(b). The Administrative Agent or the Public Debt Trustee may, at any time upon giving 30 days' prior written notice thereof to the Trustee and the Public Debt Trustee, remove the Trustee and appoint a successor Trustee, such removal to be effective upon the acceptance of 18 such appointment by the successor. The Trustee shall be entitled to Trustee Fees to the extent incurred or arising, or relating to events occurring, before such resignation or removal. (b) If at any time the Trustee shall resign or be removed or otherwise become incapable of acting, or if at any time a vacancy shall occur in the office of the Trustee for any other cause, a successor Trustee may be appointed by the Administrative Agent or the Public Debt Trustee with the consent of the Company, which consent shall not be unreasonably withheld. The powers, duties, authority and title of the predecessor Trustee shall be terminated and cancelled without procuring the resignation of such predecessor and without any other formality (except as may be required by applicable law) than appointment and designation of a successor in writing duly acknowledged and delivered to the predecessor and the Company. Such appointment and designation shall be full evidence of the right and authority to make the same and of all the fact therein recited, and this Trust Agreement and the Pledge Agreement shall vest in such successor, without any further act, deed or conveyance, all the estates, properties, rights, powers, trusts, duties, authority and title of its predecessor, but such predecessor shall, nevertheless, on the written request of the Administrative Agent or the Public Debt Trustee, the Company, or the successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers, trusts, duties, authority and title of such predecessor hereunder and under the Pledge Agreement and shall deliver all Collateral held by it or its agents to such successor. Should any deed, conve yance or other instrument in writing from the Company be required by any successor Trustee for more fully and certainly vesting in such successor the estates, properties, rights, powers, trusts, duties, authority and title vested or intended to be vested in the predecessor Trustee, any and all such deeds, conveyances and other instruments in writing shall, on request of such successor, be executed, acknowledged and delivered by the Company. If the Company shall not have executed and delivered any such deed, conveyance or other instrument within 10 days after it received a written request from the successor Trustee to do so, or if a Notice of Acceleration is in effect, the predecessor Trustee may execute the same on behalf of the Company. The Company hereby appoints any predecessor Trustee as its agent and attorney to act for it as provided in the next preceding sentence. 5.8 STATUS OF SUCCESSOR TRUSTEE. Every successor Trustee appointed pursuant to subsection 5.7 shall be a bank or trust company in good standing and having power to act as Trustee hereunder, incorporated under the laws of the United States of America or any State thereof or the District of Columbia and having its principal corporate trust office within the 48 contiguous States and shall also have capital, surplus and undivided profits of not less than $500,000,000. 5.9 MERGER OF THE TRUSTEE. Any corporation into which the Trustee may be merged, or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Trustee shall be a party, shall be Trustee under this Trust Agreement and the Pledge Agreement without the execution or filing of any paper or any further act on the part of the parties hereto. 5.10 CO-TRUSTEE; SEPARATE TRUSTEE. (a) If at any time or times it shall be necessary or prudent in order to conform to any law of any jurisdiction in which any of the Collateral shall be located, or to avoid any violation of law or imposition on the Trustee of taxes by such 19 jurisdiction not otherwise imposed on the Trustee, or the Trustee shall be advised by counsel, satisfactory to it, that it is necessary or prudent in the interest of the Secured Parties, or the Administrative Agent or the Public Debt Trustee shall in writing so request the Trustee and the Company, or the Trustee shall deem it desirable for its own protection in the performance of its duties hereunder or under the Pledge Agreement, the Trustee and the Company shall execute and deliver all instruments and agreements necessary or proper to constitute another bank or trust company, or one or more persons approved by the Trustee and the Company, either to act as co-trustee or co-trustees of all or any of the Collateral under this Trust Agreement or under the Pledge Agreement, jointly with the Trustee originally named herein or therein or any successor Trustee, or to act as separate trustee or trustees of any of the Collateral. If the Company shall not have joined in the execution of such instruments and agreements within 10 days after it receives a written request from the Trustee to do so, or if a Notice of Acceleration is in effect, the Trustee may act under the foregoing provisions of this subsection 5.10(a) without the concurrence of the Company and execute and deliver such instruments and agreements on behalf of the Company. The Company hereby appoints the Trustee as its agent and attorney to act for it under the foregoing provisions of this subsection 5.10(a) in either of such contingencies. (b) Every separate trustee and every co-trustee, other than any successor Trustee appointed pursuant to subsection 5.7, shall, to the extent permitted by law, be appointed and act and be such, subject to the following provisions and conditions: (i) all rights, powers, duties and obligations conferred upon the Trustee in respect of the custody, control and management of moneys, papers or securities shall be exercised solely by the Trustee or any agent appointed by the Trustee; (ii) all rights, powers, duties and obligations conferred or imposed upon the Trustee hereunder and under the Pledge Agreement shall be conferred or imposed and exercised or performed by the Trustee and such separate trustee or separate trustees or co-trustee or co-trustees, jointly, as shall be provided in the instrument appointing such separate trustee or separate trustees or co-trustee or co-trustees, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Trustee shall be incompetent or unqualified to perform such act or acts, or unless the performance of such act or acts would result in the imposition of any tax on the Trustee which would not be imposed absent such joint act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate trustee or separate trustees or co-trustee or co-trustees; (iii) no power given hereby or by the Pledge Agreement to, or which it is provided herein or therein may be exercised by, any such co-trustee or co-trustees or separate trustee or separate trustees shall be exercised hereunder or thereunder by such co-trustee or co-trustees or separate trustee or separate trustees except jointly with, or with the consent in writing of, the Trustee, anything contained herein to the contrary notwithstanding; (iv) No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and (v) the Company and the Trustee, at any time by an instrument in writing executed by them jointly, may accept the resignation of or remove any such separate trustee or co-trustee and, 20 in that case by an instrument in writing executed by them jointly, may appoint a successor to such separate trustee or co-trustee, as the case may be, anything contained herein to the contrary notwithstanding. If the Company shall not have joined in the execution of any such instrument within 10 days after it receives a written request from the Trustee to do so, or if a Notice of Acceleration is in effect, the Trustee shall have the power to accept the resignation of or remove any such separate trustee or co-trustee and to appoint a successor without the concurrence of the Company, the Company hereby appointing the Trustee its agent and attorney to act for it in such connection in such contingency. If the Trustee shall have appointed a separate trustee or separate trustees or co-trustee or co-trustees as above provided, the Trustee may at any time, by an instrument in writing, accept the resignation of or remove any such separate trustee or co-trustee and the successor to any such separate trustee or co-trustee shall be appointed by the Company and the Trustee, or by the Trustee alone pursuant to this subsection 5.10(b). 5.11 TREATMENT OF PAYEE OR ENDORSEE BY TRUSTEE; REPRESENTATIVES OF SECURED PARTIES. (a) The Trustee may treat the registered holder or, if none, the payee or endorsee of any promissory note or debenture evidencing a Secured Obligation as the absolute owner thereof for all purposes and shall not be affected by any notice to the contrary, whether such promissory note or debenture shall be past due or not. (b) Any Person (other than the Administrative Agent and the Public Debt Trustee) which shall be designated as the duly authorized representative of one or more Secured Parties to act as such in connection with any matters pertaining to this Trust Agreement or the Collateral shall present to the Trustee such documents, including, without limitation, Opinions of Counsel, as the Trustee may reasonably require, in order to demonstrate to the Trustee the authority of such Person to act as the representative of such Secured Parties (it being understood that (i) the holders of Credit Agreement Obligations are represented hereunder by the Administrative Agent, the holders of the Public Debt Obligations are represented hereunder by relevant Public Debt Trustee and (ii) such holders shall have no other rights pursuant to this subsection 5.11(b)). The authority of the Administrative Agent and the Public Debt Trustee shall be demonstrated by their inclusion as such in the lists from time to time delivered pursuant to subsection 4.2. SECTION 6. MISCELLANEOUS 6.1 NOTICES. Unless otherwise specified herein, all notices, requests, demands or other communications given to the Company, the Trustee, the Administrative Agent, the Public Debt Trustee or other Secured Party, if any, shall be given in writing or by facsimile transmission and shall be deemed to have been duly given when personally delivered or when duly deposited in the mails, registered or certified mail postage prepaid, or when transmitted by facsimile transmission, addressed (i) if to the Company or the Trustee, to such party at its address specified on the signature pages hereof or any other address which such party shall have specified as its address for the purpose of communications hereunder, by notice given in accordance with this subsection 6.1 to the party sending such communication or (ii) if to the Administrative Agent, the Public Debt Trustee or such other Secured Party, to it at its address specified from time to time in the list provided by the Company to the Trustee pursuant to subsection 4.2; PROVIDED that any notice, request or demand to the Trustee shall not be effective until received by the Trustee 21 in writing or by facsimile transmission in the corporate trust division at the office designated by it pursuant to this subsection 6.1. 6.2 NO WAIVERS. No failure on the part of the Trustee, any co-trustee, any separate trustee, the Administrative Agent, the Public Debt Trustee or any Secured Party to exercise, no course of dealing with respect to, and no delay in exercising, any right, power or privilege under this Trust Agreement or the Pledge Agreement shall operate as a waiver thereof nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. 6.3 AMENDMENTS, SUPPLEMENTS AND WAIVERS. (a) With the written consent of the Administrative Agent and the Public Debt Trustee, the Trustee and the Company may, from time to time, enter into written agreements supplemental hereto or to the Pledge Agreement for the purpose of adding to, or waiving any provisions of, this Trust Agreement or the Pledge Agreement or changing in any manner the rights of the Trustee, the Secured Parties (subject, in the case of the Public Debt Securities, to the provisions of the Indenture) or the Company hereunder or thereunder; PROVIDED that no such supplemental agreement shall, except as provided in subsection 6.3(b), amend, modify or waive any provision of subsection 3.4 or the definition of Secured Obligations without the written consent of each Secured Party whose rights would be adversely affected thereby. (b) Without the consent of the Administrative Agent, the Public Debt Trustee or any Secured Party, the Trustee and the Company, at any time and from time to time, may enter into one or more agreements supplemental hereto or to the Pledge Agreement, in form satisfactory to the Trustee, (i) to add to the covenants of the Company for the benefit of the Secured Parties or to surrender any right or power herein conferred upon the Company, (ii) to mortgage or pledge as Collateral (as defined in the Pledge Agreement) to the Trustee, or grant a security interest in favor of the Trustee in, any property or assets as additional security for the Secured Obligations, or (iii) to cure any ambiguity, to correct or supplement any provision herein or in the Pledge Agreement which may be defective or inconsistent with any other provision herein or therein, or to make any other provision with respect to matters or questions arising hereunder which shall not be inconsistent with any provision hereof; PROVIDED that any such action contemplated by this clause (iii) shall not adversely affect the interests of the Secured Parties. 6.4 HEADINGS. The table of contents and the headings of Sections and subsections have been included herein and in the Pledge Agreement for convenience only and should not be considered in interpreting this Trust Agreement or the Pledge Agreement. 6.5 SEVERABILITY. Any provision of this Trust Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdic tion shall not invalidate or render unenforceable such provision in any other jurisdiction. 6.6 SUCCESSORS AND ASSIGNS. This Trust Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns and shall inure to the benefit of each of the Secured Parties and their respective successors and assigns, 22 and nothing herein is intended or shall be construed to give any other Person any right, remedy or claim under, to or in respect of this Trust Agreement or any Collateral. 6.7 GOVERNING LAW. This Trust Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of Ohio. 6.8 COUNTERPARTS. This Trust Agreement may be signed in any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument. 6.9 TERMINATION. (a) Except for the period during which a Notice of Acceleration is in effect, upon (i) receipt by the Trustee from the Administrative Agent of (A) a written direction to cause the liens created by subsection 4.7 and by the Pledge Agreement to be released and discharged as to all Secured Parties or (B) a written notice stating that the Credit Agreements have terminated in accordance with the terms thereof prior to the time any Notice of Acceleration has been given by the Public Debt Trustee and remains in effect, and (ii) payment in full of all Trustee Fees, the security interests created by subsection 4.7 and by the Pledge Agreement shall terminate as to all Secured Parties forthwith and all right, title and interest of the Trustee in and to the Collateral shall revert to the Company, its successors and assigns. (b) Upon the termination of the Trustee's security interest and the release of the Collateral in accordance with subsection 6.9(a), the Trustee will promptly, at the Company's written request and expense, (i) execute and deliver to the Company such documents as the Company shall reasonably request to evidence the termination of such security interest or the release of the Collateral and (ii) deliver or cause to be delivered to the Company all property of the Company then held by the Trustee or any agent thereof. (c) Except for the period during which a Notice of Acceleration is in effect, upon receipt by the Trustee from the Company of a certificate of the Company that all or substantially all of the assets or all of the capital stock of any maker of any promissory note constituting part of the Collateral has been sold to a third party (which certificate shall be accompanied by a written statement from the Administrative Agent that such sale is or will be in accordance with the Credit Agreement), all right, title and interest of the Trustee in and to any such promissory note constituting part of the Collateral subject to the security interests created by the Pledge Agreement shall revert to the Company, its successors and assigns. Upon any such termination, the Trustee will promptly, at the Company's written request and at the Company's expense, (y) execute and deliver to the Company such documents as the Company shall reasonably request to evidence the termination of such security interest or the release of such Collateral and (z) deliver or cause to be delivered to the Company all such released Collateral then held by the Trustees or any agent thereof. (d) Except for the period during which a Notice of Acceleration is in effect, the Company shall be entitled to request the release of, or the substitution with a new promissory note from a Restricted Subsidiary of the Company of, any promissory note constituting part of the Collateral and, upon receipt by the Trustee from the Company of a certificate of the Company that after giving effect thereto the Company is in compliance with Section 7.14(c) of the Credit Agreements, all right, title and interest of the Trustee in and to any such promissory 23 note being released or replaced by another promissory note constituting part of the Collateral subject to the security interests created by the Pledge Agreement shall revert to the Company, its successors and assigns. Upon any such termination, the Trustee will promptly, at the Company's written request and at the Company's expense, (y) execute and deliver to the Company such documents as the Company shall reasonably request to evidence the termination of such security interest or the release of such Collateral and (z) deliver or cause to be delivered to the Company all such released Collateral then held by the Trustee or any agent thereof. (e) This Trust Agreement shall terminate when the security interest granted under the Pledge Agreement has terminated and the Collateral has been released; PROVIDED that the provisions of subsections 4.3, 4.4, 4.5 and 4.6 shall not be affected by any such termination. (f) The Trustee will, at any time prior to the time any Notice of Acceleration has been given by the Public Debt Trustee and remains in effect, upon the written instruction of the Administrative Agent, at the sole expense of the Company, prior to the time any Notice of Acceleration has been given by the Public Debt Trustee and remains in effect, execute and deliver to the Company all releases or other documents reasonably necessary or desirable for the release of the Liens created by the Pledge Agreement on the Collateral specified by the Administrative Agent in such instruction. The Administrative Agent may give such instructions at any time prior to the time any Notice of Acceleration has been given by the Public Debt Trustee and remains in effect, whether or not at any such time any or all of the Secured Obligations are still outstanding so long as the Liens created by the Pledge Agreement are released as to all Secured Parties. 6.10 INSPECTION BY REGULATORY AGENCIES. The Trustee shall make available, and shall cause each custodian and agent acting on its behalf in connection with this Trust Agreement to make available, all Collateral in such Person's possession at all times for inspection by any regulatory agency having jurisdiction over the Company to the extent required by such regulatory agency in its discretion. 6.11 CONFIDENTIALITY. The Trustee agrees to keep confidential any written information (a) provided to it by or, on behalf of the Company or any of its Subsidiaries pursuant to or in connection with the Trust Agreement or the Pledge Agreement or (b) obtained by the Trustee based on a review of the books and records of the Company or any of its Subsidiaries; PROVIDED that nothing herein shall prevent the Trustee from disclosing any such information (i) to the Administrative Agent or any other Lender, (ii) to employees, directors, agents, attorneys, accountants and other professional advisors, (iii) upon the request or demand of any Governmental Authority having jurisdiction over the Trustee or as shall be required pursuant to any Requirement of Law, (iv) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (v) in connection with any litigation to which the Trustee is a party, (vii) which has been pub licly disclosed other than in breach of the Trust Agreement, or (viii) to the extent reasonably necessary, in connection with the exercise of any remedy hereunder. 6.12 SUBMISSION TO JURISDICTION; WAIVERS. The Company hereby irrevocably and unconditionally: 24 (a) submits for itself and its property in any legal action or proceeding relating to this Trust Agreement and the Pledge Agreement to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) to the extent permitted by applicable law, consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Company at its address set forth in sub section 6.1 or at such other address of which the Trustee shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any special, exemplary, punitive or consequential damages. 6.13 WAIVERS OF JURY TRIAL. THE TRUSTEE AND THE COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS TRUST AGREEMENT OR ANY THE PLEDGE AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. 6.14 INDENTURE. It is the intention of the parties hereto to make this Trust Agreement apply equally and ratably to the Administrative Agent, the Public Debt Trustee and each other Secured Party. Nothing in this Trust Agreement shall amend, supplement or modify, expressly or by implication, the Indenture or alter adversely any of the rights or benefits of the Trustee or Holders of Public Debt Securities or alter the duties or obligations of the Company thereunder, all of which shall be and remain in full force and effect. 25 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective authorized officers as of the day and year first written above. WORTHINGTON INDUSTRIES, INC. By: /s/John T. Baldwin --------------------------------------------- Name: John T. Baldwin Title: Vice President & Chief Financial Officer Address for Notices: Worthington Industries, Inc. 1205 Dearborn Drive Columbus, Ohio 43085 Attention: General Counsel Fax: 614-840-3706 WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Collateral Agent By: /s/Michael G. Slade --------------------------------------------- Name: Michael G. Slade Title: Corporate Trust Officer Address for Notices: Wells Fargo Bank Minnesota, National Association Corporate Trust Services MAC N9303-110 Sixth and Marquette Avenue Minneapolis, MN 55479 Attention: Michael G. Slade Fax: 612-667-2160 WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee By: /s/Michael G. Slade --------------------------------------------- Name: Michael G. Slade Title: Corporate Trust Officer 26 J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION (SUCCESSOR TO CHASE MANHATTAN TRUST COMPANY, N.A.), as Public Debt Trustee By: /s/Ronald J. McKenna --------------------------------------------- Name: Ronald J. McKenna Title: Vice President PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent By: /s/David B. Gookin --------------------------------------------- Name: David B. Gookin Title: Vice President 27 EXHIBIT A FORM OF NOTICE OF ACCELERATION [Date] To: Wells Fargo Bank Minnesota, National Association, as Trustee Re: Trust Agreement, dated as of May 10, 2002, among Worthington Industries, Inc. (the "COMPANY"), and Wells Fargo Bank Minnesota, National Association, as Trustee (the "TRUST AGREEMENT"). [The Credit Agreement Obligations have not been paid in full at the stated final maturity and any applicable grace period has expired.] [A default has occurred under the provisions of the Credit Agreement and, as a result thereof, the Credit Agreement Obligations have became due and payable prior to the stated maturity thereof.)] [The Public Debt Obligations have not been paid in full at the stated final maturity and any applicable grace period has expired.] [A default has occurred under the provisions of the Indenture and, as a result thereof, the Public Debt Obligations have became due and payable prior to the stated maturity thereof.)] Terms defined in the Trust Agreement and used herein shall have the meanings given to them in the Trust Agreement. [PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent] [J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION (SUCCESSOR TO CHASE MANHATTAN TRUST COMPANY, N.A.), as Public Debt Trustee] By: ------------------------------------- Name: Title: A-1 EXHIBIT B [FORM OF] JOINDER AGREEMENT This Joinder Agreement ("JOINDER AGREEMENT") is executed as of ____________, 200__, between _________________________________, a(n) _______________________ (the "JOINING PARTY"), and WORTHINGTON INDUSTRIES, INC., an Ohio corporation, and delivered to WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as collateral agent under the Credit Agreements referred to below, and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as trustee under the Trust Agreement (as defined below)(in such capacity, the "TRUSTEE"). Reference is made to the Trust Agreement dated as of May 10, 2002, among WORTHINGTON INDUSTRIES, INC., an Ohio corporation (the "COMPANY") and the Trustee (the "TRUST AGREEMENT ") which was executed in connection with the Credit Agreements (as defined therein) and the Pledge Agreement (as defined therein). Terms used but not defined in this Joinder Agreement shall have the meanings set forth in the Trust Agreement. WITNESSETH: WHEREAS, the Joining Party is becoming, pursuant to the terms hereof, a Secured Party under the Trust Agreement; WHEREAS, the Joining Party expects to realize direct and indirect benefits as a result of its joinder of the Trust Agreement as a Secured Party. NOW, THEREFORE, the Joining Party agrees as follows: AGREEMENT --------- 1. JOINDER TO TRUST AGREEMENT. By this Joinder Agreement, the Joining Party hereby becomes a "Secured Party" under the Trust Agreement with respect to all of the benefits and obligations of a Secured Party thereunder, whether now or hereafter incurred. The Joining Party agrees that it is and shall have all of the benefits of, and shall be bound by, and hereby assumes, all representations, warranties, covenants, terms, conditions, duties, obligations and waivers applicable to, a Secured Party under the Trust Agreement. 2. REPRESENTATIONS AND WARRANTIES. The Joining Party represents and warrants to the Trustee and the Collateral Agent that, as of the Effective Date (as defined below), the representations and warranties of a Secured Party contained in the Trust Agreement are true and correct in all material respects as applied to the Joining Party as a Secured Party on and as of the Effective Date as though made on that date. 3. FURTHER ASSURANCES. The Joining Party agrees to execute and deliver such other instruments and documents and take such other action, as the Trustee and the Collateral Agent may reasonably request, in connection with the transactions contemplated by this Joinder Agreement. 4. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACTUAL OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND B-1 CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF OHIO. 5. The effective date (the "EFFECTIVE DATE") of this Joinder Agreement is __________, 200__. JOINING PARTY: ---------------------------------, a(n) ---------------------------------- By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- COMPANY: WORTHINGTON INDUSTRIES, INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- ACKNOWLEDGED: TRUSTEE: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION By: --------------------------- Name: ------------------------- Title: ------------------------ COLLATERAL AGENT: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION By: --------------------------- Name: ------------------------- Title: ------------------------ B-2 EX-10.G.V 14 l95946aexv10wgwv.txt EX-10(G)(V) Exhibit 10(G)(V) ASSUMPTION AND TRANSFER AGREEMENT --------------------------------- THIS ASSUMPTION AND TRANSFER AGREEMENT (this "AGREEMENT"), dated as of October 25, 2001, is among WORTHINGTON RECEIVABLES CORPORATION (the "SELLER"), FIFTH THIRD BANK, as a purchaser (the "CONDUIT PURCHASER"), FIFTH THIRD BANK, as a related committed purchaser (the "RELATED COMMITTED PURCHASER" and together with the Conduit Purchaser, the "FIFTH THIRD PURCHASERS"), FIFTH THIRD BANK, as agent for the Fifth Third Purchasers (the "FIFTH THIRD PURCHASER AGENT" and together with the Fifth Third Purchasers, the "FIFTH THIRD PURCHASER GROUP"), MARKET STREET FUNDING CORPORATION, as a purchaser ("MARKET STREET") and PNC BANK, NATIONAL ASSOCIATION, as agent for Market Street (in such capacity, "PNC") as administrator (in such capacity, the "ADMINISTRATOR"). BACKGROUND The Seller and various others are parties to a certain Receivables Purchase Agreement dated as of November 30, 2000 (as amended through the date hereof, the "RECEIVABLES PURCHASE AGREEMENT"). Capitalized terms used and not otherwise defined herein have the respective meaning assigned to such terms in the Receivables Purchase Agreement. NOW, THEREFORE, the parties hereto hereby agree as follows: SECTION 1. This letter constitutes an Assumption Agreement pursuant to SECTION 1.2(e) and a Transfer Supplement pursuant to SECTION 6.3(c) and (e) of the Receivables Purchase Agreement. The Seller desires the Fifth Third Purchasers to become Purchasers and the Fifth Third Purchaser Agent to become a Purchaser Agent under the Receivables Purchase Agreement and upon the terms and subject to the conditions set forth in the Receivables Purchase Agreement, and the Fifth Third Purchasers agree to become Purchasers and the Fifth Third Purchaser Agent agrees to become a Purchaser Agent thereunder. Seller hereby represents and warrants to each member of the Fifth Third Purchaser Group, the Administrator and Market Street as of the date hereof, as follows: (i) the representations and warranties contained in EXHIBIT III of the Receivables Purchase Agreement are correct on and as of such dates as though made on and as of such dates and shall be deemed to have been made on such dates. (ii) no Termination Event or Unmatured Termination Event has occurred and is continuing, or would result from such purchase; and (iii) the Facility Termination Date shall not have occurred. SECTION 2. Upon execution and delivery of this Agreement by the Seller, each member of the Fifth Third Purchaser Group, the Administrator and Market Street, satisfaction of the other conditions to assignment specified in SECTION 1.2(e) and SECTION 6.3(c) and (e) of the Receivables Purchase Agreement (including the consent of the Administrator and each of the other Purchasers party thereto) and receipt by the Administrator of counterparts of this Agreement (whether by facsimile or otherwise) executed by each of the parties hereto, each of the Fifth Third Purchasers and the Fifth Third Purchaser Agent shall become a party to, and have the rights and obligations of Purchasers and Purchaser Agents, respectively, under the Receivables Purchase Agreement and Market Street and PNC as the Market Street Purchaser Agent shall, to the extent of the interest assigned by Market Street hereunder, relinquish their rights and interest (other than the right to receive payments which accrued in favor of Market Street or PNC as the Market Street Purchaser Agent prior to but not including the date hereof) and be released for their obligations under the Receivables Purchase Agreement. SECTION 3. (a) Market Street (the "ASSIGNOR") hereby sells and assigns to the Related Committed Purchaser (the "ASSIGNEE") without recourse and without representation or warranty (except that it is the sole owner of its right, title and interest in and to the portion of Purchased Interest being transferred hereunder free of any Adverse Claim), and the Assignee hereby purchases and assumes from the Assignor, that portion of the Assignor's interest in and to the Purchased Interest and that portion of the Assignor's other rights and obligations under the Receivables Purchase Agreement as of the date hereof equal to the following: Commitment assigned: $ 50,000,000 Assignor's remaining Commitment: $140,000,000 Investment assigned: $ 50,000,000 Assignor's remaining Investment: $140,000,000 The Commitments of Assignor and the Assignee shall be as set forth on the signature page hereto. (b) The Assignor hereby instructs the Administrator to make all payments from and after the date hereof in respect of the portion of the Purchased Interest assigned hereby directly to the Assignee. The Assignor and the Assignee agree that all Discount and fees accrued up to, but not including, the date hereof are the property of the Assignor, and not the Assignee. The Assignee agrees that, upon receipt of any such Discount or fees, the Assignee will promptly remit the same to the Assignor. (c) On the date hereof, the Assignee shall pay to the Assignor, in immediately available funds, an amount equal to the purchase price of the portion of the Purchased Interest assigned hereunder in accordance with the following payment instructions: -2- PNC Bank, National Association ABA No.: 04300096 Account Name: Market Street Funding Corporation Account No.: 1002422076 Ref: Worthington Receivables Corporation (d) All notices and other communications hereunder or under the Receivables Purchase Agreement to the Fifth Third Purchasers and the Fifth Third Purchaser Agent shall be sent or delivered to Fifth Third Purchasers and Fifth Third Purchaser Agent at the address set forth under their names on the signature pages hereof. SECTION 4. Each party hereto hereby covenants and agrees that it will not institute against, or join any other Person in instituting agent, any Conduit Purchaser, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law, for one year and one day after the latest maturing Note issued by such Conduit Purchaser is paid in full. The covenant contained in this paragraph shall survive any termination of the Receivables Purchase Agreement. SECTION 5. THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement may not be amended, supplemented or waived except pursuant to a writing signed by the party to be charged. This Agreement may be executed in counterparts, and by the different parties on different counterparts, each of which shall constitute an original, but all together shall constitute one and the same agreement. (continued on following page) -3- IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized officers as of the date first above written. FIFTH THIRD BANK, as a Conduit Purchaser and a Related Committed Purchaser By: /s/ David J. Folkwein -------------------------------------------- Name Printed: David J. Folkwein Title: Senior Vice President Address: Fifth Third Bank 21 East State Street Columbus, OH 43215 Attention: Daron McGuire Telephone: (614) 233-4424 Facsimile: (614) 341-2606 Commitment: $50,000,000 Assumption Agreement (Fifth Third) S-1 FIFTH THIRD BANK, as a Purchaser Agent for the Fifth Third Purchasers By: /s/ Jeff Chapman -------------------------------------------- Name Printed: Jeff Chapman Title: Vice President Address: Fifth Third Bank 38 Fountain Square Plaza M.D. 1090A3 Cincinnati, OH Attention: Robert Finley Telephone: (513) 744-4870 Facsimile: (513) 579-4270 Assumption Agreement (Fifth Third) S-2 MARKET STREET FUNDING CORPORATION, as a Conduit Purchaser and a Related Committed Purchaser By: /s/ Douglas K. Johnson -------------------------------------------- Name Printed: Douglas K. Johnson Title: President Address: Market Street Funding Corporation c/o AMACAR Group, L.L.C. 6525 Morrison Blvd. Suite 318 Charlotte, North Carolina 28211 Attention: Douglas K. Johnson Telephone No.: (704) 365-0569 Facsimile No.: (704) 365-1362 With a copy to: PNC Bank, National Association One PNC Plaza 249 Fifth Avenue Pittsburgh, Pennsylvania 15222-2707 Attention: John Smathers Telephone No.: (412) 762-6440 Facsimile No.: (412) 762-9184 Commitment $140,000,000 Assumption Agreement (Fifth Third) S-3 PNC BANK, NATIONAL ASSOCIATION, as Purchaser Agent for Market Street By: /s/ John T. Smathers -------------------------------------------- Name Printed: John T. Smathers Title: Vice President Address: PNC Bank, National Association One PNC Plaza 249 Fifth Avenue Pittsburgh Pennsylvania 15222-2707 Attention: John Smathers Telephone No.: (412) 762-6440 Facsimile No.: (412) 762-9184 Assumption Agreement (Fifth Third) S-4 WORTHINGTON RECEIVABLES CORPORATION, as Seller By: -------------------------------------------- Name Printed: --------------------------------- Title: ---------------------------------------- Address: Worthington Receivables Corporation 1205 Dearborn Drive Columbus, Ohio 43085 Attention: Randal I. Rombeiro Telephone: (614) 840-3574 Facsimile: (614) 438-7508 Consented and Agreed: PNC BANK, NATIONAL ASSOCIATION, as Administrator By: /s/ John Smathers ------------------------------ Name Printed: John Smathers Title: Vice President Assumption Agreement (Fifth Third) S-5 WORTHINGTON RECEIVABLES CORPORATION, as Seller By: /s/ John T. Baldwin -------------------------------------------- Name Printed: John T. Baldwin Title: Vice President - Treasurer Address: Worthington Receivables Corporation 1205 Dearborn Drive Columbus, Ohio 43085 Attention: Randal I. Rombeiro Telephone: (614) 840-3574 Facsimile: (614) 438-7508 Consented and Agreed: PNC BANK, NATIONAL ASSOCIATION, as Administrator By: ------------------------------ Name Printed: John Smathers Title: Vice President Assumption Agreement (Fifth Third) S-5 EX-10.G.VI 15 l95946aexv10wgwvi.txt EX-10(G)(VI) EXHIBIT 10(G)(VI) ASSUMPTION AND TRANSFER AGREEMENT --------------------------------- THIS ASSUMPTION AND TRANSFER AGREEMENT (this "AGREEMENT"), dated as of April 24, 2002, is among WORTHINGTON RECEIVABLES CORPORATION (the "SELLER"), LIBERTY STREET FUNDING CORP., as a purchaser (the "CONDUIT PURCHASER"), LIBERTY STREET FUNDING CORP., as a related committed purchaser (the "RELATED COMMITTED PURCHASER" and together with the Conduit Purchaser, the "LIBERTY STREET PURCHASERS"), THE BANK OF NOVA SCOTIA, a Canadian chartered bank acting through its New York Agency, as agent for the Liberty Street Purchasers (the "LIBERTY STREET PURCHASER AGENT" and together with the Liberty Street Purchasers, the "LIBERTY STREET PURCHASER GROUP"), MARKET STREET FUNDING CORPORATION, as a purchaser ("MARKET STREET") and PNC BANK, NATIONAL ASSOCIATION, as agent for Market Street (in such capacity, "PNC") and as administrator (in such capacity, the "ADMINISTRATOR"). BACKGROUND The Seller and various others are parties to a certain Receivables Purchase Agreement dated as of November 30, 2000 (as amended through the date hereof, the "RECEIVABLES PURCHASE AGREEMENT"). Capitalized terms used and not otherwise defined herein have the respective meaning assigned to such terms in the Receivables Purchase Agreement. NOW, THEREFORE, the parties hereto hereby agree as follows: SECTION 1. This letter constitutes an Assumption Agreement pursuant to SECTION 1.2(e) and a Transfer Supplement pursuant to SECTION 6.3(c) and (e) of the Receivables Purchase Agreement. The Seller desires the Liberty Street Purchasers to become Purchasers and the Liberty Street Purchaser Agent to become a Purchaser Agent under the Receivables Purchase Agreement and upon the terms and subject to the conditions set forth in the Receivables Purchase Agreement, and the Liberty Street Purchasers agree to become Purchasers and the Liberty Street Purchaser Agent agrees to become a Purchaser Agent thereunder. Seller hereby represents and warrants to each member of the Liberty Street Purchaser Group, the Administrator and Market Street as of the date hereof, as follows: (i) the representations and warranties contained in EXHIBIT III of the Receivables Purchase Agreement are correct on and as of such dates as though made on and as of such dates and shall be deemed to have been made on such dates; (ii) no Termination Event or Unmatured Termination Event has occurred and is continuing, or would result from such purchase; and (iii) the Facility Termination Date shall not have occurred. SECTION 2. Upon execution and delivery of this Agreement by the Seller, each member or the Liberty Street Purchaser Group, the Administrator and Market Street, satisfaction of the other conditions to assignment specified in SECTION 1.2(e) and SECTION 6.3(c) and (e) of the Receivables Purchase Agreement (including the consent of the Administrator and each of the other Purchasers party thereto) and receipt by the Administrator of counterparts of this Agreement (whether by facsimile or otherwise) executed by each of the parties hereto, each of the Liberty Street Purchasers and the Liberty Street Purchaser Agent shall become a party to, and have the rights and obligations of Purchasers and Purchaser Agents, respectively, under, the Receivables Purchase Agreement and Market Street and PNC as the Market Street Purchaser Agent shall, to the extent of the interest assigned by Market Street hereunder, relinquish their rights and interest (other than the right to receive payments which accrued in favor of Market Street or PNC as the Market Street Purchaser Agent prior to but not including the date hereof) and be released for their obligations under the Receivables Purchase Agreement. SECTION 3. (a) Market Street (the "ASSIGNOR") hereby sells and assigns to the Liberty Street Funding Corp. (the "ASSIGNEE") without recourse and without representation or warranty (except that it is the sole owner of its right, title and interest in and to the portion of Purchased Interest being transferred hereunder free of any Adverse Claim), and the Assignee hereby purchases and assumes from the Assignor, that portion of the Assignor's interest in and to the Purchased Interest and that portion of the Assignor's other rights and obligations under the Receivables Purchase Agreement as of the date hereof equal to the following: Commitment assigned: $60,000,000 Assignor's remaining Commitment: $80,000,000 Investment assigned: $40,000,000 Assignor's remaining Investment: $70,000,000 The Commitments of Assignor and the Assignee shall be as set forth on the signature page hereto. (b) The Assignor hereby instructs the Administrator to make all payments from and after the date hereof in respect of the portion of the Purchased Interest assigned hereby directly to the Assignee. The Assignor and the Assignee agree that all Discount and fees accrued up to, but not including, the date hereof are the property of the Assignor, and not the Assignee. The Assignee agrees that, upon receipt of any such Discount or fees, the Assignee will promptly remit the same to the Assignor. -2- (c) On the date hereof, the Assignee shall pay to the Assignor, in immediately available funds, an amount equal to the purchase price of the portion of the Purchased Interest assigned hereunder in accordance with the following payment instructions: PNC Bank, National Association ABA No.: 04300096 Account Name: Market Street Funding Corporation Account No.: 1002422076 Ref: Worthington Receivables Corporation (d) All notices and other communications hereunder or under the Receivables Purchase Agreement to the Liberty Street Purchasers and the Liberty Street Purchaser Agent shall be sent or delivered to Liberty Street Purchasers and Liberty Street Purchaser Agent at the address set forth under their names on the signature pages hereof. SECTION 4. Each party hereto hereby covenants and agrees that it will not institute against, or join any other Person in instituting against, any Conduit Purchaser, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law, for one year and one day after the latest maturing Note issued by such Conduit Purchaser is paid in full. The covenant contained in this paragraph shall survive any termination of the Receivables Purchase Agreement. SECTION 5. THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement may not be amended, supplemented or waived except pursuant to a writing signed by the party to be charged. This Agreement may be executed in counterparts, and by the different parties on different counterparts, each of which shall constitute an original, but all together shall constitute one and the same agreement. (continued on following page) -3- IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized officers as of the date first above written. LIBERTY STREET FUNDING CORP., as a Conduit Purchaser and a Related Committed Purchaser By: /s/ Andrew L. Stidd ---------------------------------------- Name Printed: Andrew L. Stidd ------------------------------ Title: President ------------------------------------ Address: Liberty Street Funding Corp. c/o Global Securitization Service, LLC 114 West 47th Street, Suite 1715 New York, New York 10036 Attention: Andrew L. Stidd Telephone: (212) 302-5151 Facsimile: (212) 302-8767 Commitment: $60,000,000 ----------------------- With a copy to: The Bank of Nova Scotia One Liberty Plaza New York, New York 10006 Attention: Norman Last Telephone: (212) 225-5000 Facsimile: (212) 225-5090 Assumption Agreement (Liberty Street) S-1 THE BANK OF NOVA SCOTIA, as Purchaser Agent for the Liberty Street Purchasers By: /s/ Norman Last ---------------------------------------- Name Printed: NORMAN LAST ------------------------------ Title: MANAGING DIRECTOR ------------------------------------ Address: The Bank of Nova Scotia One Liberty Plaza New York, New York 10006 Attention: Norman Last Telephone: (212) 225-5000 Facsimile: (212) 225-5090 Assumption Agreement (Liberty Street) S-2 MARKET STREET FUNDING CORPORATION, as a Conduit Purchaser and a Related Committed Purchaser By: /s/ Juliana C. Johnson ------------------------------------ Name Printed: Juliana C. Johnson ------------------------- Title: Vice President --------------------------------- Address: Market Street Funding Corporation c/o AMACAR Group, L.L.C. 6525 Morrison Blvd., Suite 318 Charlotte, North Carolina 28211 Attention: Douglas K. Johnson Telephone No.: (704) 365-0569 Facsimile No.: (704) 365-1362 With a copy to: PNC Bank, National Association One PNC Plaza 249 Fifth Avenue Pittsburgh, Pennsylvania 15222-2707 Attention: John Smathers Telephone No.: (412) 762-6440 Facsimile No.: (412) 762-9184 Commitment $80,000,000 ----------------- Assumption Agreement (Liberty Street) S-3 PNC BANK, NATIONAL ASSOCIATION, as Purchaser Agent for Market Street By: /s/ David B. Gookin --------------------------------- Name Printed: DAVID B. GOOKIN ----------------------- Title: VICE PRESIDENT ------------------------------- Address: PNC Bank, National Association One PNC Plaza 249 Fifth Avenue Pittsburgh, Pennsylvania 15222-2707 Attention: John Smathers Telephone No.: (412) 762-6440 Facsimile No.: (412) 762-9184 Assumption Agreement (Liberty Street) S-4 WORTHINGTON RECEIVABLES CORPORATION, as Seller By: /s/ John T. Baldwin ------------------------------------ Name Printed: John T. Baldwin --------------------------- Title: Vice President & Chief Financial Officer ---------------------------------- Address: Worthington Receivables Corporation 1205 Dearborn Drive Columbus, Ohio 43085 Attention: Randal I. Rombeiro Telephone: (614) 840-3574 Facsimile: (614) 438-7508 Consented and Agreed: PNC BANK, NATIONAL ASSOCIATION, as Administrator By: /s/ John Smathers --------------------------- Name Printed: John Smathers Title: Vice President Assumption Agreement (Liberty Street) S-5 Consented and Agreed: FIFTH THIRD BANK, as Purchaser Agent for the Fifth Third Purchasers By: /s/ Jeff Chapman ------------------------------ Name Printed: Jeff Chapman Title: Vice President Assumption Agreement (Liberty Street) S-6 EX-21 16 l95946aexv21.txt EX-21 EXHIBIT 21 SUBSIDIARIES OF WORTHINGTON INDUSTRIES, INC. an Ohio Corporation The following is a list of subsidiaries owned, directly or indirectly, by Worthington Industries, Inc., an Ohio corporation, together with their respective jurisdictions of organization. - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Foreign Sales Corporation Barbados - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Industries Incorporated Ohio - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Industries Medical Center, Inc. Ohio - ----------------------------------------------------------------------------------------------------- ---------------------- Enterprise Protection Insurance Company Vermont - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Steel of Michigan, Inc. (d/b/a The Worthington Steel Company) Michigan - ----------------------------------------------------------------------------------------------------- ---------------------- Dietrich Industries, Inc. Pennsylvania - ----------------------------------------------------------------------------------------------------- ---------------------- Dietrich Design Group, Inc. Pennsylvania - ----------------------------------------------------------------------------------------------------- ---------------------- WD Ventures, Inc. Delaware - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Construction Management, Inc. Ohio - ----------------------------------------------------------------------------------------------------- ---------------------- The Gerstenslager Company Michigan - ----------------------------------------------------------------------------------------------------- ---------------------- Gerstenslager Co. Ohio - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington-Buckeye, Inc. Ohio - ----------------------------------------------------------------------------------------------------- ---------------------- Buckeye Energy Company, Inc. Ohio - ----------------------------------------------------------------------------------------------------- ---------------------- Buckeye International Development, Inc. Ohio - ----------------------------------------------------------------------------------------------------- ---------------------- WI Products, Inc. Ohio - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Cylinder Corporation Ohio - ----------------------------------------------------------------------------------------------------- ---------------------- Industrias Worthington do Brasil Ltda. Brazil - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Acetylene Cylinders, Inc. (d/b/a North American Alabama Cylinders, Inc.) - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Industries of Canada, Inc. Canada - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Cylinders of Canada Corp. (d/b/a Steel Canada Cylinder Manufacturing) - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Cylinders GmbH Austria - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Cylinders-Embalagens Industriais de Gas, S.A. Portugal - ----------------------------------------------------------------------------------------------------- ---------------------- Little Pal, Inc. Ohio - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Industries of Mexico, S.A. de C.V. Mexico - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Taylor, Inc. Michigan - ----------------------------------------------------------------------------------------------------- ---------------------- Production Fit of America, L.L.C. Ohio - ----------------------------------------------------------------------------------------------------- ---------------------- The Worthington Steel Company Delaware - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Steelpac Systems, L.L.C. Delaware - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Techs II, Inc. Delaware - ----------------------------------------------------------------------------------------------------- ---------------------- The Worthington Steel Company North Carolina - ----------------------------------------------------------------------------------------------------- ---------------------- The Worthington Steel Company Ohio - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Steel Company of Kentucky, LLC Kentucky - ----------------------------------------------------------------------------------------------------- ---------------------- BeamAlloy Corporation Delaware - ----------------------------------------------------------------------------------------------------- ---------------------- Newman Crosby Steel, Incorporated Ohio - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Steel Company of Decatur, L.L.C. Alabama - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington OEG Company Michigan - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Steel Company of Alabama, Inc. & Co. OEG Austria - ----------------------------------------------------------------------------------------------------- ---------------------- The Worthington Steel Company of Decatur, Inc. Michigan - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Receivables Corporation Delaware - ----------------------------------------------------------------------------------------------------- ---------------------- - ----------------------------------------------------------------------------------------------------- ----------------------
- ----------------------------------------------------------------------------------------------------- ---------------------- Joint Ventures - ----------------------------------------------------------------------------------------------------- ---------------------- Acerex, S.A. de C.V. (1) Mexico - ----------------------------------------------------------------------------------------------------- ---------------------- Aegis Metal Framing, LLC (2) Delaware - ----------------------------------------------------------------------------------------------------- ---------------------- Spartan Steel Coating, LLC (3) Michigan - ----------------------------------------------------------------------------------------------------- ---------------------- TWB Company, L.L.C. (4) Michigan - ----------------------------------------------------------------------------------------------------- ---------------------- TWB of Ohio, Inc. Ohio - ----------------------------------------------------------------------------------------------------- ---------------------- TWB de Mexico, S.A. de C.V. Mexico - ----------------------------------------------------------------------------------------------------- ---------------------- TWB of Indiana, Inc. Indiana - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Armstrong Venture (WAVE) (5) Delaware - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Cylinders a.s. (6) Czech Republic - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Specialty Processing, Inc. (WSP) (7) Michigan - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington S.A. (8) Brazil - ----------------------------------------------------------------------------------------------------- ---------------------- Worthington Tank, Ltda (9) Brazil - ----------------------------------------------------------------------------------------------------- ----------------------
- ------------------- (1) Unconsolidated joint venture with 50% owned by Worthington Industries Mexico, S.A. de C.V. and 50% owned by Hylsa S.A. de C.V. (2) Consolidated joint venture with 52% owned by WD Ventures, Inc. and 40% owned by MiTek, Industries, Inc. (3) Unconsolidated joint venture with 60% owned by Worthington Steel of Michigan, Inc. and 48% by QS Steel Inc. (4) Unconsolidated joint venture with 33.3% owned by Worthington Steel of Michigan, Inc. and the remaining interests owned by ThyssenKrupp Stahl, Rouge Steel, LTV Steel and Bethlehem Steel. (5) Unconsolidated joint venture with 50% owned by The Worthington Steel Company (Delaware) and 50% owned by Armstrong Ventures, Inc. (6) Consolidated joint venture with 51% owned by Worthington Cylinders GmbH with a local Czech Republic entrepreneur in Hustopece, Czech Republic. (7) Unconsolidated general partnership owned 50% by Worthington Steel of Michigan, Inc. and 50% by USX Corporation. (8) Formerly our joint venture between Industrias Worthington do Brasil Ltda. and three Brazilian propane producers, which has been closed pursuant to the Consolidation Plan. (9) Formerly our joint venture between Industrias Worthington do Brasil Ltd and The Matos Group, which has been closed pursuant to the Consolidation Plan. EX-23.A 17 l95946aexv23wa.txt EX-23(A) EXHIBIT 23(a) CONSENT OF ERNST & YOUNG LLP We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 33-57981) pertaining to the Worthington Industries, Inc. Deferred Profit Sharing Plan; (Form S-3 No. 33-46470 and Form S-3 No. 333-48627) pertaining to the Worthington Industries, Inc. Dividend Reinvestment and Stock Purchase Plan; (Form S-8 No. 333-18099) pertaining to the Worthington Steel Company (Malvern) Union Retirement Savings Plan; (Form S-8 No. 333-42849) pertaining to the Worthington Industries, Inc. 1997 Long-Term Incentive Plan; and (Form S-8 No. 333-52628) pertaining to the Worthington Industries, Inc. 2000 Stock Option Plan for Non-Employee Directors, of our report dated June 15, 2001, with respect to the consolidated financial statements and schedule of Worthington Industries, Inc. as of and for each of the two years in the period ended May 31, 2001 included in this Annual Report (Form 10-K) for the year ended May 31, 2002. /s/Ernst & Young Columbus, Ohio August 19, 2002 EX-23.B 18 l95946aexv23wb.txt EX-23(B) EXHIBIT 23(b) CONSENT OF INDEPENDENT AUDITORS The Board of Directors Worthington Industries, Inc. We consent to the incorporation by reference in Registration Statement (Form S-8 No. 33-57981) pertaining to the Worthington Industries, Inc. Deferred Profit Sharing Plan; (Form S-3 No. 33-46470 and Form S-3 No. 333-48627) pertaining to the Worthington Industries, Inc. Dividend Reinvestment and Stock Purchase Plan; (Form S-8 No. 33-38486) pertaining to the Worthington Industries, Inc. 1990 Stock Option Plan; (Form S-8 No. 333-18099) pertaining to the Worthington Steel Company (Malvern) Union Retirement Savings Plan; (Form S-8 No. 333-42849) pertaining to the Worthington Industries, Inc. 1997 Long-Term Incentive Plan; and (Form S-8 No. 333-52628) pertaining to the Worthington Industries, Inc. 2000 Stock Option Plan for Non-Employee Directors of Worthington Industries, Inc. of our report dated June 18, 2002, with respect to the consolidated balance sheets of Worthington Industries, Inc. and subsidiaries as of May 31, 2002, and the related consolidated statements of earnings, shareholders' equity, and cash flows for the year then ended, and the related financial statement schedule, which report appears in the May 31, 2002, Annual Report on Form 10-K of Worthington Industries, Inc. and subsidiaries. /s/ KPMG LLP Columbus, Ohio August 20, 2002 EX-24 19 l95946aexv24.txt EX-24 EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2002 constitutes and appoints John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18 day of May, 2002. /s/ John P. McConnell ---------------------------- John P. McConnell POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2002 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18 day of May, 2002. /s/ John H. McConnell ---------------------------- John H. McConnell POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2002 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18 day of May, 2002. /s/ John S. Christie ---------------------------- John S. Christie POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2002 constitutes and appoints John P. McConnell and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18 day of May, 2002. /s/ John T. Baldwin ---------------------------- John T. Baldwin POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2002 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18 day of May, 2002. /s/ Richard G. Welch ---------------------------- Richard G. Welch POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2002 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18 day of May, 2002. /s/ John B. Blystone ---------------------------- John B. Blystone POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2002 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18 day of May, 2002. /s/ William S. Dietrich, II -------------------------------- William S. Dietrich, II POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2002 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18 day of May, 2002. /s/ Michael J. Endres ---------------------------- Michael J. Endres POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2002 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18 day of May, 2002. /s/ Peter Karmanos, Jr. ---------------------------- Peter Karmanos, Jr. POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2002 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18 day of May, 2002. /s/ John R. Kasich ---------------------------- John R. Kasich POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2002 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18 day of May, 2002. /s/ Sidney A. Ribeau ---------------------------- Sidney A. Ribeau POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2002 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18 day of May, 2002. /s/ Mary Fackler Schiavo ---------------------------- Mary Fackler Schiavo EX-99 20 l95946aexv99.txt EX-99 EXHIBIT 99 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO TITLE 18, UNITED STATES CODE, SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Worthington Industries, Inc. (the "Company") on Form 10-K for the fiscal year ended May 31, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John P. McConnell, Chairman and Chief Executive Officer of the Company, certify, pursuant to Title 18, United States Code, Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ John P. McConnell -------------------------------------------- Print Name: John P. McConnell Title: Chairman and Chief Executive Officer Date: August 21, 2002 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO TITLE 18, UNITED STATES CODE, SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Worthington Industries, Inc. (the "Company") on Form 10-K for the fiscal year ended May 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John T. Baldwin, Vice President and Chief Financial Officer of the Company, certify, pursuant to Title 18, United States Code, Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ John T. Baldwin --------------------------------------------------- Print Name: John T. Baldwin Title: Vice President and Chief Financial Officer Date: August 21, 2002 -----END PRIVACY-ENHANCED MESSAGE-----