-----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, OkUmWY5GzYF+Lp0j/VH88/MaGcjbJatoBpi4SRx3aHMULTipMafcfCDof46oS75F kCPhyO4aS1Wl27dGhBzqfA== 0000025757-96-000064.txt : 19961113 0000025757-96-000064.hdr.sgml : 19961113 ACCESSION NUMBER: 0000025757-96-000064 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960928 FILED AS OF DATE: 19961112 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CROMPTON & KNOWLES CORP CENTRAL INDEX KEY: 0000025757 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 041218720 STATE OF INCORPORATION: MA FISCAL YEAR END: 1225 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04663 FILM NUMBER: 96659636 BUSINESS ADDRESS: STREET 1: ONE STATION PL STREET 2: METRO CTR CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 2033535400 MAIL ADDRESS: STREET 1: ONE STATION PLACE STREET 2: METRO CENTER CITY: STAMFORD STATE: CT ZIP: 06902 10-Q 1 CROMPTON & KNOWLES CORP. 3RD QTR. REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended September 28, 1996 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. 1-4663 Crompton & Knowles Corporation (exact name of registrant as specified in its charter) Massachusetts 04-1218720 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Station Place, Metro Center Stamford, Connecticut 06902 (address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (203)353-5400 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at October 16, 1996 Common Stock, $.10 par value 72,755,490 shares CROMPTON & KNOWLES CORPORATION FORM 10-Q FOR QUARTER ENDED SEPTEMBER 28, 1996 INDEX PART I. FINANCIAL INFORMATION: Item 1. Condensed Financial Statements and Accompanying Notes . Consolidated Statements of Operations (unaudited) - Quarters and nine months ended September 28, 1996 and September 30, 1995 . Consolidated Balance Sheets - September 28, 1996 (unaudited) and Year end 1995 . Consolidated Statements of Cash Flows (unaudited) - Nine months ended September 28, 1996 and September 30, 1995 . Notes to the Consolidated Financial Statements - Quarter ended September 28, 1996 (unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION: Item 4. Submission of Matter to a Vote of Security Holders Item 6. Exhibits and Reports on Form 8-K Signatures Exhibit 11 Statement Re Computation of Per Share Earnings *Exhibit 27 Financial Data Schedule * A copy of this Exhibit is annexed to this report on Form 10-Q provided to the Securities and Exchange Commission and the New York Stock Exchange. UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations Quarters and nine months ended September 28, 1996 and September 30, 1995 (In thousands, except per share data) Quarters ended Nine months ended Sept.28, Sept.30, Sept.28, Sept.30, 1996 1995 1996 1995 Net sales $ 468,391 $ 453,819 $ 1,398,492 $ 1,370,555 Cost of products sold 303,834 296,930 894,041 873,932 Selling, general and admin. 72,524 74,007 212,241 209,383 Depreciation and amortization 21,129 21,144 63,477 61,122 Research and development 14,043 14,424 40,116 38,818 Merger and related costs 85,000 - 85,000 - Special environmental provision 30,000 - 30,000 - Operating profit (loss) (58,139) 47,314 73,617 187,300 Interest 28,792 28,203 86,818 89,182 Other expense(income) (483) 572 (762) (4,024) Earnings(loss) before income taxes and extraordinary loss (86,448) 18,539 (12,439) 102,142 Provision(benefit) for income taxes (16,876) 6,727 11,603 (41,154) Earnings(loss) before extraordinary charge (69,572) 11,812 (24,042) 143,296 Extraordinary loss on early extinguishment of debt - - (441) (8,279) Net earnings(loss) $ (69,572) $ 11,812 $ (24,483) $ 135,017 Per common share: Earnings(loss) before extraordinary charge $ (.97) $ .16 $ (.34) $ 2.08 Extraordinary loss - - - (.12) Net earnings (loss) $ (.97) $ .16 $ (.34) $ 1.96 Dividends per common share $ - $ .135 $ .27 $ .39 Average shares outstanding 72,140 72,256 71,747 68,945 See accompanying notes to consolidated financial statements. September 28, 1996 UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets September 28, 1996 and Year End 1995 (In thousands of dollars) September 28, Year End 1996 1995 ASSETS CURRENT ASSETS Cash $ 16,833 $ 30,437 Accounts receivable 294,608 271,989 Inventories 344,803 332,493 Other current assets 79,631 62,110 Total current assets 735,875 697,029 NON-CURRENT ASSETS Property, plant and equipment 504,937 524,463 Cost in excess of acquired net assets 189,604 185,648 Other assets 238,723 248,705 $ 1,669,139 $ 1,655,845 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current installments of long-term debt $ 11,568 $ 11,434 Notes payable 12,297 93,744 Accounts payable 143,818 144,241 Accrued expenses 169,689 125,064 Income taxes payable 31,844 32,897 Other current liabilities 18,766 13,274 Total current liabilities 387,982 420,654 NON-CURRENT LIABILITIES Long-term debt 1,036,228 974,156 Accrued postretirement liability 186,311 187,972 Other liabilities 155,680 132,248 STOCKHOLDERS' EQUITY (DEFICIT) Common stock 7,708 7,708 Additional paid-in capital 229,529 227,401 Accumulated deficit (259,165) (213,347) Accumulated translation adjustment (21,485) (12,168) Treasury stock at cost (48,196) (62,972) Deferred compensation (1,740) (2,190) Pension liability adjustment (3,713) (3,617) Total stockholders' deficit (97,062) (59,185) $ 1,669,139 $ 1,655,845 See accompanying notes to consolidated financial statements. UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows Nine months ended September 28, 1996 and September 30, 1995 (In thousands of dollars) Sept. 28, Sept. 30, Increase (decrease) to cash 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings (loss) $ (24,483) $ 135,017 Adjustments to reconcile net earnings to net cash provided by operations: Depreciation and amortization 63,477 61,122 Noncash interest 12,515 13,344 Deferred taxes (10,598) (70,894) Other 4,764 1,315 Changes in assets and liabilities, net 47,679 (31,861) Net cash provided by operations 93,354 108,043 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions (15,713) (84,279) Capital expenditures (29,107) (75,222) Other investing activities (3,429) (6,382) Net cash used by investing activities (48,249) (165,883) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of common stock, net 14,150 146,626 Proceeds (payments) on long-term borrowings, net 47,748 (135,992) Proceeds (payments) on short-term borrowings, net (96,889) 52,670 Dividends paid (12,967) (18,733) Other financing activities 2,122 (8,167) Net cash provided (used) by financing activities (45,836) 36,404 CASH Effect of exchange rates on cash 603 (982) Change in cash (128) (22,418) Fiscal year end cash adjustment (13,476) (68,326) Cash at beginning of period 30,437 123,176 Cash at end of period $ 16,833 $ 32,432 See accompanying notes to consolidated financial statements. CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Notes to Unaudited Consolidated Financial Statements Quarter Ended September 28, 1996 (In thousands of dollars) PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS On August 21, 1996, the Company merged with Uniroyal Chemical Corporation ("Uniroyal") in a common stock transaction that was accounted for on a pooling-of-interests basis. A total of 23,715,181 shares of the Company's common stock were exchanged for all of Uniroyal's outstanding common and preferred shares. The accompanying consolidated financial statements include the accounts of both companies and all information has been restated to reflect the combined operations of both companies. The results of operations previously reported by the Company and Uniroyal for the six months ended through June, 1996 are as follows: Net Sales Net Earnings Company $332,410 $19,180 Uniroyal 597,691 25,909 $930,101 $45,089 Because of differing fiscal year ends, the balance sheet for year-end 1995 includes the Company as of December 30, 1995 and Uniroyal as of October 1, 1995. The consolidated statements of operations and cash flows reflect the combined results of both companies for the actual three-month and nine-month periods indicated in such statements. Accordingly, Uniroyal's net loss for its first fiscal quarter ended December 31, 1995 of $8,368 has been charged to shareholders' equity and Uniroyal's change in cash for such quarter and the comparable quarter of 1994 have been reflected as fiscal year-end cash adjustments in the consolidated statements of cash flows. The information included in the foregoing consolidated financial statements is unaudited but reflects all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Included in accounts receivable are allowances for doubtful accounts of $6,567 in 1996 and $6,142 at year end 1995. Accumulated depreciation amounted to $349,223 in 1996 and $311,082 at year end 1995. Accumulated amortization of cost in excess of acquired net assets amounted to $35,413 in 1996 and $29,562 at year end 1995. Cash payments during the nine months ended September 28, 1996 and September 30, 1995 include interest of $68,872 and $71,119 and income taxes of $18,805 and $26,434, respectively. It is suggested that the interim consolidated financial statements be read in conjunction with the consolidated financial statements and notes included in the Company's and Uniroyal's 1995 Annual Reports on Form 10-K. CAPITAL STOCK As of September 28, 1996, there are 77,076,253 common shares issued at $.10 par value, of which 4,321,763 shares were held in the treasury. INVENTORIES Components of inventories are as follows: Sept. 28, Year end, 1996 1995 Finished goods $222,276 $218,440 Work in process 45,415 37,753 Raw materials and supplies 77,112 76,300 $344,803 $332,493 EARNINGS (LOSS) PER COMMON SHARE The computation of loss per common share for the quarter and nine months ended September 28, 1996 is based on the weighted average number of common shares outstanding. Common stock equivalents have been excluded because they are antidilutive for such periods. The computation of earnings per common share for the quarter and nine months ended September 30, 1995 is based on the weighted average number of common shares outstanding and common stock equivalents. A dual presentation of earnings (loss) per common share has not been made since there is no significant difference in earnings per share calculated on a primary or fully diluted basis. DEBT In August 1996, the Company entered into a revolving credit agreement in the amount of $600,000 of which $300,000 is available to the Company and $300,000 to Uniroyal. The agreement extends through August, 2001 and is secured in the case of Uniroyal's borrowings by a security interest in Uniroyal's accounts receivable and inventory. The agreement calls for interest based upon various options including a spread over LIBOR that varies according to certain debt ratios for the trailing four fiscal quarters and is currently at .875% over LIBOR. Borrowings under the revolving credit agreement amounted to $150,600 at September 28, 1996 and have an interest rate of 6.3%. MERGER AND RELATED COSTS Merger and related costs included in the consolidated statement of operations comprise principally severance and other personnel costs of $37,600, investment banking fees of $12,500, legal fees of $9,700, debt related fees of $8,300, facility consolidation costs of $6,400 and other costs of $10,500. PROVISION FOR ENVIRONMENTAL COSTS In the quarter ended September 28, 1996, the Company recorded a special provision for environmental costs in the amount of $30,000. The provision reflects the Company's evaluation, based on current information, of its obligation for environmental remediation activities. At September 28, 1996, the Company's reserves for such environmental liabilities amounted to $95,000. BUSINESS SEGMENT DATA Quarter Ended Sept. 28, Sept. 30, 1996 1995 SALES Specialty Chemicals $ 395,684 $ 387,240 Specialty Equipment and Controls 72,707 66,579 Total net sales $ 468,391 $ 453,819 OPERATING PROFIT (LOSS) Specialty Chemicals $ 57,939 $ 43,372 Specialty Equipment and Controls 4,605 9,697 Merger and related costs ( 85,000) - Special environmental provision ( 30,000) - General corporate expense ( 5,683) ( 5,755) Total operating profit (loss) $( 58,139) $ 47,314 Nine Months Ended Sept. 28, Sept. 30, 1996 1995 SALES Specialty Chemicals $1,186,393 $1,163,937 Specialty Equipment and Controls 212,099 206,618 Total net sales $1,398,492 $1,370,555 OPERATING PROFIT Specialty Chemicals $ 187,354 $ 173,647 Specialty Equipment and Controls 18,106 30,797 Merger and related costs (85,000) - Special environmental provision (30,000) - General corporate expense (16,843) ( 17,144) Total operating profit $ 73,617 $ 187,300 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THIRD QUARTER RESULTS Overview In August 1996, the Company merged with Uniroyal Chemical Corporation ("Uniroyal") in a common stock transaction that was accounted for on a pooling-of-interests basis. Accordingly, the consolidated financial information for all periods presented includes the combined accounts and results of operations of both the Company and Uniroyal. Consolidated net sales of $468.4 million for the third quarter of 1996 increased 3% from the comparable 1995 period due principally to the impact of acquisitions, primarily the German machinery business of Klockner ER-WE-PA GmbH acquired in January, 1996. International sales, including U.S. exports, increased as a percentage of total sales to 42% from 37% in the third quarter of 1995. The net loss of $69.6 million, or $.97 per common share, for the third quarter of 1996 compares to from net earnings of $11.8 million, or $.16 per common share, reported for the third quarter of 1995. The 1996 results include merger and related costs of $85.0 million ($68.1 million after-tax) and a special environmental provision of $30.0 million ($18.5 million after-tax). The 1995 results include a charge of $5.0 million ($3.3 million after-tax) relating to a cost reduction program. Adjusting for these items in both periods, earnings for the third quarter of 1996 would be $17.0 million, or $.24 per common share, compared to $15.1 million, or $.21 per common share, for the third quarter of 1995. Gross margin as a percentage of net sales increased to 35.1% from 34.6% in the third quarter of 1995 as a result of improved margins in all of the major business lines within the specialty chemicals segment except dyes. Consolidated operating profit, before merger and related costs of $85.0 million and a special environmental provision of $30.0 million, increased 9% to $56.9 million from $52.3 million in the prior year after adjustment for a charge of $5.0 million relating to a cost reduction program in 1995. All of the increase in consolidated operating profit is attributable to the specialty chemicals segment. Specialty Chemicals The Company's specialty chemicals segment reported sales of $395.7 million representing a 2% increase from the third quarter of 1995, primarily as a result of increased unit volume. An analysis of sales by major product class within the specialty chemicals segment follows. Chemicals and polymers sales of $124.1 million rose 2% from the 1995 third quarter attributable in part to higher selling prices for rubber chemicals implemented earlier in the year. In addition, increased volume in nitrile rubber contributed to the sales increase and more than offset lower EPDM sales attributable to lower pricing. Crop protection sales of $102.2 million were 1% lower versus the third quarter of 1995 primarily attributable to lower unit volume of insecticide sales resulting from low cotton infestation levels in the United States. International and seed treatment sales continued strong in the quarter. Specialty sales of $77.3 million increased 11% from the 1995 third quarter primarily due to improved market share, strong demand for lubricant additives and continued growth in the international markets for urethane prepolymers. Dyes sales of $65.6 million declined 1% from the comparable 1995 quarter due primarily to lower selling prices of approximately 3% offset in part by higher unit volume. Specialty ingredients sales of $26.5 million rose 2% primarily as a result of increased unit volume. Operating profit of $57.9 million in the third quarter of 1996 increased 20% versus $48.4 million in the prior year before a charge of $5.0 million relating to a cost reduction program in 1995. The improvement in operating profit resulted from an increase in unit volume, lower operating costs and improved product mix. Specialty Process Equipment and Controls The Company's specialty process equipment and controls segment reported sales of $72.7 million, representing a 9% increase from the third quarter of 1995. Approximately 19% was attributable to the incremental impact of acquisitions, primarily ER-WE-PA in Germany, offset partially by 4% from lower selling prices and 6% from lower unit volume reflecting primarily reduced domestic demand for extrusion systems. Operating profit for the third quarter of 1996 declined 53% to $4.6 million primarily attributable to lower selling prices and lower unit volume in the higher margin domestic business. The order backlog for extruders and related equipment at the end of the third quarter of 1996 amounted to $95 million (including ER-WE-PA backlog of $16 million) compared to $72 million at December 30, 1995. Other Selling, general and administrative expenses of $72.5 million decreased 2% due primarily to the cost reduction program charge of $5.0 million included in the third quarter of 1995, plus the benefits of that program in 1996, offset in part by the impact of acquisitions and inflation. Depreciation and amortization of $21.1 million approximated the 1995 third quarter. Research and development cost of $14.0 million decreased slightly from the third quarter of 1995. Merger and related costs of $85.0 million comprise principally severance and other personnel costs of $37.6 million, investment banking fees of $12.5 million, legal fees of $9.7 million, debt related fees of $8.3 million, facility consolidation costs of $6.4 million and other costs of $10.5 million. The special environmental provision of $30.0 million reflects the Company's evaluation, based on current information, of its obligation for environmental remediation activities. At September 28, 1996, the Company's reserves for such environmental liabilities totaled $95.0 million. Interest expense of $28.8 million was slightly higher than the comparable 1995 period. Other income of $483 thousand compares to $572 thousand of other expense in the third quarter of 1995. The effective tax rate excluding the tax impact of merger and related costs ($16.9 million) and the special environmental provision ($11.5 million) was 40.2% versus 36.3% in the comparable 1995 period. YEAR-TO-DATE RESULTS Overview Consolidated net sales of $1.4 billion for the first nine months of 1996 increased 2% from the comparable period in 1995. The increase is primarily attributable to the impact from acquisitions of 4% offset in part primarily by unit volume. The acquisitions include primarily the worldwide crop protection business of Solvay Duphar B.V. acquired in March of 1995 and the German extrusion machinery business of ER-WE-PA acquired in January of 1996. International sales, including U.S. exports, increased as a percentage of total sales to 41% from 36% for the nine months of 1995. The net loss of $24.5 million, or $.34 per common share, for the first nine months of 1996 compares to net earnings of $135.0 million, or $1.96 per common share, for the comparable 1995 period. The 1996 results include merger and related costs of $85.0 million ($68.1 million after-tax), a special environmental provision of $30.0 million ($18.5 million after-tax) and an extraordinary charge of $.5 million. The 1995 results include special tax credits of $78.9 million, an extraordinary charge of $8.3 million and other special income, net of $7.4 million ($4.4 million after-tax). Adjusting for these items in both periods, earnings for the nine months of 1996 would be $62.6 million, or $.87 per common share, compared to $60.0 million, or $.87 per common share, for the nine months of 1995. Gross margin as a percentage of net sales of 36.1% declined slightly from the 36.2% in the comparable period in 1995. Consolidated operating profit, before merger and related costs of $85.0 million and a special charge for environmental costs of $30.0 million, increased 3% to $188.6 million from $182.4 million in the prior year after adjustment for certain special income, net of $4.9 million in 1995. All of the increase in the consolidated operating profit is attributable to the specialty chemicals segment. Specialty Chemicals The Company's specialty chemicals segment reported sales of $1.2 billion representing a 2% increase from the comparable 1995 period. The increase is primarily attributable equally to the impact of acquisitions and improved pricing. An analysis of sales by major product class within the specialty chemicals segment follows. Chemicals and polymers sales of $374.1 million increased 2% from the first nine months of 1995 primarily attributable to improved selling prices in rubber chemicals and increased unit volume for nitrile rubber, partially offset by lower unit volume and pricing in the EPDM business. Crop protection sales of $304.5 million increased 5% from the comparable 1995 period due primarily to the acquisition of the crop protection business of Solvay Duphar B.V. in March of 1995. Lower insecticide sales due to lower infestation levels in the U.S. were offset primarily by increases in international sales and sales of seed treatment products. Specialties sales of $222.6 million increased 5% from the nine month period of 1995 primarily attributable to higher unit volume of urethane prepolymers and lubricant additives. Dyes sales of $206.2 million declined 6% from the first nine months of 1995 attributable primarily to lower selling prices of approximately 4% and lower unit volume. Specialty ingredients sales of $79.0 million increased 4% from the first nine months of 1995 primarily attributable to increased unit volume. Operating profit of $187.4 million for the first nine months of 1996 increased 11% versus $168.7 million in the prior year before certain special income, net, of $4.9 million in 1995. The improvement in operating profit resulted from an increase in unit volume, lower operating costs and improved product mix. Specialty Process Equipment and Controls The Company's specialty process equipment and controls segment reported sales of $212.1 million representing a 3% increase from the 1995 nine month period. Approximately 21% was attributable to the incremental impact of acquisitions, primarily ER-WE-PA in Germany, offset partially by 16% from lower unit volume reflecting primarily reduced domestic demand for extrusion systems and 2% from lower selling prices. Operating profit of $18.1 million decreased 41% versus the comparable 1995 period due primarily to lower selling prices and lower unit volume in the domestic business. Other Selling, general and administrative expenses of $212.2 million increased 1% versus the comparable period in 1995 due primarily to the impact of acquisitions and inflation offset in part by the cost reduction program charge of $5.0 million in 1995 and the benefits of that program in 1996. Depreciation and amortization of $63.5 million increased 4% versus the 1995 period primarily as a result of a higher fixed asset base including acquisitions. Research and development cost of $40.1 million increased 3% from the comparable period in 1995 primarily as a result of the impact of acquisitions and inflation. Interest expense of $86.8 million decreased 3% from 1995 primarily due to lower levels of indebtedness. Other income of $762 thousand decreased $3.3 million versus 1995 primarily due to lower interest income in 1996 and special licensing income reported in the prior year. The effective tax rate, excluding the tax impact of merger and related costs ($16.9 million) and a special charge for environmental costs ($11.5 million), was 39.0% versus 36.9% in the comparable 1995 period after adjustment for special tax credits of $78.9 million in 1995. LIQUIDITY AND CAPITAL RESOURCES The September 28, 1996 working capital balance of $347.9 million increased $71.5 million from $276.4 million at year end 1995. The current ratio increased to 1.9 from 1.7 at the end of 1995 primarily attributable to the decrease in notes payable. Days sales in receivables averaged 54 days for the first nine months of 1996 versus 55 days for all of 1995. Inventory turnover averaged 3.4 for the first nine months of 1996 versus 3.3 for all of 1995. Net cash provided by operations of $93.4 million decreased $14.7 million from the first nine months of 1995 primarily as a result of lower net earnings due to special charges. Net cash provided by operations and proceeds from the sale of common stock were used principally to finance acquisitions, fund capital expenditures, reduce indebtedness and pay cash dividends. The current dividend payout has been reduced to $.05 per share payable annually in May. The Company's debt to total capital percentage increased to 110% from 106% at year end 1995. Capital expenditures are expected to approximate $40 million in 1996 primarily for replacement needs and improvement of domestic and foreign facilities. The Company's long-term liquidity needs including such items as capital expenditures and debt repayments are ultimately expected to be financed from future operations. In August 1996, the Company entered into a revolving credit agreement in the amount of $600 million of which $300 million is available to the Company and $300 million to Uniroyal. The agreement extends through August, 2001 and is secured in the case of Uniroyal's borrowings by a security interest in Uniroyal's accounts receivable and inventory. The agreement calls for interest based upon various options including a spread over LIBOR that varies according to certain debt ratios for the trailing four fiscal quarters and is currently at .875% over LIBOR. Borrowings under the revolving credit agreement amounted to $151 million at September 28, 1996 and bore an interest rate of 6.3%. ENVIRONMENTAL MATTERS The Company is involved in claims, litigation, administrative proceedings and investigations of various types in several jurisdictions. A number of such matters involve claims for a material amount of damages and relate to or allege environmental liabilities, including clean-up costs associated with hazardous waste disposal sites, natural resource damages, property damage and personal injury. The Company and some of its subsidiaries have been identified by federal, state or local governmental agencies, and by other potentially responsible parties (each a "PRP") under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or comparable state statutes, as a PRP with respect to costs associated with waste disposal sites at various locations in the United States. In addition, the Company is involved with environmental remediation and compliance activities at some of its current and former sites in the United States and abroad. Each quarter, the Company evaluates and reviews estimates for future remediation and other costs to determine appropriate environmental reserve amounts. For each site a determination is made of the specific measures that are believed to be required to remediate the site, the estimated total cost to carry out the remediation plan, the portion of the total remediation costs to be borne by the Company and the anticipated time frame over which payments toward the remediation plan will occur. As a result of current information and analysis, the Company recorded a special provision in the amount of $30.0 million during the third quarter of 1996 for environmental remediation activities. As of September 28, 1996, the Company's reserves for such environmental liabilities totaled $95.0 million. These estimates may subsequently change should additional sites be identified, further remediation measures be required or undertaken, the interpretation of current laws and regulations be modified or additional environmental laws and regulations be enacted. The Company intends to assert all meritorious legal defenses and all other equitable factors which are available to it with respect to the above matters. The Company believes that the resolution of these environmental matters will not have a material adverse effect on the consolidated financial position of the Company. While the Company believes it is unlikely, the resolution of these environmental matters could have a material adverse effect on the Company's consolidated results of operation in any given year if a significant number of these matters are resolved unfavorably. PART II. OTHER INFORMATION: Item 4. Submission of Matters to a Vote of Security Holders (a) A Special Meeting of the Crompton & Knowles Stockholders was held on August 21, 1996. (b) Proxies for the Special Meeting were solicited pursuant to Regulation 14A under the Securities Exchange Act of 1934. (c) A brief description of the matter submitted to a vote at the Special Meeting, and the results of voting, are as follows: Approval and adoption of the Agreement and Plan of Merger, dated as of April 30, 1996 (the "Merger Agreement"), by and among the Company, Uniroyal Chemical Corporation, a Delaware corporation("Uniroyal"), and Tiger Merger Corp., a Delaware corporation and a wholly owned subsidiary of the Company, and the transactions contemplated thereby, which will also constitute approval of an amendment to Crompton's 1988 Long Term Incentive Plan to increase the number of shares of Crompton common stock, par value $0.10 per share, reserved for issuance thereunder by 6,000,000 shares, as fully described in the Joint Proxy Statement/Prospectus relating thereto. Abstained/ For Against Withheld 32,176,169 Shares 1,567,754 Shares 275,528 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Number Description (4)* Credit Agreement dated as of August 21, 1996, among the Registrant and four subsidiaries as borrowers, 15 initial lenders, 2 initial issuing banks, Citicorp Securities, Inc. as Arranger and Citicorp USA, Inc. as Agent and The Chase Manhattan Bank as Managing Agent. (11) Statement Re Computation of Per Share Earnings (27)* Financial Data Schedule (b) A report on Form 8K was filed by Crompton & Knowles Corporation on August 21, 1996. * A copy of this Exhibit is annexed to this report on Form 10Q provided to the Securities and Exchange Commission and the New York Stock Exchange. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CROMPTON & KNOWLES CORPORATION (Registrant) November 12, 1996 By: /s/Charles J. Marsden Charles J. Marsden Senior Vice President - Finance (Principal Financial Officer) November 12, 1996 By: /s/John T. Ferguson II Vice President, General Counsel and Secretary EX-4 2 CREDIT AGREEMENT EXHIBIT 4 $600,000,000 CREDIT AGREEMENT Dated as of August 21, 1996 Among CROMPTON & KNOWLES CORPORATION, CROMPTON & KNOWLES COLORS INCORPORATED, DAVIS-STANDARD CORPORATION, INGREDIENT TECHNOLOGY CORPORATION, and UNIROYAL CHEMICAL COMPANY, INC. as Borrowers and THE INITIAL LENDERS, INITIAL ISSUING BANKS AND SWING LINE BANK NAMED HEREIN as Initial Lenders, Initial Issuing Banks and Swing Line Bank and CITICORP SECURITIES, INC. as Arranger and CITICORP USA, INC. as Agent and THE CHASE MANHATTAN BANK as Managing Agent TABLE OF CONTENTS Section Page ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1.01. Certain Defined Terms 2 1.02. Computation of Time Periods 31 1.03. Accounting Terms 31 ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT 2.01. The Advances 32 2.02. Making the Advances 35 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit 38 2.04. Repayment of Advances 40 2.05. Termination or Reduction of the Commitments 42 2.06. Prepayments 43 2.07. Interest 44 2.08. Fees 45 2.09. Conversion of Advances 46 2.10. Increased Costs, Etc. 47 2.11. Payments and Computations 48 2.12. Taxes 50 2.13. Sharing of Payments, Etc. 53 2.14. Use of Proceeds 53 2.15. Defaulting Lenders 54 ARTICLE III CONDITIONS OF LENDING 3.01. Conditions Precedent to Initial Extension of Credit 56 3.02. Conditions Precedent to Each Borrowing and Issuance 64 3.03. Determinations Under Section 3.01 65 ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.01. Representations and Warranties of the Borrowers 65 ARTICLE V COVENANTS OF THE BORROWERS 5.01. Affirmative Covenants 71 5.02. Negative Covenants 77 5.03. Reporting Requirements 87 5.04. Financial Covenants 90 ARTICLE VI EVENTS OF DEFAULT 6.01. Events of Default 92 6.02. Actions in Respect of the Letters of Credit upon Default 96 6.03. Actions in Respect of Working Capital B-1 Commitments Reserved Pursuant to Section 2.01(g) 96 ARTICLE VII THE AGENT 7.01. Authorization and Action 97 7.02. Agent's Reliance, Etc. 97 7.03. Citicorp and Affiliates 98 7.04. Lender Party Credit Decision 98 7.05. Indemnification 98 7.06. Successor Agents 99 ARTICLE VIII MISCELLANEOUS 8.01. Amendments, Etc. 101 8.02. Notices, Etc. 102 8.03. No Waiver; Remedies 102 8.04. Costs and Expenses 102 8.05. Right of Set-off 104 8.06. Binding Effect 105 8.07. Assignments and Participations 105 8.08. Execution in Counterparts 108 8.09. No Liability of the Issuing Banks 108 8.10. Release of Collateral 109 8.11. Confidentiality 109 8.12. Jurisdiction, Etc. 110 8.13. Governing Law 110 8.14. Waiver of Jury Trial 111 SCHEDULES Schedule I- Commitments and Applicable Lending Offices Schedule II-Subsidiary Guarantors Schedule III-Minor Subsidiaries Schedule 2.03(e)-Existing Letters of Credit Schedule 3.01(d)-Surviving Debt Schedule 3.01(f)-Disclosed Litigation Schedule 3.01(k)(xx)-Local Counsel Schedule 4.01(b)-Subsidiaries Schedule 4.01(d)-Authorizations, Approvals, Actions, Notices and Filings Schedule 4.01(o)-Environmental Disclosure Schedule 4.01(t)-Existing Debt Schedule 4.01(w)-Material Subsidiaries Schedule 5.02(a)-Existing Liens Schedule 5.02(f)-Investments EXHIBITS Exhibit A-1-Form of Working Capital A Note Exhibit A-2-Form of Working Capital B-1 Note Exhibit A-3-Form of Working Capital B-2 Note Exhibit B-Form of Notice of Borrowing Exhibit C-Form of Assignment and Acceptance Exhibit D-1-Form of Crompton Security Agreement Exhibit D-2-Form of Uniroyal Security Agreement Exhibit D-3-Form of Louisiana Undertaking Exhibit E-1-Form of Parent Guaranty Exhibit E-2-Form of Subsidiary Guaranty Exhibit F-1-Form of Opinion of Counsel for the Loan Parties Exhibit F-2-Form of Opinion of General Counsel to Crompton Corp. and its Subsidiaries Exhibit F-3-Form of Opinion of General Counsel to Crompton Corp. and its Subsidiaries Exhibit G-Form of Solvency Certificate CREDIT AGREEMENT CREDIT AGREEMENT dated as of August 21, 1996 among CROMPTON & KNOWLES CORPORATION, a Massachusetts corporation ("Crompton Corp."), CROMPTON & KNOWLES COLORS INCORPORATED, a Delaware corporation ("Crompton Colors"), DAVIS-STANDARD CORPORATION, a Delaware corporation ("Davis-Standard"), INGREDIENT TECHNOLOGY CORPORATION, a Delaware corporation ("ITC" and, together with Crompton Corp., Crompton Colors and Davis-Standard, the "Crompton Borrowers"), UNIROYAL CHEMICAL COMPANY, INC., a New Jersey corporation ("Uniroyal" or the "Uniroyal Borrower" and, together with the Crompton Borrowers, the "Borrowers"), the banks, financial institutions and other institutional lenders listed on the signature pages hereof as the Initial Lenders (the "Initial Lenders"), the Initial Issuing Banks (the "Initial Issuing Banks") and the Swing Line Bank (as hereinafter defined), CITICORP SECURITIES, INC., as Arranger (the "Arranger"), CITICORP USA, INC. ("Citicorp"), as agent (together with any successor appointed pursuant to Article VII, the "Agent") for the Lender Parties (as hereinafter defined), and THE CHASE MANHATTAN BANK, as Managing Agent. PRELIMINARY STATEMENTS: (1) Each of Crompton Colors, Davis-Standard and ITC is a wholly owned Subsidiary (as hereinafter defined) of Crompton Corp. (2) Pursuant to the Agreement and Plan of Merger dated as of April 30, 1996 (as amended, supplemented or otherwise modified in accordance with its terms, to the extent permitted in accordance with the Loan Documents (as hereinafter defined), the "Merger Agreement") between Crompton Corp. and Uniroyal Chemical Corporation, a Delaware corporation ("Uniroyal Corp."), Crompton Corp. has agreed to consummate a merger (the "Merger") with Uniroyal Corp. through Tiger Merger Corp., a Delaware corporation and a wholly owned Subsidiary of Crompton Corp. in which Uniroyal Corp. will be the surviving corporation. (3) The Borrowers have requested that, immediately upon the consummation of the Merger, the Lender Parties lend to the Borrowers up to $600,000,000 to pay transaction fees and expenses incurred in connection with the Merger and that, from time to time, the Lender Parties lend to the Borrowers and issue Letters of Credit for the account of the Borrowers to redeem or repurchase public Debt (as hereinafter defined) of Uniroyal and Uniroyal Corp. and for other general corporate purposes, including, without limitation, to finance permitted acquisitions and Capital Expenditures (as hereinafter defined) and to provide working capital for the Borrowers and their respective Subsidiaries. The Lender Parties have indicated their willingness to agree to lend such amounts on the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Advance" means a Working Capital Advance, a Swing Line Advance or a Letter of Credit Advance. "Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term "control" (including the terms "controlling," "controlled by" and "under common control with") of a Person means the possession, direct or indirect, of the power to vote 10% or more of the Voting Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise. "Agent" has the meaning specified in the recital of parties to this Agreement. "Agent's Account" means the account of the Agent maintained by the Agent with Citibank at its office at 399 Park Avenue, New York, New York 10043, Account No. 3885-8061, Attention: Alexandra Lozovsky. "Applicable Lending Office" means, with respect to each Lender Party, such Lender Party's Domestic Lending Office in the case of a Base Rate Advance and such Lender Party's Eurodollar Lending Office in the case of a Eurodollar Rate Advance. "Applicable Margin" means (a) from the date hereof until December 31, 1996, 0.0% per annum for Base Rate Advances and 0.875% per annum for Eurodollar Rate Advances and (b) thereafter, a percentage per annum determined by reference to the Total Debt/EBITDA Ratio as set forth below: Total Debt/EBITDA Ratio Base Rate Advances Eurodollar Rate Advances Level I less than or equal to 2.0:1.0 0.0% 0.375% Level II greater than 2.0:1.0, but less than or equal to 2.5:1.0 0.0% 0.500% Level III greater than 2.5:1.0, but less than or equal to 3.0:1.0 0.0% 0.625% Level IV greater than 3.0:1.0, but less than or equal to 3.5:1.0 0.0% 0.750% Level V greater than 3.5:1.0, but less than or equal to 4.0:1.0 0.0% 0.875% Level VI greater than 4.0:1.0 0.0% 1.000% The Applicable Margin for each Advance shall be determined by reference to the Total Debt/EBITDA Ratio in effect from time to time; provided, however, that, at any date of determination of the Applicable Margin, if the relevant Financial Statements shall not have been delivered to the Agent and the Lender Parties by such date and Crompton Corp. shall have delivered to the Agent a certificate setting forth Crompton Corp.'s good faith estimate of the Total Debt/EBITDA Ratio for the immediately preceding Rolling Period, the Applicable Margin shall be determined by reference to such good faith estimate of the Total Debt/EBITDA Ratio, provided further that if, upon delivery by Crompton Corp. of such Financial Statements, such Financial Statements indicate that such estimate of the Total Debt/EBITDA Ratio was incorrect and, as a result thereof, the Applicable Margin was too low at such date of determination, such Applicable Margin shall be increased, as appropriate, with retroactive effect to the beginning of the Rolling Period during which such date of determination occurred, and the applicable Borrower shall immediately pay to the Agent for the account of the Lender Parties all additional interest due by reason of such increased Applicable Margin. "Applicable Percentage" means (a) from the date hereof until December 31, 1996, 0.25% per annum for commitment fees, 0.625% per annum for Trade Letter of Credit fees and 0.875% per annum for Standby Letter of Credit fees and (b) thereafter, a percentage per annum determined by reference to the Total Debt/EBITDA Ratio as set forth below: Total Debt/EBITDA Ratio Commitment Trade Letter Standby Letter Fees of Credit Fees of Credit Fees Level I less than or equal to 2.0:1.0 0.125% 0.125% 0.375% Level II greater than 2.0:1.0, but less than or equal to 2.5:1.0 0.150% 0.250% 0.500% Level III greater than 2.5:1.0, but less than or equal to 3.0:1.0 0.175% 0.375% 0.625% Level IV greater than 3.0:1.0, but less than or equal to 3.5:1.0 0.250% 0.500% 0.750% Level V greater than 3.5:1.0, but less than or equal to 4.0:1.0 0.250% 0.625% 0.875% Level VI greater than 4.0:1.0 0.375% 0.750% 1.000% The Applicable Percentage shall be determined by reference to the Total Debt/EBITDA Ratio in effect from time to time; provided, however, that, at any date of determination of the Applicable Percentage, if the relevant Financial Statements shall not have been delivered to the Agent and the Lender Parties by such date and Crompton Corp. shall have delivered to the Agent a certificate setting forth Crompton Corp.'s good faith estimate of the Total Debt/EBITDA Ratio for the immediately preceding Rolling Period, the Applicable Percentage shall be determined by reference to such good faith estimate of the Total Debt/EBITDA Ratio, provided further that if, upon delivery by Crompton Corp. of such Financial Statements, such Financial Statements indicate that such estimate of the Total Debt/EBITDA Ratio was incorrect and, as a result thereof, the Applicable Percentage was too low at such date of determination, such Applicable Percentage shall be increased, as appropriate, with retroactive effect to the beginning of the Rolling Period during which such date of determination occurred, and the applicable Borrower shall immediately pay to the Agent for the account of the Lender Parties all additional fees due by reason of such increased Applicable Percentage. "Appropriate Lender" means, at any time, with respect to (a) any of the Working Capital Facilities, a Lender that has a Commitment with respect to such Facility at such time, (b) either of the Letter of Credit Facilities, (i) any Issuing Bank that has a Commitment with respect to such Facility at such time and (ii) if other Working Capital Lenders have made Letter of Credit Advances pursuant to Section 2.03(c) that are outstanding at such time, each such other Working Capital Lender and (c) either of the Swing Line Facilities, (i) the Swing Line Bank and (ii) if other Working Capital Lenders have made Swing Line Advances pursuant to Section 2.02(b) that are outstanding at such time, each such other Working Capital Lender. "Arranger" has the meaning specified in the recital of parties to this Agreement. "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender Party and an Eligible Assignee, and accepted by the Agent, in accordance with Section 8.07 and in substantially the form of Exhibit C hereto. "Available Amount" of any Letter of Credit means, at any time, the maximum amount available to be drawn under such Letter of Credit at such time (assuming compliance at such time with all conditions to drawing). "Available Cash Flow" means, for any Fiscal Year, an amount equal to the sum of (a) Operating Cash Flow for the previous Fiscal Year, (b) the amount of Capital Expenditures permitted to be made in the previous Fiscal Year pursuant to Section 5.02(n) less the amount of Capital Expenditures actually made during the previous Fiscal Year, (c) the amount of dividends permitted to be paid by Crompton Corp. in the previous Fiscal Year pursuant to Section 5.02(g) less the amount of such dividends actually paid during the previous Fiscal Year, (d) the aggregate amount of Net Cash Proceeds from the sale or other disposition of assets pursuant to clause (iii) or (vi) (to the extent not used permanently to prepay Debt or to make Capital Expenditures) of Section 5.02(e) during the previous Fiscal Year and (e) $100,000,000. "Bank Hedge Agreement" means any Hedge Agreement required or permitted under Article V that is entered into by and between any Borrower and any Hedge Bank. "Base Rate" means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of: (a) the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank's base rate; (b) the sum (adjusted to the nearest 1/4 of 1% or, if there is no nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i) 1/2 of 1% per annum, plus (ii) the rate obtained by dividing (A) the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks, such three-week moving average (adjusted to the basis of a year of 360 days) being determined weekly on each Monday (or, if such day is not a Business Day, on the next succeeding Business Day) for the three-week period ending on the previous Friday by Citibank on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by Citibank from three New York certificate of deposit dealers of recognized standing selected by Citibank, by (B) a percentage equal to 100% minus the average of the daily percentages specified during such three-week period by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, but not limited to, any emergency, supplemental or other marginal reserve requirement) for Citibank with respect to liabilities consisting of or including (among other liabilities) three-month U.S. dollar non-personal time deposits in the United States, plus (iii) the average during such three-week period of the annual assessment rates estimated by Citibank for determining the then current annual assessment payable by Citibank to the Federal Deposit Insurance Corporation (or any successor) for insuring U.S. dollar deposits of Citibank in the United States; and (c) 1/2 of one percent per annum above the Federal Funds Rate. "Base Rate Advance" means an Advance that bears interest as provided in Section2.07(a)(i). "Borrower's Account" means, with respect to any Borrower, the account of such Borrower maintained by such Borrower with Citibank at its office at 399 Park Avenue, NewYork, NewYork 10043, which account is, in the case of Crompton Color, Account No. 4070-6438, in the case of Crompton Corp., Account No. 4070-6411, in the case of Davis-Standard, Account No. 4070-6462, in the case of ITC, Account No. 4070-6446, and in the case of Uniroyal, Account No. 4049-8376. "Borrowers" has the meaning specified in the recital of parties to this Agreement. "Borrowing" means a Working Capital Borrowing or a Swing Line Borrowing. "Business Day" means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market. "Capital Expenditures" means, for any Person for any period and without duplication, the sum of (a) all expenditures (including, without limitation, expenditures for environmental remediation) made, directly or indirectly, by such Person during such period for equipment, fixed or capital assets, real property or improvements, or for replacements or substitutions therefor or additions thereto, that have been or should be, in accordance with GAAP, reflected as additions to property, plant or equipment on a Consolidated balance sheet of such Person plus (b) the aggregate principal amount of all Debt (including Obligations under Capitalized Leases) assumed or incurred in connection with any such expenditures but excluding (x) expenditures made in connection with the replacement or restoration of assets, to the extent such replacement or restoration is financed out of insurance proceeds paid on account of the loss of or damage to the assets so replaced or restored and (y) interest capitalized during construction; provided, however, that notwithstanding anything contained herein, Capital Expenditures shall not include any Investments. "Capitalized Leases" means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases. "Cash Equivalents" means any of the following, to the extent owned by any Borrower or any of its Subsidiaries free and clear of all Liens and having a maturity of not greater than 90 days from the date of acquisition thereof: (a) readily marketable direct obligations of the Government of the United States or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the Government of the United States, (b) insured certificates of deposit of or time deposits with any commercial bank that is a Lender Party or a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause(c), is organized under the laws of the United States or any State thereof and has combined capital and surplus of at least $1 billion or (c)commercial paper in an aggregate amount of no more than $5,000,000 per issuer outstanding at any time, issued by any corporation organized under the laws of any State of the United States and rated at least "Prime-1" (or the then equivalent grade) by Moody's or "A-1" (or the then equivalent grade) by S&P. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time. "CERCLIS" means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S. Environmental Protection Agency. "Citibank" means Citibank, N.A. "Citibank Seoul" means Citibank, N.A., Seoul Branch. "Citicorp" has the meaning specified in the recital of parties to this Agreement. "Collateral" means all "Collateral" referred to in the Collateral Documents and all other property that is or is intended to be subject to any Lien in favor of the Agent for the benefit of the Secured Parties. "Collateral Documents" means the Security Agreement, the Louisiana Undertaking, the Blocked Account Letters (as defined in the Uniroyal Security Agreement) and any other agreement that creates or purports to create a Lien in favor of the Agent for the benefit of the Secured Parties. "Collateral Release Date" means the earliest of (a) the latest of (i) the Termination Date, (ii) the payment in full of the Obligations of the Loan Parties under the Loan Documents (other than any indemnities) and (iii) the termination or expiration of all Bank Hedge Agreements, (b) the date on which the Agent receives evidence satisfactory to it that a Debt Rating of (i) BBB- or above from S&P and Ba1 or above from Moody's or (ii) Baa3 or above from Moody's and BB+ or above from S&P, in either case shall have been in effect continuously for three months and is then in effect, provided that Crompton Corp. shall not have been placed on "credit watch" with negative implications (or any like designation by S&P or Moody's from time to time) by either S&P or Moody's during such three-month period, and (c) the date on which the Agent receives evidence satisfactory to it that the Total Debt/EBITDA Ratio for the two Rolling Periods then most recently ended shall be less than or equal to 3.0:1.0 and the Interest Coverage Ratio for the two Rolling Periods then most recently ended shall be greater than or equal to 3.0:1.0, provided that in any event no Default shall have occurred and shall be continuing on such date. "Commitment" means a Working Capital A Commitment, a Working Capital B-1 Commitment, a Working Capital B-2 Commitment or a Letter of Credit Commitment. "Confidential Information" means information that any Borrower furnishes to the Agent or any Lender Party in a writing designated as confidential but does not include any such information that is or becomes generally available to the public other than as a result of a breach by the Agent or any Lender Party of its obligations hereunder or that is or becomes available to the Agent or such Lender Party from a source other than a Borrower that is not, to the best of the Agent's or such Lender Party's knowledge, acting in violation of a confidentiality agreement with any Borrower. "Consolidated" refers to the consolidation of accounts in accordance with GAAP. "Conversion", "Convert" and "Converted" each refer to a conversion of Advances of one Type into Advances of the other Type pursuant to Section 2.09 or 2.10. "Crompton Borrowers" has the meaning specified in the recital of parties to this Agreement. "Crompton Colors" has the meaning specified in the recital of parties to this Agreement. "Crompton Corp." has the meaning specified in the recital of parties to this Agreement. "Crompton Guarantors" means the Subsidiaries of Crompton Corp. listed on Part I of Schedule II hereto and each other Subsidiary of Crompton Corp. (other than, in any event, Uniroyal Corp. and its Subsidiaries) that shall be required to execute and deliver a guaranty pursuant to Section 5.01(k) or 5.01(l)(v). "Crompton Security Agreement" has the meaning specified in Section 3.01(k)(vii). "Davis-Standard" has the meaning specified in the recital of parties to this Agreement. "Daylight Overdraft Bank" means Citibank. "Daylight Overdraft Documents" means those documents and agreements entered into from time to time by the Daylight Overdraft Bank and any Loan Party, evidencing or relating to the Debt referred to in Section 5.02(b)(iii)(F). "Debt" of any Person means, without duplication, (a)all indebtedness of such person for borrowed money, (b)all Obligations of such Person for the deferred purchase price of property or services (other than trade payables not overdue by more than 60 days (unless the subject of a bona fide dispute) incurred in the ordinary course of such Person's business), (c)all Obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d)all Obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e)all Obligations of such Person as lessee under Capitalized Leases, (f)all Obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities, (g)all Obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any capital stock of or other ownership or profit interest in such Person or any other Person or any warrants, rights or options to acquire such capital stock, valued, in the case of redeemable preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (h)all Obligations of such Person in respect of Hedge Agreements, (i)all Debt of others referred to in clauses(a) through (h) above or clause (j) below guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i)to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (ii)to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (iii)to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv)otherwise to assure a creditor against loss, and (j)all Debt referred to in clauses(a) through (i) above of another Person secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt. "Debt Rating" means, as of any date, the lowest rating that has been most recently announced by either S&P or Moody's, as the case may be, for any class of non-credit enhanced long-term senior unsecured debt issued by Crompton Corp. or, if applicable, the rating assigned in writing by either S&P or Moody's, as the case may be, as the "implied rating" of Crompton Corp.'s non-credit enhanced long-term senior unsecured Debt, provided that for purposes of the foregoing, if S&P or Moody's shall change the basis on which ratings are established, each reference to the Debt Rating announced by S&P or Moody's, as the case may be, shall refer to the then equivalent rating by S&P or Moody's, as the case may be. "Default" means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both. "Defaulted Advance" means, with respect to any Lender Party at any time, the portion of any Advance required to be made by such Lender Party to any Borrower pursuant to Section2.01 or 2.02 at or prior to such time which has not been made by such Lender Party or the Agent for the account of such Lender Party pursuant to Section 2.02(e) as of such time. In the event that a portion of a Defaulted Advance shall be deemed made pursuant to Section2.15(a), the remaining portion of such Defaulted Advance shall be considered a Defaulted Advance originally required to be made pursuant to Section 2.01 on the same date as the Defaulted Advance so deemed made in part. "Defaulted Amount" means, with respect to any Lender Party at any time, any amount required to be paid by such Lender Party to the Agent or any other Lender Party hereunder or under any other Loan Document at or prior to such time which has not been so paid as of such time, including, without limitation, any amount required to be paid by such Lender Party to (a) the Swing Line Bank pursuant to Section 2.02(b) to purchase a portion of a Swing Line Advance made by the Swing Line Bank, (b) any Issuing Bank pursuant to Section 2.03(c) to purchase a portion of a Letter of Credit Advance made by such Issuing Bank, (c) the Agent pursuant to Section 2.02(e) to reimburse the Agent for the amount of any Advance made by the Agent for the account of such Lender Party, (d)any other Lender Party pursuant to Section 2.13 to purchase any participation in Advances owing to such other Lender Party and (e)the Agent or any Issuing Bank pursuant to Section 7.05 to reimburse the Agent or such Issuing Bank for such Lender Party's ratable share of any amount required to be paid by the Lender Parties to the Agent or such Issuing Bank as provided therein. In the event that a portion of a Defaulted Amount shall be deemed paid pursuant to Section 2.15(b), the remaining portion of such Defaulted Amount shall be considered a Defaulted Amount originally required to be paid hereunder or under any other Loan Document on the same date as the Defaulted Amount so deemed paid in part. "Defaulting Lender" means, at any time, any Lender Party that, at such time, (a)owes a Defaulted Advance or a Defaulted Amount or (b)shall take any action or be the subject of any action or proceeding of a type described in Section 6.01(f). "Disclosed Litigation" has the meaning specified in Section 3.01(f). "Domestic Lending Office" means, with respect to any Lender Party, the office of such Lender Party specified as its "Domestic Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party, as the case may be, or such other office of such Lender Party as such Lender Party may from time to time specify to Crompton Corp. and the Agent. "Domestic Subsidiary" of Crompton Corp. means any Subsidiary of Crompton Corp. other than a Foreign Subsidiary. "EBITDA" means, for any period, net income (or net loss) calculated before the cumulative effect of accounting changes plus the sum of (a) interest expense, (b) income tax expense, (c) extraordinary losses included in net income, (d)depreciation expense, (e)amortization expense, (f)all foreign currency losses less foreign currency gains (but only to the extent such foreign currency gains do not exceed such foreign currency losses), (g) non-recurring expenses incurred in connection with the Merger in an amount not to exceed $70,000,000 in the aggregate and (h) non-recurring restructuring charges in an amount not to exceed $20,000,000 in any Fiscal Year or $50,000,000 in the aggregate after the Effective Date less extraordinary gains included in net income, determined on a Consolidated basis in accordance with GAAP for such period. "Effective Date" means the first date on which the conditions set forth in Article III are satisfied. "Eligible Assignee" means (a) with respect to any Facility (other than the Letter of Credit Facilities), (i)a Lender; (ii) an Affiliate of a Lender; and (iii)any other Person approved by the Agent and Crompton Corp., such approval not to be unreasonably withheld or delayed, and (b)with respect to the Letter of Credit Facilities, any Person approved by the Agent and Crompton Corp., such approval not to be unreasonably withheld or delayed; provided, however, that neither any Loan Party nor any Affiliate of a Loan Party shall qualify as an Eligible Assignee under this definition. "Environmental Action" means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, any Environmental Permit or Hazardous Material or arising from alleged injury or threat to health, safety or the environment, including, without limitation, (a)by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b)by any governmental or regulatory authority or third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief. "Environmental Law" means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, writ, judgment, injunction, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials. "Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental Law. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "ERISA Affiliate" means any Person that for purposes of Title IV of ERISA is a member of the controlled group of any Loan Party, or under common control with any Loan Party, within the meaning of Section 414 of the Internal Revenue Code. "ERISA Event" means (a) (i)the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC, or (ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without regard to subsection (2) of such Section) are met with respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding waiver with respect to a Plan; (c)the provision by the administrator of any Plan of a notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of any Loan Party or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e)the withdrawal by any Loan Party or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f)the conditions for imposition of a lien under Section 302(f) of ERISA shall have been met with respect to any Plan; (g)the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA; or (h)the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, such Plan. "Eurocurrency Liabilities" has the meaning specified in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Eurodollar Lending Office" means, with respect to any Lender Party, the Office of such Lender Party specified as its "Eurodollar Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender Party as such Lender Party may from time to time specify to Crompton Corp. and the Agent. "Eurodollar Rate" means, for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a)the rate per annum at which deposits in U.S. dollars are offered by the principal office of Citibank in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to Citibank's Eurodollar Rate Advance comprising part of such Borrowing to be outstanding during such Interest Period (or, if Citibank shall not have such a Eurodollar Rate Advance, $1,000,000) and for a period equal to such Interest Period by (b)a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period. "Eurodollar Rate Advance" means an Advance that bears interest as provided in Section2.07(a)(ii). "Eurodollar Rate Reserve Percentage" for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing means the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Advances is determined) having a term equal to such Interest Period. "Events of Default" has the meaning specified in Section 6.01. "Existing Debt" means Debt of the Borrowers and their respective Subsidiaries outstanding immediately before giving effect to the Merger. "Existing Letters of Credit" has the meaning specified in Section 2.03(e). "Facility" means any of any Working Capital Facility, either Swing Line Facility or either Letter of Credit Facility. "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. "Financial Statements" means, at any time, the most recent financial statements furnished or required to be furnished by Crompton Corp. to the Agent and the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be. "Fiscal Year" means a fiscal year of Crompton Corp. and its Consolidated Subsidiaries ending on or about December 31 in any calendar year. "Foreign Exchange Agreements" means currency swap agreements, currency future or option contracts and other similar agreements other than contracts or agreements under which neither any Loan Party nor any of its Subsidiaries has any obligation that may require payment in the future. "Foreign Subsidiary" of Crompton Corp. means (a) solely for purposes of Section 5.02(a), (b), (d), (e) and (f), Uniroyal Chemical International Company, Gustafson International Company and Uniroyal Chemical Company Limited and (b) in all instances, any Subsidiary of Crompton Corp. (i) which is not incorporated in the United States and (ii)(A) substantially all of whose assets and properties are located, or substantially all of whose business is carried on, outside of the United States or (B) substantially all of whose assets consist of Subsidiaries that are Foreign Subsidiaries as defined in clauses (i) and (ii)(A) of this definition. "GAAP" has the meaning specified in Section 1.03. "Guaranties" means the Parent Guaranty, the Subsidiary Guaranty and any other guaranty delivered pursuant to Section 5.01(k) or 5.01(l)(v). "Guarantors" means Crompton Corp. and the Subsidiary Guarantors. "Hazardous Materials" means (a)petroleum or petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b)any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law. "Hedge Agreements" means, collectively, Interest Rate Swap Agreements, Foreign Exchange Agreements and agreements designed to manage the total cost of publicly traded Debt obligations of the Borrowers. "Hedge Bank" means any Lender Party or any of its Affiliates in its capacity as a party to a Bank Hedge Agreement. "Indemnified Party" has the meaning specified in Section 8.04(b). "Information Memorandum" means the information memorandum dated June 1996 used by the Arranger in connection with the syndication of the Commitments. "Initial Extension of Credit" means the earlier to occur of the initial Borrowing and the initial issuance of a Letter of Credit hereunder. "Initial Issuing Banks" has the meaning specified in the recital of parties to this Agreement. "Initial Lenders" has the meaning specified in the recital of parties to this Agreement. "Insufficiency" means, with respect to any Plan, the amount, if any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA. "Interest Coverage Ratio" means, at any date of determination, the ratio of Consolidated EBITDA to interest payable on, and amortization of debt discount in respect of, all Debt (including, without limitation, the interest component of Capitalized Leases), in each case of Crompton Corp. and its Subsidiaries for the immediately preceding Rolling Period. "Interest Period" means, for each Eurodollar Rate Advance comprising part of the same Borrowing, the period commencing on the date of such Eurodollar Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance, and ending on the last day of the period selected by the Borrower requesting such Borrowing or Conversion pursuant to the provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by such Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months, as such Borrower may, upon notice received by the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that: (a)such Borrower may not select any Interest Period with respect to any Eurodollar Rate Advance under a Facility that ends after any principal repayment installment date for such Facility unless, after giving effect to such selection, the aggregate principal amount of Base Rate Advances and of Eurodollar Rate Advances having Interest Periods that end on or prior to such principal repayment installment date for such Facility shall be at least equal to the aggregate principal amount of Advances under such Facility due and payable on or prior to such date; (b)Interest Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Borrowing shall be of the same duration; (c)whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and (d)whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month. "Interest Rate Swap Agreements" means interest rate swap, cap or collar agreements, interest rate future or option contracts and other similar agreements other than contracts or agreements under which neither any Loan Party nor any of its Subsidiaries has any obligation that may require payment in the future. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "Inventory" has the meaning specified in Section 1 of the Uniroyal Security Agreement. "Investment" in any Person means any loan or advance to such Person, any purchase or other acquisition of all or substantially all of the assets of any business of such Person or any capital stock or other ownership or profit interest, warrants, rights, options, obligations or other securities of such Person, any capital contribution to such Person or any other investment in such Person, including, without limitation, any arrangement pursuant to which the investor incurs Debt of the types referred to in clause (i) or (j) of the definition of "Debt" in respect of such Person. "Issuing Banks" means (a) with respect to the Letter of Credit A Facility, each Initial Issuing Bank that has a Letter of Credit A Commitment set forth opposite its name on Schedule I hereto and any other Working Capital A Lender approved as an Issuing Bank by the Agent and, so long as no Default shall have occurred and be continuing, by Crompton Corp. (such approval not to be unreasonably withheld or delayed) and each Eligible Assignee to which a Letter of Credit A Commitment hereunder has been assigned pursuant to Section 8.07 and (b) with respect to the Letter of Credit B-1 Facility, each Initial Issuing Bank that has a Letter of Credit B-1 Commitment set forth opposite its name on Schedule I hereto and any other Working Capital B-1 Lender approved as an Issuing Bank by the Agent and, so long as no Default shall have occurred and be continuing, by Crompton Corp. (such approval not to be unreasonably withheld or delayed) and each Eligible Assignee to which a Letter of Credit B-1 Commitment hereunder has been assigned pursuant to Section 8.07 so long as, in each case, each such Lender or Eligible Assignee expressly agrees to perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as an Issuing Bank and notifies the Agent of its Applicable Lending Office and the amount of its Letter of Credit Commitment (which information shall be recorded by the Agent in the Register). "ITC" has the meaning specified in the recital of parties to this Agreement. "L/C Cash Collateral Account" has the meaning specified in the Security Agreement. "L/C Related Documents" has the meaning specified in Section 2.04(e)(ii). "Lender Party" means any Lender, any Issuing Bank or the Swing Line Bank. "Lenders" means the Initial Lenders and each Person that shall become a Lender hereunder pursuant to Section 8.07. "Letter of Credit" has the meaning specified in Section 2.01(f). "Letter of Credit A Commitment" means, with respect to any Issuing Bank at any time, the amount set forth opposite such Issuing Bank's name on Schedule I hereto under the caption "Letter of Credit A Commitment" or, if such Issuing Bank has entered into one or more Assignments and Acceptances, set forth for such Issuing Bank in the Register maintained by the Agent pursuant to Section 8.07(d) as such Issuing Bank's "Letter of Credit A Commitment", as such amount may be reduced at or prior to such time pursuant to Section 2.05. "Letter of Credit A Facility" means, at any time, an amount equal to the lesser of (a) the aggregate amount of the Issuing Banks' Letter of Credit A Commitments at such time and (b) $50,000,000, as such amount may be reduced at or prior to such time pursuant to Section 2.05. "Letter of Credit Advance" means an advance made by any Issuing Bank or any Appropriate Lender pursuant to Section 2.03(c). "Letter of Credit Agreement" has the meaning specified in Section 2.03(a). "Letter of Credit B-1 Commitment" means, with respect to any Issuing Bank at any time, the amount set forth opposite such Issuing Bank's name on Schedule I hereto under the caption "Letter of Credit B-1 Commitment" or, if such Issuing Bank has entered into one or more Assignments and Acceptances, set forth for such Issuing Bank in the Register maintained by the Agent pursuant to Section 8.07(d) as such Issuing Bank's "Letter of Credit B-1 Commitment", as such amount may be reduced at or prior to such time pursuant to Section 2.05. "Letter of Credit B-1 Facility" means, at any time, an amount equal to the lesser of (a) the aggregate amount of the Issuing Banks' Letter of Credit B-1 Commitments at such time and (b) $20,000,000, as such amount may be reduced at or prior to such time pursuant to Section 2.05. "Letter of Credit Commitment" means a Letter of Credit A Commitment or a Letter of Credit B-1 Commitment. "Letter of Credit Facility" means the Letter of Credit A Facility or the Letter of Credit B-1 Facility. "Lien" means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property. "Loan Documents" means (a) for purposes of this Agreement and the Notes and any amendment, supplement or modification hereof or thereof and for all other purposes other than for purposes of the Guaranties and the Collateral Documents, (i) this Agreement, (ii) the Notes, (iii) the Guaranties, (iv) the Collateral Documents and (v) each Letter of Credit Agreement and (b) for purposes of the Guaranties and the Collateral Documents, (i) this Agreement, (ii) the Notes, (iii) the Guaranties, (iv) the Collateral Documents, (v) each Letter of Credit Agreement, (vi) each Bank Hedge Agreement and (vii) the Daylight Overdraft Documents, in each case as amended, supplemented or otherwise modified from time to time. "Loan Parties" means the Borrowers and the Guarantors. "Louisiana Undertaking" has the meaning specified in Section 3.01(k)(xiv). "Margin Stock" has the meaning specified in Regulation U. "Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of (a) Crompton Corp. and its Subsidiaries, taken as a whole, (b) Crompton Corp. and its Subsidiaries (other than Uniroyal Corp. and its Subsidiaries), taken as a whole, or (c) Uniroyal and its Subsidiaries, taken as a whole. "Material Adverse Effect" means a material adverse effect on (a)the business, condition (financial or otherwise), operations, performance, properties or prospects of (i) Crompton Corp. and its Subsidiaries, taken as a whole, (ii) Crompton Corp. and its Subsidiaries (other than Uniroyal Corp. and its Subsidiaries), taken as a whole, or (iii) Uniroyal and its Subsidiaries, taken as a whole, (b)the rights and remedies of the Agent or any Lender Party under any Loan Document or Related Document or (c)the ability of any Loan Party to perform its Obligations under any Loan Document or Related Document to which it is or is to be a party. "Material Subsidiary" means, at any time, a Subsidiary of Crompton Corp. having at least $10,000,000 in assets on a Consolidated basis (determined as of the last day of the most recent fiscal quarter of Crompton Corp.) or at least $20,000,000 in revenues, on a Consolidated basis, for the 12-month period ending on the last day of the most recent fiscal quarter of Crompton Corp.; provided, however, that any Subsidiary formed or acquired after the last day of the most recent fiscal quarter of Crompton Corp. that would have been a Material Subsidiary if it had been formed or acquired on or prior to the last day of such fiscal quarter shall be a Material Subsidiary for purposes hereof from and after the date of its formation or acquisition. "Merger" has the meaning specified in the Preliminary Statements. "Merger Agreement" has the meaning specified in the Preliminary Statements. "Minor Subsidiaries" means those Subsidiaries of Crompton Corp. listed on Schedule III hereto. "Moody's" means Moody's Investors Service, Inc. "Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions. "Multiple Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a)is maintained for employees of any Loan Party or any ERISA Affiliate and at least one Person other than the Loan Parties and the ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. "Naugatuck" means Naugatuck Treatment Company, a Connecticut corporation. "Net Cash Proceeds" means, with respect to any sale, lease, transfer or other disposition of any asset or the sale or issuance of any Debt or capital stock or other ownership or profit interest, any securities convertible into or exchangeable for capital stock or other ownership or profit interest or any warrants, rights, options or other securities to acquire capital stock or other ownership or profit interest by any Person, the aggregate amount of cash received from time to time (whether as initial consideration or through payment or disposition of deferred consideration) by or on behalf of such Person in connection with such transaction after deducting therefrom only (without duplication) (a)reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder's fees and other similar fees and commissions and (b)the amount of taxes payable in connection with or as a result of such transaction, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid to a Person that is not an Affiliate of such Person or any Loan Party or any Affiliate of any Loan Party and are properly attributable to such transaction or to the asset that is the subject thereof; provided, however, that in the case of taxes that are deductible under clause (b) but for the fact that at the time of receipt of such cash, such taxes have not been actually paid or are not then payable, such Person may deduct an amount equal to the amount reserved in accordance with GAAP for such Person's reasonable estimate of such taxes, other than taxes for which such Person is indemnified; provided further, however, that if the amount deducted pursuant to clause (b) above is greater than the amount actually so paid, the amount of such excess shall constitute Net Cash Proceeds. "Note" means a Working Capital A Note, a Working Capital B-1 Note or a Working Capital B-2 Note. "Notice of Borrowing" has the meaning specified in Section 2.02(a). "Notice of Issuance" has the meaning specified in Section 2.03(a). "Notice of Swing Line Borrowing" has the meaning specified in Section 2.02(b). "NPL" means the National Priorities List under CERCLA. "Obligation" means, with respect to any Person, any payment, performance or other obligation of such Person of any kind, including, without limitation, any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in Section6.01(f). Without limiting the generality of the foregoing, the Obligations of each Loan Party under the Loan Documents include (a)the obligation to pay principal, interest, Letter of Credit commissions, charges, expenses, fees, attorneys' fees and disbursements, indemnities and other amounts payable by such Loan Party under any Loan Document and (b)the obligation of such Loan Party to reimburse any amount in respect of any of the foregoing that any Lender Party, in its sole discretion, may elect to pay or advance on behalf of such Loan Party. "OECD" means the Organization for Economic Cooperation and Development. "Operating Cash Flow" means, for any Fiscal Year, an amount equal to "cash flow from operations" for such Fiscal Year as set forth on the statement of cash flows furnished for such Fiscal Year pursuant to Section 5.03(c) less scheduled principal amounts of Debt paid or to be paid (other than in connection with the refinancing or replacement of any Surviving Debt) by Crompton Corp. and its Subsidiaries during such Fiscal Year. "Other Taxes" has the meaning specified in Section 2.12(b). "Parent Guaranty" has the meaning specified in Section 3.01(k)(ix). "PBGC" means the Pension Benefit Guaranty Corporation or any successor agency or entity performing substantially the same functions. "Permitted Liens" has the meaning specified in Section 5.02(a)(ii). "Person" means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "Plan" means a Single Employer Plan or a Multiple Employer Plan. "Pledged Debt" has the meaning specified in the Security Agreement. "Pro Rata Share" of any amount means (a) with respect to any Working Capital A Lender at any time, the product of such amount times a fraction the numerator of which is the amount of such Lender's Working Capital A Commitment at such time and the denominator of which is the Working Capital A Facility at such time, (b) with respect to any Working Capital B-1 Lender at any time, the product of such amount times a fraction the numerator of which is the amount of such Lender's Working Capital B-1 Commitment at such time and the denominator of which is the Working Capital B-1 Facility and (c) with respect to any Working Capital B-2 Lender at any time, the product of such amount times a fraction the numerator of which is the amount of such Lender's Working Capital B-2 Commitment at such time and the denominator of which is the Working Capital B-2 Facility. "Receivables" has the meaning specified in Section 1 of the Uniroyal Security Agreement. "Receivables Securitization" has the meaning specified in Section 5.02(e). "Register" has the meaning specified in Section 8.07(d). "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Related Documents" means the Merger Agreement, the Uniroyal Indentures, the Uniroyal Senior Notes, the Uniroyal Corp. Senior Notes, the Uniroyal Corp. Senior Subordinated Notes and the Uniroyal Corp. Subordinated Discount Notes and the Tax Agreement. "Required Lenders" means at any time Lenders owed or holding at least 51% of the sum of the aggregate Working Capital A Commitments, Working Capital B-1 Commitments and Working Capital B-2 Commitments at such time, or, if the Working Capital A Commitments, Working Capital B-1 Commitments and Working Capital B-2 Commitments have been terminated, 51% of the sum of the aggregate outstanding Working Capital A Advances, Working Capital B-1 Advances and Working Capital B-2 Advances at such time; provided, however, that if any Lender shall be a Defaulting Lender at such time, there shall be excluded from the determination of Required Lenders at such time the aggregate amount of the Working Capital A Commitment, Working Capital B-1 Commitment and Working Capital B-2 Commitment of such Lender at such time. "Responsible Officer" means any officer of any Loan Party or any of its Subsidiaries. "Rolling Period" means, with respect to any fiscal quarter of Crompton Corp. and its Subsidiaries, such fiscal quarter and the three consecutive immediately preceding fiscal quarters. "S&P" means Standard & Poor's Rating Group, a division of The McGraw-Hill Companies. "Secured Parties" means the Agent, the Lender Parties, the Hedge Banks and the Daylight Overdraft Bank. "Security Agreement" has the meaning specified in Section 3.01(k)(viii). "Seoul Guaranty" means the guaranty made by the Uniroyal Borrower in favor of Citibank Seoul, which has issued bank guaranties of the obligations of Unikor Chemical Inc. (Korea), a joint venture 50% owned by the Uniroyal Borrower, to certain banks organized and located in Korea. "Seoul Guaranty Amount" means a fluctuating dollar amount equal to the amount of the Uniroyal Borrower's obligations under the Seoul Guaranty, not to exceed $2,000,000 or such other amount (not to exceed, in any event, $5,000,000) as agreed from time to time by Citibank, the Uniroyal Borrower and the Agent. "Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or any ERISA Affiliate and no Person other than the Loan Parties and the ERISA Affiliates or (b)was so maintained and in respect of which any Loan Party or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. "Solvent" and "Solvency" mean, with respect to any Person on a particular date, that on such date (a)the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b)the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c)such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay such debts and liabilities as they mature and (d)such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "Specified Amount" means the aggregate amount of the Working Capital B-2 Commitments on the "Change of Control Purchase Date" (as defined in the Uniroyal Indentures), after giving effect to any reduction of such Commitments on or prior to such date pursuant to Section 2.05(a). "Standby Letter of Credit" means any Letter of Credit issued under either Letter of Credit Facility, other than a Trade Letter of Credit. "Subsidiary" of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a)the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b)the interest in the capital or profits of such partnership, joint venture or limited liability company or (c)the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries. "Subsidiary Guarantors" means the Crompton Guarantors and the Uniroyal Guarantors. "Subsidiary Guaranty" has the meaning specified in Section 3.01(k)(x). "Surviving Debt" has the meaning specified in Section 3.01(d). "Swing Line A Advance" means an advance made by (a) the Swing Line Bank pursuant to Section 2.01(d) or (b)any Working Capital A Lender pursuant to Section 2.02(b). "Swing Line A Borrowing" means a borrowing consisting of a Swing Line A Advance made by the Swing Line Bank. "Swing Line A Facility" has the meaning specified in Section 2.01(d). "Swing Line Advance" means a Swing Line A Advance or a Swing Line B-1 Advance. "Swing Line B-1 Advance" means an advance made by (a) the Swing Line Bank pursuant to Section 2.01(e) or (b)any Working Capital B-1 Lender pursuant to Section .02(b). "Swing Line B-1 Borrowing" means a borrowing consisting of a Swing Line B-1 Advance made by the Swing Line Bank. "Swing Line B-1 Facility" has the meaning specified in Section 2.01(e). "Swing Line Bank" means Citicorp. "Swing Line Borrowing" means a Swing Line A Borrowing or a Swing Line B-1 Borrowing. "Swing Line Facility" means the Swing Line A Facility or the Swing Line B-1 Facility. "Tax Agreement" means the Tax Agreement to be entered into by Crompton Corp. and some or all of its Subsidiaries. "Taxes" has the meaning specified in Section 2.12(a). "Termination Date" means the earlier of August 21, 2001 and the date of termination in whole of the Working Capital A Commitments, the Working Capital B-1 Commitments, the Working Capital B-2 Commitments and the Letter of Credit Commitments pursuant to Section 2.05 or 6.01. "Total Debt" of any Person means all Debt of such Person of the types referred to in clauses (a) though (e) of the definition of "Debt". "Total Debt/EBITDA Ratio" means, at any date of determination, the ratio of Consolidated Total Debt of Crompton Corp. and its Subsidiaries as at the end of the immediately preceding Rolling Period to Consolidated EBITDA of Crompton Corp. and its Subsidiaries for such immediately preceding Rolling Period. "Trade Letter of Credit" means any Letter of Credit that is issued under either Letter of Credit Facility for the benefit of a supplier of Inventory to any Borrower or any of its Subsidiaries to effect payment for such Inventory, the conditions to drawing under which include the presentation to the Issuing Bank that issued such Letter of Credit of negotiable bills of lading, invoices and related documents. "Type" refers to the distinction between Advances bearing interest at the Base Rate and Advances bearing interest at the Eurodollar Rate. "Uniroyal" has the meaning specified in the recital of parties to this Agreement. "Uniroyal Borrower" has the meaning specified in the recital of parties to this Agreement. "Uniroyal Corp." has the meaning specified in the Preliminary Statements. "Uniroyal Corp. Senior Notes" means the 10-1/2% Senior Notes due 2002 in an aggregate principal amount of $300,000,000, issued by Uniroyal Corp. pursuant to an Indenture dated as of February 8, 1993 between Uniroyal Corp. and State Street Bank and Trust Company, as Trustee, as amended, supplemented or otherwise modified from time to time. "Uniroyal Corp. Senior Subordinated Notes" means the 11% Senior Subordinated Notes due 2003 in an aggregate principal amount of $325,000,000, issued by Uniroyal Corp. pursuant to an Indenture dated as of February 8, 1993 between Uniroyal Corp. and United States Trust Company of New York, as Trustee, as amended, supplemented or otherwise modified from time to time. "Uniroyal Corp. Subordinated Discount Notes" means the 12% Subordinated Discount Notes due 2005 in an aggregate principal amount of $229,952,000, issued by Uniroyal Corp. pursuant to an Indenture dated as of February 8, 1993 between Uniroyal Corp. and Shawmut Bank Connecticut, National Association, as Trustee, as amended, supplemented or otherwise modified from time to time. "Uniroyal Guarantors" means Uniroyal Corp., the Subsidiaries of Uniroyal Corp. listed on Part II of Schedule II hereto and each other Subsidiary of Uniroyal Corp. that shall be required to execute and deliver a guaranty pursuant to Section 5.01(k). "Uniroyal Indentures" means the Indenture dated as of February 8, 1993 between Uniroyal Corp. and State Street Bank and Trust Company, as Trustee, pursuant to which the Uniroyal Corp. Senior Notes were issued, the Indenture dated as of February 8, 1993 between Uniroyal Corp. and United States Trust Company of New York, as Trustee, pursuant to which the Uniroyal Corp. Senior Subordinated Notes were issued, the Indenture dated as of February 8, 1993 between Uniroyal Corp. and Shawmut Bank Connecticut, National Association, as Trustee, pursuant to which the Uniroyal Corp. Subordinated Discount Notes were issued, and the Indenture dated as of September 1, 1993 between Uniroyal and State Street Bank and Trust Company, as Trustee, pursuant to which the Uniroyal Senior Notes were issued, in each case as amended, supplemented or otherwise modified or refinanced or refunded from time to time in accordance with its terms, to the extent permitted in accordance with the Loan Documents. "Uniroyal Security Agreement" has the meaning specified in Section 3.01(k)(viii). "Uniroyal Senior Notes" means the 9% Senior Notes issued by Uniroyal pursuant to an Indenture dated as of September 1, 1993 between Uniroyal and State Street Bank and Trust Company, as Trustee, as amended, supplemented or otherwise modified from time to time. "Unused Working Capital Commitment" means, with respect to any Working Capital Facility and any Working Capital Lender at any time, (a)such Lender's Working Capital Commitment under such Working Capital Facility at such time minus (b)the sum of (i)the aggregate principal amount of all Working Capital Advances, Swing Line Advances and Letter of Credit Advances made under such Working Capital Facility by such Lender (in its capacity as a Lender) and outstanding at such time, plus (ii)such Lender's Pro Rata Share of (A)the aggregate Available Amount of all Letters of Credit outstanding under such Working Capital Facility at such time, (B)the aggregate principal amount of all Letter of Credit Advances made under such Working Capital Facility by the Issuing Banks pursuant to Section 2.03(c) and outstanding at such time, (C)the aggregate principal amount of all Swing Line Advances made under such Working Capital Facility by the Swing Line Bank pursuant to Section 2.01(d) or (e), as the case may be, and outstanding at such time and (D) in the case of the Working Capital B-1 Facilities, the amount of the Working Capital B-1 Commitments then reserved pursuant to Section 2.01(g). "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. "Welfare Plan" means a welfare plan, as defined in Section 3(1) of ERISA, that is maintained for employees of any Loan Party or in respect of which any Loan Party could have liability. "Withdrawal Liability" has the meaning specified in Part I of Subtitle E of Title IV of ERISA. "Working Capital A Advance" has the meaning specified in Section 2.01(a). "Working Capital A Borrowing" means a borrowing consisting of simultaneous Working Capital A Advances of the same Type made by the Working Capital A Lenders. "Working Capital A Commitment" means, with respect to any Working Capital A Lender at any time, the amount set forth opposite such Lender's name on Schedule I hereto under the caption "Working Capital A Commitment" or, if such Lender has entered into one or more Assignments and Acceptances, set forth for such Lender in the Register maintained by the Agent pursuant to Section8.07(d) as such Lender's "Working Capital A Commitment", as such amount may be reduced at or prior to such time pursuant to Section2.05. "Working Capital A Facility" means, at any time, the aggregate amount of the Working Capital A Lenders' Working Capital A Commitments at such time. "Working Capital A Lender" means any Lender that has a Working Capital A Commitment. "Working Capital A Note" means a promissory note of any Crompton Borrower payable to the order of any Working Capital A Lender, in substantially the form of Exhibit A-1 hereto, evidencing the aggregate indebtedness of such Borrower to such Lender resulting from the Working Capital A Advances made by such Lender. "Working Capital Advance" means a Working Capital A Advance, a Working Capital B-1 Advance or a Working Capital B-2 Advance. "Working Capital B-1 Advance" has the meaning specified in Section 2.01(b). "Working Capital B-1 Borrowing" means a borrowing consisting of simultaneous Working Capital B-1 Advances of the same Type made by the Working Capital B-1 Lenders. "Working Capital B-1 Commitment" means, with respect to any Working Capital B-1 Lender at any time, the amount set forth opposite such Lender's name on Schedule I hereto under the caption "Working Capital B-1 Commitment" or, if such Lender has entered into one or more Assignments and Acceptances, set forth for such Lender in the Register maintained by the Agent pursuant to Section 8.07(d) as such Lender's "Working Capital B-1 Commitment", as such amount may be reduced at or prior to such time pursuant to Section 2.05. "Working Capital B-1 Facility" means, at any time, the aggregate amount of the Working Capital B-1 Lenders' Working Capital B-1 Commitments at such time. "Working Capital B-1 Lender" means any Lender that has a Working Capital B-1 Commitment. "Working Capital B-1 Note" means a promissory note of the Uniroyal Borrower payable to the order of any Working Capital B-1 Lender, in substantially the form of Exhibit A-2 hereto, evidencing the aggregate indebtedness of the Uniroyal Borrower to such Lender resulting from the Working Capital B-1 Advances made by such Lender. "Working Capital B-2 Advance" has the meaning specified in Section 2.01(c). "Working Capital B-2 Borrowing" means a borrowing consisting of simultaneous Working Capital B-2 Advances of the same Type made by the Working Capital B-2 Lenders. "Working Capital B-2 Commitment" means, with respect to any Working Capital B-2 Lender at any time, the amount set forth opposite such Lender's name on Schedule I hereto under the caption "Working Capital B-2 Commitment" or, if such Lender has entered into one or more Assignments and Acceptances, set forth for such Lender in the Register maintained by the Agent pursuant to Section 8.07(d) as such Lender's "Working Capital B-2 Commitment", as such amount may be reduced at or prior to such time pursuant to Section 2.05. "Working Capital B-2 Facility" means, at any time, the aggregate amount of the Working Capital B-2 Lenders' Working Capital B-2 Commitments at such time. "Working Capital B-2 Lender" means any Lender that has a Working Capital B-2 Commitment. "Working Capital B-2 Note" means a promissory note of the Uniroyal Borrower payable to the order of any Working Capital B-2 Lender, in substantially the form of Exhibit A-3 hereto, evidencing the aggregate indebtedness of the Uniroyal Borrower to such Lender resulting from the Working Capital B-2 Advances made by such Lender. "Working Capital Borrowing" means a Working Capital A Borrowing, a Working Capital B-1 Borrowing or a Working Capital B-2 Borrowing. "Working Capital Facility" means a Working Capital A Facility, a Working Capital B-1 Facility or a Working Capital B-2 Facility. "Working Capital Lender" means a Working Capital A Lender, a Working Capital B-1 Lender or a Working Capital B-2 Lender. SECTION 1.02. Computation of Time Periods. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(f), in the case of Crompton Corp. and its Subsidiaries (other than Uniroyal Corp. and its Subsidiaries), and Section 4.01(g), in the case of Uniroyal Corp. and its Subsidiaries ("GAAP"). ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT SECTION 2.01. The Advances. (a) The Working Capital A Advances. Each Working Capital A Lender severally agrees, on the terms and conditions hereinafter set forth, to make advances (each a "Working Capital A Advance") to any Crompton Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date in an amount for each such Advance not to exceed such Lender's Unused Working Capital Commitment under the Working Capital A Facility at such time. Each Working Capital A Borrowing shall be in an aggregate amount of $5,000,000 (or, if the Swing Line Bank shall, in its sole discretion, decline to make a Swing Line A Advance on such Business Day after a request therefor by such Crompton Borrower pursuant to Section 2.01(d), $1,000,000) or an integral multiple of $1,000,000 in excess thereof and shall consist of Working Capital A Advances made simultaneously by the Working Capital A Lenders ratably according to their Working Capital A Commitments. Within the limits of each Working Capital A Lender's Unused Working Capital Commitment under the Working Capital A Facility in effect from time to time, the Crompton Borrowers may borrow under this Section 2.01(a), prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(a). (b)The Working Capital B-1 Advances. Each Working Capital B-1 Lender severally agrees, on the terms and conditions hereinafter set forth, to make advances (each a "Working Capital B-1 Advance") to the Uniroyal Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date in an amount for each such Advance not to exceed such Lender's Unused Working Capital Commitment under the Working Capital B-1 Facility at such time. Each Working Capital B-1 Borrowing shall be in an aggregate amount of $5,000,000 (or, if the Swing Line Bank shall, in its sole discretion, decline to make a Swing Line B-1 Advance on such Business Day after a request therefor by the Uniroyal Borrower pursuant to Section 2.01(e), $1,000,000) or an integral multiple of $1,000,000 in excess thereof and shall consist of Working Capital B-1 Advances made simultaneously by the Working Capital B-1 Lenders ratably according to their Working Capital B-1 Commitments. Within the limits of each Working Capital B-1 Lender's Unused Working Capital Commitment under the Working Capital B-1 Facility in effect from time to time, the Uniroyal Borrower may borrow under this Section 2.01(b), prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(b). (c)The Working Capital B-2 Advances. Each Working Capital B-2 Lender severally agrees, on the terms and conditions hereinafter set forth, to make advances (each a "Working Capital B-2 Advance") to the Uniroyal Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date in an amount for each such Advance not to exceed such Lender's Unused Working Capital Commitment under the Working Capital B-2 Facility at such time. Each Working Capital B-2 Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and shall consist of Working Capital B-2 Advances made simultaneously by the Working Capital B-2 Lenders ratably according to their Working Capital B-2 Commitments. Within the limits of each Working Capital B-2 Lender's Unused Working Capital Commitment under the Working Capital B-2 Facility in effect from time to time, the Uniroyal Borrower may borrow under this Section 2.01(c), prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(c). (d)The Swing Line A Advances. Any Crompton Borrower may request the Swing Line Bank to make, and the Swing Line Bank may, if in its sole discretion it elects to do so, make, on the terms and conditions hereinafter set forth, Swing Line A Advances to such Crompton Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date (i) in an aggregate amount not to exceed at any time outstanding $10,000,000 (the "Swing Line A Facility") and (ii) in an amount for each such Swing Line A Borrowing not to exceed the aggregate of the Unused Working Capital Commitments under the Working Capital A Facility of the Working Capital A Lenders at such time. No Swing Line A Advance shall be used for the purpose of funding the payment of principal of any other Swing Line A Advance. Each Swing Line A Borrowing shall be in an amount of $500,000 or an integral multiple of $100,000 in excess thereof and shall be made as a Base Rate Advance. Within the limits of the Swing Line A Facility and within the limits referred to in clause (ii) above, so long as the Swing Line Bank, in its sole discretion, elects to make Swing Line A Advances, the Crompton Borrowers may borrow under this Section 2.01(d), repay pursuant to Section 2.04(d) or prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(d). (e)The Swing Line B-1 Advances. The Uniroyal Borrower may request the Swing Line Bank to make, and the Swing Line Bank may, if in its sole discretion it elects to do so, make, on the terms and conditions hereinafter set forth, Swing Line B-1 Advances to the Uniroyal Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date (i) in an aggregate amount not to exceed at any time outstanding $10,000,000 (the "Swing Line B-1 Facility") and (ii) in an amount for each such Swing Line Borrowing not to exceed the aggregate of the Unused Working Capital Commitments under the Working Capital B-1 Facility of the Working Capital B-1 Lenders at such time. No Swing Line B-1 Advance shall be used for the purpose of funding the payment of principal of any other Swing Line B-1 Advance. Each Swing Line B-1 Borrowing shall be in an amount of $500,000 or an integral multiple of $100,000 in excess thereof and shall be made as a Base Rate Advance. Within the limits of the Swing Line B-1 Facility and within the limits referred to in clause (ii) above, so long as the Swing Line Bank, in its sole discretion, elects to make Swing Line B-1 Advances, the Uniroyal Borrower may borrow under this Section 2.01(e), repay pursuant to Section 2.04(d) or prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(e). (f)Letters of Credit. Each Issuing Bank severally agrees, on the terms and conditions hereinafter set forth, to issue letters of credit (together with the Existing Letters of Credit referred to in Section 2.03(e), the "Letters of Credit") for the account of any Borrower from time to time on any Business Day during the period from the date hereof until 30 days before the Termination Date (i) in an aggregate Available Amount for all Letters of Credit issued by such Issuing Bank not to exceed at any time such Issuing Bank's Letter of Credit Commitment at such time under the Facility which the applicable Notice of Issuance specifies as the Facility under which such Letter of Credit is to be issued, (ii) in an Available Amount for each such Letter of Credit to be issued under the Letter of Credit A Facility not to exceed the lesser of (x) the Letter of Credit A Facility at such time and (y) the Unused Working Capital Commitments of the Working Capital A Lenders under the Working Capital A Facility at such time and (iii) in an Available Amount for each such Letter of Credit to be issued under the Letter of Credit B-1 Facility not to exceed the lesser of (x) the Letter of Credit B-1 Facility at such time and (y) the Unused Working Capital Commitments of the Working Capital B-1 Lenders under the Working Capital B-1 Facility at such time. Letters of Credit issued under the Letter of Credit A Facility shall be issued for the account of any Crompton Borrower and Letters of Credit issued under the Letter of Credit B-1 Facility shall be issued for the account of the Uniroyal Borrower. No Letter of Credit shall have an expiration date (including all rights of the applicable Borrower or the beneficiary to require renewal) later than the earlier of 30 days before the Termination Date and (A) in the case of a Standby Letter of Credit, one year after the date of issuance thereof and (B) in the case of a Trade Letter of Credit, 90 days after the date of issuance thereof. Within the limits of the Letter of Credit A Facility or the Letter of Credit B-1 Facility, as the case may be, and subject to the limits referred to above, the Crompton Borrowers or the Uniroyal Borrower, as the case may be, may request the issuance of Letters of Credit under this Section 2.01(f), repay any Letter of Credit Advances resulting from drawings thereunder pursuant to Section 2.03(c) and request the issuance of additional Letters of Credit under this Section 2.01(f). (g)Set Aside of Working Capital B-1 Commitments in Respect of the Seoul Guaranty. Each Working Capital B-1 Lender's Pro Rata Share of an aggregate amount of Working Capital B-1 Commitments equal to the Seoul Guaranty Amount shall be reserved to ensure that sufficient funds may be made available to the Uniroyal Borrower for payment to Citibank Seoul of the Seoul Guaranty Amount as the same becomes due and payable. The amount of Working Capital B-1 Commitments reserved under this Section 2.01(g) shall equal the Seoul Guaranty Amount from time to time. SECTION 2.02. Making the Advances. (a) Except as otherwise provided in Section 2.02(b) or 2.03, each Borrowing shall be made on notice, given not later than 11:00 A.M. (New York City time) on (x) the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurodollar Rate Advances, or (y) the first Business Day prior to the date of the proposed Borrowing (or, if the Swing Line Bank shall, in its sole discretion, decline to make a Swing Line Advance on the date of the proposed Borrowing after a request therefor by a Borrower pursuant to Section 2.01(d) or (e), the date of the proposed Borrowing) in the case of a Borrowing consisting of Base Rate Advances, by any Borrower to the Agent, which shall give to each Appropriate Lender prompt notice thereof by telex or telecopier. Each such notice of a Borrowing (a "Notice of Borrowing") shall be by telephone, confirmed immediately in writing, or telex or telecopier, in substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such Borrowing, (ii) Facility under which such Borrowing is to be made, (iii) Type of Advances comprising such Borrowing, (iv) aggregate amount of such Borrowing and (v) in the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such Advance. Each Appropriate Lender shall, before 11:00 A.M. (New York City time) on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Agent at the Agent's Account, in same day funds, such Lender's ratable portion of such Borrowing in accordance with the respective Commitments under the applicable Facility of such Lender and the other Appropriate Lenders. After the Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent will make such funds available to the relevant Borrower by crediting the relevant Borrower's Account. (b)Each Swing Line Borrowing shall be made on notice, given not later than 11:00 A.M. (New York City time) on the date of the proposed Swing Line Borrowing, by any Borrower to the Swing Line Bank and the Agent. Each such notice of a Swing Line Borrowing (a "Notice of Swing Line Borrowing") shall be by telephone, confirmed immediately in writing, or telex or telecopier, specifying therein the requested (i) date of such Borrowing, (ii) amount of such Borrowing and (iii) maturity of such Borrowing (which maturity shall be no later than the seventh day after the requested date of such Borrowing). If, in its sole discretion, it elects to make the requested Swing Line Advance, the Swing Line Bank will make the amount thereof available to the Agent at the Agent's Account, in same day funds. After the Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent will make such funds available to the relevant Borrower by crediting the relevant Borrower's Account. Upon written demand by the Swing Line Bank with an outstanding Swing Line A Advance or Swing Line B-1 Advance, as the case may be, with a copy of such demand to the Agent, each other Working Capital A Lender or Working Capital B-1 Lender, as the case may be, shall purchase from the Swing Line Bank, and the Swing Line Bank shall sell and assign to each such other Working Capital A Lender or Working Capital B-1 Lender, as the case may be, such other Lender's Pro Rata Share of such outstanding Swing Line A Advance or Swing Line B-1 Advance, as the case may be, as of the date of such demand, by making available for the account of its Applicable Lending Office to the Agent for the account of the Swing Line Bank, by deposit to the Agent's Account, in same day funds, an amount equal to the portion of the outstanding principal amount of such Swing Line A Advance or Swing Line B-1 Advance, as the case may be, to be purchased by such Lender. Each Borrower hereby agrees to each such sale and assignment. Each Working Capital A Lender agrees to purchase its Pro Rata Share of an outstanding Swing Line A Advance and each Working Capital B-1 Lender agrees to purchase its Pro Rata Share of an outstanding Swing Line B-1 Advance on (i) the Business Day on which demand therefor is made by the Swing Line Bank, provided that notice of such demand is given not later than 11:00 A.M. (New York City time) on such Business Day or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time. Upon any such assignment by the Swing Line Bank to any other Working Capital Lender of a portion of a Swing Line Advance, the Swing Line Bank represents and warrants to such other Lender that the Swing Line Bank is the legal and beneficial owner of such interest being assigned by it, but makes no other representation or warranty and assumes no responsibility with respect to such Swing Line Advance, the Loan Documents or any Loan Party. If and to the extent that any Working Capital A Lender or Working Capital B-1 Lender, as the case may be, shall not have so made the amount of such Swing Line A Advance or Swing Line B-1 Advance, as the case may be, available to the Agent, such Lender agrees to pay to the Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Swing Line Bank until the date such amount is paid to the Agent, at the Federal Funds Rate. If such Lender shall pay to the Agent such amount for the account of the Swing Line Bank on any Business Day, such amount so paid in respect of principal shall constitute a Swing Line Advance made by such Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Swing Line Advance made by the Swing Line Bank shall be reduced by such amount on such Business Day. (c)Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrowers may not select Eurodollar Rate Advances for any Borrowing if the aggregate amount of such Borrowing is less than $5,000,000 or if the obligation of the Appropriate Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.09 or Section 2.10 and (ii) the Working Capital Advances may not be outstanding as part of more than 12 separate Borrowings. (d)Each Notice of Borrowing and Notice of Swing Line Borrowing shall be irrevocable and binding on the Borrower giving such notice. In the case of any Borrowing that the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower giving such notice shall indemnify each Appropriate Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not made on such date. (e)Unless the Agent shall have received notice from an Appropriate Lender prior to the date of any Borrowing under a Facility under which such Lender has a Commitment that such Lender will not make available to the Agent such Lender's ratable portion of such Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Borrowing in accordance with subsection (a) or (b) of this Section 2.02 and the Agent may, in reliance upon such assumption, make available to the relevant Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Agent, such Lender and the relevant Borrower severally agree to repay or pay to the Agent forthwith on demand such corresponding amount and to pay interest thereon, for each day from the date such amount is made available to such Borrower until the date such amount is repaid or paid to the Agent, at (i) in the case of the Borrowers, the interest rate applicable at such time under Section 2.07 to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall pay to the Agent such corresponding amount, such amount so paid shall constitute such Lender's Advance as part of such Borrowing for all purposes. (f)The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing. (g)The Uniroyal Borrower hereby irrevocably authorizes and appoints Citibank as its attorney-in-fact to execute and deliver a Notice of Borrowing in accordance with Section 2.02(a) or a Notice of Swing Line Borrowing in accordance with Section 2.02(b), on behalf of and in the name of the Uniroyal Borrower, for a Working Capital B-1 Borrowing or Swing Line B-1 Borrowing, as the case may be, in an aggregate amount not to exceed the Seoul Guaranty Amount. The Uniroyal Borrower hereby authorizes each of Citibank and Citibank Seoul, in its discretion, to hold the proceeds of such Borrowing as collateral for, and/or then or at any time thereafter to apply such proceeds in whole or in part against the Obligations of the Uniroyal Borrower under the Seoul Guaranty. Each Working Capital B-1 Lender severally agrees, notwithstanding any other term or condition of this Agreement (including, without limitation, any non-fulfillment of any of the conditions specified in Article III), to make an Advance to or for the account of the Uniroyal Borrower for the purposes specified in the proviso to the first sentence of Section 2.14 hereof, on any Business Day during the period from the date hereof until the Termination Date, in an aggregate amount not to exceed such Lender's Pro Rata Share of the amount of Working Capital B-1 Commitments then reserved pursuant to Section 2.01(g); provided that, after giving effect to the Advances made pursuant to this Section 2.02(g), the sum of the aggregate principal amount of Working Capital B-1 Advances, Swing Line B-1 Advances and Letter of Credit B-1 Advances then outstanding plus the Available Amount of all Letters of Credit issued under the Letter of Credit B-1 Facility and then outstanding shall not exceed the aggregate Working Capital B-1 Commitments. SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit. (a) Request for Issuance. Each Letter of Credit shall be issued upon notice, given not later than 11:00 A.M. (New York City time) on the second Business Day prior to the date of the proposed issuance of such Letter of Credit, by any Crompton Borrower to any Issuing Bank under the Letter of Credit A Facility or by the Uniroyal Borrower to any Issuing Bank under the Letter of Credit B-1 Facility, which shall give to the Agent and each Appropriate Lender prompt notice thereof by telex or telecopier. Each such notice of issuance of a Letter of Credit (a "Notice of Issuance") shall be by telephone, confirmed immediately in writing, or telex or telecopier, specifying therein the requested (A) date of such issuance (which shall be a Business Day), (B) Available Amount of such Letter of Credit, (C) expiration date of such Letter of Credit, (D) name and address of the beneficiary of such Letter of Credit, (E) Facility under which such Letter of Credit is to be issued and (F) form of such Letter of Credit, and shall be accompanied by such application and agreement for letter of credit as such Issuing Bank may specify to the relevant Borrower for use in connection with such requested Letter of Credit (a "Letter of Credit Agreement"). If (x) the requested form of such Letter of Credit is acceptable to such Issuing Bank in its sole discretion and (y) it has not received notice of objection to such issuance from Appropriate Lenders holding at least 51% of the Working Capital A Commitments or Working Capital B-1 Commitments, as the case may be, such Issuing Bank will, upon fulfillment of the applicable conditions set forth in Article III, make such Letter of Credit available to the Borrower requesting the issuance of such Letter of Credit at its office referred to in Section 8.02 or as otherwise agreed with such Borrower in connection with such issuance. In the event and to the extent that the provisions of any Letter of Credit Agreement shall conflict with this Agreement, the provisions of this Agreement shall govern. (b)Letter of Credit Reports. Each Issuing Bank shall furnish (A) to the Agent on the first Business Day of each week a written report summarizing issuance and expiration dates of Letters of Credit issued by such Issuing Bank during the previous week and drawings during such week under all Letters of Credit issued by such Issuing Bank, (B) to each Appropriate Lender on the first Business Day of each month a written report summarizing issuance and expiration dates of Letters of Credit issued by such Issuing Bank during the preceding month and drawings during such month under all Letters of Credit issued by such Issuing Bank and (C) to the Agent and each Appropriate Lender on the first Business Day of each calendar quarter a written report setting forth the average daily aggregate Available Amount during the preceding calendar quarter of all Letters of Credit issued by such Issuing Bank. (c)Drawing and Reimbursement. The payment by any Issuing Bank of a draft drawn under any Letter of Credit shall constitute for all purposes of this Agreement the making by such Issuing Bank of a Letter of Credit Advance, which shall be a Base Rate Advance, in the amount of such draft. Upon payment by any Issuing Bank of a draft drawn under any Letter of Credit, such Issuing Bank shall give prompt notice thereof to the applicable Borrower and the Agent. Upon written demand by any Issuing Bank with an outstanding Letter of Credit Advance, with a copy of such demand to the Agent, each Appropriate Lender shall purchase from such Issuing Bank, and such Issuing Bank shall sell and assign to each such Appropriate Lender, such Lender's Pro Rata Share of such outstanding Letter of Credit Advance as of the date of such purchase, by making available for the account of its Applicable Lending Office to the Agent for the account of such Issuing Bank, by deposit to the Agent's Account, in same day funds, an amount equal to the portion of the outstanding principal amount of such Letter of Credit Advance to be purchased by such Lender. Promptly after receipt thereof, the Agent shall transfer such funds to such Issuing Bank. Each Borrower hereby agrees to each such sale and assignment. Each Appropriate Lender agrees to purchase its Pro Rata Share of an outstanding Letter of Credit Advance on (i) the Business Day on which demand therefor is made by the Issuing Bank which made such Advance, provided notice of such demand is given not later than 11:00 A.M. (New York City time) on such Business Day or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time. Upon any such assignment by an Issuing Bank to any Appropriate Lender of a portion of a Letter of Credit Advance, such Issuing Bank represents and warrants to such Appropriate Lender that such Issuing Bank is the legal and beneficial owner of such interest being assigned by it, free and clear of any liens, but makes no other representation or warranty and assumes no responsibility with respect to such Letter of Credit Advance, the Loan Documents or any Loan Party. If and to the extent that any Appropriate Lender shall not have so made the amount of such Letter of Credit Advance available to the Agent, such Appropriate Lender agrees to pay to the Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by such Issuing Bank until the date such amount is paid to the Agent, at the Federal Funds Rate for its account or the account of such Issuing Bank, as applicable. If such Lender shall pay to the Agent such amount for the account of such Issuing Bank on any Business Day, such amount so paid in respect of principal shall constitute a Letter of Credit Advance made by such Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Letter of Credit Advance made by such Issuing Bank shall be reduced by such amount on such Business Day. (d)Failure to Make Letter of Credit Advances. The failure of any Lender to make the Letter of Credit Advance to be made by it on the date specified in Section 2.03(c) shall not relieve any other Lender of its obligation hereunder to make its Letter of Credit Advance on such date, but no Lender shall be responsible for the failure of any other Lender to make the Letter of Credit Advance to be made by such other Lender on such date. (e)Existing Letters of Credit. Pursuant to the Credit Agreement dated as of December 21, 1995 (the "1995 Credit Agreement") among the Uniroyal Borrower, the lender parties party thereto and Citicorp as agent for the lender parties thereunder, the "Issuing Bank" thereunder issued "Letters of Credit" (such Letters of Credit as are outstanding under the 1995 Credit Agreement on the Effective Date and set forth on Schedule 2.03(e) hereto being the "Existing Letters of Credit") for the account of the Uniroyal Borrower. Effective as of the Effective Date: (i) the "Issuing Bank" under the 1995 Credit Agreement will be deemed to have sold and transferred, and each Working Capital B-1 Lender hereunder will be deemed to have purchased and received, without further action on the part of any party, an undivided interest and participation in such Existing Letters of Credit, based on such Working Capital B-1 Lender's Pro Rata Share of the Working Capital B-1 Facility; and (ii) the Existing Letters of Credit will be deemed to be Letters of Credit hereunder. SECTION 2.04. Repayment of Advances. (a) Working Capital A Advances. Each Crompton Borrower shall repay to the Agent for the ratable account of the Working Capital A Lenders on the Termination Date the aggregate principal amount of the Working Capital A Advances made to such Crompton Borrower and then outstanding. (b)Working Capital B-1 Advances. The Uniroyal Borrower shall repay to the Agent for the ratable account of the Working Capital B-1 Lenders on the Termination Date the aggregate principal amount of the Working Capital B-1 Advances then outstanding. (c)Working Capital B-2 Advances. The Uniroyal Borrower shall repay to the Agent for the ratable account of the Working Capital B-2 Lenders on the Termination Date the aggregate outstanding principal amount of the Working Capital B-2 Advances then outstanding. (d)Swing Line Advances. Each Borrower shall repay to the Agent for the account of the Swing Line Bank and each other Working Capital Lender that has made a Swing Line Advance the outstanding principal amount of each Swing Line Advance made by each of them and owing by such Borrower on the earlier of the maturity date specified in the applicable Notice of Swing Line Borrowing (which maturity shall be no later than the seventh day after the requested date of such Borrowing) and the Termination Date. (e)Letter of Credit Advances. (i) Each Borrower shall repay to the Agent for the account of each Issuing Bank and each other Working Capital Lender that has made a Letter of Credit Advance on the earlier of the second Business Day following the date on which such Letter of Credit is drawn and the Termination Date the outstanding principal amount of each Letter of Credit Advance made by each of them. (ii)The Obligations of each Borrower under this Agreement, any Letter of Credit Agreement and any other agreement or instrument relating to any Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement, such Letter of Credit Agreement and such other agreement or instrument under all circumstances, including, without limitation, the following circumstances: (A)any lack of validity or enforceability of any Loan Document, any Letter of Credit Agreement, any Letter of Credit or any other agreement or instrument relating thereto (all of the foregoing being, collectively, the "L/C Related Documents"); (B)any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations of any Borrower in respect of any L/C Related Document or any other amendment or waiver of or any consent to departure from all or any of the L/C Related Documents; (C)the existence of any claim, set-off, defense or other right that any Borrower may have at any time against any beneficiary or any transferee of a Letter of Credit (or any Persons for whom any such beneficiary or any such transferee may be acting), any Issuing Bank or any other Person, whether in connection with the transactions contemplated by the L/C Related Documents or any unrelated transaction; (D)any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (E)payment by any Issuing Bank under a Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; (F)any exchange, release or non-perfection of any Collateral or other collateral, or any release or amendment or waiver of or consent to departure from any Guaranty or any other guarantee, for all or any of the Obligations of any Borrower in respect of the L/C Related Documents; or (G)any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Borrower, any Guarantor or any other guarantor. SECTION 2.05. Termination or Reduction of the Commitments. (a) Optional. Crompton Corp. may, on its own behalf and on behalf of the other Borrowers, upon at least two Business Days' notice to the Agent, terminate in whole or reduce in part the unused portion of either Letter of Credit Facility, either Swing Line Facility or the Unused Working Capital Commitments under any Working Capital Facility; provided, however, that each partial reduction of a Facility (i) shall be in an aggregate amount of $10,000,000 or an integral multiple of $5,000,000 in excess thereof and (ii) shall be made ratably among the Appropriate Lenders in accordance with their Commitments with respect to such Facility. (b)Mandatory. (i) The aggregate Working Capital B-2 Commitments of the Working Capital B-2 Lenders shall be automatically and permanently reduced, on a pro rata basis, on the following dates in the amounts indicated: Date Amount December 31, 1997 5% of the Specified Amount December 31, 1998 10% of the Specified Amount December 31, 1999 15% of the Specified Amount (ii) The Letter of Credit A Facility or Letter of Credit B-1 Facility, as the case may be, shall be permanently reduced from time to time on the date of each reduction in the Working Capital A Facility or Working Capital B-1 Facility, as the case may be, by the amount, if any, by which the amount of the Letter of Credit A Facility or Letter of Credit B-1 Facility, as the case may be, exceeds the Working Capital A Facility or Working Capital B-1 Facility, as the case may be, after giving effect to such reduction of such Working Capital Facility. (iii) The Swing Line A Facility or Swing Line B-1 Facility, as the case may be, shall be permanently reduced from time to time on the date of each reduction in the Working Capital A Facility or Working Capital B-1 Facility, as the case may be, by the amount, if any, by which the amount of the Swing Line A Facility or Swing Line B-1 Facility, as the case may be, exceeds the Working Capital A Facility or Working Capital B-1 Facility, as the case may be, after giving effect to such reduction of such Working Capital Facility. (iv) Upon the date of receipt by Crompton Corp. or any of its Subsidiaries of the Net Cash Proceeds from the sale or other disposition of assets pursuant to clause (vii) of Section 5.02(e), the Working Capital Facilities shall be automatically and permanently reduced, on a pro rata basis, by the amount of such Net Cash Proceeds to the extent required under such clause (vii). SECTION 2.06. Prepayments. (a) Optional. Each Borrower may, upon at least one Business Day's notice in the case of Base Rate Advances and three Business Days' notice in the case of Eurodollar Rate Advances, in each case to the Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given such Borrower shall, prepay the outstanding aggregate principal amount of the Advances comprising part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the aggregate principal amount prepaid; provided, however, that (x) each partial prepayment shall be in an aggregate principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) if any prepayment of a Eurodollar Rate Advance is made on a date other than the last day of an Interest Period for such Advance, such Borrower shall also pay any amounts owing pursuant to Section 8.04(c). (b)Mandatory. (i) The Crompton Borrowers shall, on each Business Day, prepay an aggregate principal amount of the Working Capital A Advances comprising part of the same Borrowings, the Letter of Credit A Advances and the Swing Line A Advances equal to the amount by which (A) the sum of the aggregate principal amount of (x) the Working Capital A Advances, (y) the Letter of Credit A Advances and (z) the Swing Line A Advances then outstanding plus the aggregate Available Amount of all Letters of Credit then outstanding under the Working Capital A Facility exceeds (B) the Working Capital A Facility on such Business Day. (ii)The Uniroyal Borrower shall, on each Business Day, prepay an aggregate principal amount of the Working Capital B-1 Advances comprising part of the same Borrowings, the Letter of Credit B-1 Advances and the Swing Line B-1 Advances equal to the amount by which (A) the sum of the aggregate principal amount of (x) the Working Capital B-1 Advances, (y) the Letter of Credit B-1 Advances and (z) the Swing Line B-1 Advances then outstanding plus the aggregate Available Amount of all Letters of Credit then outstanding under the Working Capital B-1 Facility exceeds (B) the Working Capital B-1 Facility on such Business Day. (iii)The Uniroyal Borrower shall, on each Business Day, prepay an aggregate principal amount of the Working Capital B-2 Advances comprising part of the same Borrowings equal to the amount by which the aggregate principal amount of the Working Capital B-2 Advances then outstanding exceeds the Working Capital B-2 Facility on such Business Day. (iv)The Crompton Borrowers shall, on each Business Day, pay to the Agent for deposit in the relevant L/C Cash Collateral Account an amount sufficient to cause the aggregate amount on deposit in such Account to equal the amount by which the aggregate Available Amount of all Letters of Credit then outstanding under the Working Capital A Facility exceeds the Letter of Credit A Facility on such Business Day. (v)The Uniroyal Borrower shall, on each Business Day, pay to the Agent for deposit in the relevant L/C Cash Collateral Account an amount sufficient to cause the aggregate amount on deposit in such Account to equal the amount by which the aggregate Available Amount of all Letters of Credit then outstanding under the Letter of Credit B-1 Facility exceeds the Letter of Credit B-1 Facility on such Business Day. (vi)Prepayments of the Working Capital A Facility or Working Capital B-1 Facility made pursuant to clause (i) or (ii) above shall be first applied to prepay Letter of Credit Advances then outstanding under such Facility until such Advances are paid in full, second applied to prepay Swing Line Advances then outstanding under such Facility until such Advances are paid in full, third applied to prepay Working Capital Advances then outstanding under such Facility comprising part of the same Borrowings until such Advances are paid in full and fourth deposited in the relevant L/C Cash Collateral Account to cash collateralize 100% of the Available Amount of the Letters of Credit then outstanding under such Facility. (vii)All prepayments under this subsection (b) shall be made together with accrued interest to the date of such prepayment on the principal amount prepaid. SECTION 2.07. Interest. (a) Scheduled Interest. Each Borrower shall pay interest on the unpaid principal amount of each Advance made to such Borrower and owing to each Lender from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum: (i)Base Rate Advances. During such periods as such Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (A) the Base Rate in effect from time to time plus (B) the Applicable Margin in effect from time to time, payable in arrears quarterly on the first day of each October, January, April and July during such periods and on the date such Base Rate Advance shall be Converted or paid in full. (ii)Eurodollar Rate Advances. During such periods as such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of (A) the Eurodollar Rate for such Interest Period for such Advance plus (B) the Applicable Margin in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full. (b)Default Interest. Upon the occurrence and during the continuance of an Event of Default, each Borrower shall pay interest on (i) the unpaid principal amount of each Advance made to such Borrower and owing to each Lender, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by law, the amount of any interest, fee or other amount payable hereunder that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid, in the case of interest, on the Type of Advance on which such interest has accrued pursuant to clause (a)(i) or (a)(ii) above, and, in all other cases, on Base Rate Advances pursuant to clause (a)(i) above. (c)Notice of Interest Rate. Promptly after receipt of a Notice of Borrowing pursuant to Section 2.02(a), the Agent shall give notice to the relevant Borrower and each Appropriate Lender of the applicable interest rate determined by the Agent for purposes of clause (a)(i) or (ii). SECTION 2.08. Fees. (a) Commitment Fee. The Borrowers jointly and severally agree to pay to the Agent for the account of the Lenders a commitment fee, from August 15, 1996 in the case of each Initial Lender and from the effective date specified in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender until the Termination Date, payable in arrears on the date of the initial Borrowing hereunder, thereafter quarterly on the first Business Day of each quarter, commencing August 1, 1996, and on the Termination Date, at a rate per annum equal to the Applicable Percentage in effect from time to time on the average daily Unused Working Capital Commitments of such Lender (without giving effect to clause (b)(ii)(D) of the definition of "Unused Working Capital Commitment"); provided, however, that any commitment fee accrued with respect to any of the Commitments of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrowers so long as such Lender shall be a Defaulting Lender except to the extent that such commitment fee shall otherwise have been due and payable by the Borrowers prior to such time; and provided further that no commitment fee shall accrue on any of the Commitments of a Defaulting Lender so long as such Lender shall be a Defaulting Lender. (b)Letter of Credit Fees, Etc. (i) The Borrowers jointly and severally agree to pay to the Agent for the account of each Working Capital A Lender and each Working Capital B-1 Lender a commission, payable quarterly in arrears on the first Business Day of each January, April, July and October, commencing October 1, 1996, and on the earliest to occur of the full drawing, expiration, termination or cancellation of any Letter of Credit and on the Termination Date, on such Lender's Pro Rata Share of the average daily aggregate Available Amount during such quarter of all Letters of Credit issued under the Working Capital A Facility and Working Capital B-1 Facility, respectively, and outstanding from time to time at the rate per annum equal to the Applicable Percentage in effect from time to time. (ii)Any Borrower giving a Notice of Issuance shall pay to each Issuing Bank, for its own account, such commissions, issuance fees, fronting fees, transfer fees and other fees and charges in connection with the issuance or administration of the requested Letter of Credit as such Borrower and such Issuing Bank shall agree. (c)Agent's Fees. The Borrowers jointly and severally agree to pay to the Agent for its own account such fees as may from time to time be agreed between the Borrowers and the Agent. SECTION 2.09. Conversion of Advances. (a) Optional. Any Borrower may on any Business Day, upon notice given to the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.07 and 2.10, Convert all or any portion of the Advances of one Type made to such Borrower comprising the same Borrowing into Advances of the other Type; provided, however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for such Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(c), no Conversion of any Advances shall result in more separate Borrowings than permitted under Section 2.02(c) and each Conversion of Advances comprising part of the same Borrowing under any Facility shall be made ratably among the Appropriate Lenders in accordance with their Commitments under such Facility. Each such notice of Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Advances to be Converted and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for such Advances. Each notice of Conversion shall be irrevocable and binding on the Borrower giving such notice. (b)Mandatory. (i) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $5,000,000, such Advances shall automatically Convert into Base Rate Advances. (ii)If any Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances made to such Borrower in accordance with the provisions contained in the definition of "Interest Period" in Section 1.01, the Agent will forthwith so notify such Borrower and the Appropriate Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance. (iii)Upon the occurrence and during the continuance of any Event of Default, (x) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (y) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended. SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Lender Party of agreeing to make or of making, funding or maintaining Eurodollar Rate Advances or of agreeing to issue or of issuing or maintaining Letters of Credit or of agreeing to make or of making or maintaining Letter of Credit Advances (excluding for purposes of this Section 2.10 any such increased costs resulting from (i) Taxes or Other Taxes (as to which Section 2.12 shall govern) and (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which such Lender Party is organized or has its Applicable Lending Office or any political subdivision thereof), then the Borrowers jointly and severally agree to pay from time to time, upon demand by such Lender Party (with a copy of such demand to the Agent), to the Agent for the account of such Lender Party additional amounts sufficient to compensate such Lender Party for such increased cost; provided, however, that, before making any such demand, each Lender Party agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Applicable Lending Office if the making of such a designation would avoid the need for, or reduce the amount of, such increased cost and would not, in the reasonable judgment of such Lender Party, be otherwise disadvantageous to such Lender Party. A certificate as to the amount of such increased cost, submitted to the Borrowers by such Lender Party, shall be conclusive and binding for all purposes, absent manifest error. (b)If any Lender Party determines that either (i) the enactment of or any change in or in the interpretation of any law or regulation or (ii) the compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender Party or any corporation controlling such Lender Party and that the amount of such capital is increased by or based upon the existence of such Lender Party's commitment to lend or to issue Letters of Credit hereunder and other commitments of such type or the issuance or maintenance of the Letters of Credit (or similar contingent obligations), then, upon demand by such Lender Party (with a copy of such demand to the Agent), the Borrowers jointly and severally agree to pay to the Agent for the account of such Lender Party, from time to time as specified by such Lender Party, additional amounts sufficient to compensate such Lender Party in the light of such circumstances, to the extent that such Lender Party reasonably determines such increase in capital to be allocable to the existence of such Lender Party's commitment to lend or to issue Letters of Credit hereunder or to the issuance or maintenance of any Letters of Credit; provided, however, that, before making any such demand, each Lender Party agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Applicable Lending Office if the making of such a designation would avoid the need for, or reduce the amount of, such additional amounts payable under this subsection (b) and would not, in the reasonable judgment of such Lender Party, be otherwise disadvantageous to such Lender Party. A certificate as to such amounts submitted to the Borrowers by such Lender Party shall be conclusive and binding for all purposes, absent manifest error. (c)If, with respect to any Eurodollar Rate Advances made or to be made under any Facility, Appropriate Lenders holding at least 51% of the Commitments under such Facility notify the Agent that the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Lenders of making, funding or maintaining their Eurodollar Rate Advances for such Interest Period, the Agent shall forthwith so notify the Borrowers and the Appropriate Lenders, whereupon (i) each such Eurodollar Rate Advance under such Facility will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrowers that such Lenders have determined that the circumstances causing such suspension no longer exist. (d)Notwithstanding any other provision of this Agreement, if the introduction of or any change in or in the interpretation of any law or regulation shall make it unlawful, or any central bank or other governmental authority shall assert that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder, then, on notice thereof and demand therefor by such Lender to the Borrowers through the Agent, (i) each Eurodollar Rate Advance under each Facility under which such Lender has a Commitment will automatically, upon such demand, Convert into a Base Rate Advance and (ii) the obligation of the Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrowers that such Lender has determined that the circumstances causing such suspension no longer exist. SECTION 2.11. Payments and Computations. (a) Each Borrower shall make each payment hereunder and under the Notes, irrespective of any right of counterclaim or set-off (except as otherwise provided in Section 2.15), not later than 11:00 A.M. (New York City time) on the day when due in U.S. dollars to the Agent at the Agent's Account in same day funds. The Agent will promptly thereafter cause like funds to be distributed (i) if such payment by such Borrower is in respect of principal, interest, commitment fees or any other Obligation then payable hereunder and under the Notes to more than one Lender Party, to such Lender Parties for the account of their respective Applicable Lending Offices ratably in accordance with the amounts of such respective Obligations then payable to such Lender Parties and (ii) if such payment by such Borrower is in respect of any Obligation then payable hereunder to one Lender Party, to such Lender Party for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 8.07(d), from and after the effective date of such Assignment and Acceptance, the Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender Party assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (b)If the Agent receives funds for application to the Obligations under the Loan Documents under circumstances for which the Loan Documents do not specify the Advances or the Facility to which, or the manner in which, such funds are to be applied, the Agent may, but shall not be obligated to, elect to distribute such funds to each Lender Party ratably in accordance with such Lender Party's proportionate share of the principal amount of all outstanding Advances and the Available Amount of all Letters of Credit then outstanding, in repayment or prepayment of such of the outstanding Advances or other Obligations owed to such Lender Party, and for application to such principal installments, as the Agent shall direct. (c)Each Borrower hereby authorizes each Lender Party, if and to the extent payment owed to such Lender Party is not made when due hereunder or, in the case of a Lender, under the Note held by such Lender, to charge from time to time against any or all of such Borrower's accounts with such Lender Party any amount so due. (d)All computations of interest based on the Base Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate or the Federal Funds Rate and of fees and Letter of Credit commissions shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, fees or commissions are payable. Each determination by the Agent of an interest rate, fee or commission hereunder shall be conclusive and binding for all purposes, absent manifest error. (e)Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commitment fee, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (f)Unless the Agent shall have received notice from a Borrower prior to the date on which any payment is due to any Lender Party hereunder that such Borrower will not make such payment in full, the Agent may assume that such Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each such Lender Party on such due date an amount equal to the amount then due such Lender Party. If and to the extent any Borrower shall not have so made such payment in full to the Agent, each such Lender Party shall repay to the Agent forthwith on demand such amount distributed to such Lender Party together with interest thereon, for each day from the date such amount is distributed to such Lender Party until the date such Lender Party repays such amount to the Agent, at the Federal Funds Rate. SECTION 2.12. Taxes. (a) Any and all payments by any Borrower hereunder or under the Notes shall be made, in accordance with Section 2.11, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, (i) in the case of each Lender Party and the Agent, respectively, taxes that are imposed on its overall net income or the overall net income of its branch by the United States and taxes that are imposed on its overall net income or the overall net income of its branch (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction under the laws of which such Lender Party or the Agent, respectively, is organized or any political subdivision thereof, (ii) in the case of each Lender Party, taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction in which the principal office or such Lender Party's Applicable Lending Office is located or any political subdivision thereof and (iii) in the case of the Agent, taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the jurisdiction in which the office through which the Agent performs its activities hereunder is located (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as "Taxes"). If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Lender Party or the Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.12) such Lender Party or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b)In addition, the Borrowers jointly and severally agree to pay any present or future stamp, documentary, excise, property or similar taxes, charges or levies that arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as "Other Taxes"). (c)The Borrowers jointly and severally agree to indemnify each Lender Party and the Agent for and hold them harmless against the full amount of Taxes and Other Taxes, and for the full amount of taxes of any kind imposed by any jurisdiction on amounts payable under this Section 2.12, imposed on or paid by such Lender Party or the Agent (as the case may be) and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date such Lender Party or the Agent (as the case may be) makes written demand therefor. (d)Within 30 days after the date of any payment of Taxes, the Borrowers shall furnish to the Agent, at its address referred to in Section 8.02, the original or a certified copy of a receipt evidencing such payment. In the case of any payment hereunder or under the Notes by or on behalf of any Borrower through an account or branch outside the United States or by or on behalf of any Borrower by a payor that is not a United States person, if such Borrower determines that no Taxes are payable in respect thereof, such Borrower shall furnish, or shall cause such payor to furnish, to the Agent, at such address, an opinion of counsel acceptable to the Agent stating that such payment is exempt from Taxes. For purposes of this subsection (d) and subsection (e), the terms "United States" and "United States person" shall have the meanings specified in Section 7701 of the Internal Revenue Code. (e)Each Lender Party organized under the laws of a jurisdiction outside the United States shall, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender or Initial Issuing Bank, as the case may be, and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender Party in the case of each other Lender Party, and from time to time thereafter as requested in writing by the Borrowers (but only so long thereafter as such Lender Party remains lawfully able to do so), provide each of the Agent and the Borrowers with two accurate and complete original signed Internal Revenue Service forms 1001 or 4224 or (in the case of a Lender Party that is claiming exemption from United States withholding tax under Section 871(h) or 881(c) of the Internal Revenue Code with respect to payments of "portfolio interest") two accurate and complete signed original Forms W-8 (and, if such Lender Party delivers Forms W-8, two signed certificates certifying that such Lender Party is not (i) a "bank" for purposes of Section 881(c) of the Internal Revenue Code, (ii) is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the Borrower, (iii) is not a controlled foreign corporation related to the Borrower (within the meaning of Section 864(d)(4) of the Internal Revenue Code) and (iv) is not a conduit entity participating in a conduit financing arrangement (as defined in Treasury Regulation Section 1.881-3), as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender Party is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or the Notes. If the accurate and complete forms provided by a Lender Party at the time such Lender Party first becomes a party to this Agreement indicate a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Lender Party provides the appropriate form certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such form; provided, however, that, if at the date of the Assignment and Acceptance pursuant to which a Lender Party becomes a party to this Agreement, the Lender Party assignor was entitled to payments under subsection (a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includible in Taxes) United States withholding tax, if any, applicable with respect to the Lender Party assignee on such date. (f)For any period with respect to which a Lender Party has failed to provide the Borrowers with the appropriate form described in subsection (e) above (other than if such failure is due to a change in law occurring after the date on which a form originally was required to be provided or if such form otherwise is not required under subsection (e) above), such Lender Party shall not be entitled to indemnification under subsection (a) or (c) with respect to Taxes imposed by the United States by reason of such failure; provided, however, that should a Lender Party become subject to Taxes because of its failure to deliver a form required hereunder, the Borrowers shall take such steps, at such Lender Party's sole expense, as such Lender Party shall reasonably request to assist such Lender Party to recover such Taxes. (g)Any Lender Party claiming any additional amounts payable pursuant to this Section 2.12 shall use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amount which may thereafter accrue and would not, in the reasonable judgment of such Lender Party, be otherwise disadvantageous to such Lender Party. (h)If the Agent or any Lender Party, in its sole opinion, determines that it has finally and irrevocably received or been granted a refund in respect of any Taxes or Other Taxes as to which indemnification has been paid by Crompton Corp. pursuant to Section 2.12(a) or (c), it shall promptly remit such refund (including any interest) to Crompton Corp., net of all out-of-pocket expenses of the Agent or such Lender Party; provided, however, that Crompton Corp., upon the request of the Agent or such Lender Party, agrees promptly to return such refund (plus any interest) to such party in the event such party is required to repay such refund to the relevant taxing authority. The Agent or such Lender Party shall provide Crompton Corp. with a copy of any notice or assessment from the relevant taxing authority (deleting any confidential information contained therein) requiring repayment of such refund. Nothing contained herein shall impose an obligation on the Agent or any Lender Party to apply for any refund. SECTION 2.13. Sharing of Payments, Etc. If any Lender Party shall obtain at any time any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) (a) on account of Obligations due and payable to such Lender Party hereunder and under the Notes at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender Party at such time to (ii) the aggregate amount of the Obligations due and payable to all Lender Parties hereunder and under the Notes at such time) of payments on account of the Obligations due and payable to all Lender Parties hereunder and under the Notes at such time obtained by all the Lender Parties at such time or (b) on account of Obligations owing (but not due and payable) to such Lender Party hereunder and under the Notes at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing to such Lender Party at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lender Parties hereunder and under the Notes at such time) of payments on account of the Obligations owing (but not due and payable) to all Lender Parties hereunder and under the Notes at such time obtained by all of the Lender Parties at such time, such Lender Party shall forthwith purchase from the other Lender Parties such participations in the Obligations due and payable or owing to them, as the case may be, as shall be necessary to cause such purchasing Lender Party to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender Party, such purchase from each other Lender Party shall be rescinded and such other Lender Party shall repay to the purchasing Lender Party the purchase price to the extent of such Lender Party's ratable share (according to the proportion of (i) the purchase price paid to such Lender Party to (ii) the aggregate purchase price paid to all Lender Parties) of such recovery together with an amount equal to such Lender Party's ratable share (according to the proportion of (i) the amount of such other Lender Party's required repayment to (ii) the total amount so recovered from the purchasing Lender Party) of any interest or other amount paid or payable by the purchasing Lender Party in respect of the total amount so recovered. Each Borrower agrees that any Lender Party so purchasing a participation from another Lender Party pursuant to this Section 2.13 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender Party were the direct creditor of such Borrower in the amount of such participation. SECTION 2.14. Use of Proceeds. The proceeds of the Advances and issuances of Letters of Credit under the Working Capital A Facility and the Working Capital B-1 Facility shall be available (and each Borrower agrees that it shall use such proceeds and Letters of Credit) solely to pay transaction fees and expenses incurred in connection with the Merger, redeem or repurchase certain public Existing Debt of Uniroyal Corp. and Uniroyal, and for other general corporate purposes, including, without limitation, to finance permitted acquisitions and Capital Expenditures and provide working capital for the Borrowers and their respective Subsidiaries; provided that Advances made pursuant to Section 2.02(g) shall be used by the Uniroyal Borrower solely for the purpose of satisfying its obligations under the Seoul Guaranty. The proceeds of the Advances under the Working Capital B-2 Facility shall be available (and the Uniroyal Borrower agrees that it shall use such proceeds) solely to redeem, repurchase or defease, in full or in part, the Uniroyal Senior Notes, the Uniroyal Corp. Senior Notes, the Uniroyal Corp. Senior Subordinated Notes and the Uniroyal Corp. Subordinated Discount Notes. SECTION 2.15. Defaulting Lenders. (a) In the event that, at any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Advance to any Borrower and (iii) such Borrower shall be required to make any payment hereunder or under any other Loan Document to or for the account of such Defaulting Lender, then such Borrower may, so long as no Default shall occur or be continuing at such time and to the fullest extent permitted by applicable law, set off and otherwise apply the Obligation of such Borrower to make such payment to or for the account of such Defaulting Lender against the obligation of such Defaulting Lender to make such Defaulted Advance. In the event that, on any date, such Borrower shall so set off and otherwise apply its Obligation to make any such payment against the obligation of such Defaulting Lender to make any such Defaulted Advance on or prior to such date, the amount so set off and otherwise applied by such Borrower shall constitute for all purposes of this Agreement and the other Loan Documents an Advance by such Defaulting Lender made on the date under the Facility pursuant to which such Defaulted Advance was originally required to have been made pursuant to Section 2.01. Such Advance shall be a Base Rate Advance and shall be considered, for all purposes of this Agreement, to comprise part of the Borrowing in connection with which such Defaulted Advance was originally required to have been made pursuant to Section 2.01, even if the other Advances comprising such Borrowing shall be Eurodollar Rate Advances on the date such Advance is deemed to be made pursuant to this subsection (a). Each Borrower shall notify the Agent at any time such Borrower exercises its right of set-off pursuant to this subsection (a) and shall set forth in such notice (A) the name of the Defaulting Lender and the Defaulted Advance required to be made by such Defaulting Lender and (B) the amount set off and otherwise applied in respect of such Defaulted Advance pursuant to this subsection (a). Any portion of such payment otherwise required to be made by any Borrower to or for the account of such Defaulting Lender which is paid by such Borrower, after giving effect to the amount set off and otherwise applied by such Borrower pursuant to this subsection (a), shall be applied by the Agent as specified in subsection (b) or (c) of this Section 2.15. (b)In the event that, at any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to the Agent or any of the other Lender Parties and (iii) any Borrower shall make any payment hereunder or under any other Loan Document to the Agent for the account of such Defaulting Lender, then the Agent may, on its behalf or on behalf of such other Lender Parties and to the fullest extent permitted by applicable law, apply at such time the amount so paid by such Borrower to or for the account of such Defaulting Lender to the payment of each such Defaulted Amount to the extent required to pay such Defaulted Amount. In the event that the Agent shall so apply any such amount to the payment of any such Defaulted Amount on any date, the amount so applied by the Agent shall constitute for all purposes of this Agreement and the other Loan Documents payment, to such extent, of such Defaulted Amount on such date. Any such amount so applied by the Agent shall be retained by the Agent or distributed by the Agent to such other Lender Parties, ratably in accordance with the respective portions of such Defaulted Amounts payable at such time to the Agent and such other Lender Parties and, if the amount of such payment made by any Borrower shall at such time be insufficient to pay all Defaulted Amounts owing at such time to the Agent and the other Lender Parties, in the following order of priority: (i)first, to the Agent for any Defaulted Amount then owing to the Agent; and (ii)second, to any other Lender Parties for any Defaulted Amounts then owing to such other Lender Parties, ratably in accordance with such respective Defaulted Amounts then owing to such other Lender Parties. Any portion of such amount paid by any Borrower for the account of such Defaulting Lender remaining, after giving effect to the amount applied by the Agent pursuant to this subsection (b), shall be applied by the Agent as specified in subsection (c) of this Section 2.15. (c)In the event that, at any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance or a Defaulted Amount and (iii) any Borrower, the Agent or any other Lender Party shall be required to pay or distribute any amount hereunder or under any other Loan Document to or for the account of such Defaulting Lender, then such Borrower or such other Lender Party shall pay such amount to the Agent to be held by the Agent, to the fullest extent permitted by applicable law, in escrow or the Agent shall, to the fullest extent permitted by applicable law, hold in escrow such amount otherwise held by it. Any funds held by the Agent in escrow under this subsection (c) shall be deposited by the Agent in an account with Citibank, in the name and under the control of the Agent, but subject to the provisions of this subsection (c). The terms applicable to such account, including the rate of interest payable with respect to the credit balance of such account from time to time, shall be Citibank's standard terms applicable to escrow accounts maintained with it. Any interest credited to such account from time to time shall be held by the Agent in escrow under, and applied by the Agent from time to time in accordance with the provisions of, this subsection (c). The Agent shall, to the fullest extent permitted by applicable law, apply all funds so held in escrow from time to time to the extent necessary to make any Advances required to be made by such Defaulting Lender and to pay any amount payable by such Defaulting Lender hereunder and under the other Loan Documents to the Agent or any other Lender Party, as and when such Advances or amounts are required to be made or paid and, if the amount so held in escrow shall at any time be insufficient to make and pay all such Advances and amounts required to be made or paid at such time, in the following order of priority: (i)first, to the Agent for any amount then due and payable by such Defaulting Lender to the Agent hereunder; (ii)second, to any other Lender Parties for any amount then due and payable by such Defaulting Lender to such other Lender Parties hereunder, ratably in accordance with such respective amounts then due and payable to such other Lender Parties; and (iii)third, to such Borrower for any Advance then required to be made by such Defaulting Lender pursuant to a Commitment of such Defaulting Lender. In the event that any Lender Party that is a Defaulting Lender shall, at any time, cease to be a Defaulting Lender, any funds held by the Agent in escrow at such time with respect to such Lender Party shall be distributed by the Agent to such Lender Party and applied by such Lender Party to the Obligations owing to such Lender Party at such time under this Agreement and the other Loan Documents ratably in accordance with the respective amounts of such Obligations outstanding at such time. (d)The rights and remedies against a Defaulting Lender under this Section 2.15 are in addition to other rights and remedies that the Borrowers may have against such Defaulting Lender with respect to any Defaulted Advance and that the Agent or any Lender Party may have against such Defaulting Lender with respect to any Defaulted Amount. ARTICLE III CONDITIONS OF LENDING SECTION 3.01. Conditions Precedent to Initial Extension of Credit. The obligation of each Lender to make an Advance or of any Issuing Bank to issue a Letter of Credit on the occasion of the Initial Extension of Credit hereunder is subject to the satisfaction of the following conditions precedent before or concurrently with the Initial Extension of Credit: (a)The Merger shall have been consummated substantially in accordance with the terms of the Merger Agreement, without any waiver or amendment not consented to by the Lender Parties of any material term, provision or condition set forth therein, and in material compliance with all applicable laws. (b)The Merger Agreement shall be in full force and effect. (c)The Lender Parties shall be satisfied with the corporate and legal structure and capitalization of each Loan Party and each of its Subsidiaries, including the terms and conditions of the charter, bylaws and each class of capital stock of each Loan Party and each such Subsidiary and of each agreement or instrument relating to such structure or capitalization. (d)The Lender Parties shall be satisfied that all Existing Debt, other than the Debt identified on Schedule 3.01(d) (the "Surviving Debt"), has been prepaid, redeemed or defeased in full or otherwise satisfied and extinguished. (e)There shall have occurred no material adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of (i) before and after giving effect to the Merger and the other transactions contemplated by this Agreement, Crompton Corp. and its Subsidiaries, taken as a whole, since December 31, 1995, (ii) after giving effect to the Merger and the other transactions contemplated by this Agreement, Crompton Corp. and its Subsidiaries (other than Uniroyal Corp. and its Subsidiaries), taken as a whole, since December 31, 1995 or (iii) before and after giving effect to the Merger and the other transactions contemplated by this Agreement, Uniroyal and its Subsidiaries, taken as a whole, since September 30, 1995. (f)There shall exist no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries pending or threatened before any court, governmental agency or arbitrator that (i) would be reasonably likely to have a Material Adverse Effect other than the matters described on Schedule 3.01(f) (the "Disclosed Litigation") or (ii) purports to affect the legality, validity or enforceability of the Merger, this Agreement, any Note, any other Loan Document, any Related Document or the consummation of the transactions contemplated hereby, and there shall have been no material adverse change in the status, or financial effect on any Loan Party or any of its Subsidiaries, of the Disclosed Litigation from that described on Schedule 3.01(f). (g)The Lender Parties shall have completed a due diligence investigation of the Borrowers and their respective Subsidiaries in scope, and with results, satisfactory to the Lender Parties, and nothing shall have come to the attention of the Lender Parties during the course of such due diligence investigation to lead them to believe (i) that the Information Memorandum was or has become misleading, incorrect or incomplete in any material respect, (ii) that, following the consummation of the Merger, Crompton Corp. and its Subsidiaries would not have good and marketable title to all material assets of Uniroyal Corp. and its Subsidiaries reflected in the Information Memorandum and (iii) that the Merger will have a Material Adverse Effect; without limiting the generality of the foregoing, the Lender Parties shall have been given such access to the management, records, books of account, contracts and properties of the Borrowers and their respective Subsidiaries as they shall have requested. (h)All stock of the Borrowers (other than Crompton Corp.) and the Borrowers' Subsidiaries, to the extent owned by the Borrowers and their Subsidiaries, shall be owned by the Borrowers or one or more of the Borrowers' Subsidiaries, in each case free and clear of any lien, charge or encumbrance; the Agent shall have a valid and perfected first priority lien on and security interest in the Collateral (other than as to matters of perfection and priority of the security interest in the Pledged Accounts (as defined in the Uniroyal Security Agreement) and the Other Accounts (as defined in the Uniroyal Security Agreement)) for the benefit of the Secured Parties; all filings, recordations and searches necessary or desirable in connection with such liens and security interests shall have been duly made; and all filing and recording fees and taxes shall have been duly paid. (i)All governmental and third party consents and approvals (including, without limitation, any consents or approvals required under the documents relating to the Uniroyal Corp. Senior Notes and the Uniroyal Corp. Senior Subordinated Notes) necessary in connection with Loan Documents and the transactions contemplated thereby (including, without limitation, the Merger) shall have been obtained (without the imposition of any conditions that are not reasonably acceptable to the Lender Parties) and shall remain in effect other than such governmental or third party consents and approvals the failure to obtain which shall not (x) be materially adverse to any of the Borrowers, in each case together with its respective Subsidiaries, taken as a whole, (y) affect the enforceability, validity or binding effect of any of the Loan Documents required to be executed and delivered prior to or on the Effective Date or (z) expose the Agent or the Lender Parties to personal liability; all applicable waiting periods shall have expired without any action being taken by any competent authority; and no law or regulation shall be applicable in the judgment of the Lender Parties that restrains, prevents or imposes materially adverse conditions upon the Loan Documents or the transactions contemplated thereby (including, without limitation, the Merger). (j)The Borrowers shall have paid all accrued fees and expenses of the Agent and the Lender Parties (including the accrued fees and expenses of counsel to the Agent and local counsel to the Lender Parties). (k)The Agent shall have received on or before the day of the Initial Extension of Credit the following, each dated such day (unless otherwise specified), in form and substance satisfactory to the Agent (unless otherwise specified) and (except for the Notes) in sufficient copies for each Lender Party: (i)The Notes payable to the order of the Lenders. (ii)Certified copies of the resolutions of the Board of Directors of each Borrower, and each other Loan Party approving the Merger, this Agreement, the Notes, each other Loan Document and each Related Document to which it is or is to be a party, and of all documents evidencing other necessary corporate action and governmental and other third party approvals and consents, if any, with respect to the Merger, this Agreement, the Notes, each other Loan Document and each Related Document. (iii)A copy of a certificate of the Secretary of State of the jurisdiction of its incorporation, dated reasonably near the date of the Initial Extension of Credit, listing the charter of each Borrower and each other Loan Party and each amendment thereto on file in his office and certifying that (A) such amendments are the only amendments to such Borrower's or such other Loan Party's charter on file in his office, (B) each Borrower and each other Loan Party have paid all franchise taxes to the date of such certificate and (C) each Borrower and each other Loan Party are duly incorporated and in good standing under the laws of the State of the jurisdiction of its incorporation. (iv)Certified copies of a certificate of merger or other confirmation from the Secretary of State of the State of Delaware satisfactory to the Lender Parties of the consummation of the Merger. (v)A certificate of each Borrower and each other Loan Party, signed on behalf of such Borrower or such other Loan Party, as the case may be, by its President or a Vice President and its Secretary or any Assistant Secretary, dated the date of the Initial Extension of Credit (the statements made in which certificate shall be true on and as of the date of the Initial Extension of Credit), certifying as to (A) the absence of any amendments to the charter of such Borrower or such other Loan Party since the date of the Secretary of State's certificate referred to in Section 3.01(k)(iii), (B) a true and correct copy of the bylaws of such Borrower or such other Loan Party as in effect on the date of the Initial Extension of Credit, (C) the due incorporation and good standing of such Borrower or such other Loan Party organized under the laws of the State of its incorporation, and the absence of any proceeding for the dissolution or liquidation of such Borrower or such other Loan Party, (D) the truth of the representations and warranties contained in the Loan Documents as though made on and as of the date of the Initial Extension of Credit and (E) the absence of any event occurring and continuing, or resulting from the Initial Extension of Credit, that constitutes a Default. (vi)A certificate of the Secretary or an Assistant Secretary of each Borrower and each other Loan Party certifying the names and true signatures of the officers of such Borrower or such other Loan Party authorized to sign this Agreement, the Notes, each other Loan Document and each Related Document to which they are or are to be parties and the other documents to be delivered hereunder and thereunder. (vii)A security agreement in substantially the form of Exhibit D-1 (as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Crompton Security Agreement"), duly executed by each Crompton Borrower and each Crompton Guarantor, together with: (A)certificates representing the Pledged Shares referred to therein accompanied by undated stock powers executed in blank, and instruments evidencing the Pledged Debt (except as otherwise provided in Sections 5.02(b)(i)(D) and 5.02(b)(ii)) referred to therein indorsed in blank, (B)duly executed proper financing statements, to be filed under the Uniform Commercial Code of all jurisdictions that the Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Crompton Security Agreement, covering the Collateral described in the Crompton Security Agreement, (C)completed requests for information, dated on or before the date of the Initial Extension of Credit, listing all effective financing statements filed in the jurisdictions referred to in clause (B) above that name any Crompton Borrower or any Crompton Guarantor as debtor, together with copies of such other financing statements, (D)evidence of the completion of all other recordings and filings of or with respect to the Crompton Security Agreement that the Agent may deem necessary or desirable in order to perfect and protect the Liens created thereby, and (E)evidence that all other action that the Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Crompton Security Agreement has been taken. (viii)A security agreement in substantially the form of Exhibit D-2 (as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Uniroyal Security Agreement" and, together with the Crompton Security Agreement and each security agreement delivered pursuant to Section 5.01(k), in each case as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Security Agreement"), duly executed by the Uniroyal Borrower and each Uniroyal Guarantor, together with: (A)duly executed proper financing statements, to be filed on or before the day of the Initial Extension of Credit under the Uniform Commercial Code of all jurisdictions that the Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Uniroyal Security Agreement, covering the Collateral described in the Uniroyal Security Agreement, (B)completed requests for information, dated on or before the date of the Initial Extension of Credit, listing all effective financing statements filed in the jurisdictions referred to in clause (A) above that name the Uniroyal Borrower or any Uniroyal Guarantor as debtor, together with copies of such other financing statements, (C)evidence of the completion of all other recordings and filings of or with respect to the Uniroyal Security Agreement that the Agent may deem necessary or desirable in order to perfect and protect the Liens created thereby, (D)evidence of the insurance required by the terms of the Security Agreement, (E)instruments evidencing the Pledged Debt (except as otherwise provided in Sections 5.02(b)(i)(D) and 5.02(b)(ii)) referred to therein endorsed in blank, and (F)evidence that all other action that the Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Uniroyal Security Agreement has been taken. (ix)A guaranty in substantially the form of Exhibit E-1 (as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Parent Guaranty"), duly executed by Crompton Corp. (x)A guaranty in substantially the form of Exhibit E-2 (together with each other guaranty delivered pursuant to Section 5.01(k), in each case as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Subsidiary Guaranty"), duly executed by each Subsidiary Guarantor. (xi)Certified copies of each of the Related Documents, duly executed by the parties thereto and in form and substance satisfactory to the Lender Parties, together with all agreements, instruments and other documents delivered in connection therewith. (xii)Such financial, business and other information regarding each Loan Party and its Subsidiaries as the Lender Parties shall have requested, including, without limitation, information as to possible contingent liabilities, tax matters, environmental matters, obligations under Plans, Multiemployer Plans and Welfare Plans, collective bargaining agreements and other arrangements with employees, audited annual financial statements of Crompton Corp. and its Subsidiaries (other than Uniroyal Corp. and its Subsidiaries) dated December 30, 1995, audited annual financial statements of Uniroyal Corp. and its Subsidiaries dated October 1, 1995, interim financial statements dated the end of the most recent fiscal quarter for which financial statements are available, pro forma financial statements as to Crompton Corp. and its Subsidiaries after giving effect to the Merger and the other transactions, on a Consolidated basis, of balance sheets, income statements and cash flow statements for the one-year period ended on or about March 31, 1996 and forecasts prepared by management of the Borrowers, in form and substance satisfactory to the Lender Parties, on a Consolidated basis and, to the extent otherwise available, on a Consolidating basis, of balance sheets, income statements and cash flow statements for the first year following January 1, 1996 and on an annual basis for each year thereafter until the Termination Date. (xiii)Certificates, in substantially the form of Exhibit G, attesting to the Solvency of each Loan Party after giving effect to the Merger and the other transactions contemplated hereby, from its chief financial officer. (xiv) A supplement to the Uniroyal Security Agreement in respect of Collateral located in the State of Louisiana in substantially the form of Exhibit D-3 (as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Louisiana Undertaking"), duly executed by the Uniroyal Borrower and the Uniroyal Guarantors. (xv)An environmental assessment report, in form and substance satisfactory to the Lender Parties, from Environmental Safety and Designs, Inc., as to any hazards, costs or liabilities under Environmental Laws to which any Loan Party or any of its Subsidiaries may be subject, the amount and nature of which and the Borrowers' plans with respect to which shall be acceptable to the Lender Parties, together with evidence, in form and substance satisfactory to the Lender Parties, that all Environmental Laws applicable to the consummation of the Merger shall have been materially complied with. (xvi)A letter, in form and substance satisfactory to the Agent, from Crompton Corp. to KPMG Peat Marwick LLP, its independent certified public accountants, advising such accountants that the Agent and the Lender Parties have been authorized to exercise all rights of the Borrowers to require such accountants to disclose any and all financial statements and any other information of any kind that they may have with respect to the Borrowers and their respective Subsidiaries and directing such accountants to comply with any reasonable request of the Agent or any Lender Party for such information; provided that all requests for such information shall be provided through Crompton Corp. (xvii)A favorable opinion of Wachtell, Lipton, Rosen & Katz, special counsel for the Loan Parties, in substantially the form of Exhibit F-1 hereto and as to such other matters as any Lender Party through the Agent may reasonably request. (xviii)A favorable opinion of John T. Ferguson, II, Esq., General Counsel and Corporate Secretary of Crompton Corp. and its Subsidiaries, in substantially the form of Exhibit F-2 hereto and as to such other matters as any Lender Party through the Agent may reasonably request. (xix)A favorable opinion of John T. Ferguson, II, Esq., General Counsel and Corporate Secretary of Crompton Corp. and its Subsidiaries, in substantially the form of Exhibit F-3 hereto and as to such other matters as any Lender Party through the Agent may reasonably request. (xx)A favorable opinion of local counsel to the Loan Parties or Lender Parties, as the case may be, listed on Schedule 3.01(k)(xx) in the jurisdictions listed on Schedule 3.01(k)(xx) in form and substance satisfactory to the Agent and as to such other matters as any Lender Party through the Agent may reasonably request. (xxi)A favorable opinion of Shearman & Sterling, counsel for the Agent, in form and substance satisfactory to the Agent. SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance. The right of the Borrowers to request and the obligation of each Appropriate Lender to make an Advance (other than a Letter of Credit Advance made by an Issuing Bank or a Working Capital Lender pursuant to Section 2.03(c) and a Swing Line Advance made by a Working Capital Lender pursuant to Section 2.02(b)) on the occasion of each Borrowing (including the Initial Extension of Credit), and the right of the Borrowers to request and the obligation of each Issuing Bank to issue a Letter of Credit (including the initial issuance) and the right of the Borrowers to request a Swing Line Borrowing, shall be subject to the further conditions precedent that on the date of such Borrowing or issuance (a) the following statements shall be true (and each of the giving of the applicable Notice of Borrowing, Notice of Swing Line Borrowing or Notice of Issuance and the acceptance by the relevant Borrower of the proceeds of such Borrowing or of such Letter of Credit shall constitute a representation and warranty by such Borrower that both on the date of such notice and on the date of such Borrowing or issuance such statements are true): (i)the representations and warranties contained in each Loan Document are correct on and as of such date, before and after giving effect to such Borrowing or issuance and to the application of the proceeds therefrom, as though made on and as of such date other than any such representations or warranties that, by their terms, refer to a specific date other than the date of such Borrowing or issuance, in which case as of such specific date; and (ii)no event has occurred and is continuing, or would result from such Borrowing or issuance or from the application of the proceeds therefrom, that constitutes a Default; and (b) the Agent shall have received such other approvals, opinions or documents as any Appropriate Lender through the Agent may reasonably request. SECTION 3.03. Determinations Under Section 3.01. For purposes of determining compliance with the conditions specified in Section 3.01, each Lender Party shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lender Parties unless an officer of the Agent responsible for the transactions contemplated by the Loan Documents shall have received notice from such Lender Party prior to the Initial Extension of Credit specifying its objection thereto and, if the Initial Extension of Credit consists of a Borrowing, such Lender Party shall not have made available to the Agent such Lender Party's ratable portion of such Borrowing. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Borrowers. Each Borrower represents and warrants as follows: (a)Each Loan Party (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) is duly qualified and in good standing as a foreign corporation in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where the failure to so qualify or be licensed would not have a Material Adverse Effect and (iii) has all requisite corporate power and authority (including, without limitation, all governmental licenses, permits and other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. All of the outstanding capital stock of the Borrowers has been validly issued and is fully paid and non-assessable. (b)Set forth on Schedule 4.01(b) hereto is a complete and accurate list of all Subsidiaries of each Loan Party as of the date hereof, showing as of the date hereof (as to each such Subsidiary) the jurisdiction of its incorporation, the number of shares of each class of capital stock authorized, and the number outstanding, on the date hereof and the percentage of the outstanding shares of each such class owned (directly or indirectly) by such Loan Party and the number of shares covered by all outstanding options, warrants, rights of conversion or purchase and similar rights at the date hereof. All of the outstanding capital stock of all of such Subsidiaries to the extent owned by the Borrowers and their Subsidiaries has been validly issued, is fully paid and non-assessable and is owned by such Loan Party or one or more of its Subsidiaries free and clear of all Liens, except those created under the Loan Documents. Each such Subsidiary (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) is duly qualified and in good standing as a foreign corporation in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where the failure to so qualify or be licensed would not have a Material Adverse Effect and (iii) has all requisite corporate power and authority (including, without limitation, all governmental licenses, permits and other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. (c)The execution, delivery and performance by each Loan Party of this Agreement, the Notes, each other Loan Document and each Related Document to which it is or is to be a party, and the consummation of the Merger and the other transactions contemplated hereby, are within such Loan Party's corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene such Loan Party's charter or bylaws, (ii) violate any law, rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award, (iii) conflict with or result in the breach of, or constitute a default under, any loan agreement, indenture, mortgage, deed of trust or other instrument or material contract or material lease binding on or affecting any Loan Party, any of its Subsidiaries or any of their properties or (iv) except for the Liens created under the Loan Documents, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of any Loan Party or any of its Subsidiaries. No Loan Party or any of its Subsidiaries is in violation of any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or in breach of any such loan agreement, indenture, mortgage, deed of trust or other instrument or material contract or material lease, the violation or breach of which would have a Material Adverse Effect. (d)No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (i) the due execution, delivery, recordation, filing or performance by any Loan Party of this Agreement, the Notes, any other Loan Document or any Related Document to which it is or is to be a party, or for the consummation of the Merger or the other transactions contemplated hereby, (ii) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, (iii) the perfection or maintenance of the Liens created by the Collateral Documents (including the first priority nature thereof) or (iv) the exercise by the Agent or any Lender Party of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents, except for the authorizations, approvals, actions, notices and filings listed on Schedule 4.01(d), all of which have been duly obtained, taken, given or made and are in full force and effect. All applicable waiting periods in connection with the Merger and the other transactions contemplated hereby have expired without any action having been taken by any competent authority restraining, preventing or imposing materially adverse conditions upon the Merger or the rights of the Loan Parties or their Subsidiaries freely to transfer or otherwise dispose of, or to create any Lien on, any properties now owned or hereafter acquired by any of them. (e)This Agreement has been, and each of the Notes, each other Loan Document and each Related Document when delivered hereunder will have been, duly executed and delivered by each Loan Party party thereto. This Agreement is, and each of the Notes, each other Loan Document and each Related Document when delivered hereunder will be, the legal, valid and binding obligation of each Loan Party party thereto, enforceable against such Loan Party in accordance with its terms. (f)The Consolidated balance sheet of Crompton Corp. and its Subsidiaries as at December 30, 1995, and the related Consolidated statement of income and Consolidated statement of cash flows of Crompton Corp. and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of KPMG Peat Marwick LLP, independent public accountants, and the Consolidated balance sheet of Crompton Corp. and its Subsidiaries as at March 30, 1996, and the related Consolidated statement of income and Consolidated statement of cash flows of Crompton Corp. and its Subsidiaries for the three months then ended, duly certified by the chief financial officer of Crompton Corp., copies of which have been furnished to each Lender Party, fairly present, subject, in the case of said balance sheet as at March 30, 1996, and said statements of income and cash flows for the three months then ended, to year-end audit adjustments, the Consolidated financial condition of Crompton Corp. and its Subsidiaries as at such dates and the Consolidated results of operations of Crompton Corp. and its Subsidiaries for the periods ended on such dates, all in accordance with generally accepted accounting principles applied on a consistent basis, and since December 30, 1995, there has been no Material Adverse Change. (g)The Consolidated balance sheet of Uniroyal Corp. and its Subsidiaries as at October 1, 1995, and the related Consolidated statement of income and Consolidated statement of cash flows of Uniroyal Corp. and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of Deloitte & Touche LLP, independent public accountants, and the Consolidated balance sheet of Uniroyal Corp. and its Subsidiaries as at March 31, 1996, and the related Consolidated statement of income and Consolidated statement of cash flows of Uniroyal Corp. and its Subsidiaries for the six months then ended, duly certified by the chief financial officer of Uniroyal Corp., copies of which have been furnished to each Lender Party, fairly present, subject, in the case of said balance sheet as at March 31, 1996, and said statements of income and cash flows for the six months then ended, to year-end audit adjustments, the Consolidated financial condition of Uniroyal Corp. and its Subsidiaries as at such date and the Consolidated results of operations of Uniroyal Corp. and its Subsidiaries for the period ended on such dates, all in accordance with generally accepted accounting principles applied on a consistent basis, and since October 1, 1995, there has been no Material Adverse Change. (h)The Consolidated pro forma balance sheet of Crompton Corp. and its Subsidiaries and the related Consolidated pro forma statements of income and cash flows of Crompton Corp. and its Subsidiaries, in each case contained in the Proxy Statement dated July 23, 1996, copies of which have been furnished to each Lender Party, fairly present the Consolidated pro forma financial condition of Crompton Corp. and its Subsidiaries as at such date and the Consolidated pro forma results of operations of Crompton Corp. and its Subsidiaries for the period ended on such date, in each case giving effect to the Merger and the other transactions contemplated hereby. (i)The Consolidated and consolidating forecasted balance sheets, income statements and cash flows statements of Crompton Corp. and its Subsidiaries delivered to the Lender Parties pursuant to Section 3.01(k)(xii) or 5.03 were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in the light of conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, Crompton Corp.'s good faith estimate of its future financial performance. (j)Neither the Information Memorandum nor any other information, exhibit or report furnished by any Loan Party to the Agent or any Lender Party in connection with the negotiation of the Loan Documents or pursuant to the terms of the Loan Documents contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein not misleading. (k)There is no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries, including any Environmental Action, pending or threatened before any court, governmental agency or arbitrator that (i) would be reasonably likely to have a Material Adverse Effect (other than the Disclosed Litigation) or (ii) purports to affect the legality, validity or enforceability of the Merger, this Agreement, any Note, any other Loan Document or any Related Document or the consummation of the transactions contemplated hereby, and there has been no material adverse change in the status, or financial effect on any Loan Party or any of its Subsidiaries, of the Disclosed Litigation from that described on Schedule 3.01(f). (l)No proceeds of any Advance or drawings under any Letter of Credit will be used to acquire any equity security of a class that is registered pursuant to Section 12 of the Securities Exchange Act of 1934. (m)No Borrower is engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any Advance or drawings under any Letter of Credit will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. (n)(i) No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan that has had or is reasonably expected to have a Material Adverse Effect. (ii)Schedule B (Actuarial Information) to the most recent annual report (Form 5500 Series) for each Plan, copies of which have been filed with the Internal Revenue Service and furnished to the Lender Parties, is complete and accurate and fairly presents the funding status of such Plan, and since the date of such Schedule B there has been no material adverse change in such funding status. (iii)Neither any Loan Party nor any ERISA Affiliate has incurred or is reasonably expected to incur any Withdrawal Liability to any Multiemployer Plan that has had or is reasonably expected to have a Material Adverse Effect. (iv)Neither any Loan Party nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and no such Multiemployer Plan is reasonably expected to be in reorganization or to be terminated, within the meaning of Title IV of ERISA which, in either event, has had or is reasonably expected to have a Material Adverse Effect. (o)(i) Except as disclosed in Part I of Schedule 4.01(o) hereto, the operations and properties of each Loan Party and each of its Subsidiaries comply in all material respects with all applicable Environmental Laws and Environmental Permits, all past non-compliance with such Environmental Laws and Environmental Permits has been resolved without material ongoing obligations or costs, and no circumstances exist that would be reasonably likely to (i) form the basis of an Environmental Action against any Loan Party or any of its Subsidiaries or any of their properties that could have a Material Adverse Effect or (ii) cause any such property to be subject to any material restrictions on ownership, occupancy, use or transferability under any Environmental Law in effect on the date hereof. (ii)Except as disclosed in Part II of Schedule 4.01(o) hereto or as would not, individually or in the aggregate, result in a Material Adverse Effect, none of the properties currently or formerly owned or operated by any Loan Party or any of its Subsidiaries is listed or, to the best knowledge of any Loan Party, proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state or local list or is adjacent to any such property; there are no and never have been any underground or aboveground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed on any property currently owned or operated by any Loan Party or any of its Subsidiaries or, to the best of its knowledge, on any property formerly owned or operated by any Loan Party or any of its Subsidiaries; there is no asbestos or asbestos-containing material on any property currently owned or operated by any Loan Party or any of its Subsidiaries; and Hazardous Materials have not been released, discharged or disposed of on any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries. (iii)Except as disclosed in Part III of Schedule 4.01(o) hereto, neither any Loan Party nor any of its Subsidiaries is undertaking, and has not completed, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any governmental or regulatory authority or the requirements of any Environmental Law; and all Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries have been disposed of in a manner not reasonably expected to result in material liability to any Loan Party or any of its Subsidiaries. (p)The Collateral Documents create a valid and, upon the making of the filings referred to in Section 5.01(l), perfected first priority interest in the Collateral (other than as to matters of perfection and priority of the security interest in the Pledged Accounts (as defined in the Uniroyal Security Agreement) and the Other Accounts (as defined in the Uniroyal Security Agreement)), securing the payment of the Secured Obligations (as defined in the Collateral Documents), and all filings and other actions necessary or desirable to perfect and protect such security interest have been duly taken except, during the period immediately following the Effective Date specified in Section 5.01(l) the filings and other actions referred to in Section 5.01(l). The Loan Parties are the legal and beneficial owners of the Collateral free and clear of any Lien, except for the liens and security interests created or permitted under the Loan Documents. (q)The Merger will not be taxable to any Loan Party or any of its Subsidiaries or Affiliates. (r)Neither any Loan Party nor any of its Subsidiaries is an "investment company," or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. Neither the making of any Advances, nor the issuance of any Letters of Credit, nor the application of the proceeds or repayment thereof by any Borrower, nor the consummation of the other transactions contemplated hereby, will violate any provision of such Act or any rule, regulation or order of the Securities and Exchange Commission thereunder. (s)Each Loan Party is, individually and together with its Subsidiaries, Solvent. (t)Set forth on Schedule 4.01(t) hereto is a complete and accurate list of all Existing Debt (other than Surviving Debt), showing as of the date hereof the principal amount outstanding thereunder. (u)Set forth on Schedule 3.01(d) hereto is a complete and accurate list of all Surviving Debt, showing as of the date hereof the principal amount outstanding thereunder. (v)The aggregate revenues of the Minor Subsidiaries (other than Crompton and Knowles I.P.R. Corporation), on a Consolidated basis, do not exceed $250,000 for the twelve-month period ending on the last day of the most recent fiscal quarter of Crompton Corp., and the aggregate book value of the assets of the Minor Subsidiaries (other than Crompton and Knowles I.P.R. Corporation), on a Consolidated basis, as at the end of the most recent fiscal quarter of Crompton Corp. does not exceed $250,000. (w)Set forth on Schedule 4.01(w) hereto is a complete and accurate list of all Material Subsidiaries existing as of the date hereof. (x)Crompton and Knowles I.P.R. Corporation does not conduct any business or engage in any activity and has no material assets other than an intercompany receivable in an amount that does not exceed $33,000,000. ARTICLE V COVENANTS OF THE BORROWERS SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, each Borrower will: (a)Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA and the Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime Control Act of 1970, except, in any case, where the failure so to comply, either individually or in the aggregate, could not be reasonably expected to have a Material Adverse Effect and would not be reasonably likely to subject any Loan Party or any of its Subsidiaries to any criminal penalties or any Lender Party to any civil or criminal penalties. (b)Payment of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all federal income and other material taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided, however, that neither any Borrower nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim (x) that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained or (y) in respect of which the Lien resulting therefrom, if any, attaches to its property and becomes enforceable against its other creditors, to the extent that the aggregate amount of all such taxes, assessments, charges or claims does not exceed $3,000,000. (c)Maintenance of Insurance. Maintain (or maintain on behalf of each of its Subsidiaries), and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which such Borrower or such Subsidiary operates; it being understood and agreed that Crompton Corp. and its Subsidiaries may self-insure to the extent consistent with prudent business practice. (d)Preservation of Corporate Existence, Etc. Preserve and maintain, and cause each of its Subsidiaries (other than any Minor Subsidiary) to preserve and maintain, its existence, legal structure, legal name, rights (charter and statutory), permits, licenses, approvals, privileges and franchises; provided, however, that such Borrower and its Subsidiaries may consummate the Merger and any other merger or consolidation permitted under Section 5.02(d); provided further that neither any Borrower nor any of its Subsidiaries shall be required to preserve any legal structure, legal name, right, permit, license, approval, privilege or franchise if such Borrower or such Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Borrower or such Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any material respect to such Borrower, such Subsidiary or the Lender Parties or, with respect to permits, licenses, approvals, privileges and franchises, that the loss thereof could not be reasonably expected to have a Material Adverse Effect; provided still further that, prior to the Collateral Release Date, if any Borrower or any of its Subsidiaries shall determine not to preserve any legal structure or legal name (to the extent permitted under the immediately preceding proviso), the Borrowers and their Subsidiaries shall take such action (within such time as may be required under the Collateral Documents or under the Uniform Commercial Code (as defined in the Security Agreement)) as the Agent may deem necessary or desirable to perfect and protect the Liens created under the Collateral Documents. (e)Visitation Rights. At any reasonable time and from time to time, during regular business hours and upon reasonable prior notice, permit the Agent or any of the Lender Parties or any agents or representatives thereof, to examine and make copies of and abstracts from the records (other than (i) records subject to attorney-client privilege or confidentiality agreements and (ii) records relating to trade secrets) and books of account of, and visit the properties of, any Borrower and any of its Subsidiaries, and to discuss the affairs, finances and accounts of any Borrower and any of its Subsidiaries with any of their respective officers or directors and with their independent certified public accountants and authorize and direct such accountants to disclose to the Agent or any of the Lender Parties any and all financial statements and other information of any kind that they may have with respect to any Borrower and any of its Subsidiaries. (f)Keeping of Books. Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of such Borrower and each such Subsidiary in accordance with generally accepted accounting principles in effect from time to time. (g)Maintenance of Properties, Etc. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted, except where the failure to do so, either individually or in the aggregate, could not be reasonably expected to have a Material Adverse Effect. (h)Compliance with Terms of Leaseholds. Make all payments and otherwise perform all obligations in respect of all leases of real property to which such Borrower or any of its Subsidiaries is a party, keep such leases in full force and effect and not allow such leases to lapse or be terminated or any rights to renew such leases to be forfeited or cancelled, notify the Agent of any default by any party with respect to such leases and cooperate with the Agent in all respects to cure any such default, and cause each of its Subsidiaries to do so, except, in any case, where the failure to do so, either individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect. (i)Performance of Related Documents. Perform and observe all of the terms and provisions of each Related Document to be performed or observed by it, maintain each such Related Document in full force and effect, enforce such Related Document in accordance with its terms, take all such action to such end as may be from time to time requested by the Agent and, upon request of the Agent, make to each other party to each such Related Document such demands and requests for information and reports or for action as such Borrower is entitled to make under such Related Document, and cause each of its Subsidiaries to do so, except, in any case, where the failure to do so, either individually or in the aggregate, could not be reasonably expected to have a Material Adverse Effect. (j)Transactions with Affiliates. Conduct, and cause each of its Subsidiaries to conduct, all transactions otherwise permitted under the Loan Documents with any of their Affiliates other than wholly owned Subsidiaries (except the Minor Subsidiaries) of Crompton Corp. on terms which have been determined by the applicable Borrower's board of directors or such Subsidiary's board of directors, board of trustees or managing partners, as the case may be, to be at least as favorable to the Borrowers as would be obtainable on an arm's length basis at the time of such transaction for a comparable transaction with a Person who is not an Affiliate; provided, however, the foregoing restriction shall not apply to (i) the execution by Crompton Corp. and certain of its Subsidiaries of, and payments by Crompton Corp. and any of its Subsidiaries pursuant to, the Tax Agreement, (ii) the payment of reasonable and customary fees to members of the board of directors of Crompton Corp. or any of its Subsidiaries who are not employees of Crompton Corp. or any of its Subsidiaries, (iii) loans and advances to officers, directors and employees of Crompton Corp. or any of its Subsidiaries for travel, entertainment, moving and other relocation expenses made in the ordinary course of business to the extent otherwise permitted hereunder, (iv) subject to the provisions of this Agreement, any transaction between or among Crompton Corp. and any of its wholly owned Subsidiaries or between Uniroyal and Premier Chemical Company, Ltd. (so long as Premier Chemical Company, Ltd. remains at least 80% owned, directly or indirectly, by Crompton Corp.), (v) payment by Crompton Corp. and its Subsidiaries of ordinary and customary compensation to their respective employees in the ordinary course of business, (vi) any dividends or other distributions permitted by Section 5.02(g), (vii) transactions with Monochem, Inc. and Rubicon Inc. on terms that are customary in the ordinary course of business of Uniroyal and its Subsidiaries as currently practiced, (viii) a Receivables Securitization and (ix) transactions in addition to those permitted by the foregoing clauses of this subsection (j) which in the aggregate involve amounts not in excess of $500,000 per year. (k) Covenant to Guarantee Obligations and Give Security. (i) At such time as any new direct or indirect Material Subsidiaries of any Loan Party are formed or acquired by such Loan Party or at such time as any Minor Subsidiary shall have revenues which exceed $250,000 for the twelve-month period ending on the last day of the most recent fiscal quarter of Crompton Corp. or the aggregate book value of the assets of such Minor Subsidiary, as at the end of the most recent fiscal quarter of Crompton Corp. exceeds $250,000, in each case to the extent not prohibited by the terms of the Uniroyal Indentures then in effect and at the expense of the Borrowers, within 30 days after such formation or acquisition, cause each such Material Subsidiary (other than any Foreign Subsidiary) or each such Minor Subsidiary, as the case may be, and cause each direct and indirect parent (other than the Borrowers and any Foreign Subsidiary) of such Material Subsidiary or each such Minor Subsidiary, as the case may be, (if it has not already done so), to duly execute and deliver to the Agent a guaranty, in form and substance satisfactory to the Agent, guaranteeing the other Loan Parties' Obligations under the Loan Documents; (ii) At any time prior to the Collateral Release Date, at such time as any new direct or indirect Material Subsidiaries of any Loan Party are formed or acquired by such Loan Party or at such time as any Minor Subsidiary shall have revenues which exceed $250,000 for the twelve-month period ending on the last day of the most recent fiscal quarter of Crompton Corp. or the aggregate book value of the assets of such Minor Subsidiary, as at the end of the most recent fiscal quarter of Crompton Corp. exceeds $250,000, in each case to the extent not prohibited by the terms of the Uniroyal Indentures then in effect and at the expense of the Borrowers, within 30 days after such formation or acquisition, duly execute and deliver, and cause each such Material Subsidiary (other than any Foreign Subsidiary) or each such Minor Subsidiary, as the case may be, and each direct and indirect parent of such Material Subsidiary or each such Minor Subsidiary, as the case may be, (other than any Foreign Subsidiary except to the extent provided in the proviso below), if it has not already done so, to duly execute and deliver, to the Agent, in the case of Crompton Corp. or any of its Subsidiaries (other than Uniroyal Corp. and its Subsidiaries), pledge agreements (pledging the capital stock of its Subsidiaries, except to the extent provided in the proviso below) and, in the case of any direct or indirect Subsidiary of Uniroyal Corp., security agreements (granting a security interest in Inventory and Receivables), as specified by and in form and substance satisfactory to the Agent, securing payment of all the Obligations of such Borrower, such Subsidiary or such parent, as the case may be, under the Loan Documents and constituting Liens on all such properties; provided that with respect to the pledge of the capital stock of any Foreign Subsidiary, such pledge shall cover not more than 66% of the outstanding capital stock of such Foreign Subsidiary if it is directly owned by a Loan Party and not cover any of the outstanding capital stock of such Foreign Subsidiary if it is directly or indirectly owned by another Foreign Subsidiary; (iii) At any time prior to the Collateral Release Date, upon the request of the Agent following the occurrence and during the continuance of an Event of Default, in each case to the extent not prohibited by the terms of the Uniroyal Indentures then in effect and at the expense of the Borrowers: (A)within 30 days after such request, duly execute and deliver, and cause each of its Subsidiaries (other than any Foreign Subsidiary) and each direct and indirect parent of such Subsidiary (if it has not already done so) (other than any Foreign Subsidiary except to the extent required in the proviso below) to duly execute and deliver, to the Agent mortgages, pledges, assignments and other security agreements, as specified by and in form and substance satisfactory to the Agent, securing payment of all the Obligations of such Borrower, such Subsidiary or such parent, as the case may be, under the Loan Documents and constituting Liens on all such properties; provided that with respect to the pledge of the capital stock of any Foreign Subsidiary, such pledge shall cover not more than 66% of the outstanding capital stock of such Foreign Subsidiary if it is directly owned by a Loan Party and not cover any of the outstanding capital stock of such Foreign Subsidiary if it is directly or indirectly owned by another Foreign Subsidiary; and (B)within 30 days after such request, take, and cause such Subsidiary (other than any Foreign Subsidiary) or such parent (other than any Foreign Subsidiary) to take, whatever action (including, without limitation, the recording of mortgages, the filing of Uniform Commercial Code financing statements, the giving of notices and the endorsement of notices on title documents) may be necessary or advisable in the opinion of the Agent to vest in the Agent (or in any representative of the Agent designated by it) valid and subsisting Liens on the properties purported to be subject to the mortgages, pledges, assignments and security agreements delivered pursuant to this Section 5.01(k), enforceable against all third parties in accordance with their terms; (iv)Within 60 days after such formation, acquisition or request, deliver to the Agent, upon the request of the Agent in its sole discretion, a signed copy of a favorable opinion, addressed to the Agent and the other Secured Parties, of counsel for the Loan Parties acceptable to the Agent as to the guaranties, mortgages, pledges, assignments and security agreements referred to in clauses (i), (ii) and (iii) above being the legal, valid and binding obligations of each Loan Party party thereto enforceable in accordance with their terms and as to such other matters as the Agent may reasonably request; and (v)At any time and from time to time, promptly execute and deliver any and all further instruments and documents and take all such other action as the Agent may deem necessary or desirable in obtaining the full benefits of, or in perfecting and preserving the Liens of, the guaranties, mortgages, pledges, assignments and security agreements referred to in clauses (i), (ii) and (iii) above. (l)Conditions Subsequent. Deliver to the Agent, in form and substance satisfactory to the Agent and in sufficient copies for each Lender Party, as soon as possible and in any event within 60 days after the Initial Extension of Credit (or such later date as may be agreed by Crompton Corp. and the Agent or such later date otherwise provided below): (i)acknowledgment copies of proper financing statements, duly filed under the Uniform Commercial Code of all jurisdictions that the Collateral Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Security Agreement, covering the Collateral described in the Security Agreement, (ii)completed requests for information, listing the financing statements referred to in clause (i) above and all other effective financing statements filed in the jurisdictions referred to in clause (i) above that name any Loan Party as debtor, together with copies of such financing statements, (iii)(A) evidence that such action as the Agent may deem necessary or desirable in order to perfect and protect the Liens created under the Crompton Security Agreement on the capital stock held by any Crompton Borrower or Crompton Guarantor in any of its Foreign Subsidiaries that are Material Subsidiaries has been taken, and (B) at the sole discretion of the Agent, evidence that such actions as the Agent may deem necessary or desirable in order to perfect and protect the Liens created under the Crompton Security Agreement on the capital stock held by any Crompton Borrower or Crompton Guarantor in any of its Foreign Subsidiaries that are not Material Subsidiaries; provided that in any event such Liens shall cover not more than 66% of the outstanding capital stock of Foreign Subsidiaries directly owned by such Loan Party and shall not cover any capital stock of any Foreign Subsidiary directly or indirectly owned by a Foreign Subsidiary, (iv)evidence that all other action as the Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Collateral Documents has been taken, and (v)within 90 days after the date hereof, (A) cause (1) Crompton & Knowles I.P.R. Corporation (if it has not already done so) to duly execute and deliver to the Agent a guaranty, in form and substance satisfactory to the Agent, guaranteeing the other Loan Parties' Obligations under the Loan Documents, (2) Crompton & Knowles I.P.R. Corporation (if it has not already done so) to duly execute and deliver to the Agent, a pledge agreement, pledging the intercompany Debt owed to Crompton & Knowles I.P.R. Corporation, in form and substance satisfactory to the Agent, securing payment of its Obligations under the Loan Documents and constituting Liens on all such properties and (3) each direct and indirect parent of Crompton & Knowles I.P.R. Corporation to duly execute and deliver to the Agent, a pledge agreement, pledging the capital stock of Crompton & Knowles I.P.R. Corporation, in form and substance satisfactory to the Agent, securing payment of its Obligations under the Loan Documents and constituting Liens on all such properties or (B) fully dissolve and liquidate the assets of Crompton & Knowles I.P.R. Corporation (if it has not already done so). SECTION 5.02. Negative Covenants. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, no Borrower will, at any time: (a)Liens, Etc. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on or with respect to any of its properties of any character (including, without limitation, accounts) whether now owned or hereafter acquired, or sign or file or suffer to exist, or permit any of its Subsidiaries to sign or file or suffer to exist, under the Uniform Commercial Code of any jurisdiction, a financing statement that names any Borrower or any of its Subsidiaries as debtor, or sign or suffer to exist, or permit any of its Subsidiaries to sign or suffer to exist, any security agreement authorizing any secured party thereunder to file such financing statement, or assign, or permit any of its Subsidiaries to assign, any accounts or other right to receive income, excluding, however, from the operation of the foregoing restrictions the following: (i)Liens created under the Loan Documents; (ii)with respect to any Person, all of the following (collectively, the "Permitted Liens"): (A)pledges or deposits by such Person under workers' compensation laws, unemployment insurance laws or similar legislation or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Debt) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States Government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or for charges relating thereto (including, without limitation, interest, penalties and certain other similar charges) or import duties or for the payment of rent; (B)(x) liens imposed by law, such as carriers', warehousemen's and mechanics' liens or (y) other liens arising out of judgments or awards against such Person with respect to which such Person shall then be prosecuting an appeal or other proceedings for review or otherwise arising out of judicial proceedings to the extent such liens do not constitute an Event of Default; (C)liens for taxes, assessments or governmental charges or levies to the extent not required to be paid by Section 5.01(b); and (D)minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not incurred in connection with Debt or other extensions of credit and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person. (iii)Liens existing on the date hereof and described on Schedule 5.02(a) hereto; (iv)purchase money Liens upon or in real property or personal property (other than Inventory of Uniroyal Corp. and its Subsidiaries) acquired or held by any Borrower or any of its Subsidiaries in the ordinary course of business to secure the purchase price of such property or to secure Debt incurred solely for the purpose of financing the acquisition, construction or improvement of any such property to be subject to such Liens, or Liens existing on any such property at the time of acquisition (other than any such Liens created in contemplation of such acquisition that do not secure the purchase price); provided, however, that no such Lien shall extend to or cover any property other than the property being acquired, constructed or improved, and no such extension, renewal or replacement shall extend to or cover any property not theretofore subject to the Lien being extended, renewed or replaced; and provided further that the aggregate principal amount of the Debt secured by Liens permitted by this clause (iv) shall not exceed the amount permitted under Section 5.02(b)(iii)(B) at any time outstanding and that any such Debt shall not otherwise be prohibited by the terms of the Loan Documents; (v)Liens arising in connection with Capitalized Leases permitted under Section 5.02(b)(iii)(C); provided that no such Lien shall extend to or cover any Collateral or assets other than the assets subject to such Capitalized Leases; (vi)Liens on property of a Person existing at the time such Person is merged into or consolidated with any Borrower or any Subsidiary of such Borrower or becomes a Subsidiary of such Borrower; provided that such Liens were not created in contemplation of such merger, consolidation or investment and do not extend to any assets other than those of the Person merged into or consolidated with such Borrower or such Subsidiary or acquired by such Borrower or such Subsidiary; (vii)Liens arising in connection with any lease permitted under Section 5.02(c), provided that no such Lien shall extend to or cover any assets other than the assets subject to such lease; (viii)Liens securing Debt incurred by Foreign Subsidiaries pursuant to Section 5.02(b)(iii)(G) and (H); (ix)Liens on accounts receivable (and in property securing or otherwise supporting such accounts receivable together with proceeds thereof) of Crompton Corp. and its Subsidiaries (other than Uniroyal Corp. and its Subsidiaries) in connection with a Receivables Securitization; (x)Liens securing Obligations of Crompton Corp. or any of its Subsidiaries in an aggregate amount not to exceed $5,000,000 at any time outstanding; (xi)filings for information purposes only under the Uniform Commercial Code, as amended, of any state in connection with a lease of property (other than Capitalized Leases); and (xii)Liens to secure any extension, renewal or replacement (or successive extensions, renewals or replacements) as a whole, or in part, of any Debt secured by any Lien referred to in the foregoing clauses (iii) through (vii), provided that (i) such extended, renewed or replacement Lien shall be limited to all or part of the same type of property that secured the Lien extended, renewed or replaced (plus improvements on such property) and (ii) the Debt secured by such Lien at such time is not increased to an amount in excess of the original principal amount of the Debt secured by such Lien. (b)Debt. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Debt other than: (i)in the case of the Borrowers, (A)Debt of the Uniroyal Borrower in respect of the Seoul Guaranty, provided that the U.S. dollar equivalent of the amount of such Debt shall not exceed U.S.$5,000,000, (B)Debt in respect of Interest Rate Swap Agreements designed to hedge against fluctuations in interest rates incurred in the ordinary course of business and consistent with prudent business practice in an aggregate notional amount not to exceed $400,000,000 at any time outstanding, (C)Debt in respect of Foreign Exchange Agreements designed to hedge against fluctuations in foreign exchange rates incurred in the ordinary course of business and consistent with prudent business practice in an aggregate notional amount not to exceed $100,000,000 at any time outstanding, and (D)Debt owed to Crompton Corp. or to a wholly owned Subsidiary of Crompton Corp, provided that, solely with respect to any Borrower, Guarantor and Uniroyal Chemical Ltd., such Debt (x) shall, to the extent not prohibited by the terms of the Uniroyal Indentures then in effect, constitute Pledged Debt (as defined in the Security Agreement) other than any such Debt owing to any Minor Subsidiary and (y) shall, to the extent not prohibited by the terms of the Uniroyal Indentures then in effect, be evidenced by promissory notes in form and substance satisfactory to the Agent and such promissory notes shall be pledged as security for the Obligations under the Loan Documents of the holder thereof and delivered to the Agent pursuant to the terms of the Security Agreement, (ii)in the case of any of such Borrower's Subsidiaries (other than any Minor Subsidiary), Debt owed to any Borrower or to a wholly owned Subsidiary of any Borrower, provided that, solely with respect to any Borrower, Guarantor and Uniroyal Chemical Ltd., such Debt (A) shall, to the extent not prohibited by the terms of the Uniroyal Indentures then in effect, constitute Pledged Debt (as defined in the Security Agreement) other than any such Debt owing to any Minor Subsidiary and (B) shall be evidenced by promissory notes in form and substance satisfactory to the Agent and such promissory notes shall be pledged as security for the Obligations under the Loan Documents of the holder thereof and delivered to the Agent pursuant to the terms of the Security Agreement, and (iii)in the case of the Borrowers and their respective Subsidiaries (other than any Minor Subsidiary except as provided below), (A)Debt under the Loan Documents, (B)Debt secured by Liens permitted by Section 5.02(a)(iv) not to exceed in the aggregate, together with Debt referred to in clause (C) below, $100,000,000 at any time outstanding, (C)(i) Capitalized Leases not to exceed in the aggregate, together with Debt referred to in clause (B) above, $100,000,000 at any time outstanding and (ii) in the case of Capitalized Leases to which any Subsidiary of any Borrower is a party, Debt of such Borrower of the type described in clause (i) of the definition of "Debt" guaranteeing the Obligations of such Subsidiary under such Capitalized Leases, (D)the Surviving Debt listed on Part I of Schedule 3.01(d) hereto, and any Debt extending the maturity of, or refunding or refinancing, in whole or in part, any Surviving Debt, provided that the terms of any such extending, refunding or refinancing Debt, and of any agreement entered into and of any instrument issued in connection therewith, are otherwise permitted by the Loan Documents; provided further that the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such extending, refunding or refinancing Debt, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or the Lender Parties than the terms of any agreement or instrument governing the Surviving Debt being extended, refunded or refinanced and the interest rate applicable to any such extending, refunding or refinancing Debt does not exceed the then market interest rate for companies having a credit standing similar to that of Crompton Corp. at such time, provided still further that the principal amount of such Surviving Debt shall not be increased above the principal amount thereof outstanding immediately prior to such extension, refunding or refinancing plus the amount of any redemption premium stipulated in the indenture relating to such Surviving Debt or other reasonable premium paid in connection with any redemption of, or tender offer or exchange offer for, or open market purchase of, such Surviving Debt, and the direct and contingent obligors therefor shall not be changed, as a result of or in connection with such extension, refunding or refinancing, provided still further that any Debt refinancing the Surviving Debt with respect to the Receivables Securitization listed on Part I of Schedule 3.01(d) may be incurred up to 6 months after the termination of such Receivables Securitization, (E)Debt of any Person that becomes a Subsidiary of any Borrower after the date hereof in accordance with the terms of Section 5.02(f) which Debt is existing at the time such Person becomes a Subsidiary of such Borrower (other than Debt incurred solely in contemplation of such Person becoming a Subsidiary of such Borrower), (F)Debt owing to the Daylight Overdraft Bank in respect of any daylight overdraft facility or in connection with any automated clearing house transfers of funds in an aggregate amount outstanding at any time not to exceed $10,000,000 in the case of the Crompton Borrowers and $10,000,000 in the case of the Uniroyal Borrower, (G)(i)Debt of any Foreign Subsidiary or any of its Subsidiaries incurred for business purposes, provided that the aggregate Debt described in this clause (G) for all such Persons at any one time outstanding shall not exceed the sum of (A) 60% of the book value of Inventory of Foreign Subsidiaries plus (B) 90% of the book value of Receivables of Foreign Subsidiaries plus (C) $100,000,000 and (ii) Debt of any Borrower of the type described in clause (i) of the definition of "Debt" guaranteeing up to 40% of the Obligations of Foreign Subsidiaries outstanding under clause (i) above, (H)Debt of Foreign Subsidiaries relating to sales of accounts receivable pursuant to Section 5.02(e)(v), (I)Debt, if any, of Crompton Corp. and its Subsidiaries (other than Uniroyal Corp. and its Subsidiaries and the Minor Subsidiaries), incurred in connection with a Receivables Securitization, (J)short term, unsecured Debt in an aggregate amount not to exceed $75,000,000 at any time outstanding, provided, however, that the aggregate amount of Debt issued or incurred pursuant to this clause (J) and clause (K) shall not exceed in the aggregate $125,000,000 at any time outstanding, (K)other Debt in an aggregate amount not to exceed $75,000,000 at any time outstanding, provided, however, that the aggregate amount of Debt issued or incurred pursuant to clause (J) and this clause (K) shall not exceed in the aggregate $125,000,000 at any time outstanding, (L)endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, (M)unsecured Debt of Naugatuck in an aggregate amount not to exceed $1,000,000 at any time outstanding, and (N)intercompany Debt owing to Crompton & Knowles I.P.R. Corporation in an amount not to exceed $33,000,000 at any time outstanding subject, however, to the provisions of Section 5.01(l)(v). (c)Lease Obligations. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any obligations as lessee for the rental or hire of real or personal property of any kind under leases or agreements to lease (including Capitalized Leases) having an original term of one year or more that would cause the direct and contingent liabilities of Crompton Corp. and its Subsidiaries, on a Consolidated basis, in respect of all such obligations to exceed $50,000,000 payable in any period of 12 consecutive months; provided, however, that no Minor Subsidiary (other than Naugatuck) shall create, incur, assume or suffer to exist any obligations as lessee for the rental or hire of real or personal property of any kind under leases or agreements to lease (including Capitalized Leases). (d)Mergers, Etc. Merge into or consolidate with any Person or permit any Person to merge into it, or permit any of its Subsidiaries to do so, except that (i) the Borrowers and their Subsidiaries may consummate the Merger, (ii) Uniroyal Corp. may merge into or consolidate with Crompton Corp., (iii) any Foreign Subsidiary may merge into or consolidate with any other Foreign Subsidiary; (iv) any Foreign Subsidiary may merge into or consolidate with any Domestic Subsidiary, provided that such Domestic Subsidiary shall survive such merger, (v) any Domestic Subsidiary of Crompton Corp. (other than the Borrowers and Uniroyal Corp. and its Subsidiaries) may merge into or consolidate with any other Domestic Subsidiary of Crompton Corp. (other than the Borrowers and Uniroyal Corp. and its Subsidiaries) so long as if any Loan Party is party to such merger or consolidaton, such Loan Party shall survive such merger or consolidation, (vi) any Domestic Subsidiary of Uniroyal Corp. may merge into or consolidate with any other Domestic Subsidiary of Uniroyal Corp. so long as if any Loan Party is party to such merger or consolidation, such Loan Party shall survive such merger or consolidation, (vii) after the Collateral Release Date, any Subsidiary of Crompton Corp. (other than the other Borrowers) may merge into or consolidate with any Borrower or any other Subsidiary of Crompton Corp. so long as if any Borrower is party to such merger or consolidation, such Borrower shall survive such merger or consolidation, (viii) in connection with any acquisition permitted under Section 5.02(f), any Subsidiary of Crompton Corp. may merge into or consolidate with any other Person or permit any other Person to merge into or consolidate with it; provided that the Person surviving such merger shall be a wholly owned Subsidiary of Crompton Corp. and (ix) in connection with any sale or other disposition permitted under Section 5.02(e) (other than clause (ii) thereof), any Subsidiary of Crompton Corp. may merge into or consolidate with any other Person or permit any other Person to merge into or consolidate with it; provided, however, that in each case, immediately after giving effect thereto, no event shall occur and be continuing that constitutes a Default and, in the case of any such merger to which Crompton Corp. is a party, Crompton Corp. is the surviving corporation. (e)Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise dispose of, any assets, or grant any option or other right to purchase, lease or otherwise acquire any assets other than Inventory to be sold in the ordinary course of its business, except: (i)sales of Inventory in the ordinary course of its business, (ii)in a transaction authorized by Section 5.02(d) (other than clause (ix) thereof), (iii)sales of assets and for fair value in an aggregate amount not to exceed $50,000,000 in any Fiscal Year, (iv)the sale or other disposition of damaged, worn out or obsolete property that is no longer necessary for the proper conduct of the business of Crompton Corp. and its Subsidiaries in the ordinary course of business, (v)sales of accounts receivable of Foreign Subsidiaries on a basis which is non-recourse to Crompton Corp. and its Subsidiaries (other than any Minor Subsidiary) (which accounts receivable shall at no time exceed 25% of the aggregate accounts receivable of Crompton Corp. and its Consolidated Subsidiaries), (vi)sales of assets after the Effective Date having an aggregate fair market value of not more than the greater of (A) $100,000,000 and (B) an amount equal to 5% of Consolidated sales of Crompton Corp. and its Subsidiaries since the Effective Date, provided that the Net Cash Proceeds of such asset sales are applied to purchase substantially similar assets (whether by means of an acquisition of stock or assets or otherwise) constituting Investments permitted under Section 5.02(f) or Capital Expenditures permitted under Section 5.02(n) or to prepay permanently Debt of Crompton Corp. or any of its Subsidiaries, (vii)sales of accounts receivable of Crompton Corp. and its Subsidiaries (other than Uniroyal Corp. and its Subsidiaries and the Minor Subsidiaries) in connection with agreements for limited recourse or non-recourse sales by Crompton Corp. or any of its Subsidiaries (other than Uniroyal Corp. and its Subsidiaries and the Minor Subsidiaries) for cash, provided that (A) any such agreement is of a type and on terms customary for comparable transactions in the good faith judgment of the Board of Directors of Crompton Corp., (B) such agreement does not create any interest in any asset other than accounts receivable (and property securing or otherwise supporting accounts receivable) and proceeds of the foregoing and (C) the Net Cash Proceeds thereof in excess of $25,000,000 shall be applied to the permanent reduction of the Facilities in accordance with Section 2.05(b)(iv) (a "Receivables Securitization"), (viii)the sale of assets listed in a letter dated the Effective Date from Crompton Corp. addressed and delivered to the Lender Parties on or prior to the Effective Date, and (ix)the transfer of assets among Loan Parties to the extent permitted under Section 5.02(f)(vii). (f)Investments in Other Persons. Make or hold, or permit any of its Subsidiaries to make or hold, any Investment in any Person other than: (i)equity Investments by the Borrowers and their Subsidiaries in their Subsidiaries outstanding on the date hereof and additional equity investments in wholly owned Subsidiaries (other than any Minor Subsidiary), which Subsidiaries were in existence on the date hereof; (ii)loans and advances to employees in the ordinary course of the business of the Borrowers and their Subsidiaries (other than any Minor Subsidiary) as presently conducted in an aggregate principal amount not to exceed $5,000,000 at any time outstanding; (iii)Investments by the Borrowers and their Subsidiaries in Cash Equivalents; (iv)Investments by the Borrowers in Hedge Agreements permitted under Sections 5.02(b)(i)(B) and (C); (v)Investments consisting of intercompany Debt permitted under Section 5.02(b)(i)(D) or (ii); (vi)Investments existing on the date hereof and described on Part I of Schedule 5.02(f) hereto; (vii)Investments consisting of the contribution of assets of (A) any Loan Party to any other Loan Party in an aggregate amount not to exceed $50,000,000 in any Fiscal Year or $100,000,000 in the aggregate after the Effective Date, (B) any Domestic Subsidiary to any Foreign Subsidiary in an aggregate amount not to exceed $25,000,000 in any Fiscal Year or $50,000,000 in the aggregate after the Effective Date, (C) any Foreign Subsidiary to any other Foreign Subsidiary, (D) any Foreign Subsidiary to any Domestic Subsidiary (other than any Minor Subsidiary) and (E) Uniroyal to Uniroyal Chemical Leasing Company, Inc. in an amount not to exceed $100,000,000 in the aggregate after the Effective Date; (viii) Investments by Crompton Corp. and its Subsidiaries in (A) the joint ventures listed on Part II of Schedule 5.02(f) and other joint ventures and non-wholly owned Subsidiaries in an aggregate amount invested (including, without limitation, assumption of debt, noncompetition arrangements, "earn-outs" and other deferred payment arrangements) not to exceed $50,000,000 and (B) Monochem, Inc. and Rubicon, Inc.; provided that with respect to Investments made under this clause (viii): (1) immediately before and after giving effect thereto, no Default shall have occurred and be continuing or would result therefrom; (2) any business acquired or invested in pursuant to this clause (viii) shall be in the same general line of business or substantially related lines of business as the business of Crompton Corp. or such Subsidiary; and (3) immediately after giving effect to the acquisition of a company or business pursuant to this clause (viii), Crompton Corp. shall be in pro forma compliance with the covenants contained in Section 5.04, calculated based on the relevant Financial Statements, as though such acquisition had occurred at the beginning of the 12-month period covered thereby, as evidenced by a certificate of the chief financial officer or treasurer of Crompton Corp. furnished to the Lender Parties, demonstrating such compliance; (ix)other Investments (other than Investments in Minor Subsidiaries) in an aggregate amount invested not to exceed the sum of (A) an amount equal to the aggregate Net Cash Proceeds of any equity issued by Crompton Corp. after the Effective Date and (B) in any Fiscal Year, an amount equal to Available Cash Flow for such Fiscal Year; provided that with respect to Investments made under this clause (ix): (1) any newly acquired or created Subsidiary of any Borrower or any of its Subsidiaries shall be a wholly owned Subsidiary thereof; (2) immediately before and after giving effect thereto, no Default shall have occurred and be continuing or would result therefrom; (3) any business acquired or invested in pursuant to this clause (ix) shall be in the same general line of business or substantially related lines of business as the business of such Borrower or any of its Subsidiaries; and (4) immediately after giving effect to the acquisition of a company or business pursuant to this clause (ix), Crompton Corp. shall be in pro forma compliance with the covenants contained in Section 5.04, calculated based on the relevant Financial Statements, as though such acquisition had occurred at the beginning of the 12-month period covered thereby, as evidenced by a certificate of the chief financial officer or treasurer of Crompton Corp. furnished to the Lender Parties, demonstrating such compliance; and (x)additional equity Investments in Naugatuck and intercompany Debt incurred by Naugatuck not to exceed $5,000,000 in the aggregate from the date hereof. (g)Dividends, Etc. Declare or pay any dividends, purchase, redeem, retire, defease or otherwise acquire for value any of its capital stock or any warrants, rights or options to acquire such capital stock, now or hereafter outstanding, return any capital to its stockholders as such, make any distribution of assets, capital stock, warrants, rights, options, obligations or securities to its stockholders as such or issue or sell any capital stock or any warrants, rights or options to acquire such capital stock, or permit any of its Subsidiaries to do any of the foregoing or permit any of its Subsidiaries to purchase, redeem, retire, defease or otherwise acquire for value any capital stock of any Borrower or any warrants, rights or options to acquire such capital stock or to issue or sell any capital stock or any warrants, rights or options to acquire such capital stock, except that, so long as no Default shall have occurred and be continuing at the time of any action described in clauses (i) and (ii) below or would result therefrom, (i) Crompton Corp. may (A) declare and pay dividends and distributions payable only in common stock of Crompton Corp., (B) issue and sell shares of its capital stock, (C) purchase, redeem, retire, defease or otherwise acquire shares of its capital stock with the proceeds received from the issue of new shares of its capital stock with equal or inferior voting powers, designations, preferences and rights and (D) declare and pay cash dividends to its stockholders and purchase, redeem, retire or otherwise acquire shares of its own outstanding capital stock for cash in an amount not to exceed in the Fiscal Year ending on or about December 31, 1996, $15,000,000, and in any Fiscal Year thereafter the greater of (I) $15,000,000 and (II) 50% of Consolidated net income of Crompton Corp. and its Subsidiaries for the immediately preceding Fiscal Year computed in accordance with GAAP, and (ii) any Subsidiary of Crompton Corp. may (A) declare and pay cash dividends to any Borrower (including, without limitation, the declaration and payment of cash dividends by Uniroyal to Uniroyal Corp.) and (B) declare and pay cash dividends to any other wholly owned Subsidiary of any Borrower of which it is a Subsidiary. (h)Change in Nature of Business. Make, or permit any of its Subsidiaries to make, any material change in the nature of its business as carried on at the date hereof. (i)Charter Amendments. Amend, or permit any of its Subsidiaries to amend, its certificate of incorporation or bylaws in any material respect. (j)Accounting Changes. Make or permit, or permit any of its Subsidiaries to make or permit, any change in (i) accounting policies or reporting practices, except as required or permitted by generally accepted accounting principles or (ii) Fiscal Year, except in each case, as necessary to make such Fiscal Year the same with respect to Uniroyal Corp. and Crompton Corp. (k)Amendment, Etc. of Related Documents. Cancel or terminate any Related Document or consent to or accept any cancellation or termination thereof, amend, modify or change in any manner any term or condition of any Related Document or give any consent, waiver or approval thereunder, waive any default under or any breach of any term or condition of any Related Document, agree in any manner to any other amendment, modification or change of any term or condition of any Related Document or take any other action in connection with any Related Document, in each case that would impair in any material respect the value of the interest or rights of any Borrower thereunder or that would impair the rights or interests of the Agent or any Lender Party, or permit any of its Subsidiaries to do any of the foregoing. (l)Negative Pledge. Enter into or suffer to exist, or permit any of its Subsidiaries to enter into or suffer to exist, any agreement prohibiting or conditioning the creation or assumption of any Lien upon any of its property or assets other than (i) in favor of the Secured Parties, (ii) in connection with any Surviving Debt, any Debt extending the maturity of, or refunding or refinancing, in whole or in part, any Surviving Debt in accordance with Section 5.02(b)(iii)(D) (to the extent the agreement or instrument evidencing such Surviving Debt contained such a provision or agreement) and any Debt outstanding on the date such Subsidiary first becomes a Subsidiary (so long as such agreement was not entered into solely in contemplation of such Subsidiary becoming a Subsidiary) or (iii) in connection with any lease permitted under Section 5.02(c) solely to the extent that such lease prohibits a Lien on the lease or the property subject to such lease. (m)Partnerships, Etc. Become a general partner in any general or limited partnership or joint venture, or permit any of its Subsidiaries to do so, other than any Subsidiary the sole assets of which consist of its interest in such partnership or joint venture. (n)Capital Expenditures. Make, or permit any of its Subsidiaries to make, any Capital Expenditures that would cause the aggregate of all such Capital Expenditures made by Crompton Corp. and its Subsidiaries in any period set forth below to exceed the amount set forth below for such period. Fiscal Year Ending On or About Amount December 31, 1996 $100,000,000 December 31, 1997 $100,000,000 December 31, 1998 $110,000,000 December 31, 1999 $110,000,000 December 31, 2000 $110,000,000 December 31, 2001 and thereafter $110,000,000 plus, for each Fiscal Year set forth above, an amount equal to (i) the excess, if any, of the amount set opposite the immediately preceding Fiscal Year over the aggregate amount of such Capital Expenditures actually made during such Fiscal Year (other than pursuant to clause (ii) below), provided that any Capital Expenditures made in any Fiscal Year shall be applied first against any amount permitted to be carried over from the immediately preceding Fiscal Year and (ii) the amount of any Net Cash Proceeds received with respect to the sale, lease, transfer or other disposition of assets pursuant to Section 5.02(e)(vi), solely to the extent such Net Cash Proceeds are not used to make Investments permitted under Section 5.02(f) or to prepay permanently Debt of Crompton Corp. or any of its Subsidiaries, provided that such amount of Net Cash Proceeds shall not be carried over to any subsequent Fiscal Year pursuant to clause (i) above. (o) Minor Subsidiaries. Permit any Minor Subsidiary (other than Naugatuck Treatment Company) to enter into or conduct any business or engage in any activity (including, without limitation, any action or transaction that is required or restricted with respect to any Borrower and its Subsidiaries under Section 5.01 and this Section 5.02). SECTION 5.03. Reporting Requirements. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, Crompton Corp. will furnish to the Agent and the Lender Parties: (a) Default Notice. As soon as possible and in any event within five days after any Responsible Officer of any Borrower becomes aware of the occurrence of each Default or any event, development or occurrence reasonably likely to have a Material Adverse Effect continuing on the date of such statement, a statement of the chief financial officer, treasurer or chief accounting officer of such Borrower setting forth details of such Default and the action that such Borrower has taken and proposes to take with respect thereto. (b) Quarterly Financials. As soon as available and in any event within 50 days after the end of each of the first three quarters of each Fiscal Year, Consolidated and, to the extent otherwise available, consolidating balance sheets of Crompton Corp. and its Subsidiaries and Consolidated balance sheets of Uniroyal Corp. and its Subsidiaries, in each case, as of the end of such quarter and Consolidated and, to the extent otherwise available, consolidating statements of income and a Consolidated statement of cash flows of Crompton Corp. and its Subsidiaries and Consolidated statements of income and of cash flows of Uniroyal Corp. and its Subsidiaries, in each case, for the period commencing at the end of the previous fiscal quarter and ending with the end of such fiscal quarter and Consolidated and, to the extent otherwise available, consolidating statements of income and a Consolidated statement of cash flows of Crompton Corp. and its Subsidiaries and Consolidated statements of income and of cash flows of Uniroyal Corp. and its Subsidiaries, in each case, for the period commencing at the end of the previous Fiscal Year and ending with the end of such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding period of the preceding Fiscal Year, all in reasonable detail and duly certified (subject to year-end audit adjustments) by the chief financial officer or treasurer of such Borrower as having been prepared in accordance with GAAP, together with (i) a certificate of said officer stating that no Default has occurred and is continuing or, if a Default has occurred and is continuing, a statement as to the nature thereof and the action that such Borrower has taken and proposes to take with respect thereto and (ii) a schedule in form satisfactory to the Agent of the computations used by Crompton Corp. in determining compliance with the covenants contained in Sections 5.04(a) and (b), provided that in the event of any change in GAAP used in the preparation of such financial statements, Crompton Corp. shall also provide, if necessary for the determination of compliance with Section 5.04, a statement of reconciliation conforming such financial statements to GAAP. (c) Annual Financials. As soon as available and in any event within 95 days after the end of each Fiscal Year, a copy of the annual report for such year for Crompton Corp. and its Subsidiaries, including therein a Consolidated balance sheet of Crompton Corp. and its Subsidiaries as of the end of such Fiscal Year and a Consolidated statement of income and a Consolidated statement of cash flows of Crompton Corp. and its Subsidiaries for such Fiscal Year, in each case accompanied by an opinion acceptable to the Required Lenders of KPMG Peat Marwick LLP or other independent public accountants of recognized standing acceptable to the Required Lenders, and a Consolidated and, to the extent otherwise available, consolidating balance sheets of Crompton Corp. and Uniroyal Corp. and their respective Subsidiaries as of the end of such Fiscal Year and Consolidated and, to the extent otherwise available, consolidating statements of income and a Consolidated statement of cash flows of Crompton Corp. and Uniroyal Corp. and their respective Subsidiaries for such Fiscal Year, all in reasonable detail and duly certified by the chief financial officer or treasurer of such Borrower as having been prepared in accordance with GAAP, together with (i) a certificate of such accounting firm to the Lender Parties stating that in the course of the regular audit of the business of Crompton Corp. and its Subsidiaries, which audit was conducted by such accounting firm in accordance with generally accepted auditing standards, such accounting firm has obtained no knowledge that a Default has occurred and is continuing, or if, in the opinion of such accounting firm, a Default has occurred and is continuing, a statement as to the nature thereof, (ii) a schedule in form satisfactory to the Agent of the computations used by such accountants in determining, as of the end of such Fiscal Year, compliance with the covenants contained in Sections 5.04(a) and (b), provided that in the event of any change in GAAP used in the preparation of such financial statements, Crompton Corp. shall also provide, if necessary for the determination of compliance with Section 5.04, a statement of reconciliation conforming such financial statements to GAAP and (iii) a certificate of the chief financial officer or treasurer of each Borrower stating that no Default has occurred and is continuing or, if a default has occurred and is continuing, a statement as to the nature thereof and the action that such Borrower has taken and proposes to take with respect thereto. (d) Annual Forecasts. As soon as available and in any event no later than 30 days after the end of each Fiscal Year, forecasts prepared by management of Crompton Corp. and Uniroyal Corp., in form satisfactory to the Agent, of balance sheets, income statements and cash flow statements for Crompton Corp. and its Subsidiaries, Uniroyal Corp. and its Subsidiaries and Crompton Corp. and its Subsidiaries (other than Uniroyal Corp. and its Subsidiaries) on an annual basis for the Fiscal Year following such Fiscal Year then ended and for each Fiscal Year thereafter until the Termination Date. (e) Annual Budget. As soon as available and in any event within 30 days after the end of each Fiscal Year, an annual budget for Crompton Corp. and its Subsidiaries, Uniroyal Corp. and its Subsidiaries and Crompton Corp. and its Subsidiaries (other than Uniroyal Corp. and its Subsidiaries), prepared by management of Crompton Corp. and Uniroyal Corp. consisting of balance sheets, income statements and cash flow statements on a quarterly basis for the Fiscal Year following such Fiscal Year then ended in form and substance satisfactory to the Agent. (f) ERISA Events and ERISA Reports. (i) Promptly and in any event within 15 days after any Loan Party or any ERISA Affiliate knows or has reason to know that any ERISA Event has occurred, a statement of the chief financial officer or treasurer of Crompton Corp. describing such ERISA Event and the action, if any, that such Loan Party or such ERISA Affiliate has taken and proposes to take with respect thereto and (ii) promptly and in any event within two days after the date any records, documents or other information must be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA, a copy of such records, documents and information. (g) Plan Terminations. Promptly and in any event within three Business Days after receipt thereof by any Loan Party or any ERISA Affiliate, copies of each notice from the PBGC stating its intention to terminate any Plan or to have a trustee appointed to administer any Plan. (h) Plan Annual Reports. Promptly and in any event within 30 days after the filing thereof with the Internal Revenue Service, copies of each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) with respect to each Plan. (i) Multiemployer Plan Notices. Promptly and in any event within five Business Days after receipt thereof by any Loan Party or any ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of each notice concerning (i) the imposition of Withdrawal Liability by any such Multiemployer Plan, (ii) the reorganization or termination, within the meaning of Title IV of ERISA, of any such Multiemployer Plan or (iii) the amount of liability incurred, or that may be incurred, by such Loan Party or any ERISA Affiliate in connection with any event described in clause (i) or (ii). (j) Litigation. Promptly after the commencement thereof, notice of all actions, suits, investigations, litigation and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting any Loan Party or any of its Subsidiaries of the type described in Section 4.01(k), and promptly after the occurrence thereof, notice of any adverse change in the status or the financial effect on any Loan Party or any of its Subsidiaries of the Disclosed Litigation from that described on Schedule 3.01(f). (k) Securities Reports. Promptly after the sending or filing thereof, copies of all proxy statements, financial statements and reports that any Loan Party or any of its Subsidiaries sends to its outside stockholders, and copies of all regular, periodic and special reports, and all registration statements, that any Loan Party or any of its Subsidiaries files with the Securities and Exchange Commission or any governmental authority that may be substituted therefor, or with any national securities exchange. (l) Creditor Reports. Promptly after the furnishing thereof, copies of any statement or report furnished to any other holder of the securities of any Loan Party or of any of its Subsidiaries pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lender Parties pursuant to any other clause of this Section 5.03. (m) Agreement Notices. Promptly upon receipt thereof, copies of all notices of any default or breach and all other material requests and other documents received by any Loan Party or any of its Subsidiaries under or pursuant to any Related Document or indenture, loan or credit or similar agreement and, from time to time upon request by the Agent, such information and reports regarding the Related Documents as the Agent may reasonably request. (n) Revenue Agent Reports. Within 10 days after receipt, copies of all Revenue Agent Reports (Internal Revenue Service Form 886), or other written proposals of the Internal Revenue Service, that propose, determine or otherwise set forth positive adjustments to the Federal income tax liability of the affiliated group (within the meaning of Section 1504(a)(1) of the Internal Revenue Code) of which Crompton Corp. is a member aggregating $3,000,000 or more. (o) Environmental Conditions. Promptly after the assertion or occurrence thereof, notice of any Environmental Action against or of any noncompliance by any Loan Party or any of its Subsidiaries with any Environmental Law or Environmental Permit that could reasonably be expected to have a Material Adverse Effect. (p) Other Information. Such other information respecting the business, condition (financial or otherwise), operations, performance, properties or prospects of any Loan Party or any of its Subsidiaries as any Lender Party (through the Agent) may from time to time reasonably request. SECTION 5.04. Financial Covenants. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, Crompton Corp. will: (a) Leverage Ratio. Maintain at the end of each fiscal quarter of Crompton Corp. a Total Debt/EBITDA Ratio of not more than the amount set forth below for each Rolling Period set forth below: Rolling Period Ending On or About Ratio September 30, 1996 4.00:1.0 December 31, 1996 4.00:1.0 March 31, 1997 4.00:1.0 June 30, 1997 4.00:1.0 September 30, 1997 3.75:1.0 December 31, 1997 3.75:1.0 March 31, 1998 3.75:1.0 June 30, 1998 3.50:1.0 September 30, 1998 3.50:1.0 December 31, 1998 3.50:1.0 March 31, 1999 3.25:1.0 June 30, 1999 3.00:1.0 September 30, 1999 3.00:1.0 December 31, 1999 3.00:1.0 March 31, 2000 3.00:1.0 June 30, 2000 3.00:1.0 September 30, 2000 3.00:1.0 December 31, 2000 3.00:1.0 March 31, 2001 3.00:1.0 June 30, 2001 thereafter 3.00:1.0 (b)Interest Coverage Ratio. Maintain at the end of each fiscal quarter of Crompton Corp. an Interest Coverage Ratio of not less than the amount set forth below for each Rolling Period set forth below: Rolling Period Ending On or About Ratio September 30, 1996 2.50:1.0 December 31, 1996 2.50:1.0 March 31, 1997 2.50:1.0 June 30, 1997 2.50:1.0 September 30, 1997 2.75:1.0 December 31, 1997 2.75:1.0 March 31, 1998 2.75:1.0 June 30, 1998 2.75:1.0 September 30, 1998 2.75:1.0 December 31, 1998 3.00:1.0 March 31, 1999 3.00:1.0 June 30, 1999 3.00:1.0 September 30, 1999 3.25:1.0 December 31, 1999 3.25:1.0 March 31, 2000 3.50:1.0 June 30, 2000 3.50:1.0 September 30, 2000 3.50:1.0 December 31, 2000 3.50:1.0 March 31, 2001 3.50:1.0 June 30, 2001 and thereafter 3.50:1.0 ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default. If any of the following events ("Events of Default") shall occur and be continuing: (a) (i) any Borrower shall fail to pay any principal of any Advance when the same shall become due and payable or (ii) any Borrower shall fail to pay any interest on any Advance, or any Loan Party shall fail to make any other payment under any Loan Document, in each case under this clause (ii) within five days after the same becomes due and payable; or (b) any representation or warranty made by any Loan Party (or any of its officers) under or in connection with any Loan Document shall prove to have been incorrect in any material respect when made; or (c) any Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 2.14, 5.01(d), (e), (k) or (l), 5.02, 5.03(a) or 5.04; or (d) any Loan Party shall fail to perform or observe any other term, covenant or agreement contained in any Loan Document on its part to be performed or observed if such failure shall remain unremedied for 15 days after the earlier of the date on which (A) a Responsible Officer becomes aware of such failure or (B) written notice thereof shall have been given to Crompton Corp. by the Agent or any Lender Party; or (e) any Loan Party or any of its Subsidiaries shall fail to pay any principal of, premium or interest on or any other amount payable in respect of any Debt that is outstanding in a principal or notional amount of at least $10,000,000 either individually or in the aggregate (but excluding Debt outstanding hereunder) of such Loan Party or such Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt or otherwise to cause, or to permit the holder thereof to cause, such Debt to mature; or any such Debt shall be declared to be due and payable or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or (f) any Loan Party or any of its Material Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against any Loan Party or any of its Material Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it) that is being diligently contested by it in good faith, either such proceeding shall remain undismissed or unstayed for a period of 60 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or any substantial part of its property) shall occur; or any Loan Party or any of its Material Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (f); or (g)any judgment or order for the payment of money in excess of $10,000,000 shall be rendered against any Loan Party or any of its Material Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; provided, however, that any such judgment or order shall not be an Event of Default under this Section 6.01(g) if and to the extent that the amount of such judgment or order is covered by a valid and binding policy of insurance between the defendant and the insurer covering payment thereof so long as such insurer, which shall be rated at least "A" by A.M. Best Company, has been notified of, and has not disputed the claim made for payment of, the amount of such judgment or order; or (h)any non-monetary judgment or order shall be rendered against any Loan Party or any of its Material Subsidiaries that is reasonably likely to have a Material Adverse Effect, and there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (i)any provision of any Loan Document after delivery thereof pursuant to Section 3.01 or 5.01(k) shall for any reason cease to be valid and binding on or enforceable against any Loan Party party to it, or any such Loan Party shall so state in writing; or (j)any Collateral Document after delivery thereof pursuant to Section 3.01 or 5.01(k) shall for any reason (other than pursuant to the terms thereof or as a result of action taken or failure to take action by the Agent or any Lender Party) cease to create a valid and perfected first priority lien on and security interest in the Collateral purported to be covered thereby; or (k)(i) any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of Crompton Corp. (or other securities convertible into such Voting Stock) representing 20% or more of the combined voting power of all Voting Stock of Crompton Corp.; or (ii) during any period of up to 24 consecutive months, commencing before or after the date of this Agreement, individuals who at the beginning of such 24-month period were directors of Crompton Corp. shall cease for any reason to constitute a majority of the board of directors of Crompton Corp. (except to the extent that individuals who at the beginning of such 24-month period were replaced by individuals (x) elected by 66-2/3% of the remaining members of the board of directors of Crompton Corp. or (y) nominated for election by a majority of the remaining members of the board of directors of Crompton Corp. and thereafter elected as directors by the shareholders of Crompton Corp.); or (iii) Crompton Corp. shall at any time for any reason cease to be the record and beneficial owner of 100% of the capital stock of the other Borrowers; or (l)(i) any ERISA Event shall have occurred with respect to a Plan; (ii) the sum (determined as of the date of occurrence of such ERISA Event) of the Insufficiency of such Plan and the Insufficiency of any and all other Plans with respect to which an ERISA Event shall have occurred and then exist exceeds $10,000,000; and (iii) such ERISA Events (considered in the aggregate) are reasonably likely to result in obligations on the part of the Loan Parties to make payments in the aggregate in excess of $10,000,000 in any given calendar year; or (m)any Loan Party or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to such Multiemployer Plan in an amount that, when aggregated with all other amounts required to be paid to Multiemployer Plans by the Loan Parties and the ERISA Affiliates as Withdrawal Liability (determined as of the date of such notification), requires payments exceeding $10,000,000 in any given calendar year; or (n)any Loan Party or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, and as a result of such reorganization or termination the aggregate annual contributions of the Loan Parties and the ERISA Affiliates to all Multiemployer Plans that are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the plan years of such Multiemployer Plans immediately preceding the plan year in which such reorganization or termination occurs by an amount exceeding $10,000,000; then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrowers, declare the Commitment of each Lender Party and the obligation of each Appropriate Lender to make Advances (other than Letter of Credit Advances by an Issuing Bank or a Working Capital Lender pursuant to Section 2.03(c) and Swing Line Advances by a Working Capital Lender pursuant to Section 2.02(b)) and of each Issuing Bank to issue Letters of Credit to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrowers, declare the Notes, all interest thereon and all other amounts payable under this Agreement and the other Loan Documents to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by each Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to any Loan Party or any of its Subsidiaries under the Federal Bankruptcy Code, (x) the Commitment of each Lender Party and the obligation of each Lender to make Advances (other than Letter of Credit Advances by an Issuing Bank or a Working Capital Lender pursuant to Section 2.03(c) and Swing Line Advances by a Working Capital Lender pursuant to Section 2.02(b)) and of each Issuing Bank to issue Letters of Credit shall automatically be terminated and (y) the Notes, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by each Borrower. SECTION 6.02. Actions in Respect of the Letters of Credit upon Default. If any Event of Default shall have occurred and be continuing, the Agent shall at the request, or may with the consent, of the Required Lenders, irrespective of whether it is taking any of the actions described in Section 6.01 or otherwise, make demand upon the Borrowers to, and forthwith upon such demand the Borrowers jointly and severally agree to, pay to the Agent on behalf of the Lender Parties in same day funds at the Agent's office designated in such demand, for deposit in the relevant L/C Cash Collateral Account, an amount equal to the aggregate Available Amount of all Letters of Credit then outstanding. If at any time the Agent determines that any funds held in such L/C Cash Collateral Account are subject to any right or claim of any Person other than the Agent and the Lender Parties or that the total amount of such funds is less than the aggregate Available Amount of all Letters of Credit, the Borrowers jointly and severally agree to, forthwith upon demand by the Agent, pay to the Agent, as additional funds to be deposited and held in such L/C Cash Collateral Account, an amount equal to the excess of (a) such aggregate Available Amount over (b) the total amount of funds, if any, then held in such L/C Cash Collateral Account that the Agent determines to be free and clear of any such right and claim. SECTION 6.03. Actions in Respect of Working Capital B-1 Commitments Reserved Pursuant to Section 2.01(g). If, at any time and from time to time, any Working Capital B-1 Commitments are reserved pursuant to Section 2.01(g) and either (i) an Event of Default shall have occurred and be continuing or (ii) the Termination Date shall have occurred, then, upon the occurrence of any of the events described in clause (i) or (ii) above, Citibank may, whether in addition to the taking by the Agent of any of the actions described in Section 6.01 or 6.02 or otherwise, make demand upon the Uniroyal Borrower to, and forthwith upon such demand the Uniroyal Borrower will, pay to Citibank in same day funds at Citibank's office designated in such demand, for deposit in a special cash collateral account to be maintained in the name of Citibank Seoul and under the sole dominion and control of Citibank at such place as shall be designated by Citibank, an amount equal to the Seoul Guaranty Amount on the date of such demand. ARTICLE VII THE AGENT SECTION 7.01. Authorization and Action. Each Lender Party (in its capacities as a Lender, a Swing Line Bank (if applicable), an Issuing Bank (if applicable) and, on behalf of itself and its Affiliates, a potential Hedge Bank) hereby appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Loan Documents as are delegated to the Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters not expressly provided for by the Loan Documents (including, without limitation, enforcement or collection of the Notes), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lender Parties and all holders of Notes; provided, however, that the Agent shall not be required to take any action that exposes the Agent to personal liability or that is contrary to this Agreement or applicable law. The Agent agrees to give to each Lender Party prompt notice of each notice given to it by any Borrower pursuant to the terms of this Agreement. SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with the Loan Documents, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (a) may treat the payee of any Note as the holder thereof until the Agent receives and accepts an Assignment and Acceptance entered into by the Lender that is the payee of such Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07; (b) may consult with legal counsel (including counsel for any Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender Party and shall not be responsible to any Lender Party for any statements, warranties or representations (whether written or oral) made in or in connection with the Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of any Loan Document on the part of any Loan Party or to inspect the property (including the books and records) of any Loan Party; (e) shall not be responsible to any Lender Party for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant thereto; and (f) shall incur no liability under or in respect of any Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, telecopy or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 7.03. Citicorp and Affiliates. With respect to its Commitments, the Advances made by it and the Notes issued to it, Citicorp shall have the same rights and powers under the Loan Documents as any other Lender Party and may exercise the same as though it were not the Agent; and the term "Lender Party" or "Lender Parties" shall, unless otherwise expressly indicated, include Citicorp in its individual capacity. Citicorp and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, any Loan Party, any of its Subsidiaries and any Person who may do business with or own securities of any Loan Party or any such Subsidiary, all as if Citicorp were not the Agent and without any duty to account therefor to the Lender Parties. SECTION 7.04. Lender Party Credit Decision. Each Lender Party acknowledges that it has, independently and without reliance upon the Agent or any other Lender Party and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender Party also acknowledges that it will, independently and without reliance upon the Agent or any other Lender Party 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. SECTION 7.05. Indemnification. (a) Each Lender Party severally agrees to indemnify the Agent (to the extent not promptly reimbursed by the Borrowers) from and against such Lender Party's ratable share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by the Agent under the Loan Documents; provided, however, that no Lender Party shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender Party agrees to reimburse the Agent promptly upon demand for its ratable share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Borrowers under Section 8.04, to the extent that the Agent is not promptly reimbursed for such costs and expenses by the Borrowers. For purposes of this Section 7.05(a), the Lender Parties' respective ratable shares of any amount shall be determined, at any time, according to their respective Working Capital Commitments at such time. In the event that any Defaulted Advance shall be owing by any Defaulting Lender at any time, such Lender Party's Commitment with respect to the Facility under which such Defaulted Advance was required to have been made shall be considered to be unused for purposes of this Section 7.05(a) to the extent of the amount of such Defaulted Advance. The failure of any Lender Party to reimburse the Agent promptly upon demand for its ratable share of any amount required to be paid by the Lender Party to the Agent as provided herein shall not relieve any other Lender Party of its obligation hereunder to reimburse the Agent for its ratable share of such amount, but no Lender Party shall be responsible for the failure of any other Lender Party to reimburse the Agent for such other Lender Party's ratable share of such amount. (b)Each Lender Party severally agrees to indemnify each Issuing Bank (to the extent not promptly reimbursed by the Borrowers) from and against such Lender Party's ratable share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against such Issuing Bank in any way relating to or arising out of the Loan Documents or any action taken or omitted by such Issuing Bank under the Loan Documents; provided, however, that no Lender Party shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Issuing Bank's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender Party agrees to reimburse such Issuing Bank promptly upon demand for its ratable share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Borrowers under Section 8.04, to the extent that such Issuing Bank is not promptly reimbursed for such costs and expenses by the Borrowers. For purposes of this Section 7.05(b), the Lender Parties' respective ratable shares of any amount shall be determined, at any time, according to their respective Working Capital Commitments at such time. In the event that any Defaulted Advance shall be owing by any Defaulting Lender at any time, such Lender Party's Commitment with respect to the Facility under which such Defaulted Advance was required to have been made shall be considered to be unused for purposes of this Section 7.05(b) to the extent of the amount of such Defaulted Advance. The failure of any Lender Party to reimburse such Issuing Bank promptly upon demand for its ratable share of any amount required to be paid by the Lender Parties to such Issuing Bank as provided herein shall not relieve any other Lender Party of its obligation hereunder to reimburse such Issuing Bank for its ratable share of such amount, but no Lender Party shall be responsible for the failure of any other Lender Party to reimburse such Issuing Bank for such other Lender Party's ratable share of such amount. (c)Without prejudice to the survival of any other agreement of any Lender Party hereunder, the agreement and obligations of each Lender Party contained in this Section 7.05 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the other Loan Documents. SECTION 7.06. Successor Agents. The Agent may resign as to any or all of the Facilities at any time by giving written notice thereof to the Lender Parties and the Borrowers and may be removed as to all of the Facilities at any time with or without cause by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent as to such of the Facilities as to which the Agent has resigned or been removed, subject, so long as no Default shall have occurred and be continuing, to the consent of Crompton Corp., such consent not to be unreasonably withheld or delayed. If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Required Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf of the Lender Parties, appoint a successor Agent, subject, so long as no Default shall have occurred and be continuing, to the consent of Crompton Corp., such consent not to be unreasonably withheld or delayed, which shall be a commercial bank organized under the laws of the United States or of any State thereof and having a combined capital and surplus of at least $250,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent as to all of the Facilities and upon the execution and filing or recording of such financing statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Required Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Collateral Documents, such successor Agent shall succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under the Loan Documents. Upon the acceptance of any appointment as Agent hereunder by a successor Agent as to less than all of the Facilities and upon the execution and filing or recording of such financing statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Required Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Collateral Documents, such successor Agent shall succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent as to such Facilities, other than with respect to funds transfers and other similar aspects of the administration of Borrowings under such Facilities, issuances of Letters of Credit (notwithstanding any resignation as Agent with respect to the Letter of Credit Facility) and payments by the Borrowers in respect of such Facilities, and the retiring Agent shall be discharged from its duties and obligations under this Agreement as to such Facilities, other than as aforesaid. After any retiring Agent's resignation or removal hereunder as Agent as to all of the Facilities, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent as to any Facilities under this Agreement. ARTICLE VIII MISCELLANEOUS SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the Notes or any other Loan Document, nor consent to any departure by any Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed (or, in the case of the Collateral Documents, consented to) by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that (a) no amendment, waiver or consent shall, unless in writing and signed by all of the Lenders, do any of the following at any time: (i) waive any of the conditions specified in Section 3.01 or, in the case of the Initial Extension of Credit, Section 3.02, (ii) change the number of Lenders or the percentage of (x) the Commitments, (y) the aggregate unpaid principal amount of the Advances or (z) the aggregate Available Amount of outstanding Letters of Credit that, in each case, shall be required for the Lenders or any of them to take any action hereunder, (iii) reduce or limit the obligations of any Guarantor under Section 1 of the Guaranty to which it is a party or otherwise limit such Guarantor's liability with respect to the Obligations owing to the Agent and the Lender Parties, (iv) release all or substantially all of the Collateral in any transaction or series of related transactions or permit the creation, incurrence, assumption or existence of any Lien on all or substantially all of the Collateral in any transaction or series of related transactions to secure any Obligations other than Obligations owing to the Secured Parties under the Loan Documents and other than Debt owing to any other Person, provided that, in the case of any Lien on all or substantially all of the Collateral to secure Debt owing to any other Person, (A) such Lien shall be subordinated to the Liens created under the Loan Documents on terms acceptable to the Required Lenders and (B) the Required Lenders shall otherwise permit the creation, incurrence, assumption or existence of such Lien and, to the extent not otherwise permitted under Section 5.02(b), of such Debt, (v) amend this Section 8.01, or (vi) limit the liability of any Loan Party under any of the Loan Documents and (b) no amendment, waiver or consent shall, unless in writing and signed by the Required Lenders and each Lender that has a Commitment under any Working Capital Facility if affected by such amendment, waiver or consent, (i) increase the Commitments of such Lender or subject such Lender to any additional obligations, (ii) reduce the principal of, or interest on, the Notes held by such Lender or any fees or other amounts payable hereunder to such Lender, (iii) postpone any date fixed for any payment or prepayment of principal of, or interest on, the Notes held by such Lender or any fees or other amounts payable hereunder to such Lender or (iv) change the order of application of any prepayment set forth in Section 2.06 in any manner that materially affects such Lender; provided further that no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Bank or each Issuing Bank, as the case may be, in addition to the Lenders required above to take such action, affect the rights or obligations of the Swing Line Bank or of the Issuing Banks, as the case may be, under this Agreement; and provided further that no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Agent under this Agreement. SECTION 8.02. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telegraphic, telecopy or telex communication) and mailed, telegraphed, telecopied, telexed or delivered, if to the Borrowers, addressed both c/o Crompton Corp. at its address at One Station Place, Metro Center, Stamford, CT 06902, Attention: Chief Financial Officer and c/o Uniroyal Corp. at its address at World Headquarters, Benson Road, Middlebury, CT 06749, Attention: Chief Financial Officer; if to any Initial Lender or any Initial Issuing Bank, at its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender Party, at its Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender Party; and if to the Agent, at its address at 399 Park Avenue, New York, New York 10043, Attention: Robert Kosian; or, as to the Borrowers or the Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrowers and the Agent. All such notices and communications shall (a) when mailed, be effective three Business Days after the same is deposited in the mails, (b) when mailed for next day delivery by a reputable freight company or reputable overnight courier service, be effective one Business Day thereafter, and (c) when sent by telegraph, telecopier or telex, be effective when the same is confirmed by telephone, telecopier confirmation or return telecopy or telex answerback, respectively, except that notices and communications to the Agent pursuant to Article II, III or VII shall not be effective until received by the Agent. Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement or the Notes or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of a manually executed counterpart thereof. Delivery of a notice from any Borrower pursuant to Section 5.03(a) shall be deemed, solely with respect to such Section, notice from all Borrowers. SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender Party or the Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 8.04. Costs and Expenses. (a) The Borrowers jointly and severally agree to pay on demand (i) all costs and expenses of the Agent in connection with the preparation, execution, delivery, administration, modification and amendment of the Loan Documents (including, without limitation, (A) all due diligence, collateral review, syndication, transportation, computer, duplication, appraisal, audit, insurance, consultant, search, filing and recording fees and expenses and (B) the reasonable fees and expenses of counsel for the Agent with respect thereto, with respect to advising the Agent as to its rights and responsibilities, or the perfection, protection or preservation of rights or interests, under the Loan Documents, with respect to negotiations with any Loan Party or with other creditors of any Loan Party or any of its Subsidiaries arising out of any Default or any events or circumstances that may give rise to a Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or other similar proceeding involving creditors' rights generally and any proceeding ancillary thereto) and (ii) all costs and expenses of the Agent and the Lender Parties in connection with the enforcement of the Loan Documents, whether in any action, suit or litigation, any bankruptcy, insolvency or other similar proceeding affecting creditors' rights generally (including, without limitation, the reasonable fees and expenses of counsel for the Agent and each Lender Party with respect thereto). (b)The Borrowers jointly and severally agree to indemnify and hold harmless the Agent, each Lender Party and each of their Affiliates and their officers, directors, employees, agents and advisors (each, an "Indemnified Party") from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of, or in connection with the preparation for a defense of, any investigation, litigation or proceeding arising out of, related to or in connection with (i) the Facilities, the actual or proposed use of the proceeds of the Advances or the Letters of Credit, the Loan Documents or any of the transactions contemplated thereby, including, without limitation, any acquisition or proposed acquisition (including, without limitation, the Merger and any of the other transactions contemplated hereby) by Crompton Corp. or any of its Subsidiaries or Affiliates of all or any portion of the stock or substantially all the assets of Uniroyal Corp. or any of its Subsidiaries or (ii) the actual or alleged presence of Hazardous Materials on any property of any Loan Party or any of its Subsidiaries or any Environmental Action relating in any way to any Loan Party or any of its Subsidiaries, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct. In the case of any investigation, litigation or other proceeding to which the indemnity in this Section 8.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by any Loan Party, its directors, shareholders or creditors or an Indemnified Party or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrowers also jointly and severally agree not to assert any claim against the Agent, any Lender Party or any of their Affiliates, or any of their respective officers, directors, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Facilities, the actual or proposed use of the proceeds of the Advances or the Letters of Credit, the Loan Documents or any of the transactions contemplated thereby. (c)If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made by any Borrower to or for the account of a Lender Party other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.09(b)(i) or 2.10(d), acceleration of the maturity of the Notes pursuant to Section 6.01 or for any other reason, or by an Eligible Assignee to a Lender Party other than on the last day of the Interest Period for such Advance upon an assignment of rights and obligations under this Agreement pursuant to Section 8.07 as a result of a demand by Crompton Corp. pursuant to Section 8.07(a), such Borrower shall, upon demand by such Lender Party (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender Party any amounts required to compensate such Lender Party for any additional losses, costs or expenses that it may reasonably incur as a result of such payment, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender Party to fund or maintain such Advance. (d)If any Loan Party fails to pay when due any costs, expenses or other amounts payable by it under any Loan Document, including, without limitation, fees and expenses of counsel and indemnities, such amount may be paid on behalf of such Loan Party by the Agent or any Lender Party, in its sole discretion, and will result in an increase in the amount owing by such Loan Party to the Agent or such Lender Party. (e)Without prejudice to the survival of any other agreement of any Loan Party hereunder or under any other Loan Document, the agreements and obligations of the Borrowers contained in Sections 2.10 and 2.12 and this Section 8.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under any of the other Loan Documents. SECTION 8.05. Right of Set-off. Upon (a) the occurrence and during the continuance of any Event of Default and (b) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Agent to declare the Notes due and payable pursuant to the provisions of Section 6.01, each Lender Party and each of its respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and otherwise apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender Party or such Affiliate to or for the credit or the account of any Borrower against any and all of the Obligations of such Borrower now or hereafter existing under this Agreement and the Note or Notes (if any) held by such Lender Party, irrespective of whether such Lender Party shall have made any demand under this Agreement or such Note or Notes and although such obligations may be unmatured. Each Lender Party agrees promptly to notify any Borrower after any such set-off and application; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender Party and its respective Affiliates under this Section 8.05 are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender Party and its respective Affiliates may have. SECTION 8.06. Binding Effect. This Agreement shall become effective when it shall have been executed by each Borrower and the Agent and when the Agent shall have been notified by each Initial Lender and each Initial Issuing Bank that such Initial Lender and such Initial Issuing Bank has executed it and thereafter shall be binding upon and inure to the benefit of each Borrower, the Agent and each Lender Party and their respective successors and assigns, except that no Borrower shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lender Parties. SECTION 8.07. Assignments and Participations. (a) Each Lender may (and, so long as no Default shall have occurred and be continuing, if demanded by Crompton Corp. (following a demand by such Lender pursuant to Section 2.10 or 2.12 or if such Lender shall be a Defaulting Lender) assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment or Commitments, the Advances owing to it and the Note or Notes held by it); provided, however, that (i) each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations under and in respect of all of the Facilities, (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender or an assignment of all of a Lender's rights and obligations under this Agreement, the amount of the Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $20,000,000 or, if the aggregate amount of the Commitment of such assigning Lender is less than 20,000,000, all of such Lender's Commitment, (iii) each such assignment shall be to an Eligible Assignee, (iv) each such assignment made as a result of a demand by Crompton Corp. pursuant to this Section 8.07(a) shall be arranged by Crompton Corp. after consultation with the Administrative Agent and shall be either an assignment of all of the rights and obligations of the assigning Lender under this Agreement and the other Loan Documents or an assignment of a portion of such rights and obligations made concurrently with another such assignment or other such assignments that together cover all of the rights and obligations of the assigning Lender under this Agreement and the other Loan Documents, (v) no Lender shall be obligated to make any such assignment as a result of a demand by Crompton Corp. pursuant to this Section 8.07(a) unless and until such Lender shall have received one or more payments from either the applicable Borrowers or one or more Eligible Assignees in an aggregate amount at least equal to the aggregate outstanding principal amount of the Advances owing to such Lender, together with accrued interest thereon to the date of payment of such principal amount and all other amounts payable to such Lender under this Agreement, (vi) no such assignments shall be permitted without the consent of the Agent until the Agent shall have notified the Lender Parties that syndication of the Commitments hereunder has been completed, and (vii) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any Note or Notes subject to such assignment and a processing and recordation fee of $3,500. (b)Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender or Issuing Bank, as the case may be, hereunder and (y) the Lender or Issuing Bank assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's or Issuing Bank's rights and obligations under this Agreement, such Lender or Issuing Bank shall cease to be a party hereto). (c)By executing and delivering an Assignment and Acceptance, the Lender Party assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender Party makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, this Agreement or any other Loan Document or any other instrument or document furnished pursuant hereto or thereto; (ii) such assigning Lender Party makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower or any other Loan Party or the performance or observance by any Loan Party of any of its obligations under any Loan Document or any other instrument or document furnished pursuant thereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 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; (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender Party or any other Lender Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender or Issuing Bank, as the case may be. (d)The Agent shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lender Parties and the Commitment under each Facility of, and principal amount of the Advances owing under each Facility to, each Lender Party from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrowers, the Agent and the Lender Parties shall treat each Person whose name is recorded in the Register as a Lender Party hereunder for all purposes of this Agreement. The Register shall be available for inspection by any Borrower or any Lender Party at any reasonable time and from time to time upon reasonable prior notice. (e)Upon its receipt of an Assignment and Acceptance executed by an assigning Lender Party and an assignee, together with any Note or Notes subject to such assignment, the Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrowers. In the case of any assignment by a Lender, within five Business Days after its receipt of such notice, each Borrower, at its own expense, shall execute and deliver to the Agent in exchange for the surrendered Note or Notes a new Note to the order of such Eligible Assignee in an amount equal to the Commitment assumed by it under a Facility pursuant to such Assignment and Acceptance and, if the assigning Lender has retained a Commitment hereunder under such Facility, a new Note to the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit A-1, A-2 or A-3 hereto, as the case may be. f)Each Issuing Bank may assign to one or more Eligible Assignees all or a portion of its rights and obligations under the undrawn portion of its Letter of Credit Commitment at any time; provided, however, that (i) except in the case of an assignment to a Person that immediately prior to such assignment was an Issuing Bank or an assignment of all of an Issuing Bank's rights and obligations under this Agreement, the amount of the Letter of Credit Commitment of the assigning Issuing Bank being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $10,000,000 and shall be in an integral multiple of $1,000,000 in excess thereof, (ii) each such assignment shall be to an Eligible Assignee and (iii) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with a processing and recordation fee of $3,500. (g)Each Lender Party may sell participations to one or more Persons (other than any Loan Party or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Advances owing to it and the Note or Notes (if any) held by it); provided, however, that (i) such Lender Party's obligations under this Agreement (including, without limitation, its Commitments) shall remain unchanged, (ii) such Lender Party shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender Party shall remain the holder of any such Note for all purposes of this Agreement, (iv) the Borrowers, the Agent and the other Lender Parties shall continue to deal solely and directly with such Lender Party in connection with such Lender Party's rights and obligations under this Agreement and (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of any Loan Document, or any consent to any departure by any Loan Party therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or release all or substantially all of the Collateral. (h)Any Lender Party may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 8.07, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrowers furnished to such Lender Party by or on behalf of the Borrowers; provided, however, that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any Confidential Information received by it from such Lender Party. (i)Notwithstanding any other provision set forth in this Agreement, any Lender Party may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System. SECTION 8.08. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 8.09. No Liability of the Issuing Banks. Each Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither any Issuing Bank nor any of its officers or directors shall be liable or responsible for: (a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank against presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, except that the relevant Borrower shall have a claim against such Issuing Bank, and such Issuing Bank shall be liable to such Borrower, to the extent of any direct, but not consequential, damages suffered by such Borrower that such Borrower proves were caused by (i) such Issuing Bank's willful misconduct or gross negligence in determining whether documents presented under any Letter of Credit comply with the terms of the Letter of Credit or (ii) such Issuing Bank's willful failure to make lawful payment under a Letter of Credit after the presentation to it of a draft and certificates strictly complying with the terms and conditions of the Letter of Credit. In furtherance and not in limitation of the foregoing, such Issuing Bank 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. SECTION 8.10. Release of Collateral. As soon as practicable after the Collateral Release Date, the Agent shall, at the expense of the Borrowers, execute and deliver to Crompton Corp. such documents as Crompton Corp. shall reasonably request to evidence the release of the Collateral from the liens and security interest created under the Collateral Documents. SECTION 8.11. Confidentiality. Neither the Agent nor any Lender Party shall disclose any Confidential Information to any Person without the consent of Crompton Corp., other than (a) to the Agent's or such Lender Party's Affiliates and their officers, directors, partners, employees, agents and advisors and to actual or prospective Eligible Assignees and participants, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process, provided that, other than with respect to Confidential Information otherwise permitted to be disclosed pursuant to clause (d) below, the Agent or such Lender Party shall, unless prohibited by applicable law or regulation or court order, give notice to Crompton Corp. of any such requirement to disclose such Confidential Information, and, if practicable, such notice shall be given prior to such disclosure, provided, however, that the failure to give such notice shall not prohibit such disclosure, (c) to any rating agency when required by it, provided that, prior to any such disclosure, such rating agency shall undertake to preserve the confidentiality of any Confidential Information relating to the Borrowers received by it from such Lender Party and (d) as requested or required by any state, federal or foreign authority or examiner or the National Association of Insurance Commissioners or any state or federal authority regulating such Lender Party. SECTION 8.12. Jurisdiction, Etc. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Loan Documents in the courts of any jurisdiction. (b)Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents to which it is a party in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. SECTION 8.13. Governing Law. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York. SECTION 8.14. Waiver of Jury Trial. Each of the Borrowers, the Agent and the Lender Parties irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to any of the Loan Documents, the Advances or the actions of the Agent or any Lender Party in the negotiation, administration, performance or enforcement thereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. CROMPTON & KNOWLES CORPORATION By /s/Peter Barna/Charles J. Marsden Title: CROMPTON & KNOWLES COLORS INCORPORATED By /s/Peter Barna Title: DAVIS-STANDARD CORPORATION By /s/Peter Barna Title: INGREDIENT TECHNOLOGY CORPORATION By /s/Peter Barna Title: UNIROYAL CHEMICAL COMPANY, INC. By /s/Frank Manganella Title: Treasurer CITICORP SECURITIES, INC., as Arranger By /s/Robin F. Lenna Title: CITICORP USA, INC., as Agent By /s/Keith R. Karoko Title: THE CHASE MANHATTAN BANK, as Managing Agent By /s/Robert Sacks Title: Initial Lenders CITICORP USA, INC. By /s/Keith R. Karoko Title: THE CHASE MANHATTAN BANK By /s/Robert Sacks Title: ABN AMRO BANK, N.V., NEW YORK BRANCH By /s/Nancy W. Lanzoni Title: Nancy W. Lanzoni, Group VP By /s/David W. Stack Title: David W. Stack, Assistant VP BANCA COMMERCIALE ITALIANA - NEW YORK BRANCH By /s/Charles Dougherty Title: Vice President By /s/Brian Carlson Title: Assistant Vice President BANK OF AMERICA ILLINOIS By /s/Wendy L. Loring Title: Wendy L. Loring, Vice President THE BANK OF NEW YORK By /s/David P. Judge Title: Vice President BANK OF BOSTON CONNECTICUT By /s/Joann Keller Title: Senior Vice President BHF - BANK AKTIENGESELLSCHAFT By /s/Linda Pace Title: AVP CIBC, INC. By /s/Judy Domowski Title: CORESTATES BANK, N.A. By /s/Brian M. Haley Title: Vice President CREDIT LYONNAIS NEW YORK BRANCH By /s/John Oberle Title: Vice President FIRST UNION NATIONAL BANK By /s/Robert Waters Title: Vice President FLEET NATIONAL BANK By /s/Robert C. Rubino Title: Vice President SOCIETE GENERALE By /s/Salvatore Galatiota Title: First Vice President TORONTO DOMINION (NEW YORK), INC. By /s/Jorge Garcia Title: Vice President Initial Issuing Banks CITIBANK, N.A. By /s/Robin F. Lenna Title: BANK OF BOSTON CONNECTICUT By /s/Joanne Keller Title: Senior Vice President SCHEDULE I COMMITMENTS AND APPLICABLE LENDING OFFICES Name of Letter Initial Working Working Working of Credit Domestic Eurodollar Lender/ Capital A Capital B-1 Capital B-2 Committment Lending/ Lending Initial Committment Committment Committment Facility Issuing Office Issuing Office Bank ABN AMRO $20,000,000 $10,000,000 $10,000,000 500 Park Ave 500 Park Ave Bank N.V., NY, NY 10022 NY, NY 10022 New York Attn:M.Jeter Attn:M.Jeter Branch TEL212446-4224 TEL212446-4224 FAX212832-7468 FAX212832-7468 Banca $12,500,000 $6,250,000 $6,250,000 One William St One William St Commerciale NY,NY 10004 NY, NY 10004 Italiana Attn:B.Carlson Attn:B.Carlson New York TEL212607-3886 TEL212607-3886 Branch FAX212809-2124 FAX212809-2124 Bankof $20,000,000 $10,000,000$10,000,000 200W.JacksonBlvd 200W.JacksonBlvd America Chicago,IL 60697 Chicago, IL 60697 Illinois Attn:R. DiMatteo Attn:R. DiMatteo TEL:312828-1988 TEL:312828-1988 FAX:312974-9626 FAX:312974-9626 Bank of $20,000,000 $10,000,000 $10,000,000 $25,000,000 (A) Boston $10,000,000 (B-1) Connecticut 31 Pratt Street 31 Pratt Street Hartford, CT 06103 Hartford, CT 06103 Attn:J. Edwards Attn:J. Edwards TEL:203973-1940 TEL:203973-1940 FAX:203967-8169 FAX:203967-8169 Bank of $20,000,000 $10,000,000 $10,000,000 1 Wall St 1 Wall St New York 22nd Floor 22nd Floor NY, NY 10286 NY, NY 10286 Attn:D. Judge Attn:D. Judge TEL:212635-6861 TEL:212635-6861 FAX:212635-6999 FAX:212635-6999 BHF-Bank $20,000,000 $10,000,000 $10,000,000590 Madison Ave590 Madison Ave Aktiengesellschaft NY, NY 10022 NY, NY 10022 Attn:Linda Pace Attn:Linda Pace TEL:212756-5915 TEL:212756-5915 FAX:212756-5536 FAX:212756-5536 CIBC, Inc.$20,000,000 $10,000,000$10,000,000 2727PacesFerryRd 2727PacesFerryRoad Suite 1200 Suite 1200 Atlanta, GA 30339 Atlanta, GA 30339 Attn:S. Hogan Attn:S. Hogan TEL:(770) 319-4820 TEL:(770) 319-4820 FAX:770319-4950 FAX:770319-4950 CoreStates $20,000,000 $10,000,000 $10,000,000 1345Chestnut St 1345Chestnut St Bank, N.A. PO Box 7618 PO Box 7618 Philadelphia, PA 19101 Philadelphia, PA 19101 Attn: Brian M. Haley Attn: Brian M. Haley TEL: (215) 973-2372 TEL: (215) 973-2372 FAX: (215) 973-7820 FAX: (215) 973-7820 Credit $20,000,000 $10,000,000 $10,000,000 1301 Ave of the 1301 Ave of the Lyonnais Americas Americas New York New York, NY 10019 New York, NY 10019 Branch Attn:John C. Oberle Attn: John C. Oberle TEL: (212) 261-7344 TEL: (212) 261-7344 FAX: (212) 459-3179 FAX: (212) 459-3179 First Union $20,000,000 $10,000,000 $10,000,000 550 Broad St, 550 Broad St, National Bank NJ1535 NJ1535 Newark, NJ 07102 Newark, NJ 07102 Attn: Mary Tenore Attn: Mary Tenore TEL:201565-3607 TEL:201565-3607 FAX:(201) 565-3978 FAX:201 565-3978 Fleet $20,000,000 $10,000,000 $10,000,000 1 Landmark Sq 1 Landmark Sq National 12th Floor 12th Floor Bank Stamford, CT 06904 Stamford, CT 06904 Attn:Jenny Rockwood Attn:Jenny Rockwood TEL:(203) 358-6146 TEL: (203) 358-6146 FAX: (203) 358-6111 FAX: (203) 358-6111 Societe $12,500,000 $6,250,000 $6,250,000 1221 Ave of the 1221 Ave of the Generle Americas Americas NY, NY 10020 NY, NY 10020 Attn:Maggie O'Donnell Attn:Maggie O'Donnell TEL:(212) 278-6853 TEL: (212) 278-6853 FAX: (212) 278-7490 FAX: (212) 278-7490 The Chase $25,000,000 $12,500,000 $12,500,000 270 Park Ave 270 Park Ave Manhattan NY, NY 10017 NY, NY 10017 Bank Attn:R. T. Sacks Attn:R.T. Sacks TEL:(212) 552-2331 TEL:(212) 552-2331 FAX:(212) 552-7175 FAX:(212) 552-7175 Toronto $20,000,000 $10,000,000 $10,000,000 909 Fanin, 909 Fanin ,Dominion Suite 1700 Suite 1700 (New York), Inc. Houston, TX 77010 Houston, TX 77010 Attn:Jorge Garcia Attn:Jorge Garcia TEL:(713) 653-8242 TEL:(713) 653-8242 FAX:(713) 951-9921 FAX:(713) 951-9921 Citibank, N.A. $25,000,000(A) 399 Park Avenue $10,000,000(B-1) New York, NY 10043 Attn: Rob Johnson TEL: (212) 559-3974 FAX: (212) 793-1290 Citicorp USA, $30,000,000 $15,000,000 $15,000,000 Inc. 399 Park Ave 399 Park Ave NY, NY 10043 NY,NY 10043 Attn: R. Johnson Attn: R. Johnson TEL:212559-3974 TEL:212 559-3974 FAX:212793-1290 FAX:212793-1290 Total Commitments: $300,000,000 $150,000,000 $150,000,000 $50,000,000(A) $20,000,000(B-1) SCHEDULE II DELAWARE LOAN PARTIES CK Holding Corporation Crompton & Knowles Overseas Corporation Davis-Standard Corporation Crompton & Knowles Colors Incorporated Ingredient Technology Corporation Uniroyal Chemical Corporation Uniroyal Chemical Brazil Holding, Inc. Lokar Enterprises, Inc. Uniroyal Chemical Export Limited SCHEDULE III AUTHORIZATIONS, APPROVALS, ACTIONS, NOTICES AND FILINGS Schedule 4.01(d) to the Credit Agreement is hereby incorporated by reference. SCHEDULE 2.03(e) EXISTING LETTERS OF CREDIT Beneficiary Amount ($000s) National Union Fire Insurance $2,411 National Union Fire Insurance 964 Premier/Bayou Sorrel Trust 229 Nuclear Regulatory Commission 150 Bankers Trust/O.P.I.C. 676 Kredietbank/Chemical Forwarders 150 Kredietbank/Chemical Forwarders 175 Fregata S.A. (Customs Office) 100 L. Marquez 10 SCHEDULE 3.01(d) SURVIVING DEBT ( $ OOO'S ) * OUT- UN- STAND- USED ING COM- TOTAL BORROW- MIT- I. LOAN FACILITIES DESCRIPTION LINE(S) INGS MENTS CROMPTON & KNOWLES CORPORATION INDUSTRIAL REV. BONDS INDUSTRIAL REVENUE BONDS 4,000 4,000 0 BANK OF NEW YORK UNSECURED SHORT-TERM DEBT 10,000 0 10,000 NEW ENGLAND LIFE INS.CO. LIFE INSURANCE POLICY LOAN 6,986 6,986 0 CROMPTON & KNOWLES COLORS, INC., DAVIS STANDARD CORP. & INGREDIENT TECHNOLOGY CORP. CHASE MANHATTAN BANK UNSECURED SHORT-TERM DEBT 5,000 0 5,000 CROMPTON & KNOWLES EUROPE S.A. CREDIT LYONNAIS NOTES PAYABLE & OVERDRAFT 19,084 3,858 15,226 BANK BRUSSELS LAMBERT NOTES PAYABLE & OVERDRAFT 2,544 0 2,544 GENERALE DE BANQUE NOTES PAYABLE & OVERDRAFT 954 0 954 ER-WA-PA DAVIS STANDARD GmbH COMMERZBANK NOTES PAYABLE & OVERDRAFT 4,902 0 4,902 WESTDEUTSCHE LANDESBANK NOTES PAYABLE & OVERDRAFT 4,902 0 4,902 UNIROYAL CHEMICAL COMPANY, INC. (USA) VARIOUS BONDHOLDERS 9% SR. SECURED NOTES 252,800 252,800 0 CREDIT SUISSE A/R SECURED LOAN FACILITY 15,000 5,306 9,694 UNIROYAL CHIMICA S.p.A. (ITALY) BANCO DI NAPOLI OVERDRAFT & CURRENCY LOANS 2,610 670 1,940 MONTE DEI PASCHI DI SIENA " 4,890 1,599 3,291 BANCA COMMERCIALE ITALIANA " 3,260 0 3,260 BANCA DI ROMA " 3,260 471 2,789 CREDITO ROMAGNOLO " 1,304 0 1,304 ISTITUIO BANCARIO S. PAOLO DI TORINO " 4,623 256 4,367 BANCA NAZIONALE DEL LAVORO " 3,384 924 2,460 BANCA ITALO ROMENA " 1,630 0 1,630 CREDITO ITALIANO " 196 0 196 BANCA NAZIONALE DEL LAVORO LONG-TERM DEBT 835 85 0 BANCA NAZIONALE DEL LAVORO " 1,089 239 0 BANCA NAZIONALE DEL LAVORO " 730 561 0 BANCA NAZIONALE DEL LAVORO " 126 126 0 BANCA NAZIONALE DEL LAVORO " 3,651 1,956 0 CITIBANK " 47,100 29,666 0 CITIBANK - STANDBY " 12,560 5,216 7,344 UNIROYAL CHEMICAL, LIMITED (U.K.) NATIONAL WESTMINSTER OVERDRAFT FACILITY 775 500 275 UNIROYAL CHEMICAL, LTD. (CANADA) ROYAL BANK OF CANADA REVOLVER 11,100 0 11,100 PREMIER CHEMICAL COMPANY, LTD. (TAIWAN) ROYAL BANK OF CANADA MULTI-PURPOSE 2,000 543 1,457 HONG KONG BANK " 545 0 545 UNIROYAL CHEMICAL PTY. LTD. (AUSTRALIA) NATIONAL AUSTRALIA BANK OVERDRAFT 789 0 789 HANNAFORD SEEDMASTER SERVICES PTY. LTD (AUSTRALIA) WESTPAC OVERDRAFT 1,066 0 1,066 " " EQUIPMENT FINANCE 395 0 395 " " REMITTANCE L/C 8 0 8 " " BANKERS' UNDERTAKING 8 0 8 " " FORWARD EXCHANGE CONTRACT 494 42 452 " " TAPE NEGOTIATION AUTHORIT 40 0 40 UNIROYAL CHEMICAL COMPANY, LTD. (BAHAMAS) BANKERS TRUST CO. OPIC GUARANTEED LOAN 10,800 1,906 0 UNIROYAL QUIMICA S.A. (BRAZIL) ITAU SHORT-TERM DEBT 200 0 200 UNIROYAL CHEMICAL EXPORT, LTD. CREDIT SUISSE A/R SECURED LOAN FACILITY 15,000 0 15,000 (CO-BORROWER WITH UCCI) (1) included in Uniroyal Chemical Co., Inc. amount UNIROYAL CHEMICAL B.V. ABN-AMRO UNSECURED OVERDRAFT FACIL 1,500 0 1,500 II. LETTERS OF CREDIT AMOUNT OF L/C CROMPTON & KNOWLES CORPORATION PENNSYLVANIA DEPT. OF EPA 6,000 FIRST UNION BANK, AS TRUSTEE 4,123 NEW JERSEY DEPT. OF EPA 3,558 PENNSYLVANIA DEPT. OF EPA 3,772 ENVIRONMENTAL PROTECTION AGENCY 196 CONTINENTAL CASUALTY COMPANY 3,471 INSURANCE CO. OF NORTH AMERICA 130 INSURANCE CO. OF NORTH AMERICA 100 HARTFORD INSURANCE COMPANY 20 BANCO NATIONAL DE MEXICO S.A. 35 CHINA NATIONAL OVERSEAS TRADING 358 INDIAN ALUMINUM COMPANY, LTD 471 WIHURI OY WIPAK 455 HUBEI JIANGYU PLASTICS INDUSTRY DEV. CO., LTD. 228 SUN A ENTERPRISE CO., LTD 280 PKL - VARPACKUNGSSYTEME GmbH 4,438 THE PAPER PRODUCTS, LTD 20 DAELIM ENGINEERING CO., LTD 9 BARCLAY'S BANK, LTD 27 AT & T NETWORK SYSTEMS IRELAND LTD 311 J.K. INDUSTRIES, LTD. 18 KLERK'S PLASTICS RECYCLING N.V. 111 BANK HAPOALIM B.M. 27 DALIAN VASTONE COMMUNICATION CABLE CORP. 37 GIZA CABLE TELEPHONE CO. 32 ANZ GRINDLAYS BANK PLC 37 DALIAN TIENCHENG PACKING MATERIAL 208 RATHI DYE CHEM PVT. LTD 409 DIVIYA CHEMICALS LTD 211 UNIROYAL CHEMICAL COMPANY, INC. (USA) AMOUNT OF L/C NATIONAL UNION FIRE INS. 2,411 NATIONAL UNION FIRE INS. 964 PREMIER/BAYOU SORREL TRUST 229 NUCLEAR REGULATORY COMMISSION 150 BANKERS TRUST/O.P.I.C. 676 KREDIETBANK/CHEMICAL FORWARDERS 150 KREDIETBANK/CHEMICAL FORWARDERS 175 FREGATA S.A. (CUSTOMS OFFICE) 100 L. MARQUEZ 10 PREMIER CHEMICAL COMPANY LTD. (TAIWAN) ROYAL BANK OF CANADA USANCE 381 UNIROYAL QUIMICA, S.A. (BRAZIL) BANCO ITAU S/A 61 BANCO DE BOSTON 46 III LETTERS OF GUARANTY AMOUNT OF GUARANTY CROMPTON & KNOWLES CORPORATION CHASE MANHATTAN BANK UNSECURED S-T SUB LOANS 5,000 CROMPTON & KNOWLES COLORS, INC., DAVIS STANDARD CORP. & INGREDIENT TECHNOLOGY CORP. CHASE MANHATTAN BANK L/C'S ISSUED FOR CROMPTON & KNOWLES 10,891 UNIROYAL CHEMICAL COMPANY, INC. (USA) OVERSEAS PRIVATE INVESTMENT CBAHAMAS LOAN 10,800 ICI (RUBICON/RCRA) LA. EPA OBLIGATIONS 2,780 CITIBANK UNIKOR LOCAL LINES OF CREDIT 1,800 SIAM COMMERCIAL BANK THAILAND J.V. - OVERDRAFT & SHORT TERM LOAN 490 SIAM COMMERCIAL BANK THAILAND J.V. - OVERDRAFT 98 SIAM COMMERCIAL BANK THAILAND J.V. - SHORT-TERM LOAN 588 SIAM COMMERCIAL BANK THAILAND J.V. - L/C & TRUST RECEIPT 392 SIAM COMMERCIAL BANK THAILAND J.V. - OFFSHORE LOAN 2,940 SIAM COMMERCIAL BANK THAILAND J.V. - LEGAL GUARANTY 98 CREDIT SUISSE EUROPEAN RECEIVABLES 15,000 UNIROYAL CHIMICA S.p.A. (ITALY) BANCA NAZIONALE DEL LAVORO METAN GAS USAGE 59 BANCA NAZIONALE DEL LAVORO CUSTOM DUTY VAT - ANTWERP 46 ISTITUTO BANCARIO S. PAOLO DI TORINO CUSTOM DUTY VAT - ROME 98 " CUSTOM DUTY VAT - APRILIA 196 " WASTE DISPOSAL (LOCAL GOVERNMEN 130 " GOVERNMENT RAILWAYS 6 BANCO DI NAPOLI TELEX EXPENSES COVERAGE IN FAVO 2 POST & TELECOMMUNICATIONS IND. UNIROYAL CHEMICAL, LTD. (U.K.) MINISTRY OF AGRICULTURE - EGYPT 4 PISCO ESTABLISHMENT 137 PISCO ESTABLISHMENT 43 PISCO ESTABLISHMENT 35 H.M. CUSTOMS & EXCISE 465 * MOST FOREIGN SUBSIDIARY LINES ARE IN LOCAL CURRENCY, AND FOR PURPOSES OF THIS EXHIBIT HAVE BEEN CONVERTED TO U.S. $ AT THE EXCHANGE RATES IN EFFECT ON 6/30/96. SCHEDULE 3.01(f) DISCLOSED LITIGATION None, except as disclosed in the (i) Annual Report on Form 10K of Crompton & Knowles Corporation for the fiscal year ended December 30, 1995, and the Quarterly Reports on Form 10Q of such company for the quarters ended March 30, 1996 and June 29, 1996, (ii) Annual Report on Form 10K of Uniroyal Chemical Corporation and Uniroyal Chemical Company, Inc. for the fiscal year ended October 1, 1995, and the Quarterly Reports on Form 10Q of the same companies for the quarters ended December 31, 1995, March 31, 1996, and June 30, 1996, (iii) the report of Beveridge and Diamond, P.C. dated March 9, 1995, (iv) any report issued pursuant to Section 3.01(k)(xv) of this Credit Agreement and (v) Schedule 4.01(o) to this Credit Agreement. SCHEDULE 3.01(K)(xx) LOCAL COUNSEL FIRMSTATE BASS, BERRY & SIMS TENNESSEE GERALD & BRAND, LPPC MISSISSIPPI HAYNES AND BOONE, L.L.P. TEXAS JONES, DAY, REAVIS & POGUE ILLINOIS OHIO KEAN, MILLER, HAWTHORNE, D'ARMOND MCCOWAN & JARMAN LOUISIANA LINDQUIST & VENNUM MINNESOTA THE MCCALL FIRM NORTH CAROLINA SAIBER SCHLESINGER SATZ & GOLDSTEIN NEW JERSEY SCHRECK, JONES, BERHARD, WOLOSON & GODFREY NEVADA SHEARMAN & STERLING CALIFORNIA SUTHERLAND, ASBILL & BRENNAN GEORGIA TYLER, COOPER & ALCORN CONNECTICUT Schedule 4.01(b) 1. Name/Place of Incorporation 2. Number of Shares/Class Authorized 3. Shares of Issued and Outstanding Capital Stock 4. Percentage of Securities Owned by its Immediate Parent 1. Uniroyal Chemical Corporation/Delaware 2. 205,000,000 shares of Common Stock 3. 24,308,403 4. 0% 1. 50,000,000 shares of Preferred Stock authorized 2. (a) 12,000 shares of Series B Preferred Stock (b) 29,721 shares of Series A Cumulative Redeemable Preferred Stock (c) 2,050,000 shares of Series C Junior Participating Preferred Stock 3. (a) 12,000 (b) 29,721 (c) 0 4. (a) 0% (b) 0% (c) 0% Purchase Rights - 718,216 Warrants - 111,930 Options - 1,821,798 Domestic Subsidiaries 1. Uniroyal Chemical Company, Inc./New Jersey(A) 2. 2,500 shares of Common Stock 3. 100 shares of Common Stock 4. 100% 1. Uniroyal Chemical Leasing Company, Inc./Delaware(B) 2. 1,000 shares of Common Stock 3. 100 shares of Common Stock 4. 100% 1. Naugatuck Treatment Company/Connecticut(B) 2. 100 shares of Common Stock 3. 100 shares of Common Stock 4. 100% 1. Interbel Trading, Inc./Florida 2. 50 shares of Common Stock 3. 50 shares of Common Stock 4. 100% 1. Gustafson, Inc./Minnesota (B) 2. 150,000 shares of Common Stock 3. 116,310 shares of Common Stock 4. 100% 1. Uniroyal Chemical Brazil Holding, Inc./Delaware(B) 2. 1,000 shares of Common Stock 3. 100 shares of Common Stock 4. 100% 1. Uniroyal Chemical Brazil Holding, Inc./Delaware(B) 2. 1,000 shares of Preferred Stock 3. -0- 4. 0% 1. Uniroyal Chemical International Company/Texas(C) 2. 1,000 shares of Common Stock 3. 150 shares of Common Stock 4. 100% 1. Uniroyal Chemical International Company/Texas(C) 2. 1,000 shares of Preferred Stock 3. -0- 4. 0% 1. Gustafson International Company/Texas(B) 2. 100 shares of Common Stock 3. 100 shares of Common Stock 4. 100% 1. Uniroyal Chemical Asia, Ltd./Delaware(B) 2. 3,000 of Common Stock 3. 100 shares of Common Stock 4. 100% 1. Lokar Enterprises, Inc./ Delaware(A) 2. 3,000 shares of Common Stock 3. 100 shares of Common Stock 4. 100% 1. Trace Chemicals, Inc./Nevada (B) 2. 1,000 shares of Common Stock 3. 80 shares of Common Stock 4. 100% 1. Uniroyal Chemical Export Limited/Delaware(B) 2. 1,000 shares of Common Stock 3. 100 shares of Common Stock 4. 100% Foreign Subsidiaries 1. Novaquim Holdings S.A. de C.V./Mexico(B) 2. 50,000 shares of Series B Capital Stock 3. 50,000 shares of Series B Capital Stock 4. 100% 1. Novaquim S.A. de C.V./Mexico(D) 2. 5,150,750 shares of Series B Capital Stock 3. 5,150,750 shares of Series B Capital Stock 4. 100% 1. Novaquim S.A. de C.V./Mexico(D) 2. 683,255,080 shares of Sub-S Series B Capital Stock 3. 683,255,080 shares of Sub-S Series B Capital Stock 4. 100% 1. Unicorb Limited/England(B) 2. 636,945 shares of Common Stock 3. 636,945 shares of Common Stock 4. 100% 1. Uniroyal Quimica S.A.C.I./Argentina(B) 2. 3,000 shares of Common Stock 3. 3,000 shares of Common Stock 4. 100% 1. Uniroyal Chemical Investments Ltd./Canada(B) 2. 1,000,000 shares of Common Stock 3. 1,000,000 shares of Common Stock 4. 100% 1. Uniroyal Chemical Ltd./Canada(E) 2. 4,000,000 shares of Common Stock 3. 440,000 shares of Common Stock 4. 100% 1. Uniroyal Chemical Participacoes Ltda./Brazil(F) 2. 2,700,996,670 Quotas 3. 2,700,996,670 Quotas 4. 100% 1. Uniroyal Quimica S.A./Brazil(G) 2. 2,798,781,305 shares of Common Stock 3. 2,798,781,305 shares of Common Stock 4. 100% 1. Premier Chemical Company Ltd./Taiwan(B) 2. 3,970,740 shares of Common Stock 3. 3,970,740 shares of Common Stock 4. 80% 1. Uniroyal Chemical Holdings B.V./The Netherlands(H) 2. 250,000 shares of Common Stock 3. 50,000 shares of Common Stock 4. 100% 1. Uniroyal Chimica S.p.A./Italy (I) 2. 10,000 shares of Common Stock 3. 10,000 shares of Common Stock 4. 100% 1. Uniroyal Chemical B.V./The Netherlands(J) 2. 500 shares of Common Stock 3. 500 shares of Common Stock 4. 100% 1. Uniroyal Chemical Technology B.V./The Netherlands(B) 2. 2,000 shares of Capital Stock 3. 400 shares of Capital Stock 4. 100% 1. Uniroyal Chemical (Proprietary) Limited/South Africa(B) 2. 25,000 shares of Common Stock 3. 25,000 shares of Common Stock 4. 100% 1. Uniroyal Chemical S.A.R.L./Switzerland(B) 2. 20 Quota Units 3. 20 Quota Units 4. 100% 1. Uniroyal Chemical S.A./Spain(B) 2. 10,000 shares of Common Stock 3. 10,000 shares of Common Stock 4. 100% 1. Uniroyal Chemical Pty. Ltd./Australia(B) 2. 1,000,000 shares of Common Stock 3. 500,000 shares of Common Stock 4. 100% 1. Hannaford Seedmaster Services (Australia) Pty. Ltd./Australia(K) 2. 10,000 shares of Common Stock 3. 10,000 shares of Common Stock 4. 100% 1. Industrias Gustafson S.A. de C.V./Mexico(L) 2. 50 shares of Common Stock 3. 50 shares of Common Stock 4. 100% 1. Uniroyal Chemical International Sales Corporation/Barbados(M) 2. Unlimited no. of Common Shares 3. 1,000 shares of Common Stock 4. 100% 1. Uniroyal Chemical Limited/Scotland(B) 2. 5,000,000 shares of Common Stock 3. 1,697,372 shares of Common Stock 4. 100% 1. Uniroyal Chemical Company Limited/Bahamas/Delaware(B) 2. 100,000 shares of Capital Stock 3. 4,000 shares of Capital Stock 4. 100% 1. Hancock Tire Company Limited/Canada(F) 2. 400 shares of Common Stock 3. 3 shares of Common Stock 4. 100% 1. Hancock Tire Company Limited/Canada(F) 2. 15 shares of Preferred Stock 3. -0- 4. 0% Domestic Affiliates 1. Monochem, Inc./Louisiana(B) 2. 500 shares of Class A Common Stock 3. 500 shares of Class A Common Stock 4. 100%(*) 1. Monochem, Inc./Louisiana(B) 2. 500 shares of Class B Common Stock 3. 500 shares of Class B Common Stock 4. 0% 1. Monochem, Inc./Louisiana(B) 2. 1,500,000 shares of Class C Common Stock 3. 501,020 shares of Class C Common Stock 4. 33.1% 1. Rubicon Inc./Louisiana(B) 2. 5,000,000 shares of Class A Common Stock 3. 400,000 shares of Class A Common Stock 4. 100%(*) 1. Rubicon Inc./Louisiana(B) 2. 5,000,000 shares of Class B Common Stock 3. 400,000 shares of Class B Common Stock 4. 0% 1. NPC Services, Inc./Louisiana(B) 2. 100 shares of Common Stock 3. 100 shares of Common Stock 4. 12.75% Foreign Affiliates 1. TOA UNI Chemical Manufacturing Ltd./Thailand(B) 2. 490,000 Group A Shares 3. 490,000 Group A Shares 4. 100%(*) 1. TOA UNI Chemical Manufacturing Ltd./Thailand(B) 2. 510,000 Group B Shares 3. 510,000 Group B Shares 4. 0% 1. TOA UNI Chemicals Ltd./Thailand(B) 2. 14,700 Group A Shares 3. 14,700 Group A Shares 4. 100%(*) 1. TOA UNI Chemicals Ltd./Thailand(B) 2. 15,300 Group B Shares 3. 15,300 Group B Shares 4. 0% 1. Orchem (Proprietary) Limited/South Africa(B) 2. 1,050,000 shares of Class A Common Stock 3. 1,050,000 shares of Class A Common Stock 4. 0% 1. Orchem (Proprietary) Limited/South Africa(B) 2. 450,000 shares of Class B Common Stock 3. 450,000 shares of Class B Common Stock 4. 100%(*) 1. Herdillia Unimers Limited/India(F) 2. 35,000,000 Equity Shares 3. 33,000,000 Equity Shares 4. 10.0% 1. Unikor Chemical Inc./Korea(B) 2. 408,000 shares of Common Stock 3. 408,000 shares of Common Stock 4. 50% (A) Owned by Uniroyal Chemical Corporation (B) Owned by Uniroyal Chemical Company, Inc. (C) 66-2/3% owned by Uniroyal Chemical Company, Inc. and 33-1/3% owned by Uniroyal Chemical Brazil Holding, Inc. (D) Owned by Novaquim Holdings, S.A. de C.V. (E) Owned by Uniroyal Chemical International Company (F) Owned by Uniroyal Chemical Ltd. (G) Owned by Uniroyal Chemical Participacoes Ltda. (H) Owned by Gustafson International Company (I) Owned by Uniroyal Chemical Holdings B.V. (J) Owned by Uniroyal Chimica S.p.A. (K) Owned by Uniroyal Chemical Pty. Ltd. (L) Owned by Gustafson, Inc. (M) Owned by Uniroyal Chemical Export Limited (*) Uniroyal Chemical Company, Inc. holds the following combined voting power of the entities indicated: Monochem, Inc. - 50% Rubicon Inc. - 50% TOA UNI Chemical Manufacturing Ltd. - 48.9% TOA UNI Chemicals Ltd. - 49% Orchem (Proprietary) Ltd. - 30% 8/08/96 Subsidiaries Place of & Owned Name Organization Authorized Issued Owner By Owner CK Holding DE 1,000 750 Crompton & Corporation Knowles Corp 100% CNK Disposition Corp. FL Crompton & 100% Knowles Corp CNK Specialities Netherlands KEM Manufact. 100% Holding B.V. Corp. Crompton & Knowles Overseas Corporation DE 2,000 100 Crompton & 100% Knowles Corp. Crompton & Knowles Canada Limited Canada Unlimited 104.4 Crompton & 69.6 Knowles Corp 45.6 Crompton & Knowles Overseas Corp. 30.4 Crompton & Knowles Chemical Realty Pennsylvania Crompton & Knowles Europe S.A. Belgium 60,000 59,999 Crompton & Knowles Overseas Corporation 99.98 1 Crompton & Knowles Corp. .02 Crompton & Knowles (France) S.A. France 1,021,470 1,021,464 Crompton & Knowles Europe S.A.99% 1 V. Calarco Less than 1% 1 C. Marsden Less than 1% 1 G.Fickenscher Less than 1% 1 E. Mortier Less than 1% 1 A. Caste (in process to be changed to P. Boury)Less than 1% 1 J. Ferguson Less than 1% Crompton & Knowles (Hong Kong) Ltd. Hong Kong 1 1 Crompton & Knowles Europe S.A. 100% Crompton & Knowles Korea 20,000 10,000 Crompton & Knowles (Korea) Ltd. Europe S.A. 100% Davis-Standard Corporation Delaware 1,000 500 CK Holding Corp. 100% Davis-Standard (Deutschland) GmbH Germany Davis-Standard Corp. Davis-Standard (France) SARL France 7,326 2,400 Crompton & Knowles Corporation 32.76 4,926 Grandma Food Products Ltd. 67.24 Crompton & Knowles Colors Incorporated Delaware 1,000 500 CK Holding Corp. 100% ER-WE-PA Davis- Standard GmbH Germany 10,000,000 9,999,999 Davis-Standard (Deutschland) 99% 1 ER-We-PA D-S Beteiligungs GmbH Less than 1% Ingredient Technology Corporation Delaware 1,000 10 CK Holding Corp. 100% Grandma Food Products , Ltd. Quebec, Unlimited 251 Ingredient Technology 100% Canada Common Corporation Unlimited 1,000 100% Preferred "A" Killion Extruders, Inc. New Jersey 14,997,240 3,006,700 Davis-Standard Corp. 100% Common 1,400 1,050 100% Preferred "A" 1,360 1,360 100% Preferred "B" KEM International Corporation Delaware 2,000 250 KEM Manufacturing Corporation 100% KEM Manufacturing Corporation Georgia Crompton & Knowles Corporation 100% Orlex Chemicals Corporation New Jersey 100% Crompton & Knowles I.P.R. Delaware 3,000 250 Crompton & Knowles Corp. 100% Corporation Crompton & Knowles Acceptance Corporation MA 7,500 100 Crompton & Knowles Corp.100% C&K Services S.A. Brussels, 149,000 149,000 Crompton & Knowles Belgium Europe S.A.99%+ 1 Crompton & Knowles Corp Less than 1% Crompton & Knowles (Nederland) B.V. Tilburg, 100 100 Crompton & Knowles Netherlands Europe S.A. 100% Crompton & Knowles (Deutschland) GmbH Dusseldorf, 50 50 Crompton & Knowles Germany Europe S.A. 100% Crompton & Knowles (U.K.) Ltd. Manchester, 800,000 799,999 Crompton & Knowles U.K. Europe S.A. 99% 1 Crompton & Knowles (Nederland)B.V. Less than 1% Crompton & Knowles (Italia) SRL Milan, 20,000 14,000 Crompton & Knowles Italy Europe S.A. 70% 6,000 Crompton & Knowles (Nederland) B.V. 30% Crompton & Knowles (Portugal) LDA Lisbon, 5,000,000 3,500,000 Crompton & Knowles Portugal Europe S.A. 70% 1,500,000 Crompton & Knowles (Nederland) B.V. 30% Crompton & Knowles (Espana) SL Barcelone, 2,300,000 2,188,000 Crompton & Knowles Spain Europe S.A. 95% 112,000 Crompton & Knowles (Nederland) B.V. 5% Crompton & Knowles (Luxembourg) S.A. Luxembourg 1,250 1,250 Crompton & Knowles Europe S.A. 100% C&K Services (Luxembourg) S.A. Luxembourg 1,250 125 Crompton & Knowles Europe S.A. 100% Ifatex Chemische Produkte GmbH Dusseldorf, 4 4 Crompton & Knowles Germany (Deutschland GmbH) 100% Crompton & Knowles LaMadeline 20 20 Overseas Corp. 100% International) SARL France Crompton & Knowles International Inc. Virgin Islands Superior Chemical Corporation CNK One B.V. CNK Two B.V. CNK S.R.L. Italiana S.R.L. SCHEDULE 4.01(d) AUTHORIZATIONS, APPROVALS, ACTIONS, NOTICES AND FILINGS 1. Authorization of the Merger and the transactions contem- plated by the Merger Agreement by stockholders of Crompton & Knowles Corporation. 2. Authorization for inclusion of the shares of Crompton & Knowles Corporation common stock to be issued in the Merger and the transactions contemplated by the Merger Agreement on the NYSE, subject to official notice of issu- ance. 3. Actions required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder. 4. Registrations or other actions required under federal and state securities laws as are contemplated by the Merger Agreement. 5. Authorization of the Merger and the transactions contem- plated by the Merger Agreement by stockholders of Uniroyal Chemical Corporation. 6. As may be required under the following instruments: a. $125 Million Revolving Credit Facility of Crompton & Knowles Corporation b. Indenture, dated as of February 8, 1993, among Uniroyal Chemical Corporation and State Street Bank and Trust Company, as Trustee, relating to the 10 % Senior Notes due 2002. c. Indenture, dated as of February 8, 1993, among Uniroyal Chemical Corporation and United States Trust Company of New York, as Trustee, relating to the 11% Senior Subordinated Notes due 2003. d. Indenture, dated as of February 8, 1993, among Uniroyal Chemical Corporation and The Shawmut Bank Connecticut, N.A., as Trustee, relating to the 12% Subordinated Discount Notes due 2005. e. Indenture, dated as of September 1, 1993, among Uniroyal Chemical Company, Inc. and State Street Bank and Trust Company, as Trustee, relating to the 9% Senior Notes due 2000. f. Amended and Restated $150 Million Credit Agreement, dated as of December 21, 1995, among Uniroyal Chemical Company, Inc., as borrower, various lenders and Citibank USA, Inc., as Agent (and related documents). g. Warrant Agreement, dated as of October 30, 1989, between Uniroyal Chemical Corporation and Avery, Inc. h. Loan Agreement, dated as of March 16, 1995, among Uniroyal Chimica S.p.A., Citibank N.A., as Agent, and the Banks party thereto. i. Finance Agreement, dated as of May 15, 1992, between Uniroyal Chemical Company Limited, Borrower, and Overseas Private Investment Corporation, Loan Guarantor (and related documents). 7. Receipt of legal opinions, accountant letters, officers' certificates and "affiliate" letters as prescribed by the Merger Agreement. 8. Execution of employment agreements with certain officers of Uniroyal Chemical Corporation as prescribed by the Merger Agreement. 9. Filing of Uniform Commercial Code financing statements as contemplated by the Uniroyal Security Agreement, to be filed on or about the Effective Date. 10. Delivery of the instruments evidencing the Pledged Debt as contemplated by the Security Agreement. 11. Delivery of the certificates evidencing the Pledged Shares as contemplated by the Crompton Security Agreement. 12. Delivery of the Blocked Account Letters as contemplated by the Uniroyal Security Agreement. Disclosure Schedules 1. Schedule 4.01(o) - Part I (a) See the environmental report of Beveridge & Diamond dated March 9, 1995 ("B & D Report") and the public filings of Uniroyal Chemical Corporation including but not limited to its Annual Report on Form 10-K for the fiscal year ended October 1, 1995, its Quarterly Reports on Form 10-Q for the periods ended December 31, 1995, March 31, 1996 and June 30, 1996 and its Prospectus used in connection with its initial public offering of Common Stock dated March 16, 1995 (collectively, its "Public Filings"). (b) Uniroyal Chemical Company's Painesville, Lake County, Ohio Plant (the "Painesville Plant") manufactures nitrile rubber. The Painesville Plant pretreats and discharges its process wastewater to the Lake County sewer system for treatment at Lake County's Greater Mentor Wastewater Treatment Plant ("GMWTP"). In June 1993, Lake County submitted to Ohio EPA a proposed Local Limit aimed at regulating the amount of substances, which absorb at 230 nanometers, that are discharged in wastewater to the GMWTP. Ohio EPA approved the Local Limit in March 1994. One of the principal ingredients in the Painesville Plant's nitrile rubber manufacturing process, which is known as Tamol, absorbs at 230 nanometers. As a result, the Painesville Plant appealed Ohio EPA's approval of the Local Limit to the Ohio Environmental Board of Review (the "EBR"). The EBR plans to hold an evidentiary hearing on the Painesville Plant's appeal in December 1996. If the EBR's decision is adverse to the Painesville Plant, it may appeal the decision to the Ohio courts. If the Painesville Plant loses its appeal and the Local Limit becomes final, the Plant would be required to modify its nitrile rubber recipes to remove or reduce the amount of Tamol used and/or install some form of additional pretreatment. (c) Crompton Corp. has been designated along with others as a potentially responsible party under CERCLA or comparable state statutes, at the Industrial Solvent & Chemical Company solvent reprocessing facility in York County, Pennsylvania, and the Spectron waste site in Elkton Maryland. CNK Disposition Corp. has been designated along with others as a potentially responsible party under CERCLA or comparable state statutes, at the Taylor Road Landfill and the Bay Drums drum recycling sites located in Hillsborough County, Florida. (d) In CPS Chemical Co., Inc. v. Evor Phillips Leasing Co., Inc., et al., (C.A. 94-4107, D.C.N.J.), the plaintiffs allege that hazardous substances migrated from the Evor Phillips Site to the adjoining property of CPS Chemical Company, Inc. ("CPS Site"), contaminating the CPS Site and the groundwater beneath it. The plaintiffs were required by a 1988 consent order to perform remediation in connection with contamination at the CPS Site. In Adhesives Research v. American Inks & Coatings, (C.A. 1:CV-95-1975, M.D. Pa.), the plaintiffs seek to recover cleanup and other response costs and to obtain contribution from Crompton Corp. and the other defendants in connection with the Industrial Solvent & Chemical Company solvents reprocessing facility located in York County, Pennsylvania. (e) KEM Manufacturing Corporation ("KEM"), a wholly-owned subsidiary of Crompton Corp. acquired in 1976, was named along with others, a potentially responsible party under the New Jersey Spill Compensation and Control Act by the New Jersey Department of Environmental Protection and Energy with respect to the Evor Phillips waste disposal site located in central New Jersey ("Evor Phillips Site"). It appears that KEM held title to the site between 1970 and 1974, prior to the acquisition of KEM by Crompton Corp., but that KEM did not own or operate any facility at the site. On September.28, 1995, KEM was released by the State of New Jersey as a potentially responsible party with respect to the Evor Phillips Site upon payment to the state of $175,000. 2. Schedule 4.01(o) - Part II (a) With respect to Uniroyal Chemical Corporation and its Subsidiaries, none, except as disclosed or reflected in the B & D Report and the Public Filings including the reserves for environmental contingencies reflected in the financial statements contained in the Public Filings. (b) Crompton Corp. has been designated along with others as a potentially responsible party under CERCLA or comparable state statutes, at the Industrial Solvent & Chemical Company solvent reprocessing facility in York County, Pennsylvania, and the Spectron waste site in Elkton Maryland. CNK Disposition Corp. has been designated along with others as a potentially responsible party under CERCLA or comparable state statutes, at the Taylor Road Landfill and the Bay Drums drum recycling sites located in Hillsborough County, Florida. (c) In CPS Chemical Co., Inc. v. Evor Phillips Leasing Co., Inc., et al., (C.A. 94-4107, D.C.N.J.), the plaintiffs allege that hazardous substances migrated from the Evor Phillips Site to the adjoining property of CPS Chemical Company, Inc. ("CPS Site"), contaminating the CPS Site and the groundwater beneath it. The plaintiffs were required by a 1988 consent order to perform remediation in connection with contamination at the CPS Site. In Adhesives Research v. American Inks & Coatings, (C.A. 1:CV-95-1975, M.D. Pa.), the plaintiffs seek to recover cleanup and other response costs and to obtain contribution from Crompton Corp. and the other defendants in connection with the Industrial Solvent & Chemical Company solvents reprocessing facility located in York County, Pennsylvania. (d) KEM Manufacturing Corporation ("KEM"), a wholly-owned subsidiary of Crompton Corp. acquired in 1976, was named along with others, a potentially responsible party under the New Jersey Spill Compensation and Control Act by the New Jersey Department of Environmental Protection and Energy with respect to the Evor Phillips waste disposal site located in central New Jersey ("Evor Phillips Site"). It appears that KEM held title to the site between 1970 and 1974, prior to the acquisition of KEM by Crompton Corp., but that KEM did not own or operate any facility at the site. On September.28, 1995, KEM was released by the State of New Jersey as a potentially responsible party with respect to the Evor Phillips Site upon payment to the state of $175,000. 3. Schedule 4.01(o) - Part III (a) The matters described or referred to in Schedule 4.01(o) - Part II are hereby incorporated by reference. (b) Uniroyal Chemical Company has received a notice from the State of Ohio regarding the Painesville Plant alleging water and soil contamination of the facility and inviting Uniroyal Chemical Company to negotiate a Consent Order governing performance of on-site studies. Uniroyal Chemical Company intends to attempt to negotiate such an Order which would also encompass the adjoining property owned by Dartron Corporation which at one time was owned and operated by Uniroyal Chemical Company. The Dartron property has been thus far included by Ohio as part of the much larger Diamond Shamrock site study area rather than as part of the Painesville Plant study area. (c) Compton Colors is conducting remediation at its Nutley, New Jersey dyes manufacturing plant under the New Jersey Industrial Site Recovery Act ("ISRA") in connection with its purchase of the facility in 1990 from Atlantic Industries, Inc. CNK Disposition Corporation is conducting remediation at its former manufacturing facility in Tampa, Florida pursuant to a consent order with the State of Florida. KEM Manufacturing Corporation is conducting remediation at its former warehouse and formulation site in East Brunswick, New Jersey under ISRA. (d) Crompton Corp. has been designated along with others as a potentially responsible party under CERCLA or comparable state statutes, at the Industrial Solvent & Chemical Company solvent reprocessing facility in York County, Pennsylvania, and the Spectron waste site in Elkton Maryland. CNK Disposition Corp. has been designated along with others as a potentially responsible party under CERCLA or comparable state statutes, at the Taylor Road Landfill and the Bay Drums drum recycling sites located in Hillsborough County, Florida. SCHEDULE 4.01(t) EXISTING DEBT ( @ 6/30/96 ) ( $ OOO'S ) * OUT- UN- STAND- USED ING COM- TOTAL BORROW- MIT- I. LOAN FACILITIES DESCRIPTION LINE(S) INGS MENTS CROMPTON & KNOWLES CORPORATION BANKERS TRUST COMPANY REVOLVING CREDIT AGREE. 125,000 75,000 50,000 FLEET BANK UNSECURED SHORT-TERM DEBT 27,200 27,200 0 FIRST UNION BANK UNSECURED SHORT-TERM DEBT 20,000 20,000 0 BANK OF NEW YORK UNSECURED SHORT-TERM DEBT 9,300 9,300 0 CHASE MANHATTAN BANK UNSECURED SHORT-TERM DEBT 15,000 15,000 0 INDUSTRIAL REV. BONDS INDUSTRIAL REVENUE BONDS 4,000 4,000 0 BANK OF NEW YORK UNSECURED SHORT-TERM DEBT 10,000 0 10,000 NEW ENGLAND LIFE INS. LIFE INSURANCE POLICY LOAN 6,986 6,986 0 CROMPTON & KNOWLES COLORS, INC., DAVIS STANDARD CORP. & INGREDIENT TECHNOLOGY CORP. CHASE MANHATTAN BANK UNSECURED SHORT-TERM DEBT 5,000 0 5,000 CROMPTON & KNOWLES EUROPE S.A. CREDIT LYONNAIS NOTES PAYABLE & OVERDRAFT 19,084 3,858 15,226 BANK BRUSSELS LAMBERT NOTES PAYABLE & OVERDRAFT 2,544 0 2,544 GENERALE DE BANQUE NOTES PAYABLE & OVERDRAFT 954 0 954 ER-WA-PA DAVIS STANDARD GmbH COMMERZBANK NOTES PAYABLE & OVERDRAFT 4,902 0 4,902 WESTDEUTSCHE LANDESBANNOTES PAYABLE & OVERDRAFT 4,902 0 4,902 UNIROYAL CHEMICAL COMPANY, INC. (USA) VARIOUS BONDHOLDERS 9% SR. SECURED NOTES 252,800 252,800 0 CREDIT SUISSE A/R SECURED LOAN FACILITY 15,000 5,306 9,694 CITIBANK, N.A. REVOLVER 150,000 31,419 100,216 UNIROYAL CHIMICA S.p.A. (ITALY) BANCO DI NAPOLI OVERDRAFT & CURRENCY 2,610 670 1,940 LOANS EXPORT MONTE DEI PASCHI DI SIENA " 4,890 1,599 3,291 BANCA COMMERCIALE ITALIANA " 3,260 0 3,260 BANCA DI ROMA " 3,260 471 2,789 CREDITO ROMAGNOLO " 1,304 0 1,304 ISTITUIO BANCARIO S. PAOLO DI TORINO " 4,623 256 4,367 BANCA NAZIONALE DEL LAVORO " 3,384 924 2,460 BANCA ITALO ROMENA " 1,630 0 1,630 CREDITO ITALIANO " 196 0 196 BANCA NAZIONALE DEL LAVORO LONG-TERM DEBT 835 85 0 BANCA NAZIONALE DEL LAVORO " 1,089 239 0 BANCA NAZIONALE DEL LAVORO " 730 561 0 BANCA NAZIONALE DEL LAVORO " 126 126 0 BANCA NAZIONALE DEL LAVORO " 3,651 1,956 0 CITIBANK " 47,100 29,666 0 CITIBANK - STANDBY " 12,560 5,216 7,344 UNIROYAL CHEMICAL, LIMITED (U.K.) NATIONAL WESTMINSTER OVERDRAFT FACILITY 775 500 275 UNIROYAL CHEMICAL, LTD. (CANADA) ROYAL BANK OF CANADA REVOLVER 11,100 0 11,100 PREMIER CHEMICAL COMPANY, LTD. (TAIWAN) ROYAL BANK OF CANADA MULTI-PURPOSE 2,000 543 1,457 HONG KONG BANK " 545 0 545 UNIROYAL CHEMICAL PTY. LTD. (AUSTRALIA) NATIONAL AUSTRALIA BANOVERDRAFT 789 0 789 HANNAFORD SEEDMASTER SERVICES PTY. LTD (AUSTRALIA) WESTPAC OVERDRAFT 1,066 0 1,066 " " EQUIPMENT FINANCE 395 0 395 " " REMITTANCE L/C 8 0 8 " " BANKERS' UNDERTAKING 8 0 8 " " FORWARD EXCHANGE CONTRACT 494 42 452 " " TAPE NEGOTIATION AUTHORITY 40 0 40 UNIROYAL CHEMICAL COMPANY, LTD. (BAHAMAS) BANKERS TRUST CO. OPIC GUARANTEED LOAN 10,800 1,906 0 UNIROYAL QUIMICA S.A. (BRAZIL) ITAU SHORT-TERM DEBT 200 0 200 UNIROYAL CHEMICAL EXPORT, LTD. CREDIT SUISSE A/R SECURED LOAN FACILITY 15,000 0 15,000 (CO-BORROWER WITH UCCI) (1) included in Uniroyal Chemical Co., Inc. amount UNIROYAL CHEMICAL B.V. ABN-AMRO UNSECURED OVERDRAFT FACIL 1,500 0 1,500 II. LETTERS OF CREDIT AMOUNT OF L/C CROMPTON & KNOWLES CORPORATION PENNSYLVANIA DEPT. OF EPA 6,000 FIRST UNION BANK, AS TRUSTEE 4,123 NEW JERSEY DEPT. OF EPA 3,558 PENNSYLVANIA DEPT. OF EPA 3,772 ENVIRONMENTAL PROTECTION AGENCY 196 CONTINENTAL CASUALTY COMPANY 3,471 INSURANCE CO. OF NORTH AMERICA 130 INSURANCE CO. OF NORTH AMERICA 100 HARTFORD INSURANCE COMPANY 20 BANCO NATIONAL DE MEXICO S.A. 35 CHINA NATIONAL OVERSEAS TRADING 358 INDIAN ALUMINUM COMPANY, LTD 471 WIHURI OY WIPAK 455 HUBEI JIANGYU PLASTICS INDUSTRY DEV. CO., LTD. 228 SUN A ENTERPRISE CO., LTD 280 PKL - VARPACKUNGSSYTEME GmbH 4,438 THE PAPER PRODUCTS, LTD 20 DAELIM ENGINEERING CO., LTD 9 BARCLAY'S BANK, LTD 27 AT & T NETWORK SYSTEMS IRELAND LTD 311 J.K. INDUSTRIES, LTD. 18 KLERK'S PLASTICS RECYCLING N.V. 111 BANK HAPOALIM B.M. 27 DALIAN VASTONE COMMUNICATION CABLE CORP. 37 GIZA CABLE TELEPHONE CO. 32 ANZ GRINDLAYS BANK PLC 37 DALIAN TIENCHENG PACKING MATERIAL 208 RATHI DYE CHEM PVT. LTD 409 DIVIYA CHEMICALS LTD 211 UNIROYAL CHEMICAL COMPANY, INC. (USA) AMOUNT OF L/C NATIONAL UNION FIRE INS. 2,411 NATIONAL UNION FIRE INS. 964 PREMIER/BAYOU SORREL TRUST 229 NUCLEAR REGULATORY COMMISSION 150 BANKERS TRUST/O.P.I.C. 676 KREDIETBANK/CHEMICAL FORWARDERS 150 KREDIETBANK/CHEMICAL FORWARDERS 175 FREGATA S.A. (CUSTOMS OFFICE) 100 L. MARQUEZ 10 PREMIER CHEMICAL COMPANY LTD. (TAIWAN) ROYAL BANK OF CANADA USANCE 381 UNIROYAL QUIMICA, S.A. (BRAZIL) BANCO ITAU S/A 61 BANCO DE BOSTON 46 III LETTERS OF GUARANTY AMOUNT OF GUARANTY CROMPTON & KNOWLES CORPORATION CHASE MANHATTAN BANK UNSECURED S-T SUB LOANS 5,000 CROMPTON & KNOWLES COLORS, INC., DAVIS STANDARD CORP. & INGREDIENT TECHNOLOGY CORP. CHASE MANHATTAN BANK L/C'S ISSUED FOR CROMPTON & KNOWKES 10,891 UNIROYAL CHEMICAL COMPANY, INC. (USA) OVERSEAS PRIVATE INVESTMENTBAHAMAS LOAN 10,800 ICI (RUBICON/RCRA) LA. EPA OBLIGATIONS 2,780 CITIBANK UNIKOR LOCAL LINES OF CREDIT 1,800 SIAM COMMERCIAL BANK THAILAND J.V.-OVERDRAFT & SHORT-TERM LOAN 490 SIAM COMMERCIAL BANK THAILAND J.V. - OVERDRAFT 98 SIAM COMMERCIAL BANK THAILAND J.V. - SHORT-TERM LOAN 588 SIAM COMMERCIAL BANK THAILAND J.V. - L/C & TRUST RECEIPT 392 SIAM COMMERCIAL BANK THAILAND J.V. - OFFSHORE LOAN 2,940 SIAM COMMERCIAL BANK THAILAND J.V. - LEGAL GUARANTY 98 CREDIT SUISSE EUROPEAN RECEIVABLES 15,000 UNIROYAL CHIMICA S.p.A. (ITALY) BANCA NAZIONALE DEL LAVORO METAN GAS USAGE 59 BANCA NAZIONALE DEL LAVORO CUSTOM DUTY VAT - ANTWERP 46 ISTITUTO BANCARIO S. PAOLO DI TORINO CUSTOM DUTY VAT - ROME 98 " CUSTOM DUTY VAT - APRILIA 196 " WASTE DISPOSAL (LOCAL GOVERNMENT 130 " GOVERNMENT RAILWAYS 6 BANCO DI NAPOLI TELEX EXPENSES COVERAGE IN FAVOR 2 POST & TELECOMMUNICATIONS IND. UNIROYAL CHEMICAL, LTD. (U.K.) MINISTRY OF AGRICULTURE - EGYPT 4 PISCO ESTABLISHMENT 137 PISCO ESTABLISHMENT 43 PISCO ESTABLISHMENT 35 H.M. CUSTOMS & EXCISE 465 * MOST FOREIGN SUBSIDIARY LINES ARE IN LOCAL CURRENCY, AND FOR PURPOSES OF THIS EXHIBIT HAVE BEEN CONVERTED TO U.S. $ AT THE EXCHANGE RATES IN EFFECT ON 6/30/96. SCHEDULE 4.01(w) MATERIAL SUBSIDIARIES CK Holding Corporation Crompton & Knowles Overseas Corporation Crompton & Knowles Europe S.A. Crompton & Knowles (France) S.A. Davis-Standard Corporation Davis-Standard (Deutschland) GmbH Davis-Standard (France) SARL Crompton & Knowles Colors Incorporated ER-WE-PA Davis-Standard GmbH Ingredient Technology Corporation Grandma Food Products, Ltd. KEM Manufacturing Corporation C&K Services S.A. C&K Services (Luxembourg) S.A. Uniroyal Chemical Corporation Uniroyal Chemical Company, Inc. Premier Chemical Company Ltd. Uniroyal Chemical Export Limited Uniroyal Chemical Leasing Company, Inc. Uniroyal Chemical Limited Novaquim Holdings S.A. de C.V. Novaquim S.A. de C.V. Gustafson International Company Uniroyal Chemical Holdings B.V. Uniroyal Chimica S.p.A. Uniroyal Chemical B.V. Gustafson, Inc. Uniroyal Chemical International Company Uniroyal Chemical LTD/LTEE Uniroyal Chemical Participacoes Ltda. Uniroyal Quimica S.A. Uniroyal Chemical Brazil Holding, Inc. Uniroyal Chemical Pty. Ltd. Uniroyal Chemical Company Limited Uniroyal Chemical Investments Ltd. Trace Chemicals Inc. Schedule 5.02(a) Debtor: Crompton & Knowles Colors Incorporated Index Filing Filing Jurisdiction Date Date Number Secured Party Collateral NC - Sec. of State 9/27/95 1267402 Bankers Leasing Specified Assoc., Inc. Assets Debtor: Crompton & Knowles Corporation CT - Sec. of State 4/9/96 5/19/93 1011971 Datronic Equip. Specified Income Fund Equipment XVII, L.P. CT - Sec. of State 4/9/96 5/24/93 1013330 Caterpillar Fin. Specified Services Corp. Equipment CT - Sec. of State 4/9/96 8/26/93 1025926 Caterpillar Fin. Specified Services Corp.- Equipment Amendment CT - Sec. of State 4/9/96 1/18/94 1042994 Citicorp Dealer Specified Fin. Equipment CT - Sec. of State 4/9/96 3/14/94 1049268 Caterpillar Fin. Specified Services Corp. Equipment CT - Sec. of State 4/9/96 6/22/94 1062559 Caterpillar Fin. Specified Services Corp. Equipment CT - Sec. of State 4/9/96 8/10/94 1068586 Caterpillar Fin. Specified Services Corp. Equipment CT - Sec. of State 4/9/96 2/23/95 1607933 Toyota Motor Specified Credit Corp. Equipment CT - Sec. of State 4/9/96 6/5/95 1627933 Assignment from Specified Toyota Motor Equipment Credit Corp. to Citicorp Dealer Finance CT - Sec. of State 4/9/96 9/27/95 1646673 Caterpillar Fin. Specified Services Equipment NC - Mecklenburg 8/9/96 7/10/90 346-323 Cyclone Roofing Mechanic County Company Lien Claim $15,962.00 NC - Mecklenburg 8/9/96 10/5/95 013981 McRae Graphics, Specified County Inc. Equipment Debtor: Gustafson, Inc. IL - Sec of State 7/19/96 6/24/88 2443312 First Specified Illinois Assets Bk. of Evanston, N.A. IL - Sec of State 7/19/96 5/10/93 3119568 First Specified Illinois Bank Assets of Evanston, N.A.- Continuation IL - Sec of State 7/19/96 5/23/94 3260710 Tri-Cities Sales Specified Co., Inc. Assets MN - Hennepin County 6/7/96 12/23/87 87-23337 Larue, Nancy A. Judgement et al. $1,308.00 Texas - Sec. of State 7/16/96 9/18/91 91-181848 The Baker Co. Specified Equipment Texas - Sec. of State 7/16/96 11/2/94 94-214318 The Baker Co. Specified Equipment WI - Sec. of State 7/15/96 11/14/90 1164353 The First Nat'l Specified Bank of Park Assets Falls WI - Sec. of State 7/15/96 9/26/95 1536213 The First Nat'l Specified Bank of Park Assets Falls - Continuation WI - Sec. of State 7/15/96 7/8/91 1215851 U.S. Small Bus. Specified Administration Assets WI - Sec. of State 7/15/96 5/17/96 1587438 U.S. Small Bus. Specified Administration Assets - Continuation WI - Sec. of State 7/15/96 8/8/91 1221927 City of Park Specified Falls Equipment WI - Sec. of State 7/15/96 4/15/94 1422601 Advance Accept. Specified Corporation Equipment Debtor: Ingredient Technology Corporation New Jersey - Bergen 8/7/96 8/29/95 003881 CMO Specified County Enterprises, Equipment Inc. Debtor: Uniroyal Chemical Company, Inc. CT - Sec. of State 4/9/96 8/29/91 936838 Citicorp Specified Leasing, Inc. Equipment CT - Sec. of State 4/9/96 10/28/91 943524 Citicorp Specified Leasing, Inc. Equipment CT - Sec. of State 4/9/96 11/26/91 947114 The Manifest Specified Group Equipment CT - Sec. of State 4/9/96 12/27/91 950397 Graphics Specified Leasing Corp. Equipment CT - Sec. of State 4/9/96 1/6/92 951382 Graphics Specified Leasing Corp.- Equipment Amends Collateral Description CT - Sec. of State 4/9/96 1/6/92 951383 Execulease Cred.Specified Corporation Equipment CT - Sec. of State 4/9/96 1/21/92 952965 Graphics Specified Leasing Corp. Equipment CT - Sec. of State 4/9/96 1/21/92 952966 American Lease Specified Funding Corp. Equipment CT - Sec. of State 4/9/96 1/21/92 952967 Amer. Network Specified Leasing Corp. Equipment CT - Sec. of State 4/9/96 1/2/92 950884 Citicorp Specified Leasing, Equipment Inc. CT - Sec. of State 4/9/96 1/2/92 950885 Citicorp Specified Leasing, Equipment Inc. CT - Sec. of State 4/9/96 1/8/92 951554 Citicorp Specified Leasing, Inc. Equipment CT - Sec. of State 4/9/96 6/2/92 968252 Citicorp Specified Leasing, Equipment Inc. CT - Sec. of State 4/9/96 6/22/92 970769 Graphics Specified Leasing Corp. Equipment CT - Sec. of State 4/9/96 10/2/92 982921 Dana Comm'l Specified Credit Corp. Equipment CT - Sec. of State 4/9/96 7/31/92 975992 IBM Credit Specified Corporation Equipment CT - Sec. of State 4/9/96 3/26/93 1003101 Citicorp Specified Leasing, Inc. Equipment CT - Sec. of State 4/9/96 12/30/93 1040909 Citicorp Specified Leasing, Inc. Equipment CT - Sec. of State 4/9/96 3/30/94 1051458 Citicorp Specified Leasing, Inc. Equipment CT - Sec. of State 4/9/96 4/14/94 1053429 Citicorp Specified Leasing, Inc. Equipment CT - Sec. of State 4/9/96 4/25/94 1054813 Citicorp Specified Leasing, Inc. Equipment CT - Sec. of State 4/9/96 5/2/94 1055817 Sanwa Leasing Specified Corp. Equipment CT - Sec. of State 4/9/96 6/3/94 1060126 Citicorp Specified Leasing, Inc. Equipment CT - Sec. of State 4/9/96 6/27/94 1063035 Citicorp Specified Leasing, Inc. Equipment CT - Sec. of State 4/9/96 8/24/94 1070311 Pepsi Cola Specified Equipment CT - Sec. of State 4/9/96 3/8/95 1608471 Citicorp Specified Leasing, Inc. Equipment CT - Sec. of State 4/9/96 4/26/96 1691461 Sanwa Leasing Specified Corp. N/A Equipment NC - Gaston County 7/30/96 7/23/90 90-1818 Citibank N.A. Specified Assets NC - Gaston County 7/30/96 2/11/91 90-1818 Citibank N.A. - Specified Amendment Assets NC - Gaston County 7/30/96 5/24/95 95-936 Citibank N.A. - Specified Continuation Assets Ohio - Sec. of State 7/15/96 11/15/93 AK59118 Clarklift of Specified Cleveland Inc. Equipment Ohio - Lake County 7/17/96 11/16/93 93173308 Clarklift of Specified Cleveland Inc. Equipment PA - Crawford County 7/24/96 7/23/90 71055 Citibank N.A. Specified Vol36 Assets PA - Crawford County 7/24/96 2/7/91 71056 Citibank N.A. - Specified Vol36 Amendment Assets PA - Crawford County 7/24/96 5/24/95 71055 Citibank N.A. - Specified Vol36 Continuation Assets Debtor: Uniroyal Chemical Co. Accumulation Plan NY - Sec. of State 7/24/96 5/14/91 099755 Internal Federal Revenue Service Tax Lien - $2,471.19 SCHEDULE 5.02(f) INVESTMENTS (@ 6/30/96) UNIROYAL CHEMICAL COMPANY, INC. INVESTEE AMOUNT ($000'S) RUBICON 21,181 MONOCHEM 3,762 NAUGATUCK TREATMENT CO. 2 RAPID, INC. 14 ORCHEM 498 HERDILLIA 1,374 TOA UNI, TLD. 69 TOA UNI MFG. 1,910 UNIKOR 805 TOTAL 29,615 EXHIBIT A-1 FORM OF WORKING CAPITAL A PROMISSORY NOTE $ Dated: FOR VALUE RECEIVED, the undersigned, [CROMPTON & KNOWLES CORPORATION] [CROMPTON & KNOWLES COLORS INCORPORATED] [DAVIS-STANDARD CORPORATION] [INGREDIENT TECHNOLOGY CORPORATION], a [Massachusetts] [Delaware] corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of (the "Lender") for the account of its Applicable Lending Office (as defined in the Credit Agreement referred to below) the aggregate principal amount of the Working Capital A Advances (as defined below) owing to the Lender by the Borrower pursuant to the Credit Agreement dated as of August 21, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; terms defined therein being used herein as therein defined) among the Borrower, [Crompton & Knowles Corporation, a Massachusetts corporation,] [Crompton & Knowles Colors Incorporated, a Delaware corporation,] [Davis-Standard Corporation, a Delaware corporation,] [Ingredient Technology Corporation, a Delaware corporation,] Uniroyal Chemical Company, Inc., a New Jersey corporation, the Lender and certain other lender parties party thereto, Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent for the Lender and such other lender parties, and The Chase Manhattan Bank, as Managing Agent, on the Termination Date. The Borrower promises to pay interest on the unpaid principal amount of each Working Capital A Advance from the date of such Working Capital A Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. Both principal and interest are payable in lawful money of the United States of America to Citicorp USA, Inc., as Agent, at 399 Park Avenue, New York, New York 10043 in same day funds. Each Working Capital A Advance owing to the Lender by the Borrower and the maturity thereof, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto, which is part of this Promissory Note. This Promissory Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit Agreement. The Credit Agreement, among other things, (i)provides for the making of advances (the "Working Capital A Advances") by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the U.S. dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Working Capital A Advance being evidenced by this Promissory Note, and (ii)contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. The Obligations of the Borrower under this Promissory Note, and the Obligations of the other Loan Parties under the Loan Documents, are secured by the Collateral as provided in the Loan Documents. [CROMPTON & KNOWLES CORPORATION] [CROMPTON & KNOWLES COLORS INCORPORATED] [DAVIS-STANDARD CORPORATION] [INGREDIENT TECHNOLOGY CORPORATION] By Title: ADVANCES AND PAYMENTS OF PRINCIPAL Date Amount of Working Amount of Unpaid Capital A Principal Paid Principal Notation Advance Or Prepaid Balance Made By EXHIBIT A-2 FORM OF WORKING CAPITAL B-1 PROMISSORY NOTE $ Dated: FOR VALUE RECEIVED, the undersigned, UNIROYAL CHEMICAL COMPANY, INC., a New Jersey corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of (the "Lender") for the account of its Applicable Lending Office (as defined in the Credit Agreement referred to below) the aggregate principal amount of the Working Capital B-1 Advances (as defined below) owing to the Lender by the Borrower pursuant to the Credit Agreement dated as of August 21, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; terms defined therein being used herein as therein defined) among the Borrower, Crompton & Knowles Corporation, a Massachusetts corporation, Crompton & Knowles Colors Incorporated, a Delaware corporation, Davis-Standard Corporation, a Delaware corporation, Ingredient Technology Corporation, a Delaware corporation, the Lender and certain other lender parties party thereto, Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent for the Lender and such other lender parties, and The Chase Manhattan Bank, as Managing Agent, on the Termination Date. The Borrower promises to pay interest on the unpaid principal amount of each Working Capital B-1 Advance from the date of such Working Capital B-1 Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. Both principal and interest are payable in lawful money of the United States of America to Citicorp USA, Inc., as Agent, at 399 Park Avenue, New York, New York 10043 in same day funds. Each Working Capital B-1 Advance owing to the Lender by the Borrower and the maturity thereof, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto, which is part of this Promissory Note. This Promissory Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit Agreement. The Credit Agreement, among other things, (i)provides for the making of advances (the "Working Capital B-1 Advances") by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the U.S. dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Working Capital B-1 Advance being evidenced by this Promissory Note, and (ii)contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. The Obligations of the Borrower under this Promissory Note, and the Obligations of the other Loan Parties under the Loan Documents, are secured by the Collateral as provided in the Loan Documents. UNIROYAL CHEMICAL COMPANY, INC. By Title: ADVANCES AND PAYMENTS OF PRINCIPAL Date Amount of Working Amount of Unpaid Capital B-1 Principal Paid Principal Notation Advance Or Prepaid Balance Made By EXHIBIT A-3 FORM OF WORKING CAPITAL B-2 PROMISSORY NOTE $ Dated: FOR VALUE RECEIVED, the undersigned, UNIROYAL CHEMICAL COMPANY, INC., a New Jersey corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of (the "Lender") for the account of its Applicable Lending Office (as defined in the Credit Agreement referred to below) the aggregate principal amount of the Working Capital B-2 Advances (as defined below) owing to the Lender by the Borrower pursuant to the Credit Agreement dated as of August 21, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; terms defined therein being used herein as therein defined) among the Borrower, Crompton & Knowles Corporation, a Massachusetts corporation, Crompton & Knowles Colors Incorporated, a Delaware corporation, Davis-Standard Corporation, a Delaware corporation, Ingredient Technology Corporation, a Delaware corporation, the Lender and certain other lender parties party thereto, Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent for the Lender and such other lender parties, and The Chase Manhattan Bank, as Managing Agent, on the dates and in the amounts specified in the Credit Agreement. The Borrower promises to pay interest on the unpaid principal amount of each Working Capital B-2 Advance from the date of such Working Capital B-2 Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. Both principal and interest are payable in lawful money of the United States of America to Citicorp USA, Inc., as Agent, at 399 Park Avenue, New York, New York 10043 in same day funds. Each Working Capital B-2 Advance owing to the Lender by the Borrower and the maturity thereof, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto, which is part of this Promissory Note. This Promissory Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit Agreement. The Credit Agreement, among other things, (i)provides for the making of advances (the "Working Capital B-2 Advances") by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the U.S. dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Working Capital B-2 Advance being evidenced by this Promissory Note, and (ii)contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. The Obligations of the Borrower under this Promissory Note, and the Obligations of the other Loan Parties under the Loan Documents, are secured by the Collateral as provided in the Loan Documents. UNIROYAL CHEMICAL COMPANY, INC. By Title: ADVANCES AND PAYMENTS OF PRINCIPAL Date Amount of Working Amount of Unpaid Capital B-2 Principal Paid Principal Notation Advance Or Prepaid Balance Made By EXHIBIT B FORM OF NOTICE OF BORROWING Citicorp USA, Inc., as Agent under the Credit Agreement referred to below 399 Park Avenue New York, New York 10043 Date Attention: Robert Kosian Ladies and Gentlemen: The undersigned, [Crompton & Knowles Corporation] [Crompton & Knowles Colors Incorporated] [Davis-Standard Corporation] [Ingredient Technology Corporation] [Uniroyal Chemical Company, Inc.], refers to the Credit Agreement dated as of August 21, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement", the terms defined therein being used herein as therein defined), among the undersigned, [Crompton & Knowles Corporation,] [Crompton & Knowles Colors Incorporated,] [Davis-Standard Corporation,] [Ingredient Technology Corporation,] [Uniroyal Chemical Company, Inc.,] certain Lender Parties party thereto, Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent for said Lender Parties, and The Chase Manhattan Bank, as Managing Agent, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the "Proposed Borrowing") as required by Section 2.02(a) of the Credit Agreement: (i)The Business Day of the Proposed Borrowing is . (ii)The Facility under which the Proposed Borrowing is requested is the Facility. (iii)The Type of Advances comprising the Proposed Borrowing is [Base Rate Advances] [Eurodollar Rate Advances]. (iv)The aggregate amount of the Proposed Borrowing is $ . [(v)The initial Interest Period for each Eurodollar Rate Advance made as part of the Proposed Borrowing is month[s].] The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing: (A)the representations and warranties contained in each Loan Document are correct on and as of the date of the Proposed Borrowing, before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on and as of such date other than any such representations or warranties that, by their terms, refer to a specific date other than the date of the Proposed Borrowing, in which case, as of such specific date; and (B)no event has occurred and is continuing, or would result from such Proposed Borrowing or from the application of the proceeds therefrom, that constitutes a Default. Very truly yours, [CROMPTON & KNOWLES CORPORATION] [CROMPTON & KNOWLES COLORS INCORPORATED] [DAVIS-STANDARD CORPORATION] [INGREDIENT TECHNOLOGY CORPORATION] [UNIROYAL CHEMICAL COMPANY, INC.] By Title: EXHIBIT C FORM OF ASSIGNMENT AND ACCEPTANCE Reference is made to the Credit Agreement dated as of August 21, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") among Crompton & Knowles Corporation, a Massachusetts corporation ("Crompton Corp."), Crompton & Knowles Colors Incorporated, a Delaware corporation ("Crompton Colors"), Davis-Standard Corporation, a Delaware corporation ("Davis-Standard"), Ingredient Technology Corporation, a Delaware corporation ("ITC"), Uniroyal Chemical Company, Inc., a New Jersey corporation (together with Crompton Corp., Crompton Colors, Davis-Standard and ITC, the "Borrowers"), the Lender Parties (as defined in the Credit Agreement), Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as agent for the Lender Parties (the "Agent"), and The Chase Manhattan Bank, as Managing Agent. Terms defined in the Credit Agreement are used herein with the same meaning. The "Assignor" and the "Assignee" referred to on Schedule 1 hereto agree as follows: 1.The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement as of the date hereof equal to the percentage interest specified on Schedule 1 hereto of all outstanding rights and obligations under the Credit Agreement Facility or Facilities specified on Schedule 1 hereto. After giving effect to such sale and assignment, the Assignee's Commitments and the amount of the Advances owing to the Assignee will be as set forth on Schedule 1 hereto. 2.The Assignor (i)represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii)makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, the Loan Documents or any other instrument or document furnished pursuant thereto; and (iii)makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by any Loan Party of any of its obligations under any Loan Document or any other instrument or document furnished pursuant thereto; and (iv)attaches the Note or Notes held by the Assignor and requests that the Agent exchange such Note or Notes for a new Note or Notes payable to the order of the Assignee in an amount equal to the Commitments assumed by the Assignee pursuant hereto or new Notes payable to the order of the Assignee in an amount equal to the Commitments assumed by the Assignee pursuant hereto and the Assignor in an amount equal to the Commitments retained by the Assignor under the Credit Agreement, respectively, as specified on Schedule 1 hereto. 3.The Assignee (i)confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii)agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii)confirms that it is an Eligible Assignee; (iv)appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (v)agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender or Issuing Bank, as the case may be; and (vi)attaches any U.S. Internal Revenue Service forms required under Section2.12 of the Credit Agreement. 4.Following the execution of this Assignment and Acceptance, it will be delivered to the Agent for acceptance and recording by the Agent. The effective date for this Assignment and Acceptance (the "Effective Date") shall be the date of acceptance hereof by the Agent, unless otherwise specified on Schedule 1 hereto. 5.Upon such acceptance and recording by the Agent, as of the Effective Date, (i)the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender Party thereunder and (ii)the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 6.Upon such acceptance and recording by the Agent, from and after the Effective Date, the Agent shall make all payments under the Credit Agreement and the Notes in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and commitment fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the Notes for periods prior to the Effective Date directly between themselves. 7.This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York. 8.This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this Assignment and Acceptance to be executed by their officers thereunto duly authorized as of the date specified thereon. SCHEDULE 1 to ASSIGNMENT AND ACCEPTANCE As to the _____Facility in respect of which an interest is being assigned: Percentage interest assigned:__________% Assignee's Commitment:$__________ Aggregate outstanding principal amount of Advances assigned:$__________ Principal amount of Note payable to Assignee:$__________ Principal amount of Note payable to Assignor:$__________ Effective Date (if other than date of acceptance by Agent): 1__________,____ [NAME OF ASSIGNOR], as Assignor By Title: Dated: ___________, ____ [NAME OF ASSIGNEE], as Assignee By Title: Dated: ___________, ____ Domestic Lending Office: Eurodollar Lending Office: Accepted 1[and Approved] this ____ day of ___________, ____ [NAME OF AGENT] By Title: 2[Approved this ____ day of _____________, ____ CROMPTON & KNOWLES CORPORATION By Title:] EXHIBIT D-1 FORM OF CROMPTON SECURITY AGREEMENT CROMPTON SECURITY AGREEMENT Dated August 21, 1996 from THE PERSONS LISTED ON THE SIGNATURE PAGES HEREOF as Pledgors to CITICORP USA, INC. as Agent TABLE OF CONTENTS Section Page 1. Grant of Security 2 2. Security for Obligations 3 3. Pledgors Remain Liable 4 4. Delivery of Security Collateral and Account Collateral 4 5. Maintaining the L/C Cash Collateral Accounts 4 6. Investing of Amounts in the L/C Cash Collateral Accounts 5 7. Release of Amounts 5 8. Representations and Warranties 6 9. Further Assurances 7 10. Voting Rights; Dividends; Etc. 8 11. Transfers and Other Liens; Additional Shares 9 12. Agent Appointed Attorney-in-Fact 10 13. Agent May Perform 10 14. The Agent's Duties 10 15. Remedies 11 16. Registration Rights 12 17. Indemnity and Expenses 13 18. Amendments; Waivers; Etc. 13 19. Addresses for Notices 14 20. Continuing Security Interest; Assignments 14 21. Release and Termination 15 22. Security Interest Absolute 15 23. Execution in Counterparts 15 24. Governing Law; Terms 16 Schedule I-Initial Pledged Shares and Initial Pledged Debt Schedule II-Trade Names Schedule III-Chief Executive Offices of Pledgors Exhibit A-Form of Crompton Security Agreement Supplement CROMPTON SECURITY AGREEMENT CROMPTON SECURITY AGREEMENT dated August 21, 1996 made by the Persons listed on the signature pages hereof and the Additional Pledgors (as defined in Section 18(b)) (such Persons so listed and the Additional Pledgors being, collectively, the "Pledgors") to CITICORP USA, INC. ("Citicorp"), as agent (in such capacity, the "Agent") for the Secured Parties (as defined in the Credit Agreement referred to below). PRELIMINARY STATEMENTS. (1) Crompton & Knowles Corporation ("Crompton Corp."), Crompton & Knowles Colors Incorporated ("Crompton Colors"), Davis-Standard Corporation ("Davis-Standard") and Ingredient Technology Corporation ("ITC" and, together with Crompton Corp., Crompton Colors and Davis-Standard, the "Crompton Borrowers") have entered into a Credit Agreement dated as of August 21, 1996 (said Agreement, as it may hereafter be amended, supplemented or otherwise modified from time to time, being the "Credit Agreement"; capitalized terms used herein and not otherwise defined herein are used herein as therein defined) with Uniroyal Chemical Company, Inc., the lender parties party thereto (the "Lender Parties"), Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent and The Chase Manhattan Bank, as Managing Agent. (2)Each Pledgor is the owner of the shares of stock set forth opposite such Pledgor's name in Part I of Schedule I hereto and issued by the corporations indicated therein and of the indebtedness set forth opposite such Pledgor's name in Part II of Schedule I hereto and issued by the obligors indicated therein. (3)Each of the Crompton Borrowers have opened a non-interest bearing (but subject to investment pursuant to Section 6) cash collateral account (each, an "L/C Cash Collateral Account") with Citibank at its office at 399 Park Avenue, New York, New York 10043, which account is, in the case of Crompton Colors, Account No. 4070-5777 in the case of Crompton Corp., Account No. 4070-5785, in the case of Davis-Standard, Account No. 4070-5769, and in the case of ITC, Account No. 4070-5793, each such L/C Cash Collateral Account being in the name of such Crompton Borrower but under the sole control and dominion of the Agent and subject to the terms of this Agreement. (4)Each Pledgor will derive substantial direct and indirect benefit from the transactions contemplated by the Credit Agreement. (5)It is a condition precedent to the making of Advances and the issuance of Letters of Credit by the Lender Parties under the Credit Agreement and the entry by the Hedge Banks into Bank Hedge Agreements with the Borrowers from time to time that each Pledgor shall have granted the assignment and security interest and made the pledge and assignment contemplated by this Agreement. NOW, THEREFORE, in consideration of the premises and in order to induce the Lender Parties to make Advances and to issue Letters of Credit under the Credit Agreement and to induce the Hedge Banks to enter into Bank Hedge Agreements with the Borrowers from time to time, each Pledgor hereby agrees with the Agent for the ratable benefit of the Secured Parties as follows: SECTION 1. Grant of Security. Each Pledgor hereby assigns and pledges to the Agent for the ratable benefit of the Secured Parties, and hereby grants to the Agent for the ratable benefit of the Secured Parties a security interest in, the following, in each case, as to each type of property described below, whether now owned or hereafter acquired by such Pledgor, wherever located and whether now or hereafter existing (collectively, the "Collateral"): (a)All of the following (the "Security Collateral"): (i)the shares of stock set forth opposite such Pledgor's name in Part I of Schedule I hereto and issued by the corporations indicated therein (collectively referred to herein as the "Initial Pledged Shares", and together with the shares referred to in clause (iii) below, the "Pledged Shares"), together with the certificates representing such Initial Pledged Shares and all dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Initial Pledged Shares; (ii)the indebtedness (whether or not evidenced by instruments) set forth opposite such Pledgor's name in Part II of Schedule I hereto and issued by the obligors indicated therein (collectively referred to herein as the "Initial Pledged Debt", and together with the indebtedness referred to in clause (iv) below, the "Pledged Debt") and the instruments (if any) evidencing such Initial Pledged Debt, all security therefor and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Initial Pledged Debt; (iii)all additional shares of stock of any issuer of any Initial Pledged Shares or of any other Loan Party or any Subsidiary of any Loan Party or of any other Person from time to time acquired by such Pledgor in any manner, and all additional shares of stock of each other Subsidiary of such Pledgor to the extent required pursuant to Section 5.01(k) of the Credit Agreement, together with the certificates representing such additional shares and all dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares; and (iv)all additional indebtedness from time to time owed to such Pledgor by any obligor of the Initial Pledged Debt (whether or not evidenced by instruments) and the instruments evidencing such indebtedness (if any), and all additional indebtedness owed to such Pledgor by any other obligor to the extent required pursuant to Section 5.01(k) of the Credit Agreement, all security therefor and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such indebtedness; provided, however, that the Pledged Shares shall not include more than 66 2/3% of the issued and outstanding shares of stock of any Foreign Subsidiary; (b)All of such Pledgor's right, title and interest in and to the following (collectively, the "Account Collateral"): (i)each L/C Cash Collateral Account, all funds held therein and all certificates and instruments, if any, from time to time representing or evidencing such L/C Cash Collateral Account; (ii)all Collateral Investments (as hereinafter defined) from time to time and all certificates and instruments, if any, from time to time representing or evidencing the Collateral Investments; (iii)all notes, certificates of deposit, deposit accounts, checks and other instruments from time to time hereafter delivered to or otherwise possessed by the Agent for or on behalf of such Pledgor in substitution for or in addition to any or all of the then existing Account Collateral; and (iv)all interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Account Collateral; and (c)All proceeds of any and all of the foregoing Collateral (including, without limitation, proceeds that constitute property of the types described in clauses (a) and (b) of this Section 1) and, to the extent not otherwise included, all (i) payments under insurance (whether or not the Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral, and (ii) cash. SECTION 2. Security for Obligations. This Agreement secures, in the case of each Pledgor, the payment of all Obligations of such Pledgor now or hereafter existing under the Loan Documents, whether direct or indirect, absolute or contingent, including any extensions, modifications, substitutions, amendments and renewals thereof, whether for principal (including reimbursement for amounts drawn under Letters of Credit), interest, premiums, penalties, fees, indemnifications, contract causes of action, costs, expenses or otherwise (all such Obligations being the "Secured Obligations"). Without limiting the generality of the foregoing, this Agreement secures, as to each Pledgor, the payment of all amounts that constitute part of the Secured Obligations of such Pledgor and that would be owed by such Pledgor to the Secured Parties under the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such Pledgor. SECTION 3. Pledgors Remain Liable. Anything herein to the contrary notwithstanding, (a) each Pledgor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Agent of any of its rights hereunder shall not release any Pledgor from any of its duties or obligations under the contracts and agreements included in the Collateral, and (c) no Secured Party shall have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement or any other Loan Document, nor shall any Secured Party be obligated to perform any of the obligations or duties of any Pledgor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. SECTION 4. Delivery of Security Collateral and Account Collateral. All certificates or instruments representing or evidencing any Security Collateral or Account Collateral shall be delivered to and held by or on behalf of the Agent pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Agent. If any Event of Default shall have occurred and be continuing, the Agent shall have the right to transfer to or to register in the name of the Agent or any of its nominees any or all of the Security Collateral and Account Collateral, subject only to the revocable rights specified in Section 10(a). In addition, the Agent shall have the right at any time to exchange certificates or instruments representing or evidencing the Security Collateral or Account Collateral for certificates or instruments of smaller or larger denominations. SECTION 5. Maintaining the L/C Cash Collateral Accounts. So long as any Advance shall remain unpaid, any Letter of Credit or Bank Hedge Agreement shall be outstanding or any Lender Party shall have any Commitment under the Credit Agreement: (a)The Crompton Borrowers will maintain the L/C Cash Collateral Accounts with Citibank. (b)It shall be a term and condition of each the L/C Cash Collateral Accounts, notwithstanding any term or condition to the contrary in any other agreement relating to such L/C Cash Collateral Account, as the case may be, and except as otherwise provided by the provisions of Section 7 and Section 15, that no amount (including interest on Collateral Investments) shall be paid or released to or for the account of, or withdrawn by or for the account of, any Crompton Borrower or any other Person from the L/C Cash Collateral Accounts, as the case may be. The L/C Cash Collateral Accounts shall be subject to such applicable laws, and such applicable regulations of the Board of Governors of the Federal Reserve System and of any other appropriate banking or governmental authority, as may now or hereafter be in effect. SECTION 6. Investing of Amounts in the L/C Cash Collateral Accounts. If requested by any Crompton Borrower and until the Crompton Borrower in any way amends such request, the Agent will direct Citibank to, subject to the provisions of Sections 7 and 15, from time to time (a) invest amounts on deposit in such Crompton Borrower's L/C Cash Collateral Account in such Cash Equivalents in the name of the Agent or as to which all action required by Section 9 shall have been taken as such Crompton Borrower may select and the Agent may approve and (b) invest interest paid on the Cash Equivalents referred to in clause (a) above, and reinvest other proceeds of any such Cash Equivalents that may mature or be sold, in each case in such Cash Equivalents in the name of the Agent or as to which all action required by Section 9 shall have been taken as such Crompton Borrower may select and the Agent may approve (the Cash Equivalents referred to in clauses (a) and (b) above being collectively "Collateral Investments"). Interest and proceeds that are not invested or reinvested in Collateral Investments as provided above shall be deposited and held in such L/C Cash Collateral Account, as the case may be. SECTION 7. Release of Amounts. So long as no Event of Default shall have occurred and be continuing, the Agent will direct Citibank to pay and release to each Crompton Borrower or at its order or, at the request of such Crompton Borrower, apply to the Obligations of such Crompton Borrower under the Loan Documents, such amounts on deposit in its L/C Cash Collateral Accounts at the times and in the amounts specified in the Credit Agreement, or, if such times or amounts are not specified in the Credit Agreement, such amount on deposit shall be released at such Crompton Borrower's direction. SECTION 8. Representations and Warranties. Each Pledgor represents and warrants as follows: (a)Such Pledgor is the legal and beneficial owner of the Collateral of such Pledgor free and clear of any Lien, claim, option or rights of others, except for the liens and security interests created under this Agreement or permitted under the Credit Agreement. No effective financing statement or other instrument similar in effect covering all or any part of such Collateral (including, without limitation, general intangibles relating to the Collateral) or listing such Pledgor or any of its Subsidiaries or any trade names of such Pledgor or any of its Subsidiaries as debtor is on file in any recording office, except such as may have been filed in favor of the Agent relating to this Agreement or such as may have been filed in connection with other Liens permitted under the Credit Agreement. (b)The Pledged Shares owned by such Pledgor have been duly authorized and validly issued and are fully paid and non-assessable. The Pledged Debt held by such Pledgor has been duly authorized, authenticated or issued and delivered, is the legal, valid and binding obligation of the issuers thereof, is evidenced by one or more promissory notes (except as otherwise provided in Section 5.02(b)(i)(D) and Section 5.02(b)(ii) of the Credit Agreement) (which notes have been delivered to the Agent) and is not in default. (c)The Initial Pledged Shares owned by such Pledgor constitute the percentage of the issued and outstanding shares of stock of the issuers thereof indicated on Schedule I hereto. The Initial Pledged Debt constitutes all of the outstanding indebtedness owed to such Pledgor by the issuers thereof. (d)The principal place of business and the chief executive office of such Pledgor are located at the address specified opposite the name of such Pledgor on Schedule III. (e)This Agreement, the pledge of the Security Collateral pursuant hereto and the pledge and assignment of the Account Collateral pursuant hereto create in favor of the Agent for the benefit of the Secured Parties a valid and perfected first priority security interest in the Collateral of such Pledgor, securing the payment of the Secured Obligations of such Pledgor, and all filings and other actions necessary or desirable to perfect and protect such security interest have been duly taken. (f)Such Pledgor has no trade names except as set forth on Schedule II hereto; such trade names were adopted in good faith; and, to the best of such Pledgor's knowledge, there exist no adverse claims against such trade names as of the Effective Date. (g)No consent of any other Person and no authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other third party is required (i) for the grant by such Pledgor of the assignment and security interest granted hereunder, for the pledge by such Pledgor of any Security Collateral pursuant hereto or for the execution, delivery or performance of this Agreement by such Pledgor, (ii) for the perfection or maintenance of the pledge, assignment and security interest created hereunder (including the first priority nature of such pledge, assignment and security interest), except for the filing of financing and continuation statements under the Uniform Commercial Code, which financing statements shall have been duly filed within 60 days after the Initial Extension of Credit (or such later date as may be agreed by the Borrowers and the Agent), or (iii) for the exercise by the Agent of its voting or other rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with the disposition of any portion of the Security Collateral by laws affecting the offering and sale of securities generally. (h)There are no conditions precedent to the effectiveness of this Agreement that have not been satisfied or waived. SECTION 9. Further Assurances. (a) Each Pledgor agrees that from time to time, at the expense of such Pledgor, such Pledgor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Agent may request, in order to perfect and protect any pledge, assignment or security interest granted or purported to be granted hereby or to enable the Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Pledgor will: (i) if any Collateral shall be evidenced by a promissory note or other instrument, deliver and pledge to the Agent for the benefit of the Secured Parties hereunder such note or instrument duly indorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Agent, (ii) deliver and pledge to the Agent for the benefit of the Secured Parties hereunder certificates representing the Pledged Shares accompanied by undated stock powers executed in blank and evidence that all other action that the Agent may deem necessary or desirable in order to perfect and protect the liens and security interests created under this Agreement has been taken and (iii) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Agent may reasonably request, in order to perfect and preserve the pledge, assignment and security interests granted or purported to be granted hereunder. (b)Each Pledgor hereby authorizes the Agent to file one or more financing or continuation statements, and amendments thereto, relating to all or any part of the Collateral without the signature of such Pledgor where permitted by law, provided that the Agent shall give reasonably prompt notice of any such filing to such Pledgor. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. (c)Each Pledgor will furnish to the Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Agent may reasonably request, all in reasonable detail. (d)Each Pledgor shall keep its chief place of business and chief executive office and the office where it keeps its records concerning the Collateral, at the location therefor specified opposite the name of such Pledgor on the signature pages hereof or, upon 20 days' prior written notice to the Agent, at such other locations in a jurisdiction where all actions required by this Section 9 shall have been taken with respect to the Collateral. Each Pledgor will hold and preserve such records and will permit representatives of the Agent at any reasonable time and from time to time during regular business hours and upon reasonable prior notice to inspect and make abstracts from such records. SECTION 10. Voting Rights; Dividends; Etc. (a) So long as no Default under Section 6.01(a) or (f) of the Credit Agreement or Event of Default shall have occurred and be continuing: (i)Each Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Security Collateral of such Pledgor or any part thereof for any purpose not inconsistent with the terms of this Agreement or the other Loan Documents; provided, however, that no Pledgor shall exercise or refrain from exercising any such right if, in the Agent's judgment, such action would have a material adverse effect on the value of the Security Collateral or any part thereof. (ii)Each Pledgor shall be entitled to receive and retain any and all dividends and interest paid in respect of the Security Collateral of such Pledgor if and to the extent that the payment thereof is not otherwise prohibited by the terms of the Loan Documents; provided, however, that any and all (A)dividends and interest paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Security Collateral, (B)dividends and other distributions paid or payable in cash in respect of any Security Collateral in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in-surplus, and (C)cash paid, payable or otherwise distributed in respect of principal of, or in redemption of, or in exchange for, any Security Collateral, shall be, and shall be forthwith delivered to the Agent to hold as, Security Collateral and shall, if received by any Pledgor, be received in trust for the benefit of the Agent, be segregated from the other property or funds of such Pledgor and be forthwith delivered to the Agent as Security Collateral in the same form as so received (with any necessary indorsement). (iii)The Agent shall execute and deliver (or cause to be executed and delivered) to each Pledgor all such proxies and other instruments as such Pledgor may reasonably request for the purpose of enabling such Pledgor to exercise the voting and other rights that it is entitled to exercise pursuant to paragraph (i) above and to receive the dividends or interest payments that it is authorized to receive and retain pursuant to paragraph (ii) above. (b)Upon the occurrence and during the continuance of any Default under Section 6.01(a) or (f) of the Credit Agreement or any Event of Default: (i)All rights of each Pledgor (A) to exercise or refrain from exercising the voting and other consensual rights that it would otherwise be entitled to exercise pursuant to Section 10(a)(i) shall, upon notice to such Pledgor by the Agent, cease, and (B) to receive the dividends and interest payments that it would otherwise be authorized to receive and retain pursuant to Section 10(a)(ii) shall automatically cease, and all such rights shall thereupon become vested in the Agent, which shall thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights and to receive and hold as Security Collateral such dividends and interest payments. (ii)All dividends and interest payments that are received by any Pledgor contrary to the provisions of paragraph (i) of this Section 10(b) shall be received in trust for the benefit of the Agent, shall be segregated from other funds of such Pledgor and shall be forthwith paid over to the Agent as Security Collateral in the same form as so received (with any necessary indorsement). SECTION 11. Transfers and Other Liens; Additional Shares. (a) Each Pledgor agrees that it shall not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral of such Pledgor (other than sales, assignments, options and other dispositions permitted under the terms of the Credit Agreement) or (ii) create or suffer to exist any Lien upon or with respect to any of the Collateral of such Pledgor, except for the Liens created under the Collateral Documents and any other Liens permitted under the Credit Agreement. (b)Each Pledgor agrees that it shall (i) cause each issuer of the Pledged Shares owned by such Pledgor not to issue any stock or other securities in addition to or in substitution for the Pledged Shares issued by such issuer, except to such Pledgor, and (ii) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional shares of stock or other securities of each issuer of any Pledged Shares. SECTION 12. Agent Appointed Attorney-in-Fact. Each Pledgor hereby irrevocably appoints the Agent such Pledgor's attorney-in-fact, with full authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise, from time to time after the occurrence and during the continuance of an Event of Default in the Agent's discretion, to take any action and to execute any instrument that the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation: (a)to ask for, 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, indorse and collect any drafts or other instruments and documents in connection with clause (a) above, and (c)to file any claims or take any action or institute any proceedings that the Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce compliance with the terms and conditions of any Assigned Agreement or the rights of the Agent with respect to any of the Collateral. SECTION 13. Agent May Perform. If any Pledgor fails to perform any agreement contained herein, the Agent may, but without any obligation to do so and without further notice, itself perform, or cause performance of, such agreement, and the expenses of the Agent incurred in connection therewith shall be payable by such Pledgor under Section 17. The Agent agrees to notify the Crompton Borrowers of any such performance; provided, however, that the failure to give such notice shall not affect the Agent's right to perform or the validity of such performance. SECTION 14. The Agent's Duties. The powers conferred on the Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Agent shall have no duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Security Collateral, whether or not the Agent or any other Secured Party has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral. The Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which it accords its own property. SECTION 15. Remedies. If any Event of Default shall have occurred and be continuing: (a)The 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 upon default under the Uniform Commercial Code in effect in the State of New York at such time (the "Uniform Commercial Code"), whether or not the Uniform Commercial Code applies to the affected Collateral, and also may without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Agent's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Agent may deem commercially reasonable. Each Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten days' notice to such 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 Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The 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)Any cash held by the Agent as Collateral and all cash proceeds received by the 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 Agent, be held by the Agent as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Agent pursuant to Section 17) in whole or in part by the Agent for the ratable benefit of the Secured Parties against, all or any part of the Secured Obligations in such order as the Agent shall elect. In determining the amount of any such cash to be applied against the Secured Obligations owing to the Hedge Banks other than Secured Obligations theretofore accrued and unpaid, the Agent shall be fully protected in relying on the Agreement Values of the Bank Hedge Agreements. "Agreement Value" means, for any Bank Hedge Agreement on any date of determination, the amount, if any, that would be payable to the Hedge Bank in respect of "agreement value" as though such Bank Hedge Agreement were terminated on such date, calculated as provided in the International Swap Dealers Association Inc. Code of Standard Wording, Assumptions and Provisions for Swaps, 1992 Edition; each determination of Agreement Value shall be made by the Agent in good faith and in reliance on any information, including information provided by such Hedge Bank, that it believes accurate, but without any obligation to verify such information. Any surplus of such cash or cash proceeds held by the Agent and remaining after payment in full of all the Secured Obligations shall be paid over to the Pledgor or to whomsoever may be lawfully entitled to receive such surplus. (c)The Agent may exercise any and all rights and remedies of the Pledgors in respect of the Collateral. (d)All payments received by any Pledgor in respect of the Collateral shall be received in trust for the benefit of the Agent and the other Secured Parties, shall be segregated from other funds of such Pledgor and shall be forthwith paid over to the Agent in the same form as so received (with any necessary indorsement). (e)The Agent may, without notice to any Crompton Borrower except as required by law and at any time or from time to time, charge, set-off and otherwise apply all or any part of the Secured Obligations against such Crompton Borrower's L/C Cash Collateral Account or any part thereof. SECTION 16. Registration Rights. If the Agent shall determine to exercise its right to sell all or any of the Security Collateral pursuant to Section 15, each Pledgor agrees that, upon request of the Agent, such Pledgor will, at its own expense: (a)execute and deliver, and cause each issuer of the Security 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 Agent, advisable to register such Security Collateral under the provisions of the Securities Act of 1933 (as amended from time to time, the "Securities Act"), to cause the registration statement 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 that, in the opinion of the 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 Security Collateral under the state securities or "Blue Sky" laws and to obtain all necessary governmental approvals for the sale of the Security Collateral, as requested by the Agent; (c)cause each such 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; (d)provide the Agent with such other information and projections as may be necessary or, in the opinion of the Agent, advisable to enable the Agent to effect the sale of such Security Collateral; and (e)do or cause to be done all such other acts and things as may be necessary to make such sale of the Security Collateral or any part thereof valid and binding and in compliance with applicable law. The Agent is authorized, in connection with any sale of the Security Collateral pursuant to Section 15, to deliver or otherwise disclose to any prospective purchaser of the Security Collateral (i) any registration statement or prospectus, and all supplements and amendments thereto, prepared pursuant to clause (a) above, (ii) any information and projections provided to it pursuant to clause (d) above and (iii) any other information in its possession relating to the Security Collateral. SECTION 17. Indemnity and Expenses. (a) Each Pledgor agrees to defend, protect, indemnify and hold harmless each Secured Party from and against any and all claims, losses and liabilities growing out of or resulting from this Agreement (including, without limitation, enforcement of this Agreement), except claims, losses or liabilities resulting from the Agent's or any such other Secured Party's gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. (b)Each Pledgor will upon demand pay to the Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, that the Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from or other realization upon, any of the Collateral of such Pledgor, (iii) the exercise or enforcement of any of the rights of the Agent or any other Secured Party against such Pledgor, or (iv) the failure by such Pledgor to perform or observe any of the provisions hereof. (c)Without prejudice to the survival of any other agreement of any Loan Party hereunder or under any other Loan Document, the agreements and obligations of the Pledgors contained in this Section 17 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under any of the other Loan Documents. SECTION 18. Amendments; Waivers; Etc. (a) No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Pledgor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of the Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. (b)Upon the execution and delivery by any Person of a security agreement supplement in substantially the form of Exhibit A hereto (each a "Crompton Security Agreement Supplement"), (i) such Person shall be referred to as an "Additional Pledgor" and shall be and become a Pledgor and each reference in this Agreement to "Pledgor" shall also mean and be a reference to such Additional Pledgor, and (ii) the annexes attached to each Crompton Security Agreement Supplement shall be incorporated into and become a part of and supplement Schedules I and II hereto, and the Collateral Agent may attach such annexes as supplements to such Schedules; and each reference to such Schedules shall mean and be a reference to such Schedules as supplemented by such Crompton Security Agreement Supplement. SECTION 19. Addresses for Notices. All notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic or telex communication) and, if to any Pledgor, mailed, telecopied, telegraphed, telexed or delivered to it, addressed to it c/o Crompton Corp. at its address at One Station Place, Metro Center, Stamford, CT 06902, Attention: Chief Financial Officer, and if to the Agent, mailed, telecopied, telegraphed, telexed or delivered to it, addressed to it at the address of the Agent specified in the Credit Agreement, or as to any 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 19. All such notices and other communications shall (a) when mailed, be effective three Business Days after the same is deposited in the mails, (b) when mailed for next day delivery by a reputable freight company or reputable overnight courier service, be effective one Business Day thereafter, and (c) when sent by telegraph, telecopier or telex, be effective when the same is confirmed by telephone, telecopier confirmation or return telecopy or telex answerback, respectively. SECTION 20. Continuing Security Interest; Assignments. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the Collateral Release Date, (b) be binding upon each Pledgor, its successors and assigns and (c) inure, together with the rights and remedies of the Agent hereunder, to the benefit of the Secured Parties and their respective successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), any Lender Party may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement (including, without limitation, all or any portion of its Commitments, the Advances owing to it and the Note or Notes held by it) to any other Person and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender Party herein or otherwise, in each case as provided in Section 8.07 of the Credit Agreement. No Pledgor shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Secured Parties. SECTION 21. Release and Termination. (a) Upon any sale, lease, transfer or other disposition of any item of Collateral of any Pledgor, in accordance with the terms of the Loan Documents, the Agent will, at such Pledgor's expense, execute and deliver to such Pledgor such documents as such Pledgor shall reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted hereby; provided, however, that (i) at the time of such request and such release no Event of Default shall have occurred and be continuing and (ii) Crompton Corp. shall have delivered to the Agent, at least ten Business Days prior to the date of the proposed release, a written request for release describing the item of Collateral and the terms of the sale, lease, transfer or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a form of release for execution by the Agent and a certification by Crompton Corp. to the effect that the transaction is in compliance with the Loan Documents and as to such other matters as the Agent may request. (b)Upon the Collateral Release Date, the pledge, assignment and security interest granted hereby shall terminate and all rights to the Collateral shall revert to the respective Pledgor. Upon any such termination or release, the Agent will, at such Pledgor's expense, execute and deliver to such Pledgor such documents as such Pledgor shall reasonably request to evidence such termination. SECTION 22. Security Interest Absolute. The Obligations of each Pledgor hereunder are independent of the Obligations of any other Loan Party under the Loan Documents, and a separate action or actions may be brought or prosecuted against each Pledgor whether action is brought against any other Loan Party or whether any other Loan Party is joined in any such action or actions. All rights of the Collateral Agent and security interests hereunder, and all obligations of each Pledgor hereunder, shall be absolute and unconditional, irrespective of, and each Pledgor hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the circumstances described in the Guaranties or any other circumstance that might constitute a discharge available to, or a discharge of, any Borrower or any Guarantor. This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Secured Obligations is rescinded or must otherwise be returned by any Secured Party or by any other Person upon the insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as though such payment had not been made. SECTION 23. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 24. Governing Law; Terms. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, 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 New York. Unless otherwise defined herein or in the Credit Agreement, terms used in Article 8 or Article 9 of the Uniform Commercial Code are used herein as therein defined. IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. CK HOLDING CORPORATION By Title: CNK DISPOSITION CORP. By Title: CROMPTON & KNOWLES COLORS INCORPORATED By Title: CROMPTON & KNOWLES CORPORATION By Title: CROMPTON & KNOWLES OVERSEAS CORPORATION By Title: DAVIS-STANDARD CORPORATION By Title: INGREDIENT TECHNOLOGY CORPORATION By Title: KEM MANUFACTURING CORPORATION By Title: SCHEDULE I TO THE CROMPTON SECURITY AGREEMENT INITIAL PLEDGED SHARES AND INITIAL PLEDGED DEBT PART I Initial Pledged Shares Name of Pledgor Name of Issuer Number of Shares Crompton & Knowles Corporation CK Holding Corporation 750 Crompton & Knowles Crompton & Knowles Overseas Corporation Corporation 100 Crompton & Knowles KEM Manufacturing 5,000 Corporation Corporation (formerly known as CNK Corporation) CK Holding Corporation Davis-Standard Corporation 500 CK Holding Corporation Crompton & Knowles Colors 500 Incorporated (formerly known as Dyes & Chemicals Corporation) PART II Initial Pledged Debt Debt of the Crompton Borrowers and the Crompton Guarantors evidenced by the intercompany promissory note dated August 21, 1996 made by CK Holding Corporation, CNK Disposition Corp., Crompton & Knowles Colors Incorporated, Crompton & Knowles Corporation, Crompton & Knowles Overseas Corporation, Davis-Standard Corporation, Ingredient Technology Corporation, Kem Manufacturing Corporation, Gustafson, Inc., Gustafson International Company, Lokar Enterprises, Inc., Trace Chemicals, Inc., Uniroyal Chemical Brazil Holding, Inc., Uniroyal Chemical Company, Inc., Uniroyal Chemical Corporation, Uniroyal Chemical Export Limited, Uniroyal Chemical International Company, Uniroyal Chemical Leasing Company Inc. and Uniroyal Chemical Ltd. SCHEDULE II TO THE CROMPTON SECURITY AGREEMENT TRADE NAMES John Brown John Brown Plastics Machinery Trafalgar House Egan Bone Markham Bone Cravens Bone Brothers Western Polymer Johnson Plastics Machine Magna Graphics DATM Spartan Titan Flex lip CMR-1000 CMR-2000 CMR-3000 CRM-Plus Flexistrictor Powerflight SCHEDULE III TO THE CROMPTON SECURITY AGREEMENT CHIEF EXECUTIVE OFFICES OF PLEDGORS CK Holding Corporation One Station Place - Metro Center Stamford, CT 06902 Fed Tax ID #: 06-1413342 Crompton & Knowles Overseas Corporation One Station Place - Metro Center Stamford, CT 06902 Fed Tax ID #: 04-2463110 Davis-Standard Corporation One Extrusion Drive Pawcatuck, CT 06379 Fed Tax ID #: 06-1413340 Crompton & Knowles Colors Incorporated 3001 N. Graham Street Charlotte, NC 28206 Fed Tax ID #: 06-1413341 Ingredient Technology Corporation 1595 MacArthur Blvd. Mahwah, NJ 07430 Fed Tax ID #: 13-4923610 Kem Manufacturing Corporation One Station Place - Metro Center Stamford, CT 06902 Fed Tax ID #: 58-0620603 Crompton & Knowles Corporation One Station Place - Metro Center Stamford, CT 06902 Fed Tax ID #: 04-1218720 CNK Disposition Corp. 5414 North 56th Street Tampa, FL 33610 Fed Tax ID #: 59-0614068 EXHIBIT A TO THE CROMPTON SECURITY AGREEMENT FORM OF CROMPTON SECURITY AGREEMENT SUPPLEMENT Citicorp USA, Inc., as Agent under the Credit Agreement referred to below 399 Park Avenue New York, New York 10043 [Date] Attention: Robert Kosian Crompton Security Agreement dated as of August 21, 1996 made by the Pledgors party thereto to Citicorp USA, Inc., as Agent Ladies and Gentlemen: Reference is made to the above-captioned Crompton Security Agreement (such Crompton Security Agreement, as in effect on the date hereof and as it may hereafter be amended, modified or otherwise supplemented from time to time, being the "Crompton Security Agreement"). The terms defined in the Crompton Security Agreement (or in the Credit Agreement referred to therein) and not otherwise defined herein are used herein as therein defined. The undersigned hereby agrees, as of the date first above written, to become a Pledgor under the Crompton Security Agreement as if it were an original party thereto and agrees that each reference in the Crompton Security Agreement to "Pledgor" shall also mean and be a reference to the undersigned. The undersigned hereby assigns and pledges to the Agent for the ratable benefit of the Secured Parties, and hereby grants to the Agent for the ratable benefit of the Secured Parties as security for the Secured Obligations a lien on and security interest in, all of the right, title and interest of the undersigned, whether now owned or hereafter acquired, in and to the Collateral owned by the undersigned, including, but not limited to, the property listed on Annex I hereto. Schedules I and II to the Crompton Security Agreement are hereby supplemented by Annexes I and II hereto, respectively. The undersigned hereby certifies that such Annexes have been prepared by the undersigned in substantially the form of Schedules I and II to the Crompton Security Agreement and are accurate and complete as of the date hereof. The undersigned hereby makes each representation and warranty set forth in Section 8 of the Crompton Security Agreement (as supplemented by the attached Annexes) to the same extent as each other Pledgor and hereby agrees to be bound as a Pledgor by all of the terms and provisions of the Crompton Security Agreement to the same extent as each other Pledgor. This Crompton Security Agreement Supplement shall be governed by, and construed in accordance with, the laws of the State of New York. Very truly yours, [NAME OF ADDITIONAL PLEDGOR] By Title: Address of Chief Executive Office and for Notices: [Address] EXHIBIT D-2 FORM OF UNIROYAL SECURITY AGREEMENT UNIROYAL SECURITY AGREEMENT Dated August 21, 1996 From THE PERSONS LISTED ON THE SIGNATURE PAGES HEREOF as Pledgors to CITICORP USA, INC., as Agent T A B L E O F C O N T E N T S Section Page 1. Grant of Security 2 2. Security for Obligations 4 3. Pledgors Remain Liable 4 4. Delivery of Security Collateral and Account Collateral 5 5. Maintaining the Collection Account, the Cash Concentration Account and the L/C Cash Collateral Account 5 6. As to Account Collateral 6 7. Investing of Amounts in the Cash Concentration Account and the L/C Cash Collateral Account 7 8. Release of Amounts 7 9. Representations and Warranties 7 10. Further Assurances 9 11. As to Inventory 10 12. Insurance 10 13. Place of Perfection; Records; Collection of Receivables11 14. Transfers and Other Liens 12 15. Agent Appointed Attorney-in-Fact 12 16. Agent May Perform 12 17. The Agent's Duties 13 18. Remedies 13 19. Indemnity and Expenses 14 20. Amendments; Waivers; Etc 15 21. Addresses for Notices 15 22. Continuing Security Interest; Assignments 16 23. Release and Termination 16 24. Security Interest Absolute 17 25. Execution in Counterparts 17 26. Governing Law; Terms 18 Schedule I-Trade Names Schedule II-Locations of Inventory Schedule III-Pledged Debt Schedule IV-Chief Executive Offices of Pledgors Exhibit A-Form of Uniroyal Security Agreement Supplement UNIROYAL SECURITY AGREEMENT UNIROYAL SECURITY AGREEMENT dated August 21, 1996 made by the Persons listed on the signature pages hereof and the Additional Pledgors (as defined in Section 20(b)) (such Persons so listed and the Additional Pledgors being, collectively, the "Pledgors") to CITICORP USA, INC. as agent (in such capacity, the "Agent") for the Secured Parties (as defined in the Credit Agreement referred to below). PRELIMINARY STATEMENTS. (1)Uniroyal Chemical Company, Inc. (the "Uniroyal Borrower") has entered into a Credit Agreement dated as of August 21, 1996 (said Agreement, as it may hereafter be amended, supplemented or otherwise modified from time to time, being the "Credit Agreement"; capitalized terms used herein and not otherwise defined herein are used herein as therein defined) with Crompton & Knowles Corporation, Crompton & Knowles Colors Incorporated, Davis-Standard Corporation, Ingredient Technology Corporation, the lender parties party thereto (the "Lender Parties"), Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent and The Chase Manhattan Bank, as Managing Agent. (2)The Uniroyal Borrower maintains a non-interest bearing cash collection account (the "Collection Account") with Citibank, N.A. ("Citibank") at its office at 399 Park Avenue, New York, New York 10043, Account No. 4055-5094, in the name of the Uniroyal Borrower but under the sole control and dominion of the Agent and subject to the terms of this Agreement. (3)The Uniroyal Borrower maintains a non-interest bearing cash concentration account (the "Cash Concentration Account") with Citibank at its office at 399 Park Avenue, New York, New York 10043, Account No. 4049-8376, in the name of the Uniroyal Borrower and subject to the terms of this Agreement. (4)The Uniroyal Borrower has opened a non-interest (but subject to investment pursuant to Section 6) cash collateral account (an "L/C Cash Collateral Account") with Citibank at its office at 399 Park Avenue, New York, New York 10043, Account No. 4070-5742, in the name of the Uniroyal Borrower and subject to the terms of this Agreement. (5)Each Pledgor will derive substantial direct and indirect benefit from the transactions contemplated by the Credit Agreement. (6)It is a condition precedent to the making of Advances and the issuance of Letters of Credit by the Lender Parties under the Credit Agreement and the entry by the Hedge Banks into Bank Hedge Agreements with the Borrowers from time to time that each Pledgor shall have granted the assignment and security interest and made the pledge and assignment contemplated by this Agreement. NOW, THEREFORE, in consideration of the premises and in order to induce the Lender Parties to make Advances and to issue Letters of Credit under the Credit Agreement and to induce the Hedge Banks to enter into Bank Hedge Agreements with the Borrowers from time to time, each Pledgor hereby agrees with the Agent for the ratable benefit of the Secured Parties as follows: SECTION 1. Grant of Security. Each Pledgor hereby assigns and pledges to the Agent for the ratable benefit of the Secured Parties, and hereby grants to the Agent for the ratable benefit of the Secured Parties a security interest in, the following, in each case, as to each type of property described below, whether now owned or hereafter acquired by such Pledgor, wherever located and whether now or hereafter existing (collectively, the "Collateral"): (a)all of such Pledgor's right, title and interest, whether now owned or hereafter acquired, in and to all inventory in all of its forms, wherever located, now or hereafter existing (including, but not limited to, (i) all herbicides, agricides, insecticides, foliar nutrients, plant growth regulants, fungicides, seed treatment chemicals and equipment, chemicals and polymers and specialty chemicals and raw materials and work in process therefor, finished goods thereof and materials used or consumed in the manufacture or production thereof, (ii) inventory in which such Pledgor has an interest in mass or a joint or other interest or right of any kind (including, without limitation, goods in which such Pledgor has an interest or right as consignee) and (iii) inventory that is returned to or repossessed by such Pledgor), and all accessions thereto and products thereof and documents therefor (any and all such inventory, accessions, products and documents being the "Inventory"); (b)all of such Pledgor's (i) right, title and interest, whether now owned or hereafter acquired, in and to all accounts, contract rights, chattel paper, instruments, deposit accounts, general intangibles and other obligations of any kind, now or hereafter existing, but only to the extent the foregoing arise out of or in connection with, and constitute a right of payment of money or other property for, the sale or lease of goods or the rendering of services other than intercompany royalty payments, licensing fees, technology transfer payments and other similar intercompany payments (to the extent not referred to in clause (c) below, the "Receivables") and (ii) rights now or hereafter existing in and to all security agreements, leases and other contracts securing or otherwise relating to the Receivables (the "Related Contracts"); (c)all of such Pledgor's right, title and interest in and to the following (collectively, the "Account Collateral"): (i)the Cash Concentration Account, all funds held therein and all certificates and instruments, if any, from time to time representing or evidencing the Cash Concentration Account; (ii)the Collection Account, all funds held therein and all certificates and instruments, if any, from time to time representing or evidencing the Collection Account; (iii)the L/C Cash Collateral Account, all funds held therein and all certificates and instruments, if any, from time to time representing or evidencing such L/C Cash Collateral Account; (iv)all Pledged Accounts (as hereinafter defined), all funds held therein and all certificates and instruments, if any, from time to time representing or evidencing the Pledged Accounts; (v)all Other Accounts (as hereinafter defined), all funds held therein and all certificates and instruments, if any, from time to time representing or evidencing such accounts; (vi)all notes, certificates of deposit, deposit accounts, checks and other instruments from time to time hereafter delivered to or otherwise possessed by the Agent for or on behalf of such Pledgor in substitution for or in addition to any or all of the then existing Account Collateral; and (vii)all interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Account Collateral; and (d)All of the following (the "Security Collateral"): (i)the indebtedness (whether or not evidenced by instruments) set forth opposite such Pledgor's name on Schedule III hereto and issued by the obligors indicated therein (collectively referred to herein as the "Initial Pledged Debt", and together with the indebtedness referred to in clause (ii) below, the "Pledged Debt") and the instruments (if any) evidencing such Initial Pledged Debt, all security therefor and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Initial Pledged Debt; and (ii)all additional indebtedness from time to time owed to such Pledgor by any obligor of the Initial Pledged Debt (whether or not evidenced by instruments) and the instruments evidencing such indebtedness (if any), and all additional indebtedness owed to such Pledgor by any other obligor to the extent required pursuant to Section 5.01(k) of the Credit Agreement, all security therefor and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such indebtedness; (e)all proceeds of any and all of the foregoing Collateral (including, without limitation, proceeds that constitute property of the types described in clauses (a), (b), (c) and (d) of this Section 1) and, to the extent not otherwise included, all (i) payments under insurance (whether or not the Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral, and (ii) cash. SECTION 2. Security for Obligations. This Agreement secures, in the case of each Pledgor, the payment of all Obligations of such Pledgor now or hereafter existing under the Loan Documents, which shall not exceed, so long as any Uniroyal Indenture remains in effect, the maximum amount of Debt permitted to be incurred by such Pledgor under such Uniroyal Indenture, whether direct or indirect, absolute or contingent, including any extensions, modifications, substitutions, amendments and renewals thereof, whether for principal (including reimbursement for amounts drawn under Letters of Credit), interest, premiums, penalties, fees, indemnifications, contract causes of action, costs, expenses or otherwise (all such Obligations being the "Secured Obligations"). Without limiting the generality of the foregoing, this Agreement secures, as to each Pledgor, the payment of all amounts that constitute part of the Secured Obligations of such Pledgor and that would be owed by such Pledgor to the Secured Parties under the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such Pledgor. SECTION 3. Pledgors Remain Liable. Anything herein to the contrary notwithstanding, (a) each Pledgor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Agent of any of its rights hereunder shall not release any Pledgor from any of its duties or obligations under the contracts and agreements included in the Collateral and (c) no Secured Party shall have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement or any other Loan Document, nor shall any Secured Party be obligated to perform any of the obligations or duties of any Pledgor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. SECTION 4. Delivery of Security Collateral and Account Collateral. All certificates or instruments representing or evidencing any Security Collateral or Account Collateral have been or shall be delivered to and held by or on behalf of the Agent pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Agent. If any Event of Default shall have occurred and be continuing, the Agent shall have the right to transfer to or to register in the name of the Agent or any of its nominees any or all of the Security Collateral and Account Collateral. In addition, the Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Account Collateral for certificates or instruments of smaller or larger denominations. SECTION 5. Maintaining the Collection Account, the Cash Concentration Account and the L/C Cash Collateral Account. So long as any Advance shall remain unpaid, any Letter of Credit or Bank Hedge Agreement shall be outstanding or any Lender Party shall have any Commitment under the Credit Agreement: (a)The Pledgor will maintain the Collection Account and the Cash Concentration Account with Citibank. (b)It shall be a term and condition of the Collection Account and the L/C Cash Collateral Account, notwithstanding any term or condition to the contrary in any other agreement relating to such Collection Account or such L/C Cash Collateral Account, as the case may be, and except as otherwise provided by the provisions of Section 8 and Section 18, that no amount (including interest on Collateral Investments) shall be paid or released to or for the account of, or withdrawn by or for the account of, the Pledgor or any other Person from such Collection Account or L/C Cash Collateral Account, as the case may be. The Collection Account, the Cash Concentration Account and the L/C Cash Collateral Account shall be subject to such applicable laws, and such applicable regulations of the Board of Governors of the Federal Reserve System and of any other appropriate banking or governmental authority, as may now or hereafter be in effect. SECTION 6. As to Account Collateral. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding, any Bank Hedge Agreement shall be in effect or any Lender Party shall have any Commitment under the Credit Agreement: (a)Each Pledgor shall comply with its current cash management policies and practices, and shall not make any material change to such policies and practices which could adversely affect the interests of the Secured Parties without the prior written consent of the Agent. (b)Each Pledgor shall instruct each Person obligated at any time to make any payment to such Pledgor for any reason (an "Obligor") to make such payment to a Pledged Account (as defined in Section 9(d)) or to the Collection Account and shall pay to the Agent for deposit in the Collection Account, at the end of each Business Day, all proceeds of Collateral. (c)Each Pledgor shall not make any deposit in any deposit account other than a deposit in the Cash Concentration Account or an Other Account (as defined in Section 9(d)) or an Excepted Account (as defined in Section 9(d)) in accordance with its then current cash management policies and practices in accordance with Section 6(a), provided that in the case of deposits in the Excepted Accounts, no amount deposited therein shall constitute proceeds of Collateral, other than amounts transferred directly from the Cash Concentration Account. (d)Upon the occurrence and during the continuance of an Event of Default, at the Agent's request, within 15 Business Days of such request (or such later time as the Agent and Crompton Corp. shall agree), (i) each Pledgor shall give written notice to the Agent of (A) the name and address of each bank with which each Pledged Account or Other Account is maintained by such Pledgor, (B) the account number of each such Pledged Account or Other Account and (C) the full name under which such Pledged Account or Other Account is maintained, (ii) each Pledgor shall enter into letter agreements (the "Pledged Account Letters") in form and substance satisfactory to the Agent among such Pledgor, the Agent and each bank with which such Pledgor maintains a Pledged Account or, at the option of such Pledgor, shall close such account, (iii) each Pledgor shall enter into letter agreements (the "Other Account Letters", and together with the Pledged Account Letters, the "Blocked Account Letters") in form and substance satisfactory to the Agent among such Pledgor, the Agent and each bank with which such Pledgor maintains an Other Account or, at the option of such Pledgor, shall close such account, (iv) upon any termination of any Pledged Account Letter or other agreement with respect to the maintenance of a Pledged Account, such Pledgor shall promptly notify all Obligors that were making payments to such Pledged Account to make all future payments to another Pledged Account or to the Collection Account, and (v) each Pledgor agrees to close any or all Pledged Accounts and terminate any or all Pledged Account Letters at the request of the Agent upon five Business Days' notice thereof. SECTION 7. Investing of Amounts in the Cash Concentration Account and the L/C Cash Collateral Account. If requested by the Uniroyal Borrower and until the Uniroyal Borrower in any way amends such request, the Agent will direct Citibank to, subject to the provisions of Section 8 and Section 18, from time to time (a) invest amounts on deposit in the Cash Concentration Account and the L/C Cash Collateral Account in such Cash Equivalents in the name of the Agent or as to which all action required by Section 10 shall have been taken as the Uniroyal Borrower may select and the Agent may approve and (b) invest interest paid on the Cash Equivalents referred to in clause (a) above, and reinvest other proceeds of any such Cash Equivalents that may mature or be sold, in each case in such Cash Equivalents in the name of the Agent or as to which all action required by Section 10 shall have been taken as such Uniroyal Borrower may select and the Agent may approve (the Cash Equivalents referred to in clauses (a) and (b) above being collectively "Collateral Investments"). Interest and proceeds that are not invested or reinvested in Collateral Investments as provided above shall be deposited and held in the Cash Concentration Account or the L/C Cash Collateral Account, as the case may be. SECTION 8. Release of Amounts. So long as no Event of Default shall have occurred and be continuing, the Agent will direct Citibank to pay and release to the Uniroyal Borrower or at its order or, at the request of the Uniroyal Borrower, apply to the Obligations of the Uniroyal Borrower under the Loan Documents, such amounts on deposit in the Collection Account, the Cash Concentration Account and the L/C Cash Collateral Account at the times and in the amounts specified in the Credit Agreement, or, if such times or amounts are not specified in the Credit Agreement, such amounts on deposit shall be released at the Uniroyal Borrower's direction. SECTION 9. Representations and Warranties. Each Pledgor represents and warrants as follows: (a)As of the Effective Date, all of the Inventory is located at the places specified in Schedule II hereto. The chief place of business and chief executive office of such Pledgor and the office where such Pledgor keeps its records concerning the Receivables and all originals of all chattel paper that evidence Receivables, are located at the address specified opposite the name of such Pledgor on Schedule IV. None of the Receivables is evidenced by a promissory note or other instrument which has not been pledged to the Agent for the ratable benefit of the Secured Parties and delivered to the Agent pursuant to the terms of this Agreement. (b)Such Pledgor is the legal and beneficial owner of the Collateral of such Pledgor free and clear of any Lien, claim, option or rights of others except for the liens and security interests created under this Agreement or permitted under the Credit Agreement. No effective financing statement or other instrument similar in effect covering all or any part of such Collateral (including, without limitation, general intangibles relating to the Collateral) or listing such Pledgor or any of its Subsidiaries or any trade names of such Pledgor or any of its Subsidiaries as debtor is on file in any recording office, except such as may have been filed in favor of the Agent relating to this Agreement or such as may have been filed in connection with other Liens permitted under the Credit Agreement. (c)Such Pledgor has exclusive possession and control of the Inventory, except the Inventory locations marked by an asterisk in Schedule II. (d)Such Pledgor has no lockbox accounts, deposit accounts, disbursement accounts or other accounts other than (i) the deposit accounts into which an Obligor deposits proceeds received in respect of Inventory Receivables or Related Contracts owing to such Pledgor (each a "Pledged Account"), (ii) the other accounts into which such Pledgor deposits proceeds received in respect of Inventory Receivables or Related Contracts owing to such Pledgor (each an "Other Account") and (iii) such other accounts into which no proceeds of Collateral are deposited (each an "Excepted Account"). (e)The Initial Pledged Debt constitutes all of the outstanding indebtedness owed to such Pledgor by the issuers thereof. (f)The principal place of business and chief executive office of such Pledgor are located at the address specified opposite the name of such Pledgor on Schedule IV. (g)Such Pledgor has no trade names except as set forth on Schedule I hereto; such trade names were adopted in good faith; and, to the best of such Pledgor's knowledge, there exist no adverse claims against such trade names as of the Effective Date. (h)This Agreement and the pledge of the Collateral pursuant hereto create in favor of the Agent for the benefit of the Secured Parties a valid and perfected first priority security interest in the Collateral (other than as to matters of perfection and priority of the security interest in the Pledged Accounts and the Other Accounts) of such Pledgor, securing the payment of the Secured Obligations of such Pledgor, and all filings and other actions necessary or desirable to perfect and protect such security interest have been duly taken. Such Pledgor has not granted any security interest in the Collateral to any other Person. (i)No consent of any other Person and no authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other third party is required (i) for the grant by such Pledgor of the assignment and security interest granted hereunder, for the pledge by such Pledgor of the Collateral pursuant hereto or for the execution, delivery or performance of this Agreement by such Pledgor, (ii) for the perfection or maintenance of the pledge, assignment and security interest created hereunder (including the first priority nature of such pledge, assignment or security interest), except for the filing of financing and continuation statements under the Uniform Commercial Code, which financing statements shall have been duly filed within 60 days after the Initial Extension of Credit (or such later date as may be agreed by the Borrowers and the Agent), or (iii) for the exercise by the Agent of its rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement. (j)The Inventory that has been produced by such Pledgor has been produced in compliance with all requirements of the Fair Labor Standards Act. (k)There are no conditions precedent to the effectiveness of this Agreement that have not been satisfied or waived. SECTION 10. Further Assurances. (a) Each Pledgor agrees that from time to time, at the expense of such Pledgor, such Pledgor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Agent may reasonably request, in order to perfect and protect any pledge, assignment or security interest granted or purported to be granted hereby or to enable the Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Pledgor will: (i) at the request of the Agent, mark conspicuously each document included in the Inventory of such Pledgor and each chattel paper included in the Receivables of such Pledgor with a legend, in form and substance satisfactory to the Agent, indicating that such document or chattel paper is subject to the security interest granted hereby; (ii) if any Collateral shall be evidenced by a promissory note or other instrument or chattel paper, at the request of the Agent, deliver and pledge to the Agent hereunder such note or instrument or chattel paper duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Agent; and (iii) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Agent may reasonably request, in order to perfect and preserve the pledge, assignment and security interests granted or purported to be granted hereunder. (b)Each Pledgor hereby authorizes the Agent to file one or more financing or continuation statements, and amendments thereto, relating to all or any part of the Collateral without the signature of such Pledgor where permitted by law, provided that the Agent shall give reasonably prompt notice of any such filing to such Pledgor. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. (c)Each Pledgor will furnish to the Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Agent may reasonably request, all in reasonable detail. SECTION 11. As to Inventory. (a) Each Pledgor shall keep the Inventory (other than Inventory sold in the ordinary course of business) at any of the places therefor specified in Section 9(a) or, upon 20 days' prior written notice to the Agent, at such other places in a jurisdiction where all action required by Section 10 shall have been taken with respect to the Inventory. (b)Each Pledgor shall pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Inventory, except to the extent not required pursuant to Section 5.01(b) of the Credit Agreement. In producing the Inventory, each Pledgor shall comply with all requirements of the Fair Labor Standards Act. SECTION 12. Insurance. (a) Each Pledgor shall, at its own expense, maintain insurance with respect to the Inventory in such amounts, against such risks, in such form and with such insurers, as shall be satisfactory to the Agent from time to time. Each policy for property damage insurance with respect to Inventory shall provide for all losses (except for losses of less than $250,000 per occurrence) to be paid directly to the Agent. Each such policy shall in addition (i) name the Agent as loss payee, (ii) provide that there shall be no recourse against the Agent for payment of premiums or other amounts with respect thereto and (iii) provide that at least 10 days' prior written notice of cancellation or of lapse shall be given to the Agent by the insurer. Each Pledgor shall, if so requested by the Agent upon an Event of Default, deliver to the Agent duplicate policies of such insurance and, as often as the Agent may reasonably request, a report of a reputable insurance broker with respect to such insurance. Further, each Pledgor shall, at the request of the Agent, duly execute and deliver instruments of assignment of such insurance policies to comply with the requirements of Section 10 and use its best efforts to cause the insurers to acknowledge notice of such assignment. (b)Reimbursement under any liability insurance maintained by the Uniroyal Borrower pursuant to this Section 12 may be paid directly to the Person who shall have incurred liability covered by such insurance. In case of any loss involving damage to Inventory when subsection (c) of this Section 12 is not applicable, the Uniroyal Borrower shall make or cause to be made the necessary repairs to such Inventory or replacements of any Inventory, and any proceeds of insurance maintained by the Uniroyal Borrower pursuant to this Section 12 shall be paid to the Uniroyal Borrower as reimbursement for the costs of such repairs or replacements. (c)Upon the occurrence and during the continuance of any Event of Default or the actual or constructive total loss (in excess of $250,000 per occurrence) of any Inventory, all insurance payments in respect of such Inventory shall be paid to and applied by the Agent as specified in Section 18(b). SECTION 13. Place of Perfection; Records; Collection of Receivables. (a) Each Pledgor shall keep its chief place of business and chief executive office and the office where it keeps its records concerning the Collateral, and all originals of all chattel paper that evidence Receivables, at the location therefor specified in Section 9(a) or, upon 20 days' prior written notice to the Agent, at such other locations in a jurisdiction where all actions required by Section 10 shall have been taken with respect to the Collateral. Each Pledgor will hold and preserve such records and chattel paper and will permit representatives of the Agent at any reasonable time and from time to time during regular business hours and upon reasonable prior notice to inspect and make abstracts from such records and chattel paper. (b) Except as otherwise provided in this subsection (b), each Pledgor shall continue to collect in the ordinary course of its business in a manner consistent with past practices, at its own expense, all amounts due or to become due to such Pledgor under the Receivables. The Agent shall have the right at any time, upon the occurrence and during the continuance of an Event of Default and upon written notice to the Pledgor of its intention to do so, to notify the Obligors under any Receivables of the assignment of such Receivables to the Agent and to direct such Obligors to make payment of all amounts due or to become due to such Pledgor thereunder directly to the Agent and, upon such notification and at the expense of such Pledgor, to enforce collection of any such Receivables, and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Pledgor might have done. After receipt by such Pledgor of the notice from the Agent referred to in the preceding sentence and so long as such Event of Default is continuing, (i) all amounts and proceeds (including instruments) received by such Pledgor in respect of the Receivables shall be received in trust for the benefit of the Agent hereunder, shall be segregated from other funds of such Pledgor and shall be forthwith paid over to the Agent in the same form as so received (with any necessary endorsement) to be deposited in the Collection Account and either (A) released to the Uniroyal Borrower on the terms set forth in Section 8 so long as no Event of Default shall have occurred and be continuing or (B) if an Event of Default shall have occurred and be continuing, applied as provided by Section 18(b) and (ii) such Pledgor shall not adjust, settle or compromise the amount or payment of any Receivable, release wholly or partly any Obligor thereof, or allow any credit or discount thereon. SECTION 14. Transfers and Other Liens. Each Pledgor agrees that it shall not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral of such Pledgor (other than sales, assignments, options and other dispositions permitted under the terms of the Credit Agreement) or (ii) create or suffer to exist any Lien upon or with respect to any of the Collateral of such Pledgor, except for the Liens created under the Collateral Documents and any other Liens permitted under the Credit Agreement. SECTION 15. Agent Appointed Attorney-in-Fact. Each Pledgor hereby irrevocably appoints the Agent such Pledgor's attorney-in-fact, with full authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise, from time to time after the occurrence and during the continuance of an Event of Default in the Agent's discretion, to take any action and to execute any instrument that the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation: (a)to obtain and adjust insurance required to be paid to the Agent pursuant to Section 12, (b)to ask for, 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, (c)to receive, indorse and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a) or (b) above, and (d)to file any claims or take any action or institute any proceedings that the Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce compliance with the rights of the Agent with respect to any of the Collateral. SECTION 16. Agent May Perform. If any Pledgor fails to perform any agreement contained herein, the Agent may, but without any obligation to do so and without further notice, itself perform, or cause performance of, such agreement, and the expenses of the Agent incurred in connection therewith shall be payable by such Pledgor under Section 19(b). The Agent agrees to notify the Uniroyal Borrower of any such performance; provided, however, that the failure to give such notice shall not affect the Agent's right to perform or the validity of such performance. SECTION 17. The Agent's Duties. The powers conferred on the Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Agent shall have no duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not the Agent or any other Secured Party has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral. The Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Agent accords its own property. SECTION 18. Remedies. If any Event of Default shall have occurred and be continuing: (a)The 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 upon default under the Uniform Commercial Code in effect in the State of New York at such time (the "Uniform Commercial Code") (whether or not the Uniform Commercial Code applies to the affected Collateral) and also may (i) require any Pledgor to, and each Pledgor hereby agrees that it will at its expense and upon request of the Agent forthwith, assemble all or part of the Collateral pledged by it (other than the Receivables and the Account Collateral) as directed by the Agent and make it available to the Agent at a place and time to be designated by the Agent that is reasonably convenient to both parties and (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Agent's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Agent may deem commercially reasonable. Each Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten days' notice to such 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 Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The 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)Any cash held by the Agent as Collateral and all cash proceeds received by the 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 Agent, be held by the Agent as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Agent pursuant to Section 19) in whole or in part by the Agent for the ratable benefit of the Secured Parties, against all or any part of the Secured Obligations in such order as the Agent shall elect. In determining the amount of any such cash to be applied against the Secured Obligations owing to the Hedge Banks other than Secured Obligations theretofore accrued and unpaid, the Agent shall be fully protected in relying on the Agreement Values of the Bank Hedge Agreements. "Agreement Value" means, for any Bank Hedge Agreement on any date of determination, the amount, if any, that would be payable to the Hedge Bank in respect of "agreement value" as though such Bank Hedge Agreement were terminated on such date, calculated as provided in the International Swap Dealers Association Inc. Code of Standard Wording, Assumptions and Provisions for Swaps, 1992 Edition; each determination of Agreement Value shall be made by the Agent in good faith and in reliance on any information, including information provided by such Hedge Bank, that it believes accurate, but without any obligation to verify such information. Any surplus of such cash or cash proceeds held by the Agent and remaining after payment in full of all the Secured Obligations shall be paid over to the Pledgors or to whomsoever may be lawfully entitled to receive such surplus. (c)The Agent may exercise any and all rights and remedies of the Pledgors in respect of the Collateral. (d)All payments received by each Pledgor in respect of the Collateral shall be received in trust for the benefit of the Agent, shall be segregated from other funds of such Pledgor and shall be forthwith paid over to the Agent in the same form as so received (with any necessary endorsement). (e)The Agent may, without notice to the Uniroyal Borrower except as required by law and at any time or from time to time, charge, set-off and otherwise apply all or any part of the Secured Obligations against the Uniroyal Borrower's Collection Account, the Cash Concentration Account and the L/C Cash Collateral Account or any part thereof. SECTION 19. Indemnity and Expenses. (a) Each Pledgor agrees to defend, protect, indemnify and hold harmless each Secured Party from and against any and all claims, losses and liabilities growing out of or resulting from this Agreement (including, without limitation, enforcement of this Agreement), except claims, losses or liabilities resulting from the Agent's or such other Secured Party's gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. (b)Each Pledgor will upon demand, pay to the Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, that the Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from or other realization upon, any of the Collateral of such Pledgor, (iii) the exercise or enforcement of any of the rights of the Agent or any other Secured Party against such Pledgor, or (iv) the failure by such Pledgor to perform or observe any of the provisions hereof. (c)Without prejudice to the survival of any other agreement of any Loan Party hereunder or under any other Loan Document, the agreements and obligations of the Pledgors contained in this Section 19 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under any of the other Loan Documents. SECTION 20. Amendments; Waivers; Etc. (a) No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Pledgor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of the Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. (b)Upon the execution and delivery by any Person of a security agreement supplement in substantially the form of Exhibit A hereto (each a "Uniroyal Security Agreement Supplement"), (i) such Person shall be referred to as an "Additional Pledgor" and shall be and become a Pledgor and each reference in this Agreement to "Pledgor" shall also mean and be a reference to such Additional Pledgor, and (ii) the annexes attached to each Uniroyal Security Agreement Supplement shall be incorporated into and become a part of and supplement Schedules I, II and III hereto, and the Collateral Agent may attach such annexes as supplements to such Schedules; and each reference to such Schedules shall mean and be a reference to such Schedules as supplemented pursuant hereto. SECTION 21. Addresses for Notices. All notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic or telex communication) and, if to any Pledgor, mailed, telecopied, telegraphed, telexed or delivered to it, addressed to it c/o Uniroyal Corp. at its address at World Headquarters, Benson Road, Middlebury, CT 06749, Attention: Chief Financial Officer, and if to the Agent, mailed, telecopied, telegraphed, telexed or delivered to it, addressed to it at the address of the Agent specified in the Credit Agreement, or as to any 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 (a) when mailed, be effective three Business Days after the same is deposited in the mails, (b) when mailed for next day delivery by a reputable freight company or reputable overnight courier service, be effective one Business Day thereafter, and (c) when sent by telegraph, telecopier or telex, be effective when the same is confirmed by telephone, telecopier confirmation or return telecopy or telex answerback, respectively. SECTION 22. Continuing Security Interest; Assignments. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the Collateral Release Date, (b) be binding upon each Pledgor, its successors and assigns and (c) inure, together with the rights and remedies of the Agent hereunder, to the benefit of the Secured Parties and their respective successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), any Lender Party may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement (including, without limitation, all or any portion of its Commitments, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender Party herein or otherwise, in each case as provided in Section 8.07 of the Credit Agreement. No Pledgor shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Secured Parties. SECTION 23. Release and Termination. (a) Upon any sale, lease, transfer or other disposition of any item of Collateral of any Pledgor, in accordance with the terms of the Loan Documents, the Agent will, at such Pledgor's expense, execute and deliver to such Pledgor such documents as such Pledgor shall reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted hereby; provided, however, that (i) at the time of such request and such release no Event of Default shall have occurred and be continuing and (ii) the Uniroyal Borrower shall have delivered to the Agent, at least ten Business Days prior to the date of the proposed release, a written request for release describing the item of Collateral and the terms of the sale, lease, transfer or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a form of release for execution by the Agent and a certification by the Uniroyal Borrower to the effect that the transaction is in compliance with the Loan Documents and as to such other matters as the Agent may request. (b)Upon the Collateral Release Date, the pledge, assignment and security interest granted hereby shall terminate and all rights to the Collateral shall revert to the respective Pledgor. Upon any such termination or release, the Agent will, at such Pledgor's expense, execute and deliver to such Pledgor such documents as such Pledgor shall reasonably request to evidence such termination. SECTION 24. Security Interest Absolute. The Obligations of each Pledgor hereunder are independent of the Obligations of any other Loan Party under the Loan Documents, and a separate action or actions may be brought or prosecuted against each Pledgor whether action is brought against any other Loan Party or whether any other Loan Party is joined in any such action or actions. All rights of the Collateral Agent and security interests hereunder, and all obligations of each Pledgor hereunder, shall be absolute and unconditional, irrespective of, and each Pledgor hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the circumstances described in the Guaranties or any other circumstance that might constitute a discharge available to, or a discharge of, any Borrower or any Guarantor. This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Secured Obligations is rescinded or must otherwise be returned by any Secured Party or by any other Person upon the insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as though such payment had not been made. SECTION 25. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 26. Governing Law; Terms. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, 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 New York. Unless otherwise defined herein or in the Credit Agreement, terms used in Article 9 of the Uniform Commercial Code are used herein as therein defined. IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. GUSTAFSON, INC. By Title: GUSTAFSON INTERNATIONAL COMPANY By Title: LOKAR ENTERPRISES, INC. By Title: TRACE CHEMICALS, INC. By Title: UNIROYAL CHEMICAL BRAZIL HOLDING, INC. By Title: UNIROYAL CHEMICAL COMPANY, INC. By Title: UNIROYAL CHEMICAL CORPORATION By Title: UNIROYAL CHEMICAL EXPORT LIMITED By Title: UNIROYAL CHEMICAL INTERNATIONAL COMPANY By Title: UNIROYAL CHEMICAL LEASING COMPANY, INC. By Title: SCHEDULE I TO THE UNIROYAL SECURITY AGREEMENT TRADE NAMES Uniroyal Chemical Company, Inc. only sells as Uniroyal Chemical Company, Inc. SCHEDULE II TO THE UNIROYAL SECURITY AGREEMENT LOCATIONS OF INVENTORY SCHEDULE III TO THE UNIROYAL SECURITY AGREEMENT PLEDGED DEBT Debt of the Uniroyal Borrower and the Uniroyal Guarantors evidenced by the intercompany promissory note dated August 21, 1996 made by CK Holding Corporation, CNK Disposition Corp., Crompton & Knowles Colors Incorporated, Crompton & Knowles Corporation, Crompton & Knowles Overseas Corporation, Davis-Standard Corporation, Ingredient Technology Corporation, Kem Manufacturing Corporation, Gustafson, Inc., Gustafson International Company, Lokar Enterprises, Inc., Trace Chemicals, Inc., Uniroyal Chemical Brazil Holding, Inc., Uniroyal Chemical Company, Inc., Uniroyal Chemical Corporation, Uniroyal Chemical Export Limited, Uniroyal Chemical International Company, Uniroyal Chemical Leasing Company Inc. and Uniroyal Chemical Ltd. SCHEDULE IV TO THE UNIROYAL SECURITY AGREEMENT CHIEF EXECUTIVE OFFICES OF PLEDGORS Uniroyal Chemical Corporation Lokar Enterprises, Inc. c/o Uniroyal Chemical Company, c/o Uniroyal Chemical Inc. Company, Inc. Benson Road Benson Road Middlebury, CT 06749 Middlebury, CT 06749 Fed. Tax ID #: 06-1258925 Gustafson International Company Uniroyal Chemical Company, Inc. c/o Gustafson, Inc. Benson Road 1400 Preston Road Middlebury, CT 06749 Suite 400 Fed. Tax ID #: 06-1148490 Plano, TX 75093 Fed. Tax ID #: 75-2295890 Gustafson, Inc. 1400 Preston Road, Suite 400 Uniroyal Chemical Brazil Holding, Inc. Plano, TX 75093 c/o Uniroyal Chemical Company, Inc. Fed. Tax ID #: 41-0795292 Benson Road Middlebury, CT 06749 Trace Chemicals, Inc. 06-1237209 839 Brinkman Drive Fed. Tax ID #: 06-1237209 Pekin, IL 61554 Fed. Tax ID #: 37-1032576 Uniroyal Chemical Export Limited c/o Uniroyal Chemical Company, Inc. Benson Road Middlebury, CT 06749 Fed. Tax ID #: 06-1431523 Uniroyal Chemical International Company c/o Gustafson, Inc. 1400 Preston Road Suite 400 Plano, TX 75093 Fed. Tax ID #: 75-2270460 Uniroyal Chemical Leasing Company, Inc. c/o Uniroyal Chemical Company, Inc. Benson Road Middlebury, CT 06749 EXHIBIT A TO THE UNIROYAL SECURITY AGREEMENT FORM OF UNIROYAL SECURITY AGREEMENT SUPPLEMENT Citicorp USA, Inc., as Agent under the Credit Agreement referred to below 399 Park Avenue New York, New York 10043 [Date] Attention: Robert Kosian Uniroyal Security Agreement dated as of August 21, 1996 made by Uniroyal Chemical Company, Inc. and the other Pledgors to Citicorp USA, Inc., as Agent Ladies and Gentlemen: Reference is made to the above-captioned Uniroyal Security Agreement (such Uniroyal Security Agreement, as in effect on the date hereof and as it may hereafter be amended, modified or otherwise supplemented from time to time, being the "Uniroyal Security Agreement"). The terms defined in the Uniroyal Security Agreement (or in the Credit Agreement referred to therein) and not otherwise defined herein are used herein as therein defined. The undersigned hereby agrees, as of the date first above written, to become a Pledgor under the Uniroyal Security Agreement as if it were an original party thereto and agrees that each reference in the Uniroyal Security Agreement to "Pledgor" shall also mean and be a reference to the undersigned. The undersigned hereby assigns and pledges to the Agent for the ratable benefit of the Secured Parties, and hereby grants to the Agent for the ratable benefit of the Secured Parties as security for the Secured Obligations a lien on and security interest in, all of the right, title and interest of the undersigned, whether now owned or hereafter acquired, in and to the Collateral owned by the undersigned, including, but not limited to, the property listed on Annex I hereto. Schedules I, II and III to the Uniroyal Security Agreement are hereby supplemented by Annexes I, II and III hereto, respectively. The undersigned hereby certifies that such Annexes have been prepared by the undersigned in substantially the form of Schedules I, II and III to the Uniroyal Security Agreement and are accurate and complete as of the date hereof. The undersigned hereby makes each representation and warranty set forth in Section 9 of the Uniroyal Security Agreement (as supplemented by the attached Annexes) to the same extent as each other Pledgor and hereby agrees to be bound as a Pledgor by all of the terms and provisions of the Uniroyal Security Agreement to the same extent as each other Pledgor. This Uniroyal Security Agreement Supplement shall be governed by, and construed in accordance with, the laws of the State of New York. Very truly yours, [NAME OF ADDITIONAL PLEDGOR] By Title: Address of Chief Executive Office and for Notices: [Address] EXHIBIT D-3 FORM OF LOUISIANA UNDERTAKING LOUISIANA UNDERTAKING Dated as of August 21, 1996 To the Lender Parties party to the Credit Agreement referred to below and to Citicorp USA, Inc., as Agent for such Lender Parties Ladies and Gentlemen: We refer to the Uniroyal Security Agreement dated as of August 21, 1996 (as amended, supplemented or otherwise modified from time to time, the "Security Agreement"), made and executed by the Pledgors party thereto in favor of Citicorp, USA, Inc., as Agent (in such capacity, the "Agent") for the Secured Parties referred to in the Credit Agreement dated as of August 21, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") among Uniroyal Chemical Company, Inc. ("Uniroyal"), Crompton & Knowles Corporation, Crompton & Knowles Colors Incorporated, Davis-Standard Corporation, Ingredient Technology Corporation, the Lender Parties party thereto, Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent and The Chase Manhattan Bank, as Managing Agent. Unless otherwise defined herein, the terms defined in the Credit Agreement or the Security Agreement shall be used herein as therein defined. Each Pledgor hereby agrees, with respect to any and all Collateral located in the State of Louisiana (the "Louisiana Collateral") that the Security Agreement is hereby supplemented, effective as of the date first above written, as follows: (a)In the event the Louisiana Collateral or any part thereof is seized as an incident to an action for the recognition or enforcement of the security interest granted under the Security Agreement by executory process, ordinary process, sequestration, writ of fieri facias, or otherwise, each Pledgor hereby agrees that any court issuing any such order shall, if petitioned for by the Agent, direct the sheriff or the United States Marshal, as applicable, to appoint as a keeper of the Louisiana Collateral, the Agent, or any agent designated by the Agent, or any person named by the Agent at the time such seizure is effected. This designation is made pursuant to LSA-R.S. 9:5136 through 5140.2, inclusive, as the same may be amended from time to time, and the Agent shall be entitled to all the rights and benefits afforded thereunder including reasonable compensation. (b) The Agent may exercise in respect of the Louisiana Collateral, in addition to all other rights and remedies provided for herein or in the Security Agreement or otherwise available to it, all of the rights and remedies of a secured party upon default under the Uniform Commercial Code in effect in the State of Louisiana at such time, whether or not the Uniform Commercial Code of the State of Louisiana applies to the affected Louisiana Collateral. (c)Each Pledgor hereby confesses judgment in the amount of the Secured Obligations for purposes of executory process in favor of the Agent or of any future holder, bona fide purchaser, or assignee of the Secured Obligations of such Pledgor under the Security Agreement, and it shall be lawful for the Agent, without making demand and without notice or putting into default, the same being hereby expressly waived, to cause all and singular the Louisiana Collateral to be seized and sold under executory or ordinary process by any court of competent jurisdiction or to proceed with enforcement of its security interests in any other manner provided by law, to be sold with or without appraisement, to the highest bidder for cash or on such other terms as the plaintiff in such proceedings may direct. To the extent otherwise applicable at all, each Pledgor hereby expressly waives all of the following: (i) the benefit of appraisement, as provided in Articles 2332, 2336, 2723, and 2724 of the Louisiana Code of Civil Procedure (the "Louisiana Code"), and all other laws conferring the same; (ii) the demand and three (3) days delay accorded by Articles 2639 and 2721 of the Louisiana Code, (iii) the notice of seizure required by Article 2293 of the Louisiana Code, and conferring the same; (iv) the three (3) days delay provided by Articles 2331 and 2722 of the Louisiana Code, and the other provisions of Articles 2331, 2722, and 2723 of the Louisiana Code, and (v) all other Articles of the Louisiana Code not specifically mentioned above, in each case, as amended from time to time; and each Pledgor expressly agrees to the immediate seizure of the Louisiana Collateral in the event of suit thereon. This Undertaking shall not operate as a waiver of any right, power or remedy of the Agent under the Security Agreement nor constitute a waiver of any provision of the Credit Agreement or any other Loan Document. Without duplication of any amount payable under Section 8.04 of the Credit Agreement, Uniroyal agrees: (a) to indemnify the Agent from and against any and all claims, losses and liabilities growing out of or resulting from this Undertaking (including, without limitation, enforcement of this Undertaking), except claims, losses or liabilities resulting from the Agent's gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction; and (b) upon demand, to pay to the Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, that the Agent may incur in connection with (i) the administration of this Undertaking, (ii) the custody, preservation, use or operation of, or the sale of, collection from or other realization upon, any of the Louisiana Collateral, (iii) the exercise or enforcement of any of the rights of the Agent or the Lender Parties hereunder or (iv) the failure by any Pledgor to perform or observe any of the provisions hereof. This Undertaking may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Undertaking by telecopier shall be effective as delivery of a manually executed counterpart of this Undertaking. This Undertaking shall be governed by, and construed in accordance with, the laws of the State of Louisiana. Very truly yours, GUSTAFSON, INC. By Title: GUSTAFSON INTERNATIONAL COMPANY By Title: LOKAR ENTERPRISES, INC. By Title: TRACE CHEMICALS, INC. By Title: UNIROYAL CHEMICAL BRAZIL HOLDING, INC. By Title: UNIROYAL CHEMICAL COMPANY, INC. By Title: UNIROYAL CHEMICAL CORPORATION By Title: UNIROYAL CHEMICAL EXPORT LIMITED By Title: UNIROYAL CHEMICAL INTERNATIONAL COMPANY By Title: UNIROYAL CHEMICAL LEASING COMPANY, INC. By Title: WITNESSES: Acknowledged this 21st day of August, 1996 CITICORP USA, INC. as Agent for the Secured Parties By Title: EXHIBIT E-1 FORM OF PARENT GUARANTY PARENT GUARANTY Dated August 21, 1996 From CROMPTON & KNOWLES CORPORATION as Guarantor in favor of THE SECURED PARTIES REFERRED TO IN THE CREDIT AGREEMENT REFERRED TO HEREIN T A B L E O F C O N T E N T S Section Page 1.Guaranty 1 2.Guaranty Absolute 2 3.Waivers and Acknowledgments 3 4.Subrogation 4 5.Payments Free and Clear of Taxes, Etc. 4 6.Representations and Warranties 7 7.Amendments, Etc. 8 8.Notices, Etc. 8 9.No Waiver; Remedies 8 10.Right of Set-off 8 11.Indemnification 9 12.Continuing Guaranty; Assignments under the Credit Agreement 9 13.Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. 9 PARENT GUARANTY PARENT GUARANTY dated August 21, 1996 made by CROMPTON & KNOWLES CORPORATION, a Massachusetts corporation (the "Guarantor"), in favor of the Secured Parties (as defined in the Credit Agreement referred to below). PRELIMINARY STATEMENT. The Guarantor has entered into a Credit Agreement dated as of August 21, 1996 (said Agreement, as it may hereafter be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; terms used herein and not otherwise defined are used herein as therein defined) with Crompton & Knowles Colors Incorporated ("Crompton Colors"), Davis-Standard Corporation ("Davis-Standard"), Ingredient Technology Corporation ("ITC" and, together with the Guarantor, Crompton Colors and Davis-Standard, the "Crompton Borrowers") and Uniroyal Chemical Company, Inc. (together with the Crompton Borrowers, the "Borrowers") the lender parties party thereto (the "Lender Parties"), Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent and The Chase Manhattan Bank, as Managing Agent. The Guarantor may receive a portion of the proceeds of the Advances under the Credit Agreement and will derive substantial direct and indirect benefit from the transactions contemplated by the Credit Agreement. It is a condition precedent to the making of Advances and the issuance of Letters of Credit by the Lender Parties under the Credit Agreement and the entry by the Hedge Banks into Bank Hedge Agreements with the Borrowers from time to time that the Guarantor, as direct or indirect owner of 100% of the outstanding shares of stock of each Borrower, shall have executed and delivered this Guaranty. NOW, THEREFORE, in consideration of the premises and in order to induce the Lender Parties to make Advances and to issue Letters of Credit under the Credit Agreement and the Hedge Banks to enter into Bank Hedge Agreements with the Borrowers from time to time, the Guarantor hereby agrees as follows: Section 1. Guaranty. The Guarantor hereby absolutely, unconditionally and irrevocably guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all Obligations of each other Loan Party now or hereafter existing under the Loan Documents, whether for principal (including reimbursement for amounts drawn under Letters of Credit), interest, premiums, penalties, fees, indemnifications, contract causes of action, costs, expenses or otherwise (such Obligations being the "Guaranteed Obligations"), and agrees to pay any and all expenses (including reasonable counsel fees and expenses) incurred by the Agent or any other Secured Party in enforcing any rights under this Guaranty and the other Loan Documents. Without limiting the generality of the foregoing, the Guarantor's liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by any other Loan Party to the Agent or any other Secured Party under the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such Loan Party. Section 2. Guaranty Absolute. The Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent or any other Secured Party with respect thereto. The Obligations of the Guarantor under this Guaranty are independent of the Guaranteed Obligations or any other Obligations of any other Loan Party under the Loan Documents, and a separate action or actions may be brought and prosecuted against the Guarantor to enforce this Guaranty, irrespective of whether any action is brought against any Borrower or any other Loan Party or whether such Borrower or any other Loan Party is joined in any such action or actions. The liability of the Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and the Guarantor hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the following: (a)any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto; (b)any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other Obligations of any other Loan Party under the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Borrower or any of its Subsidiaries or otherwise; (c)any taking, exchange, release or non-perfection of any Collateral, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations; (d)any manner of application of Collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral for all or any of the Guaranteed Obligations or any other Obligations of any other Loan Party under the Loan Documents or any other assets of any Loan Party or any of its Subsidiaries; (e)any change, restructuring or termination of the corporate structure or existence of any Loan Party or any of its Subsidiaries; (f)any failure of any Secured Party to disclose to any Borrower or the Guarantor any information relating to the financial condition, operations, properties or prospects of any other Loan Party now or in the future known to any Secured Party (the Guarantor waiving any duty on the part of the Secured Parties to disclose such information); (g)the failure of any other person to execute any other guaranty or agreement or the release or reduction of liability of any guarantor or other surety with respect to the Guaranteed Obligations; or (h)any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Agent or any other Secured Party that might otherwise constitute a defense available to, or a discharge of, each Borrower, the Guarantor or any other guarantor or surety. This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by any Secured Party or any other Person upon the insolvency, bankruptcy or reorganization of any Borrower or any other Loan Party or otherwise, all as though such payment had not been made. Section 3. Waivers and Acknowledgments. (a) The Guarantor hereby waives promptness, diligence, notice of acceptance, presentment, demand for performance, protest, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Guaranty or the rights of the Secured Parties under this Guaranty and any requirement that the Agent or any other Secured Party protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against any Loan Party or any other Person or any Collateral. (b)The Guarantor hereby waives any right to revoke this Guaranty, and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future. (c) The Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Loan Documents and that the waivers set forth in Section 2 and this Section 3 are knowingly made in contemplation of such benefits. Section 4. Subrogation. The Guarantor will not exercise any rights that it may now or hereafter acquire against any Borrower or any other insider guarantor that arise from the existence, payment, performance or enforcement of the Guarantor's Obligations under this Guaranty or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Secured Party against any Borrower or any other insider guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Borrower or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash, all Bank Hedge Agreements shall have expired or terminated and the Commitments shall have expired or terminated. If any amount shall be paid to the Guarantor in violation of the preceding sentence at any time prior to the later of the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty and the later of (i) the Termination Date and (ii) the expiration or termination of all Bank Hedge Agreements, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Agent to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (i) the Guarantor shall make payment to the Agent or any other Secured Party of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall be paid in full in cash and (iii) the Termination Date shall have occurred and all Bank Hedge Agreements shall have expired or terminated, the Agent and the other Secured Parties will, at the Guarantor's request and expense, execute and deliver to the Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to the Guarantor of an interest in the Guaranteed Obligations resulting from such payment by the Guarantor. Section 5. Payments Free and Clear of Taxes, Etc. (a) Any and all payments made by the Guarantor hereunder shall be made, in accordance with Section 2.11 of the Credit Agreement, free and clear of and without deduction for any and all present or future Taxes. If the Guarantor shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to the Agent or any other Secured Party, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Agent or such other Secured Party (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Guarantor shall make such deductions and (iii) the Guarantor shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b)In addition, the Guarantor agrees to pay any present or future Other Taxes. (c)The Guarantor agrees to indemnify the Agent and each other Secured Party for and hold them harmless against the full amount of Taxes and Other Taxes, and for the full amount of taxes of any kind imposed by any jurisdiction on amounts payable under this Section 5, imposed on or paid by the Agent or such other Secured Party (as the case may be) and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date the Agent or such other Secured Party (as the case may be) makes written demand therefor. (d)Within 30 days after the date of any payment of Taxes by or on behalf of the Guarantor, the Guarantor will furnish to the Agent, at its address referred to in the Credit Agreement, the original or a certified copy of a receipt evidencing such payment. In the case of any payment hereunder by or on behalf of the Guarantor through an account or branch outside the United States or by or on behalf of the Guarantor by a payor that is not a United States person, if the Guarantor determines that no Taxes are payable in respect thereof, the Guarantor shall furnish, or shall cause such payor to furnish, to the Agent, at such address, an opinion of counsel acceptable to the Agent stating that such payment is exempt from Taxes. For purposes of this subsection (d) and subsection (e), the terms "United States" and "United States person" shall have the meanings specified in Section 7701 of the Internal Revenue Code. (e)Upon the reasonable request in writing of the Guarantor, each Secured Party organized under the laws of a jurisdiction outside the United States shall, on or prior to the date of its execution and delivery of the Credit Agreement in the case of each Initial Lender or Initial Issuing Bank, as the case may be, and on the date of the Assignment and Acceptance or other agreement pursuant to which it becomes a Secured Party in the case of each other Secured Party, and from time to time thereafter upon the reasonable request in writing by the Guarantor (but only so long thereafter as such Secured Party remains lawfully able to do so), provide the Agent and the Guarantor with Internal Revenue Service Forms 1001 or 4224 or (in the case of a Secured Party that is claiming exemption from United States withholding tax under Section 871(h) or 881(c) of the Internal Revenue Code with respect to payments of "portfolio interest") two accurate and complete signed original Forms W-8 (and, if such Secured Party delivers Forms W-8, two signed certificates certifying that such Secured Party (i) is not a "bank" for purposes of Section 881(c) of the Internal Revenue Code, (ii) is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the Borrower, (iii) is not a controlled foreign corporation related to the Borrower (within the meaning of Section 864(d)(4) of the Internal Revenue Code) and (iv) is not a conduit entity participating in a conduit financing arrangement (as defined in Treasury Regulation Section 1.881-3), as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Secured Party is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to the Credit Agreement. If the accurate and complete forms provided by a Secured Party at the time such Secured Party first becomes a party to the Credit Agreement indicate a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Secured Party provides the appropriate form certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such form; provided, however, that, if at the date of the Assignment and Acceptance pursuant to which a Secured Party assignee becomes a party to the Credit Agreement, the Secured Party assignor was entitled to payments under subsection (a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Secured Party assignee on such date. (f)For any period with respect to which a Secured Party has failed to provide the Guarantor following the Guarantor's request therefor pursuant to subsection (e) above with the appropriate form described in subsection (e) above (other than if such failure is due to a change in law occurring after the date on which a form originally was required to be provided or if such form otherwise is not required under subsection (e) above), such Secured Party shall not be entitled to indemnification under subsection (a) or (c) with respect to Taxes imposed by the United States by reason of such failure; provided, however, that should a Secured Party become subject to Taxes because of its failure to deliver a form required hereunder, the Guarantor shall take such steps, at such Lender Party's sole expense, as such Secured Party shall reasonably request to assist such Secured Party to recover such Taxes. (g)Any Secured Party claiming any additional amounts payable pursuant to this Section 5 agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Secured Party, be otherwise disadvantageous to such Secured Party. (h)If any Secured Party, in its sole opinion, determines that it has finally and irrevocably received or been granted a refund in respect of any Taxes or Other Taxes as to which indemnification has been paid by Crompton Corp. pursuant to Section 5(a) or (b), it shall promptly remit such refund (including any interest) to Crompton Corp., net of all out-of-pocket expenses of such Secured Party; provided, however, that Crompton Corp., upon the request of such Secured Party, agrees promptly to return such refund (plus any interest) to such party in the event such party is required to repay such refund to the relevant taxing authority. Such Secured Party shall provide Crompton Corp. with a copy of any notice or assessment from the relevant taxing authority (deleting any confidential information contained therein) requiring repayment of such refund. Nothing contained herein shall impose an obligation on any Secured Party to apply for any refund. (i)Without prejudice to the survival of any other agreement of the Guarantor hereunder or under any other Loan Document, the agreements and obligations of the Guarantor contained in this Section 5 and in Section 11 shall survive the payment in full of the Guaranteed Obligations and all other amounts payable under this Guaranty. Section 6. Representations and Warranties. The Guarantor hereby represents and warrants as follows: (a)The Guarantor (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) is duly qualified and in good standing as a foreign corporation in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where the failure to so qualify or be licensed would not have a Material Adverse Effect and (iii) has all requisite corporate power and authority (including, without limitation, all governmental licenses, permits and other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. All of the outstanding capital stock of the Guarantor has been validly issued and is fully paid and non-assessable. (b)The execution, delivery and performance by the Guarantor of this Guaranty and each other Loan Document and each Related Document to which it is or is to be a party, and the consummation of the Merger and the other transactions contemplated hereby, are within the Guarantor's corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene the Guarantor's charter or bylaws, (ii) violate any law, rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award, (iii) conflict with or result in the breach of, or constitute a default under, any loan agreement, indenture, mortgage, deed of trust or other instrument or material contract or material lease binding on or affecting the Guarantor, any of its Subsidiaries or any of their properties or (iv) except for the Liens created under the Loan Documents, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of the Guarantor or any of its Subsidiaries. Neither the Guarantor nor any of its Subsidiaries is in violation of any the law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or in breach of any the contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument, the violation or breach of which would have a Material Adverse Effect. (c)No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (i) the due execution, delivery, recordation, filing or performance by the Guarantor of this Guaranty, any other Loan Document or any Related Document to which it is or is to be a party, or for the consummation of the Merger or the other transactions contemplated hereby, (ii) the grant by the Guarantor of the Liens granted by it pursuant to the Collateral Documents, (iii) the perfection or maintenance of the Liens created by the Collateral Documents (including the first priority nature thereof) or (iv) the exercise by the Agent or any Lender Party of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents, except for the authorizations, approvals, actions, notices and filings listed on Schedule 4.01(d) to the Credit Agreement, all of which have been duly obtained, taken, given or made and are in full force and effect. All applicable waiting periods in connection with the Merger and the other transactions contemplated hereby and by the Credit Agreement have expired without any action having been taken by any competent authority restraining, preventing or imposing materially adverse conditions upon the Merger or the rights of the Guarantor or its Subsidiaries freely to transfer or otherwise dispose of, or to create any Lien on, any properties now owned or hereafter acquired by any of them. (d)This Guaranty has been, and each other Loan Document and each Related Document to which the Guarantor will be a party when delivered pursuant to the Credit Agreement will have been, duly executed and delivered by the Guarantor. This Guaranty is, and each other Loan Document and each Related Document to which it will be a party when delivered pursuant to the Credit Agreement will be, the legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms. (e)There is no action, suit, investigation, litigation or proceeding affecting the Guarantor or any of its Subsidiaries, including any Environmental Action, pending or threatened before any court, governmental agency or arbitrator that (i) would be reasonably likely to have a Material Adverse Effect (other than the Disclosed Litigation) or (ii) purports to affect the legality, validity or enforceability of the Merger, this Guaranty, any other Loan Document or any Related Document or the consummation of the transactions contemplated by the Loan Documents, and there has been no material adverse change in the status, or financial effect on the Guarantor or any of its Subsidiaries, of the Disclosed Litigation from that described on Schedule 3.01(f) of the Credit Agreement. (f)There are no conditions precedent to the effectiveness of this Guaranty that have not been satisfied or waived. (g)The Guarantor has, independently and without reliance upon the Agent or any other Secured Party and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Guaranty, and the Guarantor has established adequate means of obtaining from any other Loan Parties on a continuing basis information pertaining to, and is now and on a continuing basis will be completely familiar with, the financial condition, operations, properties and prospects of such other Loan Parties. Section 7. Amendments, Etc. No amendment or waiver of any provision of this Guaranty and no consent to any departure by the Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by the Agent and the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all of the Secured Parties (other than any Lender Party that is, at such time, a Defaulting Lender), (a) reduce or limit the liability of the Guarantor hereunder or release the Guarantor, (b) postpone any date fixed for payment hereunder or (c) change the number of Secured Parties required to take any action hereunder. Section 8. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telegraphic, telecopy or telex communication) and mailed, telegraphed, telecopied, telexed or delivered to it, if to the Guarantor, addressed to it at One Station Place, Metro Center, Stamford, CT 06902, Attention: Chief Financial Officer, if to the Agent or any Lender Party, at its address specified in the Credit Agreement, if to any Hedge Bank, at its address specified in the Bank Hedge Agreement to which it is a party, or as to any party at such other address as shall be designated by such party in a written notice to each other party. All such notices and other communications shall (a) when mailed, be effective three Business Days after the same is deposited in the mails, (b) when mailed for next day delivery by a reputable freight company or reputable overnight courier service, be effective one Business Day thereafter, and (c) when sent by telegraph, telecopier or telex, be effective when the same is confirmed by telephone, telecopier confirmation or return telecopy or telex answerback, respectively. Section 9. No Waiver; Remedies. No failure on the part of the Agent or any other Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Section 10. Right of Set-off. Upon (a) the occurrence and during the continuance of any Event of Default and (b) the making of the request or the granting of the consent specified by Section 6.01 of the Credit Agreement to authorize the Agent to declare the Notes due and payable pursuant to the provisions of said Section 6.01, each Lender Party and each of its respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender Party or such Affiliate to or for the credit or the account of the Guarantor against any and all of the Obligations of the Guarantor now or hereafter existing under this Guaranty, whether or not such Lender Party shall have made any demand under this Guaranty and although such Obligations may be unmatured. Each Lender Party agrees promptly to notify the Guarantor after any such set-off and application; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender Party and its respective Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender Party and its respective Affiliates may have. Section 11. Indemnification. Without limitation on any other Obligations of the Guarantor or remedies of the Secured Parties under this Guaranty, the Guarantor shall, to the fullest extent permitted by law, indemnify, defend and save and hold harmless each Secured Party from and against, and shall pay on demand, any and all losses, liabilities, damages, costs, expenses and charges (including the fees and disbursements of such Secured Party's legal counsel) suffered or incurred by such Secured Party as a result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of any Loan Party enforceable against such Loan Party in accordance with their terms, except to the extent such loss, liability, damages, cost, expense or charge is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Secured Party's gross negligence or willful misconduct. Section 12. Continuing Guaranty; Assignments under the Credit Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the later of the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty and the later of (i) the Termination Date and (ii) the expiration or termination of all Bank Hedge Agreements, (b) be binding upon the Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Agent and the other Secured Parties and their successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), any Secured Party may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement (including, without limitation, all or any portion of its Commitments, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Secured Party herein or otherwise, in each case as and to the extent provided in Section 8.07 of the Credit Agreement. The Guarantor shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Secured Parties. Section 13. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a) This Guaranty shall be governed by, and construed in accordance with, the laws of the State of New York. (b)The Guarantor hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Guaranty or any of the other Loan Documents to which it is or is to be a party, or for recognition or enforcement of any judgment, and the Guarantor hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. The Guarantor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Guaranty shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Guaranty or any of the other Loan Documents to which it is or is to be a party in the courts of any jurisdiction. (c)The Guarantor irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Guaranty or any of the other Loan Documents to which it is or is to be a party in any New York State or federal court. The Guarantor hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (d)The Guarantor hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to any of the Loan Documents, the transactions contemplated thereby or the actions of the Agent or any other Secured Party in the negotiation, administration, performance or enforcement thereof. (e)Delivery of an executed counterpart of a signature page to this Guaranty by telecopier shall be effective as delivery of a manually executed counterpart of this Guaranty. IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. CROMPTON & KNOWLES CORPORATION By Title: EXHIBIT E-2 FORM OF SUBSIDIARY GUARANTY SUBSIDIARY GUARANTY Dated August 21, 1996 From THE GUARANTORS NAMED HEREIN as Guarantors in favor of THE SECURED PARTIES REFERRED TO IN THE CREDIT AGREEMENT REFERRED TO HEREIN T A B L E O F C O N T E N T S Section Page 1. Guaranty; Limitation of Liability 1 2. Guaranty Absolute 3 3. Waivers and Acknowledgments 4 4. Subrogation 5 5. Payments Free and Clear of Taxes, Etc 6 6. Representations and Warranties 8 7. Covenants 10 8. Amendments, Etc. 11 9. Notices, Etc. 11 10. No Waiver; Remedies 11 11. Right of Set-off 11 12. Indemnification 12 13. Continuing Guaranty; Assignments under the Credit Agreement 12 14. Execution in Counterparts 13 15. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. 13 SCHEDULE I-Uniroyal Guarantors and Crompton Guarantors SUBSIDIARY GUARANTY SUBSIDIARY GUARANTY dated August 21, 1996 made by the Persons listed on the signature pages hereof (each, a "Guarantor", and collectively the "Guarantors"), in favor of the Secured Parties (as defined in the Credit Agreement referred to below). PRELIMINARY STATEMENT. Crompton & Knowles Corporation ("Crompton Corp."), Crompton & Knowles Colors Incorporated ("Crompton Colors"), Davis-Standard Corporation ("Davis-Standard") and Ingredient Technology Corporation ("ITC" and, together with Crompton Corp., Crompton Colors and Davis-Standard, the "Crompton Borrowers") and Uniroyal Chemical Company, Inc. (together with the Crompton Borrowers, the "Borrowers") have entered into a Credit Agreement dated as of August 21, 1996 (said Agreement, as it may hereafter be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; terms used herein and not otherwise defined are used herein as therein defined) with the lender parties party thereto (the "Lender Parties"), Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent and The Chase Manhattan Bank, as Managing Agent. Each Guarantor may receive a portion of the proceeds of the Advances under the Credit Agreement and will derive substantial direct and indirect benefit from the transactions contemplated by the Credit Agreement. It is a condition precedent to the making of Advances and the issuance of Letters of Credit by the Lender Parties under the Credit Agreement and the entry by the Hedge Banks into Bank Hedge Agreements with the Borrowers from time to time that each Guarantor shall have executed and delivered this Guaranty. NOW, THEREFORE, in consideration of the premises and in order to induce the Lender Parties to make Advances and to issue Letters of Credit under the Credit Agreement and the Hedge Banks to enter into Bank Hedge Agreements with the Borrowers from time to time, each Guarantor, jointly and severally with each other Guarantor, hereby agrees as follows: Section 1. Guaranty; Limitation of Liability. (a) Each Guarantor hereby absolutely, unconditionally and irrevocably guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all Obligations of each other Loan Party now or hereafter existing under the Loan Documents, whether for principal (including reimbursement for amounts drawn under Letters of Credit), interest, premiums, penalties, fees, indemnifications, contract causes of action, costs, expenses or otherwise (such Obligations being the "Guaranteed Obligations"), and agrees to pay any and all expenses (including reasonable counsel fees and expenses) incurred by the Agent or any other Secured Party in enforcing any rights under this Guaranty and the other Loan Documents. Without limiting the generality of the foregoing, each Guarantor's liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by any Loan Party to the Agent or any other Secured Party under the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such Loan Party. (b)(i)Uniroyal Guarantors. Each Guarantor listed on Part A of Schedule I hereto (each, a "Uniroyal Guarantor" and collectively, the "Uniroyal Guarantors"), and by its acceptance of this Guaranty, the Agent and each other Secured Party, hereby confirms that it is the intention of all such parties that this Guaranty not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to this Guaranty. To effectuate the foregoing intention, the Agent, the other Secured Parties and the Guarantors hereby irrevocably agree that the Obligations of each Uniroyal Guarantor under this Guaranty shall not exceed the lesser of (A) so long as any Uniroyal Indenture remains in effect, the maximum amount of Debt permitted to be incurred under such Uniroyal Indenture and (B) the maximum amount as will, after giving effect to such maximum amount (including, without limitation, the net benefit realized by the Uniroyal Guarantors from the proceeds of the Advances made from time to time by the Borrowers to the Uniroyal Guarantors or any Subsidiary of any Uniroyal Guarantor) and all other contingent and fixed liabilities of such Uniroyal Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the Obligations of such other Guarantor under this Guaranty, result in the Obligations of such Uniroyal Guarantor under this Guaranty not constituting a fraudulent transfer or conveyance. For purposes hereof, "Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal or state law for the relief of debtors. (ii)Crompton Guarantors. The liability of each Guarantor listed on Part B of Schedule I hereto (each a "Crompton Guarantor") under this Guaranty with respect to the Obligations of each other Loan Party (other than any Loan Party that is a Subsidiary of such Crompton Guarantor) guaranteed hereunder shall not exceed the maximum amount as will, after giving effect to such maximum amount (including, without limitation, the net benefit realized by the Crompton Guarantors from the proceeds of the Advances made from time to time by the Borrowers to the Crompton Guarantors or any Subsidiary of any Crompton Guarantor) and all other contingent and fixed liabilities of such Crompton Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the Obligations of such other Guarantor under this Guaranty, result in the Obligations of such Crompton Guarantor under this Guaranty not constituting a fraudulent transfer or conveyance. (iii)Each Guarantor agrees that in the event any payment shall be required to be made to the Secured Parties under this Guaranty or the Parent Guaranty or any other guaranty, such Guarantor will contribute, to the maximum extent permitted by law, such amounts to each other Guarantor and Crompton Corp. and each other guarantor so as to maximize the aggregate amount paid to the Secured Parties under the Loan Documents. Section 2. Guaranty Absolute. Each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent or any other Secured Party with respect thereto. The Obligations of each Guarantor under this Guaranty are independent of the Guaranteed Obligations or any other Obligations of any other Loan Party under the Loan Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce this Guaranty, irrespective of whether any action is brought against any Borrower or any other Loan Party or whether such Borrower or any other Loan Party is joined in any such action or actions. The liability of each Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the following: (a)any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto; (b)any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other Obligations of any other Loan Party under the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Borrower or any of its Subsidiaries or otherwise; (c)any taking, exchange, release or non-perfection of any Collateral, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations; (d)any manner of application of Collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral for all or any of the Guaranteed Obligations or any other Obligations of any other Loan Party under the Loan Documents or any other assets of any Loan Party or any of its Subsidiaries; (e)any change, restructuring or termination of the corporate structure or existence of any Loan Party or any of its Subsidiaries; (f)any failure of any Secured Party to disclose to any Borrower or any Guarantor any information relating to the financial condition, operations, properties or prospects of any other Loan Party now or in the future known to any Secured Party (each Guarantor waiving any duty on the part of the Secured Parties to disclose such information); (g)the failure of any other person to execute any guaranty or agreement or the release or reduction of liability of any guarantor or other surety with respect to the Guaranteed Obligations; or (h)any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Agent or any other Secured Party that might otherwise constitute a defense available to, or a discharge of, any Borrower, any Guarantor or any other guarantor or surety. This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by any Secured Party or any other Person upon the insolvency, bankruptcy or reorganization of any Borrower or any other Loan Party or otherwise, all as though such payment had not been made. Section 3. Waivers and Acknowledgments. (a) Each Guarantor hereby waives promptness, diligence, notice of acceptance, presentment, demand for performance, protest, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Guaranty or the rights of the Secured Parties under this Guaranty and any requirement that the Agent or any other Secured Party protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against any Loan Party or any other Person or any Collateral. (b)Each Guarantor hereby waives any right to revoke this Guaranty, and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future. (c) Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Loan Documents and that the waivers set forth in Section 2 and this Section 3 are knowingly made in contemplation of such benefits. Section 4. Subrogation. No Guarantor will exercise any rights that it may now or hereafter acquire against any Borrower or any other insider guarantor that arise from the existence, payment, performance or enforcement of such Guarantor's Obligations under this Guaranty or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Secured Party against each Borrower or any other insider guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from each Borrower or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash, all Bank Hedge Agreements shall have expired or terminated and the Commitments shall have expired or terminated. If any amount shall be paid to any Guarantor in violation of the preceding sentence at any time prior to the later of the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty and the later of (i) the Termination Date and (ii) the expiration or termination of all Bank Hedge Agreements, such amount shall be held in trust for the benefit of the Agent and the other Secured Parties and shall forthwith be paid to the Agent to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (i) any Guarantor shall make payment to the Agent or any other Secured Party of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall be paid in full in cash and (iii) the Termination Date shall have occurred and all Bank Hedge Agreements shall have expired or terminated, the Agent and the other Secured Parties will, at any Guarantor's request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment by such Guarantor. Section 5. Payments Free and Clear of Taxes, Etc. (a) Any and all payments made by any Guarantor hereunder shall be made, in accordance with Section 2.11 of the Credit Agreement, free and clear of and without deduction for any and all present or future Taxes. If any Guarantor shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to the Agent or any other Secured Party, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Agent or such other Secured Party (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Guarantor shall make such deductions and (iii) such Guarantor shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b)In addition, each Guarantor agrees to pay any present or future Other Taxes. (c)The Guarantors jointly and severally agree to indemnify the Agent and each other Secured Party for and hold them harmless against the full amount of Taxes and Other Taxes, and for the full amount of taxes of any kind imposed by any jurisdiction on amounts payable under this Section 5, imposed on or paid by the Agent or such other Secured Party (as the case may be) and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date the Agent or such other Secured Party (as the case may be) makes written demand therefor. (d)Within 30 days after the date of any payment of Taxes by or on behalf of any Guarantor, such Guarantor will furnish to the Agent, at its address referred to in the Credit Agreement, the original or a certified copy of a receipt evidencing such payment. In the case of any payment hereunder by or on behalf of any Guarantor through an account or branch outside the United States or by or on behalf of such Guarantor by a payor that is not a United States person, if such Guarantor determines that no Taxes are payable in respect thereof, such Guarantor shall furnish, or shall cause such payor to furnish, to the Agent, at such address, an opinion of counsel acceptable to the Agent stating that such payment is exempt from Taxes. For purposes of this subsection (d) and subsection (e), the terms "United States" and "United States person" shall have the meanings specified in Section 7701 of the Internal Revenue Code. (e)Upon the reasonable request in writing of any Guarantor, each Secured Party organized under the laws of a jurisdiction outside the United States shall, on or prior to the date of its execution and delivery of the Credit Agreement in the case of each Initial Lender or Initial Issuing Bank, as the case may be, and on the date of the Assignment and Acceptance or other agreement pursuant to which it becomes a Secured Party in the case of each other Secured Party, and from time to time thereafter upon the reasonable request in writing by any Guarantor (but only so long thereafter as such Secured Party remains lawfully able to do so), provide the Agent and such Guarantor with Internal Revenue Service forms 1001 or 4224 or (in the case of a Secured Party that is claiming exemption from United States withholding tax under Section 871(h) or 881(c) of the Internal Revenue Code with respect to payments of "portfolio interest") two accurate and complete signed original Forms W-8 (and, if such Secured Party delivers Forms W-8, two signed certificates certifying that such Secured Party (i) is not a "bank" for purposes of Section 881(c) of the Internal Revenue Code, (ii) is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the Borrower, (iii) is not a controlled foreign corporation related to the Borrower (within the meaning of Section 864(d)(4) of the Internal Revenue Code) and (iv) is not a conduit entity participating in a conduit financing arrangement (as defined in Treasury Regulation Section 1.881-3), as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Secured Party is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to the Credit Agreement. If the accurate and complete forms provided by a Secured Party at the time such Secured Party first becomes a party to the Credit Agreement indicate a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Secured Party provides the appropriate form certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such form; provided, however, that, if at the date of the Assignment and Acceptance pursuant to which a Secured Party assignee becomes a party to the Credit Agreement, the Secured Party assignor was entitled to payments under subsection (a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Secured Party assignee on such date. (f)For any period with respect to which a Secured Party has failed to provide any Guarantor following such Guarantor's request therefor pursuant to subsection (e) above with the appropriate form described in subsection (e) above (other than if such failure is due to a change in law occurring after the date on which a form originally was required to be provided or if such form otherwise is not required under subsection (e) above), such Secured Party shall not be entitled to indemnification under subsection (a) or (c) with respect to Taxes imposed by the United States by reason of such failure; provided, however, that should a Secured Party become subject to Taxes because of its failure to deliver a form required hereunder, such Guarantor shall take such steps, at such Lender Party's sole expense, as such Secured Party shall reasonably request to assist such Secured Party to recover such Taxes. (g)Any Secured Party claiming any additional amounts payable pursuant to this Section 5 agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Secured Party, be otherwise disadvantageous to such Secured Party. (h)If any Secured Party, in its sole opinion, determines that it has finally and irrevocably received or been granted a refund in respect of any Taxes or Other Taxes as to which indemnification has been paid by Crompton Corp. pursuant to Section 5(a) or (b), it shall promptly remit such refund (including any interest) to Crompton Corp., net of all out-of-pocket expenses of such Secured Party; provided, however, that Crompton Corp., upon the request of such Secured Party, agrees promptly to return such refund (plus any interest) to such party in the event such party is required to repay such refund to the relevant taxing authority. Such Secured Party shall provide Crompton Corp. with a copy of any notice or assessment from the relevant taxing authority (deleting any confidential information contained therein) requiring repayment of such refund. Nothing contained herein shall impose an obligation on any Secured Party to apply for any refund. (i)Without prejudice to the survival of any other agreement of any Guarantor hereunder or under any other Loan Document, the agreements and obligations of each Guarantor contained in this Section 5 and in Section 12 shall survive the payment in full of the Guaranteed Obligations and all other amounts payable under this Guaranty. Section 6. Representations and Warranties. Each Guarantor hereby represents and warrants as follows: (a)Such Guarantor (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) is duly qualified and in good standing as a foreign corporation in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where the failure to so qualify or be licensed would not have a Material Adverse Effect and (iii) has all requisite corporate power and authority (including, without limitation, all governmental licenses, permits and other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. All of the outstanding capital stock of such Guarantor has been validly issued and is fully paid and non-assessable. (b)The execution, delivery and performance by such Guarantor of this Guaranty and each other Loan Document and each Related Document to which it is or is to be a party, and the consummation of the Merger and the other transactions contemplated hereby, are within such Guarantor's corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene such Guarantor's charter or bylaws, (ii) violate any law, rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award, (iii) conflict with or result in the breach of, or constitute a default under, any loan agreement, indenture, mortgage, deed of trust or other instrument or material contract or material lease binding on or affecting such Guarantor, any of its Subsidiaries or any of their properties or (iv) except for the Liens created under the Loan Documents, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of such Guarantor or any of its Subsidiaries. Neither such Guarantor nor any of its Subsidiaries is in violation of any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or in breach of any such contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument, the violation or breach of which would have a Material Adverse Effect. (c)No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (i) the due execution, delivery, recordation, filing or performance by such Guarantor of this Guaranty, any other Loan Document or any Related Document to which it is or is to be a party, or for the consummation of the Merger or the other transactions contemplated hereby, (ii) the grant by such Guarantor of the Liens granted by it pursuant to the Collateral Documents, (iii) the perfection or maintenance of the Liens created by the Collateral Documents (including the first priority nature thereof) or (iv) the exercise by the Agent or any Lender Party of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents, except for the authorizations, approvals, actions, notices and filings listed on Schedule 4.01(d) to the Credit Agreement, all of which have been duly obtained, taken, given or made and are in full force and effect. All applicable waiting periods in connection with the Merger and the other transactions contemplated hereby and by the Credit Agreement have expired without any action having been taken by any competent authority restraining, preventing or imposing materially adverse conditions upon the Merger or the rights of such Guarantor or its Subsidiaries freely to transfer or otherwise dispose of, or to create any Lien on, any properties now owned or hereafter acquired by any of them. (d)This Guaranty has been, and each other Loan Document and each Related Document to which such Guarantor will be a party when delivered pursuant to the Credit Agreement will have been, duly executed and delivered by such Guarantor. This Guaranty is, and each other Loan Document and each Related Document to which it will be a party when delivered pursuant to the Credit Agreement will be, the legal, valid and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms. (e)There is no action, suit, investigation, litigation or proceeding affecting such Guarantor or any of its Subsidiaries, including any Environmental Action, pending or threatened before any court, governmental agency or arbitrator that (i) would be reasonably likely to have a Material Adverse Effect (other than the Disclosed Litigation) or (ii) purports to affect the legality, validity or enforceability of the Merger, this Guaranty, any other Loan Document or any Related Document or the consummation of the transactions contemplated by the Loan Documents, and there has been no material adverse change in the status, or financial effect on such Guarantor or any of its Subsidiaries, of the Disclosed Litigation from that described on Schedule 3.01(f) of the Credit Agreement. (f)There are no conditions precedent to the effectiveness of this Guaranty that have not been satisfied or waived. (g)Such Guarantor has, independently and without reliance upon the Agent or any other Secured Party and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Guaranty, and such Guarantor has established adequate means of obtaining from any other Loan Parties on a continuing basis information pertaining to, and is now and on a continuing basis will be completely familiar with, the financial condition, operations, properties and prospects of such other Loan Parties. Section 7. Covenants. Each Guarantor covenants and agrees that, so long as any part of the Guaranteed Obligations shall remain unpaid, any Letter of Credit shall be outstanding, any Lender Party shall have any Commitment or any Hedge Bank shall have any obligation under any Bank Hedge Agreement, such Guarantor will, unless the Required Lenders shall otherwise consent in writing, perform or observe, and cause its Subsidiaries to perform or observe, all of the terms, covenants and agreements that the Loan Documents state that the Borrowers are to cause such Guarantor or such Subsidiaries to perform or observe. Section 8. Amendments, Etc. No amendment or waiver of any provision of this Guaranty and no consent to any departure by any Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by the Agent and the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all of the Secured Parties (other than any Lender Party that is, at such time, a Defaulting Lender), (a) reduce or limit the liability of such Guarantor hereunder or release such Guarantor, (b) postpone any date fixed for payment hereunder or (c) change the number of Secured Parties required to take any action hereunder. Section 9. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telegraphic, telecopy or telex communication) and mailed, telegraphed, telecopied, telexed or delivered to it, if to any Guarantor, addressed both c/o Crompton Corp. at its address at One Station Place, Metro Center, Stamford, CT 06902, Attention: Chief Financial Officer and c/o Uniroyal Corp. at its address at World Headquarters, Benson Road, Middlebury, CT 06749, Attention: Chief Financial Officer, if to the Agent or any Lender Party, at its address specified in the Credit Agreement, if to any Hedge Bank, at its address specified in the Bank Hedge Agreement to which it is a party, or as to any party at such other address as shall be designated by such party in a written notice to each other party. All such notices and other communications shall (a) when mailed, be effective three Business Days after the same is deposited in the mails, (b) when mailed for next day delivery by a reputable freight company or reputable overnight courier service, be effective one Business Day thereafter, and (c) when sent by telegraph, telecopier or telex, be effective when the same is confirmed by telephone, telecopier confirmation or return telecopy or telex answerback, respectively. Delivery of a notice to any Guarantor at the above addresses shall be deemed notice to all Guarantors. Section 10. No Waiver; Remedies. No failure on the part of the Agent or any other Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Section 11. Right of Set-off. Upon (a) the occurrence and during the continuance of any Event of Default and (b) the making of the request or the granting of the consent specified by Section 6.01 of the Credit Agreement to authorize the Agent to declare the Notes due and payable pursuant to the provisions of said Section 6.01, each Lender Party and each of its respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender Party or such Affiliate to or for the credit or the account of any Guarantor against any and all of the Obligations of such Guarantor now or hereafter existing under this Guaranty, whether or not such Lender Party shall have made any demand under this Guaranty and although such Obligations may be unmatured. Each Lender Party agrees promptly to notify such Guarantor after any such set-off and application; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender Party and its respective Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender Party and its respective Affiliates may have. Section 12. Indemnification. Without limitation on any other Obligations of any Guarantor or remedies of the Secured Parties under this Guaranty, each Guarantor shall, to the fullest extent permitted by law, indemnify, defend and save and hold harmless each Secured Party from and against, and shall pay on demand, any and all losses, liabilities, damages, costs, expenses and charges (including the fees and disbursements of such Secured Party's legal counsel) suffered or incurred by such Secured Party as a result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of any Loan Party enforceable against such Loan Party in accordance with their terms, except to the extent such loss, liability, damages, cost, expense or charge is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Secured Party's gross negligence or willful misconduct. Section 13. Continuing Guaranty; Assignments under the Credit Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the later of the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty and the later of (i) the Termination Date and (ii) the expiration or termination of all Bank Hedge Agreements, (b) be binding upon each Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Agent and the other Secured Parties and their successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), any Secured Party may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement (including, without limitation, all or any portion of its Commitments, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Secured Party herein or otherwise, in each case as and to the extent provided in Section 8.07 of the Credit Agreement. No Guarantor shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Secured Parties. Section 14. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. Section 15. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a) This Guaranty shall be governed by, and construed in accordance with, the laws of the State of New York. (b)Each Guarantor hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Guaranty or any of the other Loan Documents to which it is or is to be a party, or for recognition or enforcement of any judgment, and each Guarantor hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each Guarantor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Guaranty shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Guaranty or any of the other Loan Documents to which it is or is to be a party in the courts of any jurisdiction. (c)Each Guarantor irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Guaranty or any of the other Loan Documents to which it is or is to be a party in any New York State or federal court. Each Guarantor hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (d)Each Guarantor hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to any of the Loan Documents, the transactions contemplated thereby or the actions of the Agent or any other Secured Party in the negotiation, administration, performance or enforcement thereof. IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. CK HOLDING CORPORATION By Title: CNK DISPOSITION CORP. By Title: CROMPTON & KNOWLES COLORS INCORPORATED By Title: CROMPTON & KNOWLES OVERSEAS CORPORATION By Title: DAVIS-STANDARD CORPORATION By Title: INGREDIENT TECHNOLOGY CORPORATION By Title: GUSTAFSON, INC. By Title: GUSTAFSON INTERNATIONAL COMPANY By Title: KEM MANUFACTURING CORPORATION By Title: LOKAR ENTERPRISES, INC. By Title: TRACE CHEMICALS, INC. By Title: UNIROYAL CHEMICAL BRAZIL HOLDING, INC. By Title: UNIROYAL CHEMICAL COMPANY, INC. By Title: UNIROYAL CHEMICAL CORPORATION By Title: UNIROYAL CHEMICAL EXPORT LIMITED By Title: UNIROYAL CHEMICAL INTERNATIONAL COMPANY By Title: UNIROYAL CHEMICAL LEASING COMPANY, INC. By Title: SCHEDULE I TO THE GUARANTY PART A: UNIROYAL GUARANTORS Gustafson, Inc. Gustafson International Company Lokar Enterprises, Inc. Trace Chemicals, Inc. Uniroyal Chemical Brazil Holding, Inc. Uniroyal Chemical Company, Inc. Uniroyal Chemical Corporation Uniroyal Chemical Export Limited Uniroyal Chemical International Company Uniroyal Chemical Leasing Company, Inc. PART B: CROMPTON GUARANTORS CK Holding Corporation CNK Disposition Corp. Crompton & Knowles Colors Incorporated Crompton & Knowles Overseas Corporation Davis-Standard Corporation Ingredient Technology Corporation Kem Manufacturing Corporation EXHIBIT F-1 August 21, 1996 To the Initial Lenders party to the Credit Agreement referred to below and to Citicorp Securities, Inc., as Arranger, Citicorp. USA, Inc., as Agent for the Lender Parties and The Chase Manhattan Bank, as Managing Agent Re: Crompton & Knowles Corporation Ladies and Gentlemen: This opinion is furnished to you pursuant to Section 3.01(k)(xvii) of the Credit Agreement dated as of August 21, 1996 (the "Credit Agreement") among Crompton & Knowles Corporation, Crompton & Knowles Colors Incorporated, Davis- Standard Corporation, Ingredient Technology Corporation and Uniroyal Chemical Company, Inc., (collectively, the "Borrowers"), the Lender Parties party thereto, Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent and The Chase Manhattan Bank, as Managing Agent. Terms defined in the Credit Agreement and in the Security Agreement referred to therein are used herein as therein defined. We have acted as special counsel to the Borrowers and the other Loan Parties in the State of New York in connection with the preparation, execution and delivery of the Credit Agreement, the Notes, the other Loan Documents and the initial Borrowing made under the Credit Agreement. The opinions set forth in this letter are based upon our review of counterparts of each of the Loan Documents, executed by each of the parties thereto, and the other documents furnished by the Borrower and the other Loan Parties pursuant to Article III of the Credit Agreement. The documents set forth on Schedule I are referred to herein as the "Financing Statements". The Loan Parties set forth on Schedule II are referred to herein as the "Delaware Loan Parties". We have also examined the originals, or copies certified to our satisfaction, of the documents listed in a certificate of the respective chief financial officers of Crompton & Knowles Corporation and Uniroyal Chemical Company, Inc., dated the date hereof (the "Certificate"), certifying that the documents listed therein are all of the public indentures that affect or purport to affect the obligations of such Loan Party or any of its Subsidiaries under any Loan Document or any Related Document or the right of such Loan Party or any of its Subsidiaries to borrow money, to guarantee the obligations of other Persons, to create Liens on its property or to consummate transactions such as the Merger and the other transactions contemplated by the Subject Documents (as defined below). In addition, we have examined the originals, or copies certified to our satisfaction, of such other corporate records of the Loan Parties, certificates of public officials and of officers of the Loan Parties and agreements, instruments and other documents as we have deemed necessary as a basis for the opinions expressed below. As to questions of fact material to such opinions, we have, when relevant facts were not independently established by us, relied upon certificates of the Loan Parties or of their respective officers or of public officials and on the representations and warranties of the Loan Parties as to factual matters contained in any of the Loan Documents. In our examination of the documents referred to above, we have assumed (i)(A) the valid authorization, execution and delivery of each of the documents referred to above by all parties thereto (other than the Delaware Loan Parties) ("Subject Parties"), (B) each Subject Party (in the case of parties which are not natural persons) has been duly organized and is validly existing and in good standing in its jurisdiction of organization, (C) each Subject Party has the legal capacity, power and authority to perform its obligations thereunder and (D) such documents to which each Subject Party (other than the Loan Parties) is a party constitute the legal, valid and binding obligation of such party, enforceable against it in accordance with their respective terms, (ii) the authenticity of all such documents submitted to us as originals and (iii) the conformity to originals of all such documents submitted to us as copies. We are members of the Bar of the State of New York, and we have not considered, and we express no opinion as to, the laws of any jurisdiction other than the laws of the State of New York, the General Corporation Law of the State of Delaware and the laws of the United States of America, in each case as in effect on the date hereof (the "Relevant Laws"). Based upon the foregoing and upon such investigation as we have deemed necessary, and subject to the qualifications set forth in this letter, it is our opinion that: 1. Each Delaware Loan Party is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. 2. Each Delaware Loan Party has all necessary corporate power and authority to execute and deliver, and to perform its obligations under, each of the Loan Documents and the Merger Agreement (collectively, the "Subject Documents") to which it is a party and to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. 3. The execution, delivery and performance by each Delaware Loan Party of each Subject Document to which it is a party, and the consummation of the Merger and the other transactions contemplated by the Subject Documents (to the extent a Delaware Loan Party is contemplated to be a party to such transaction), are within such Delaware Loan Party's corporate powers, have been duly authorized by all necessary corporate action of such Delaware Loan Party and will not violate or conflict with any provision of the certificate of incorporation or bylaws of such Delaware Loan Party. 4. The execution, delivery and performance by each Loan Party of the Subject Documents to which it is a party and the transactions contemplated thereby will not (i) violate or conflict with any provision of the Delaware General Corporation Law (in the case of the Delaware Loan Parties only), or any United States federal or State of New York statute, rule or regulation or any writ, injunction, decree, order or judgment under the Relevant Laws known to us to be applicable to any Loan Party or any of such Loan Party's properties that could reasonably be expected (individually or in the aggregate) to materially impair or prevent the performance of such Loan Party's obligations under the Subject Documents to which such Loan Party is a party, (ii) conflict with or result in the breach of, or constitute a default under, any agreement or instrument listed in the Certificate or (iii) except for the Liens created by the Collateral Documents, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of any Loan Party or any of its Subsidiaries under any agreement or instrument listed in the Certificate. 5. The Credit Agreement and each other Loan Document to be delivered pursuant to the Credit Agreement on or prior to the date hereof has been duly executed and delivered by each Delaware Loan Party party thereto. 6. Each Subject Document constitutes the legal, valid and binding obligations of each Loan Party party thereto, in each case enforceable against such Loan Party in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting creditors' rights generally and by equitable principles of general applicability (regardless of whether enforcement is sought in a proceeding in equity or at law). 7. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body under the Relevant Laws, or any third party that is party to any of the agreements and instruments listed in the Certificate, is required for (a) the due execution, delivery, recordation, filing or performance by any Loan Party of the Subject Documents to which it is a party, or for the consummation of the Merger or the other transactions contemplated by the Subject Documents, (b) the grant by any Loan Party of the Liens granted by it pursuant to the Security Agreement, (c) the perfection or maintenance of the Liens created by the Security Agreement, or (d) the exercise by the Agent or any Lender Party of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Security Agreement, except for (i) in the case of clause (a) above, the authorizations, approvals, actions, notices and filings listed on Schedule III hereto, all of which have been duly obtained, taken, given or made and are in full force and effect, and except for those authorizations, approvals,actions, notices and filings the failure to obtain, take, give or make which, either individually or in the aggregate, could not be reasonably expected to have a Material Adverse Effect,(ii) in the case of the Security Collateral (as defined in the Security Agreement), as may be required in connection with any disposition of any portion of the Security Collateral by laws affecting the offering and sale of securities generally, and (iii) the matters referred to in paragraph 8 below. All applicable waiting periods under the Relevant Laws in connection with the Merger and the other transactions contemplated by the Credit Agreement have expired without any action having been taken by any competent authority restraining, preventing or imposing materially adverse conditions upon the Merger or the rights of the Loan Parties or their Subsidiaries freely to transfer or otherwise dispose of, or to create any Lien on, any properties now owned or hereafter acquired by any of them, except where, in the case of any such waiting period other than any waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the failure of such waiting period to have expired without any such action having been taken could not be reasonably likely to have a Material Adverse Effect. 8. Each Security Agreement creates a valid security interest in the Collateral referred to therein securing payment of the Secured Obligations to the extent Article 9 of the Uniform Commercial Code as in effect in State of New York (the "UCC") is applicable thereto and as to which a security interest may be perfected by filing a financing statement under the UCC. The Agent's having possession of the certificates representing the Pledged Shares and the instruments representing the Pledged Debt delivered to the Agent today results in the perfection of such security interest in such Security Collateral. Our opinion in this paragraph 8 is subject to the following qualifications: (i) in the case of instruments (as such term is defined in Article 9 of the UCC) not constituting part of chattel paper (as such term is defined in Article 9 of the UCC), the security interest of the Agent therein cannot be perfected by the filing of the Financing Statements but will be perfected if possession thereof is obtained in accordance with the provisions of Article 9 of the UCC; (ii) in the case of the issuance or other distribution in respect of the Pledged Shares or Pledged Debt of additional instruments (as such term is defined in Article 9 of the UCC), the security interest of the Agent therein will be perfected only if possession thereof is obtained in accordance with the provisions of Article 9 of the UCC; (iii) in the case of the issuance or other distribution in respect of the Pledged Shares or Pledged Debt of additional securities (as such term is defined in Article 8 of the UCC), the security interest of the Agent therein will be perfected only if possession thereof is obtained in accordance with the provisions of the Security Agreement or the transfer thereof otherwise occurs in a manner provided for in Section 8-313(1) of the UCC; (iv) in the case of proceeds, continuation of perfection of the Agent's security interest therein is limited to the extent set forth in Section 9-306 of the UCC; (v) in the case of all Collateral in which the security interest of the Agent has been perfected by the filing of Financing Statements, Article 9 of the UCC requires the filing of continuation statements within the period of six months prior to the expiration of five years from the date of the original filings in order to maintain the effectiveness of the filings referred to in this paragraph; and (vi) in the case of property that becomes Collateral after the date hereof, Section 552 of the Federal Bankruptcy Code limits the extent to which property acquired by a debtor after the commencement of a case under the Federal Bankruptcy Code may be subject to a security interest arising from a security agreement entered into by the debtor before the commencement of such case. We call to your attention that the perfection of the above security interests will be terminated as to any Collateral acquired by a Loan Party more than four months after such Loan Party so changes its name, identity or corporate structure as to make the Financing Statements seriously misleading, unless new appropriate financing statements indicating the new name, identity or corporate structure of such Loan Party are properly filed before the expiration of such four months. 9. Except as set forth on Schedule IV hereto, all taxes and governmental fees and charges, the payment of which is required in connection with the execution, delivery and recording of the Loan Documents or the execution, delivery or filing of the Financing Statements in the State of New York have been paid. 10. Neither any Loan Party nor any of its Subsidiaries is an "investment company," or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. The opinions set forth above are subject to the following qualifications: (a) We express no opinion as to the effect of the law of any jurisdiction other than the State of New York wherein any Lender may be located or wherein enforcement of the Credit Agreement or the Notes may be sought that limits the rates of interest legally chargeable or collectible. (b) Our opinions set forth in paragraph 8 above are subject to the further qualifications that we express no opinion as to: (i) any Loan Party's rights in or title to any Collateral; and (ii) the validity or perfection of the security interests referred to in paragraph 8 above as they relate to any interest in or claim in or under any policy of insurance, except a claim to proceeds payable by reason of loss or damage under insurance policies maintained by the Loan Parties with respect to Inventory as required by and in compliance with Section 12 of the Uniroyal Security Agreement. The opinions expressed herein are subject to the following additional qualifications and comments: (a) We express no opinion as to the applicability of Section 548 of the Bankruptcy Code or Article 10 of the New York Debtor and Creditor Law relating to fraudulent transfers to any obligations of any Subsidiary Guarantor under any of the Loan Documents. (b) The provisions of the Loan Documents that permit any party thereto to take action or make determinations, or to benefit from indemnities and similar undertakings of any party to the Loan Documents, may be subject to a requirement that such action be taken or such determinations be made, and any action or inaction by such party that may give rise to a request for payment under such an undertaking be taken or not taken, on a reasonable basis and in good faith. (c) We express no opinion as to (i) whether a federal or state court outside New York would give effect to the choice of New York law provided for in the Loan Documents, (ii) provisions of the Loan Documents that relate to the subject matter jurisdiction of the federal or state courts of New York to adjudicate any controversy related to any of the Loan Documents or the transactions contemplated thereby, (iii) the waiver of inconvenient forum set forth in any of the Loan Documents, or (iv) the waiver of jury trial found in any of the Loan Documents. (d) Our opinions above as to compliance with laws are based upon a review of those statutes, rules and regulations which, in our experience, are normally applicable to transactions of the type contemplated by the Subject Documents and statutes, rules and regulations applicable to corporations conducting businesses similar to those conducted by the Loan Parties. (e) Except as expressly set forth in paragraph 8 above, we express no opinion as to the creation, validity, perfection or priority of any security interest or lien purported to be created by any of the Loan Documents. (f) Certain remedial and exculpatory provisions of the Security Agreement may be unenforceable in whole or in part under the laws of the State of New York, but in our opinion the inclusion of such provisions does not affect the validity of the pledges and the granting of liens or security interests effected thereby and, in our opinion, the Security Agreement and the laws of the State of New York contain adequate remedial provisions for the practical realization of the rights and benefits purported to be afforded thereby. A copy of this letter may be delivered by you to any Eligible Assignee in accordance with the provisions of the Credit Agreement, and such Eligible Assignee may rely on the opinions expressed above as if this opinion letter were addressed and delivered to such Eligible Assignee on the date hereof. Very truly yours, RDF:bar Att. EXHIBIT F-2 August 21, 1996 To the Initial Lenders party to the Credit Agreement referred to below and to Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent for the Lender Parties and The Chase Manhattan Bank, as Managing Agent CROMPTON & KNOWLES CORPORATION and UNIROYAL CHEMICAL CORPORATION Ladies and Gentlemen: This opinion is being furnished to you pursuant to Sections 3.01(k)(xviii) and (xix) of the Credit Agreement dated as of August 21, 1996 (the "Credit Agreement") among Crompton & Knowles Corporation, a Massachusetts corporation ("Crompton"), Crompton & Knowles Colors Incorporated, a Delaware corporation ("Crompton Colors"), Davis-Standard Corporation, a Delaware corporation ("Davis-Standard"), Ingredient Technology Corporation, a Delaware corporation ("ITC", and together with Crompton, Crompton Colors and Davis-Standard, the "Crompton Borrowers") and Uniroyal Chemical Company, Inc. ("Uniroyal"), the Lender Parties party thereto, Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent (the "Agent") and The Chase Manhattan Bank, as Managing Agent. Terms defined in the Credit Agreement and in the Crompton Security Agreement referred to therein, unless otherwise defined herein, are used herein as therein defined. I am the General Counsel of Crompton and have acted as counsel to (i) Crompton, Crompton Colors, Davis-Standard, ITC and the Subsidiaries of Crompton set forth on Schedule I hereto (collectively, the "Crompton Guarantors" and, together with the Crompton Borrowers, the "Crompton Parties") and (ii) Uniroyal Chemical Corporation, a Delaware corporation ("Uniroyal Corp."), Uniroyal and the Subsidiaries of Uniroyal Corp. set forth on Schedule II hereto (collectively, the "Uniroyal Guarantors" and, together with the Crompton Parties, the "Loan Parties") in connection with (a) the Credit Agreement, (b) the Crompton Security Agreement, dated as of the date hereof (the "Crompton Security Agreement"), made by the Pledgers party thereto to the Agent; (c) the Uniroyal Security Agreement, dated as of the date hereof (the "Uniroyal Security Agreement") made by the Pledgers party thereto to the Agent; (d) the Subsidiary Guaranty, dated as of the date hereof (the "Subsidiary Guaranty"), made by the Guarantors party thereto in favor of the Secured Parties, (e) the Parent Guaranty, dated as of the date hereof (together with the Credit Agreement, the Crompton Security Agreement, the Uniroyal Security Agreement and the Subsidiary Guaranty, the "Agreements") made by Crompton in favor of the Secured Parties and (f) certain other instruments and documents related to the Agreements. In connection with this opinion, I have examined (i) the Agreements and (ii) the certificates of incorporation and by-laws of each of the Loan Parties. I have also examined such records of the Loan Parties and such other documents, certificates and records as I have deemed necessary or appropriate as a basis for the opinions set forth herein. In my examination of the documents referred to above, I have assumed (i) the due execution and delivery, pursuant to due authorization, of each of the documents referred to above by all parties thereto other than the Loan Parties, (ii) the authenticity of all documents submitted to me as originals and (iii) the conformity to originals of all documents submitted to me as copies. I am qualified to practice law in the Commonwealth of Pennsylvania and in rendering the opinions expressed herein I express no opinion as to the laws of any jurisdiction other than the laws of the Commonwealth of Pennsylvania. Based upon the foregoing and upon such investigation as I have deemed necessary, in my capacity as General Counsel, I am of the opinion that: 1.None of the execution, delivery or performance by each of the Loan Parties of the Agreements to which it is a party, nor the consummation of the transactions contemplated thereby will violate, or be in conflict with, or constitute a default under, or permit the termination of, any agreement or instrument to which such Loan Party is a party or by which such Loan Party (or its properties) is bound which, individually or in the aggregate, would have a material adverse effect on Crompton and its Subsidiaries, taken as a whole. 2.To the best of my knowledge, except as disclosed in the Credit Agreement or the Schedules thereto, there is no action, proceeding or investigation pending or threatened against any of the Loan Parties that (i) could reasonably be expected to result in any material adverse effect on the business, operations or financial condition of Crompton and its Subsidiaries taken as a whole or (ii) purports to affect the legality, validity or enforceability of any Loan Document or any Related Document to which any Loan Party is a party or any of the transactions contemplated by the Credit Agreement. 3.Each of Crompton, KEM Manufacturing Corporation ("KEM") and CNK Disposition Corp. ("CNK") (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and (b) has all requisite corporate power and authority to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. 4.The execution, delivery and performance by Crompton, KEM and CNK of each Loan Document and each Related Document to which it is a party, and the consummation of the other transactions contemplated by the Credit Agreement are within each such party's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene each such party's charter or bylaws. 5.No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for (a) the due execution, delivery, recordation, filing or performance by Crompton, KEM or CNK of any Loan Document or any Related Document to which it is a party, or for the consummation of the other transactions contemplated thereby or (b) the grant by Crompton, KEM or CNK of the Liens granted by it pursuant to the Collateral Documents. 6.Each Loan Document and each Related Document to which any of Crompton, KEM or CNK is a party has been duly executed and delivered by such party. This opinion is limited to the matters stated herein, and no opinion is implied or may be inferred beyond the matters expressly stated. This opinion is being furnished only to you and is solely for your benefit and is not to be used, circulated, quoted, relied upon or otherwise referred to by any other person or for any other purpose without my prior written consent, provided, a copy of this letter may be delivered by you to any Eligible Assignee in accordance with the provisions of the Credit Agreement, and such Eligible Assignee may rely on the opinions expressed above as if this opinion letter were addressed and delivered to such Eligible Assignee on the date hereof. Very truly yours, Schedule I Crompton Guarantors CK Holding Corporation CNK Disposition Corp. Crompton & Knowles Colors Incorporated Crompton & Knowles Overseas Corporation Davis-Standard Corporation Ingredient Technology Corporation Kem Manufacturing Corporation Schedule II Uniroyal Guarantors Gustafson, Inc. Gustafson International Company Lokar Enterprises, Inc. Trace Chemicals, Inc. Uniroyal Chemical Brazil Holding, Inc. Uniroyal Chemical Company, Inc. Uniroyal Chemical Corporation Uniroyal Chemical Export Limited Uniroyal Chemical International Company Uniroyal Chemical Leasing Company, Inc. EXHIBIT F-3 FORM OF OPINION OF GENERAL COUNSEL OF CROMPTON & KNOWLES CORPORATION [See Exhibit F-2 to the Credit Agreement] SOLVENCY CERTIFICATE OF , a corporation (the "Company"), hereby certifies that the person executing this Solvency Certificate, , is the chief financial officer of the Company and that such officer is duly authorized to execute this Solvency Certificate, which is hereby delivered on behalf of the Company pursuant to Section 3.01(k)(xiii) of the Credit Agreement, dated as of August 21, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among Crompton & Knowles Corporation ("Crompton Corp."), a Massachusetts corporation, Crompton & Knowles Colors Incorporated, a Delaware corporation, Davis-Standard Corporation, a Delaware corporation, Ingredient Technology Corporation, a Delaware corporation, and Uniroyal Chemical Company, Inc., a New Jersey corporation (collectively, the "Borrowers"), certain Lender Parties party thereto, Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent for the Lender Parties, and The Chase Manhattan Bank, as Managing Agent. Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as therein defined. The Company further certifies that such officer is generally familiar with the properties, businesses and assets of the Company and its Subsidiaries and has carefully reviewed the Loan Documents, the Related Documents and the contents of this Solvency Certificate and, in connection herewith, has reviewed such other documentation and information and has made such investigation and inquiries as the Company and such officer deem necessary and prudent therefor. The Company further certifies that the financial information and assumptions that underlie and form the basis for the representations made in this Solvency Certificate were reasonable when made and were made in good faith and continue to be reasonable as of the date hereof. Immediately upon the consummation of the Merger, the Borrowers intend to borrow up to $600,000,000 under the Credit Agreement to pay transaction fees and expenses incurred in connection with the Merger. In addition, from time to time, the Lender Parties have agreed, on the terms and conditions set forth in the Credit Agreement, to lend to the Borrowers and issue Letters of Credit for the account of the Borrowers to redeem or repurchase certain public Debt and for other general corporate purposes, including, without limitation, to finance permitted acquisitions and Capital Expenditures and to provide working capital for the Borrowers and their respective Subsidiaries. To secure, among other things, the payment of the Obligations of the Loan Parties under the Loan Documents, the Loan Parties are now granting a security interest in certain Collateral, now owned or hereafter acquired, pursuant to the Collateral Documents, substantially in the form, as applicable, of Exhibits D-1, D-2 and D-3 to the Credit Agreement and each of the Loan Parties is issuing its guaranty, substantially in the form, as applicable, of Exhibit E-1 or E-2 to the Credit Agreement. The Company understands that the Agent, the Arranger, the Managing Agent and the Lender Parties are relying on the truth and accuracy of this Solvency Certificate in connection with the transactions contemplated by the Loan Documents and the Related Documents. The Company hereby further certifies that: 1.The Company has reviewed the projected Consolidated financial statements of the Crompton Corp. and its Consolidated Subsidiaries prepared by its management, including projected Consolidated balance sheets, income statements and cash flow statements for the first year following January 1, 1996 and on an annual basis for each year thereafter until the Termination Date (collectively, the "Projected Financial Statements"), which were prepared on the basis of the estimates and assumptions stated therein, a copy of which Projected Financial Statements was furnished to the Lender Parties. The Company believes that the Projected Financial Statements were prepared in good faith and represent the Company's best estimate of its future financial performance and are reasonable in light of the business conditions existing on the date hereof. On the date hereof, after giving effect to the consummation of the Merger and the other transactions contemplated by the Loan Documents and the Related Documents, the fair value of the property of the Company and the Company and its Consolidated Subsidiaries, taken as a whole, is greater than the total amount of liabilities (including, without limitation, contingent liabilities) of the Company and the Company and its Consolidated Subsidiaries, taken as a whole, respectively. 2.On the date hereof, after giving effect to the consummation of the Merger and the other transactions contemplated by the Loan Documents and the Related Documents, the present fair saleable value of the assets of the Company and the Company and its Consolidated Subsidiaries, taken as a whole, is not less than the amount that will be required to pay the probable liabilities of the Company and the Company and its Consolidated Subsidiaries, taken as a whole, respectively, on its debts as they become absolute and matured. 3.On the date hereof, after giving effect to the consummation of the Merger and the other transactions contemplated by the Loan Documents and the Related Documents, neither the Company nor the Company and its Consolidated Subsidiaries, taken as a whole, is engaged in business or a transaction, or is about to engage in business or a transaction, for which its property would constitute unreasonably small capital. 4.The Company does not intend to, and does not believe that it by itself or together with its Consolidated Subsidiaries, taken as a whole, will, incur debts or liabilities beyond its ability to pay such debts and liabilities as they mature. 5.The Company does not intend, in consummating the transactions contemplated by the Loan Documents and the Related Documents, to hinder, delay or defraud either present or future creditors or any other Person to which the Company is or will become, on or after the date hereof, indebted. 6.In reaching the conclusions set forth in this Solvency Certificate, the Company has considered, among other things: (a)the cash and other current assets of the Company and its Consolidated Subsidiaries, after giving effect to the Merger and the other transactions, reflected in the unaudited Consolidated pro forma balance sheet of the Company and its Consolidated Subsidiaries for the one-year period ended on or about March 31, 1996; (b)all contingent liabilities of the Company and its Consolidated Subsidiaries, including without limitation, any claims arising out of pending or, to the best knowledge of the undersigned, threatened litigation against the Company or any of its Consolidated Subsidiaries, and in so doing, the Company has computed the amount of each such contingent liability as the amount that, in light of all the facts and circumstances existing on the date hereof, represents the amount that can reasonably be expected to become an actual or matured liability; (c)all obligations and liabilities of the Company and its Consolidated Subsidiaries, whether matured or unmatured, liquidated or unliquidated, disputed or undisputed, secured or unsecured, subordinated, absolute, fixed or contingent, including, among other things, claims arising out of pending, or to the best knowledge of the undersigned, threatened litigation against the Company and its Consolidated Subsidiaries; (d)historical and anticipated growth in the sales volume of the Company and its Consolidated Subsidiaries and in the income stream generated by the Company and its Consolidated Subsidiaries as reflected in, among other things, the cash flow statements delivered as part of the Projected Financial Statements; (e)the customary terms and trade payables of the Company and its Consolidated Subsidiaries; (f)the amount of the credit extended by and to customers of the Company and its Consolidated Subsidiaries; (g)the amortization requirements of the Credit Agreement and the anticipated interest payable on the Advances under the Credit Agreement; (h)the level of capital customarily maintained by the Company and its Consolidated Subsidiaries and other entities engaged in the same or similar business as the businesses of the Company and its Consolidated Subsidiaries; and (i)the Projected Financial Statements. Delivery of an executed counterpart of a signature page to this Solvency Certificate by telecopier shall be effective as delivery of a manually executed counterpart of this Solvency Certificate. IN WITNESS WHEREOF, the chief financial officer of the Company has executed this Solvency Certificate in his/her corporate capacity and on behalf of the Company this 21st day of August, 1996. By Name: Title: Chief Financial Officer EX-11 3 EXHIBIT 11 CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES EXHIBIT 11 - STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (In thousands, except per share data) PRIMARY Quarter Ended Nine Months Ended Sept.28, Sept.30, Sept.28, Sept.30, 1996 1995 1996 1995 Earnings Earnings(loss) before extraordinary charge $ (69,572) $ 11,812 $ (24,042) $ 143,296 Extraordinary loss on early extinguishment of debt - - (441) (8,279) Net earnings $ (69,572) $ 11,812 $ (24,483) $ 135,017 Shares Weighted average shares outstanding 72,140 71,445 71,747 67,995 Common stock equivalents - 786 - 932 Average shares outstanding 72,140 72,231 71,747 68,927 Per share Earnings(loss) before extraordinary charge $ (0.97) $ 0.16 $ (0.34) $ 2.08 Extraordinary loss on early extinguishment of debt - - - (0.12) Net earnings $ (0.97) $ 0.16 $ (0.34) $ 1.96 FULLY DILUTED Quarter Ended Nine Months Ended Sept.28, Sept.30, Sept.28, Sept.30, 1996 1995 1996 1995 Earnings Earnings(loss) before extraordinary charge $ (69,572) $ 11,812 $ (24,042) $ 143,296 Extraordinary loss on early extinguishment of debt - - (441) (8,279) Net earnings $ (69,572) $ 11,812 $ (24,483) $ 135,017 Shares Weighted average shares outstanding 72,140 71,445 71,747 67,995 Common stock equivalents - 811 - 950 Average shares outstanding 72,140 72,256 71,747 68,945 Per share Earnings(loss) before extraordinary charge $ (0.97) $ 0.16 $ (0.34) $ 2.08 Extraordinary loss on early extinguishment of debt - - - (0.12) Net earnings $ (0.97) $ 0.16 $ (0.34) $ 1.96 EX-27 4 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-28-1996 SEP-28-1996 16,833 0 294,608 6,567 344,803 735,875 504,937 349,223 1,669,139 387,982 0 0 0 7,708 (89,354) 1,669,139 1,398,492 1,398,492 894,041 1,324,875 (762) (88) 86,818 (12,439) 11,603 (24,042) 0 (441) 0 (24,483) (0.34) (0.34)
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