-----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, MInWwLO3cE95KLX6iHqjLIz3CY8HeQ8Wpfi73l7EEFLjYSmJ8wxAvWO86qXio9OY ijXTGXotrycRnPBxjjOCXQ== 0000025757-98-000043.txt : 19980812 0000025757-98-000043.hdr.sgml : 19980812 ACCESSION NUMBER: 0000025757-98-000043 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980627 FILED AS OF DATE: 19980811 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: SEC FILE NUMBER: 001-04663 FILM NUMBER: 98682170 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 C&K 2ND QTR. 1998 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 June 27, 1998 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 July 15, 1998 Common Stock, $.10 par value 74,442,064 shares CROMPTON & KNOWLES CORPORATION FORM 10-Q FOR QUARTER ENDED JUNE 27, 1998 INDEX PART I. FINANCIAL INFORMATION: Item 1. Condensed Financial Statements and Accompanying Notes . Consolidated Statements of Earnings (unaudited) - Quarters and six months ended June 27, 1998 and June 28, 1997 . Consolidated Balance Sheets - June 27, 1998 (unaudited) and December 27, 1997 . Consolidated Statements of Cash Flows (unaudited) - Six months ended June 27, 1998 and June 28, 1997 . Notes to Consolidated Financial Statements - Quarter ended June 27, 1998 (unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION: Item 1. Legal proceedings Item 6. Exhibits and Reports on Form 8-K Signatures *Exhibit 4 $600,000,000 Third Amended and Restated Credit Agreement *Exhibit 4.1 Amendment of 1988 Rights Agreement Exhibit 11 Statement Re Computation of Per Share Earnings *Exhibit 27 Financial Data Schedules * Copies of these Exhibits are 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 Earnings Quarters and six months ended June 27, 1998 and June 28, 1997 (In thousands, except per share data) Quarters ended Six months ended June 27, June 28, June 27, June 28, 1998 1997 1998 1997 Net sales $ 474,337 $ 494,142 $ 951,556 $ 968,015 Cost of products sold 292,091 312,638 594,556 617,010 Selling, general and administrative 66,074 69,767 133,347 136,439 Depreciation and amortization 20,394 20,300 40,487 40,153 Research and development 13,200 13,054 26,363 25,938 Operating profit 82,578 78,383 156,803 148,475 Interest expense 20,505 26,581 44,118 53,534 Other (income) expense (1,258) 583 (1,547) 781 Earnings before income taxes and extraordinary loss 63,331 51,219 114,232 94,160 Provision for income taxes 23,536 19,451 42,494 35,781 Earnings before extraordinary loss 39,795 31,768 71,738 58,379 Extraordinary loss on early extinguishment of debt (13,843) (1,227) (15,794) (1,227) Net earnings $ 25,952 $ 30,541 $ 55,944 $ 57,152 Basic Earnings per common share: Earnings before extraordinary loss $ .53 $ .44 $ .96 $ .80 Extraordinary loss (.18) (.02) (.21) (.02) Net earnings $ .35 $ .42 $ .75 $ .78 Diluted Earnings per common share: Earnings before extraordinary loss $ .52 $ .43 $ .94 $ .78 Extraordinary loss (.18) (.02) (.21) (.02) Net earnings $ .34 $ .41 $ .73 $ .76 Dividends per common share $ .05 $ .05 $ .05 $ .05 See accompanying notes to consolidated financial statements. - 2 - June 27, 1998 UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets June 27, 1998 and December 27, 1997 (In thousands of dollars) June 27, December 27, 1998 1997 ASSETS CURRENT ASSETS Cash $ 14,831 $ 10,607 Accounts receivable 268,786 262,412 Inventories 359,307 356,716 Other current assets 74,844 85,314 Total current assets 717,768 715,049 NON-CURRENT ASSETS Property, plant and equipment 467,457 474,892 Cost in excess of acquired net assets 179,700 181,025 Other assets 166,358 177,854 $ 1,531,283 $ 1,548,820 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 2,944 $ 1,770 Accounts payable 134,528 145,405 Accrued expenses 153,535 149,910 Income taxes payable 47,461 38,909 Other current liabilities 26,333 27,094 Total current liabilities 364,801 363,088 NON-CURRENT LIABILITIES Long-term debt 832,578 896,291 Postretirement health care liability 148,560 149,344 Other liabilities 144,585 160,187 STOCKHOLDERS' EQUITY (DEFICIT) Common stock 7,733 7,733 Additional paid-in capital 237,874 232,213 Accumulated deficit (121,796) (174,019) Accumulated translation adjustment (46,584) (42,045) Treasury stock at cost (32,874) (40,228) Deferred compensation (834) (984) Pension liability adjustment (2,760) (2,760) Total stockholders' equity (deficit) 40,759 (20,090) $ 1,531,283 $ 1,548,820 See accompanying notes to consolidated financial statements. - 3 - UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows Six months ended June 27, 1998 and June 28, 1997 (In thousands of dollars) June 27, June 28, Increase (decrease) to cash 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 55,944 $ 57,152 Adjustments to reconcile net earnings to net cash provided by operations: Extraordinary loss on early extinguishment of debt 15,794 1,227 Depreciation and amortization 40,487 40,153 Noncash interest 5,068 6,946 Deferred taxes 6,762 12,009 Changes in assets and liabilities, net (9,653) (21,926) Net cash provided by operations 114,402 95,561 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions (5,927) - Capital expenditures (21,341) (17,040) Other investing activities 235 2,535 Net cash used by investing activities (27,033) (14,505) CASH FLOWS FROM FINANCING ACTIVITIES Redemption of 11% and 12% notes (352,802) - Proceeds (payments) on long-term borrowings 279,313 (65,777) Proceeds (payments) on short-term borrowings 1,174 (5,157) Premium paid on early extinguishment of debt (15,289) (1,464) Dividends paid (3,721) (3,663) Other financing activities 9,343 3,053 Net cash used by financing activities (81,982) (73,008) CASH Effect of exchange rates on cash (1,163) (531) Change in cash 4,224 7,517 Cash at beginning of period 10,607 21,120 Cash at end of period $ 14,831 $ 28,637 See accompanying notes to consolidated financial statements. -4- CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Notes to Unaudited Consolidated Financial Statements Quarter ended June 27, 1998 PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS The information included in the foregoing consolidated financial statements is unaudited but reflects all 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 $9.6 million in 1998 and $8.7 million at December 27, 1997. Accumulated depreciation amounted to $442.2 million in 1998 and $416.6 million at December 27, 1997. Accumulated amortization of cost in excess of acquired net assets amounted to $45.1 million in 1998 and $42.2 million at December 27, 1997. Accumulated amortization of patents, unpatented technology, trademarks and other intangibles included in other assets amounted to $130.6 million in 1998 and $123.3 million at December 27, 1997. Cash payments during the six months ended June 27, 1998 and June 28, 1997 included interest of $40.7 million and $46.9 million, respectively, and income taxes of $9.6 million and $16.2 million, 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 1997 Annual Report on Form 10-K. CAPITAL STOCK As of June 27, 1998, there were 77,332,751 common shares issued at $.10 par value, of which 2,890,787 shares were held in the treasury. INVENTORIES Components of inventories are as follows: June 27, Dec. 27, (In thousands) 1998 1997 Finished goods $243,936 $226,730 Work in process 43,718 47,029 Raw materials and supplies 71,653 82,957 $359,307 $356,716 EARNINGS(LOSS)PER COMMON SHARE The computation of basic earnings per common share is based on the weighted average number of common shares outstanding. The computation of diluted earnings per common share is based on the weighted average number of common and common equivalent shares outstanding. The following is a reconciliation of the shares used in both computations: (In thousands) Second Quarter Six Months 1998 1997 1998 1997 Weighted average common shares outstanding 74,430 73,341 74,267 73,210 Stock options, warrants and other equivalents 2,383 1,834 2,346 1,738 Weighted average common and common equivalent shares outstanding 76,813 75,175 76,613 74,948 BUSINESS SEGMENT DATA Second Quarter Ended June 27, June 28, (In thousands) 1998 1997 SALES Specialty Chemicals $ 393,185 $ 418,303 Specialty Equipment and Controls 81,152 75,839 Total net sales $ 474,337 $ 494,142 OPERATING PROFIT Specialty Chemicals $ 77,899 $ 76,074 Specialty Equipment and Controls 9,832 8,122 General corporate expense ( 5,153) ( 5,813) Total operating profit $ 82,578 $ 78,383 Six Months Ended June 27, June 28, (In thousands) 1998 1997 SALES Specialty Chemicals $ 786,795 $ 817,009 Specialty Equipment and Controls 164,761 151,006 Total net sales $ 951,556 $ 968,015 OPERATING PROFIT Specialty Chemicals $ 148,117 $ 144,632 Specialty Equipment and Controls 20,198 15,748 General corporate expense ( 11,512) ( 11,905) Total operating profit $ 156,803 $ 148,475 COMPREHENSIVE INCOME Effective in the first quarter of 1998, the Company adopted Financial Accounting Standards Board Statement No. 130 "Reporting Comprehensive Income". The statement establishes standards for reporting "comprehensive income" and its components in financial statements and notes thereto. An analysis of the Company's comprehensive income follows: Second Quarter Six Months Ended Ended June 27, June 28, June 27, June 28, (In thousands) 1998 1997 1998 1997 Net earnings $ 25,952 $ 30,541 $ 55,944 $ 57,152 Other comprehensive (income)expense: Foreign currency translation adjustments 1,343 4,300 4,539 11,239 Minimum pension liability adjustments, net - - - ( 953) 1,343 4,300 4,539 10,286 Comprehensive income $ 24,609 $ 26,241 $ 51,405 $ 46,866 LONG-TERM DEBT On March 31, 1998, the Company amended its $600 million revolving credit agreement with a syndicate of banks. The termination date was extended to September 2003 from August 2001. Borrowings under the credit agreement were amended as follows: Tranche I provides a maximum of $375 million (up from $300 million) available to the Company for working capital and general corporate purposes. Tranche II provides a maximum of $75 million (down from $150 million) available to Uniroyal Chemical Company, Inc. for working capital and general corporate purposes. Tranche III continues to provide up to $150 million available to the European and Canadian subsidiaries of the Company. On May 8, 1998 the Company redeemed the outstanding 11% Senior Subordinated Notes at a price of 105.5% of the principal amount thereof plus accrued and unpaid interest and the 12% Subordinated Discount Notes at a price of 100% of the principal amount thereof plus accrued and unpaid interest. The payment for the redemption including premium and accrued interest amounted to $366.2 million and was funded by drawing on the Company's $600 million revolving credit agreement. Borrowings under the revolving credit agreement totaled $389.1 million at June 27, 1998. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SECOND QUARTER RESULTS Overview Consolidated net sales of $474.3 million for the second quarter of 1998 decreased 4% from the comparable 1997 period. The decrease was primarily attributable to lower unit volume. Improved pricing of 1% offset lower foreign currency translation. International sales, including US exports, were 40% of total sales compared to 39% in the second quarter of 1997. Net earnings before extraordinary losses on early extinguishment of debt increased 25% to $39.8 million, or $.53 cents per share basic and $.52 cents per share diluted, compared to $31.8 million, or $.44 cents per share basic and $.43 per share diluted, in last year's second quarter. The extraordinary loss of $.18 cents per share in the second quarter of 1998 reflects the redemption of the 11% and 12% Notes on May 8, 1998. Net earnings were $26.0 million, or $.35 cents per share basic and $.34 cents per share diluted, compared to $30.5 million, or $.42 cents per share basic and $.41 cents per share diluted, in the prior year's second quarter. Gross margin as a percentage of net sales increased to 38.4% from 36.7% in the second quarter of 1997. The increase was attributable primarily to lower raw material costs and improved pricing. Consolidated operating profit increased 5% to $82.6 million from $78.4 million in the prior year. Both segments contributed to the increase as specialty chemicals rose 2% and specialty process equipment and controls increased 21%. Specialty Chemicals The Company's specialty chemicals segment sales of $393.2 million decreased 6% from the comparable 1997 period. The decrease was primarily due to lower unit volume. An analysis of sales by major product class within the specialty chemicals segment follows. Chemicals and polymers sales of $123.5 million decreased 2% from the second quarter of 1997 primarily attributable to lower unit volume, as improved pricing of 1% was offset by lower foreign currency translation. Sales of rubber chemicals were lower than 1997 primarily due to lower pricing, foreign currency translation and unit volume. EPDM sales increased primarily due to improved pricing. Nitrile rubber sales decreased as a result of lower unit volume. Crop protection sales of $100.5 million decreased 13% from the comparable 1997 quarter primarily as a result of lower unit volume due to weather conditions in California which were unfavorable for its miticide products. This is the reverse of 1997 when second quarter sales were unusually strong and third quarter sales were weak. Improved pricing of 1% offset lower foreign currency translation. Specialty sales of $81.2 million decreased 1% versus the second quarter of 1997 primarily attributable to lower unit volume as improved pricing of 1% offset lower foreign currency translation. The comparison to last year's strong second quarter was difficult considering the 12% increase over the comparable 1996 quarter. Colors sales of $64.6 million decreased 7% from the second quarter of 1997 primarily due to lower unit volume of 4%, foreign currency translation of 2% and lower pricing of 1%. Increased imports of finished apparel into the U.S. negatively affected the business. Specialty ingredients sales of $23.4 million were 9% lower than the second quarter of 1997 primarily attributable to lower unit volume as a result of product rationalization in the second half of 1997. Operating profit of $77.9 million increased 2% versus the second quarter of 1997 primarily as a result of lower raw materials costs and improved pricing. Specialty Process Equipment and Controls The Company's specialty process equipment and controls segment sales of $81.1 million increased 7% from the second quarter of 1997 primarily attributable to higher unit volume. Sales were strong in most of the segment's major markets. Operating profit of $9.8 million increased 21% from the second quarter of 1997 primarily as a result of increased unit volume. The order backlog of extruders and related equipment at the end of the second quarter of 1998 amounted to $115 million compared to $109 million at the end of the first quarter. Other Selling, general and administrative expenses of $66.1 million decreased 5% versus the second quarter of 1997, essentially in line with the lower unit volume of sales. Depreciation and amortization of $20.4 million increased slightly from the comparable 1997 period as a result of a higher fixed asset base. Research and development costs of $13.2 million increased 1% from the second quarter of 1997, but as a percentage of sales remained constant at 3%. Interest expense of $20.5 million decreased 23% from the comparable period of 1997 primarily due to lower levels of indebtedness and lower interest on borrowings used to redeem the 11% and 12% Notes in May. Other income of $1.3 million compared to $583 thousand of other expense in the second quarter of 1997 primarily due to increased interest income. The effective tax rate of 37.2% decreased versus 38.0% in the comparable 1997 quarter. YEAR-TO-DATE RESULTS Overview Consolidated net sales of $951.6 million for the first six months of 1998 decreased 2% from the comparable period in 1997. The decrease resulted primarily from the impact of lower foreign currency translation. International sales, including U.S. exports, increased as a percentage of total sales to 40% from 38% for the first six months of 1997. Net earnings before extraordinary losses on early extinguishment of debt increased 23% to $71.7 million, or $.96 cents per share basic and $.94 cents per share diluted, compared to $58.4 million, or $.80 cents per share basic and $.78 cents per share diluted, in the first six months of 1997. Net earnings were $55.9 million, or $.75 cents per share basic and $.73 cents per share diluted, versus $57.2 million, or $.78 cents per share basic and $.76 cents per share diluted, in 1997. Gross margin as a percentage of net sales increased to 37.5% from 36.3% for the first six months of 1997. The increase was attributable primarily to lower raw material and other manufacturing costs. Consolidated operating profit increased 6% to $156.8 million as the specialty chemicals segment rose 2% and the specialty process equipment and controls segment increased 28%. Specialty Chemicals The Company's specialty chemicals segment sales of $786.8 million, decreased 4% from the comparable 1997 period. The decrease was primarily due to lower foreign currency translation and lower unit volume of approximately 2% each. An analysis of sales by major product class within the specialty chemicals segment follows: Chemicals and polymers sales of $244.3 million decreased 4% from the first six months of 1997. The decrease was primarily attributed to lower foreign currency translation of approximately 2% and lower pricing and lower unit volume of 1% each. Sales of rubber chemicals were lower than 1997 primarily due to lower pricing, foreign currency translation and unit volume. EPDM sales increased primarily due to improved pricing. Nitrile rubber sales decreased primarily as a result of lower unit volume. Crop protection sales of $208.4 million decreased 5% from the comparable 1997 period primarily as a result of lower unit volume due to weather conditions in California which were unfavorable for its miticide products. Specialty sales of $160.3 million increased 2% from the six month period of 1997 primarily due to increased unit volume. Improved pricing of 1% was offset by the impact of lower foreign currency translation. Colors sales of $125.7 million decreased 6% from the first six months of 1997 primarily due to lower unit volume of 3%, foreign currency translation of 2% and lower pricing of 1%. Specialty ingredients sales of $48.1 million were 7% lower than the comparable period in 1997 primarily attributable to lower unit volume as a result of product rationalization in the second half of 1997. Operating profit of $148.1 million for the first six months of 1998 increased 2% versus the prior year. The improvement in operating profit resulted primarily from lower raw material and other manufacturing costs. Specialty Process Equipment and Controls The Company's specialty process equipment and controls segment reported sales of $164.8 million representing a 9% increase from the 1997 six month period. Essentially all of the increase was attributable to higher unit volume. Operating profit of $20.2 million increased 28% versus the comparable 1997 period primarily due to increased unit volume. Other Selling, general and administrative expenses of $133.3 million decreased 2% versus the comparable period in 1997, essentially in line with the lower unit volume of sales. Depreciation and amortization of $40.5 million increased 1% versus the 1997 period primarily as a result of a higher fixed asset base. Research and development cost of $26.4 million increased 2% from $25.9 million in 1997, but as a percentage of sales remained constant at 3%. Interest expense of $44.1 million decreased 18% from the comparable period in 1997 due to lower levels of indebtedness and lower interest on borrowings used to redeem the 11% and 12% Notes in May. Other income of $1.5 million compared to $781 thousand of other expense in 1997 was primarily due to increased interest income. The effective tax rate of 37.2% decreased versus 38.0% in the comparable 1997 period. LIQUIDITY AND CAPITAL RESOURCES The June 27, 1998 working capital balance of $353.0 million was comparable to the balance at year-end 1997. The current ratio of 2.0 remained unchanged from the end of 1997. Days sales in receivables averaged 54 days for the six month period in 1998, unchanged from 1997. Inventory turnover averaged 3.2 compared to 3.3 at year-end 1997. Net cash flow provided by operations of $114.4 million increased $18.8 million from the first half of 1997 primarily due to increased operating earnings and lower working capital needs. The cash flow was primarily used, together with additional credit agreement borrowings, to fund capital expenditures, reduce debt including the 11% and 12% Notes, and pay the annual cash dividend. The Company's debt to total capital percentage decreased to 95% from 102% at year-end 1997. The Company's liquidity needs, including debt servicing, are expected to be financed from operations. On May 8, 1998 the Company redeemed the outstanding 11% Senior Subordinated Notes and the 12% Subordinated Discount Notes. The payment for the redemption including premium and accrued interest amounted to $366.2 million and was funded by drawing on the Company's $600 million revolving credit agreement. Borrowings under the revolving credit agreement totaled $389.1 million at June 27, 1998. Capital expenditures are expected to approximate $60 million in 1998 primarily for replacement needs and improvement of domestic and foreign facilities. In 1995 the Company initiated a program to update the current information technology systems on a worldwide basis. The Company evaluated its major computer systems and software applications with the goal of avoiding interruption in the supply of goods, services and business information at the turn of the century. Year 2000 compliance remediation costs are not expected to have a material effect on the Company's results of operation. ACCOUNTING STANDARD CHANGE In June 1997 the Financial Accounting Standards Board issued Statement No. 131 "Disclosures about Segments of an Enterprise and Related Information", which is effective for years beginning after 1997. In June 1998, the Financial Accounting Standards Board issued Statement No. 133 "Accounting for Derivative Instruments and Hedging Activities", which is effective for years beginning after 1999. The Company is currently evaluating the statements and plans to adopt Statement No. 131 in the fourth quarter of 1998 and Statement No. 133 in the first quarter of 2000. ENVIRONMENTAL MATTERS The Company is involved in claims, litigation, administrative proceedings and investigations of various types in a number of 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 of June 27, 1998, the Company's reserves for environmental remediation activities totaled $99.9 million. These estimates may change in the future 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 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. FORWARD-LOOKING STATEMENTS The information in this Form 10-Q contains forward-looking statements and estimates which are based on currently available information. The Company's actual results may differ significantly from the results discussed. Investors are cautioned that there can be no assurance that the actual results will not differ materially from those suggested in such forward- looking statements and estimates. Part II -- OTHER INFORMATION Item 1. Legal Proceedings. (i) Reference is made to page 16 (Other Environmental Matters) of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 27, 1997, for information pertaining to a suit brought by Sundor Canada Inc. against Uniroyal Chemical Co./Cie. and others. In June 1998, final settlement was reached among the parties in accordance with the terms previously disclosed and after judicial approval the suit was dismissed with prejudice. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Number Description 4* $600,000,000 Third Amended and Restated Credit Agreement dated as of March 31, 1998, by and among Crompton & Knowles Corporation and certain of its subsidiaries, as Borrowers, and various lenders, and Citicorp USA, Inc., as Agent and The Chase Manhattan Bank, Corestates Bank, N.A. and First Union National Bank as Managing Agents. 4.1* Amendment dated as of January 20, 1998, amending the Rights Agreement dated as of July 20, 1988, as amended March 28, 1991 and October 1, 1992, between the Registrant and Mellon Bank N.A. as Rights Agent (Exhibit 1 to Form 8-K dated July 29, 1988.) 11 Statement Re Computation of Per Share Earnings 27* Financial Data Schedules (b) No reports on Form 8-K were filed during the quarter for which this report is filed. * Copies of these Exhibits are annexed to this report on Form 10-Q provided to the Securities and Exchange Commission and the New York Stock Exchange. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CROMPTON & KNOWLES CORPORATION (Registrant) August 11, 1998 By:/s/ Charles J. Marsden Charles J. Marsden Senior Vice President & Chief Financial Officer August 11, 1998 By:/s/ John T. Ferguson II John T. Ferguson II Vice President, General Counsel and Secretary EX-4 2 EXECUTION COPY US$600,000,000 THIRD AMENDED AND RESTATED CREDIT AGREEMENT Dated as of March 31, 1998 Among CROMPTON & KNOWLES CORPORATION, CROMPTON & KNOWLES COLORS INCORPORATED, DAVIS-STANDARD CORPORATION, INGREDIENT TECHNOLOGY CORPORATION, UNIROYAL CHEMICAL COMPANY, INC., THE B-2 BORROWERS NAMED HEREIN, THE ITALIAN BORROWERS NAMED HEREIN AND UNIROYAL CHEMICAL CO. as Initial 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 USA, INC. as Agent and THE CHASE MANHATTAN BANK, CORESTATES BANK, N.A. AND FIRST UNION NATIONAL BANK as Managing Agents T A B L E O F C O N T E N T S Section Page ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1.01. Certain Defined Terms 2 1.02. Computation of Time Periods 38 1.03. Accounting Terms 38 ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT 2.01. The Advances 39 2.02. Making the Advances 43 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit 47 2.04. Drawings of Bankers' Acceptances 49 2.05. Repayment of Advances 52 2.06. Termination or Reduction of the Commitments 54 2.07. Prepayments 55 2.08. Interest 57 2.09. Fees 60 2.10. Conversion of Advances 61 2.11. Renewal and Conversion of Bankers' Acceptances 62 2.12. Increased Costs, Etc 64 2.13. Illegality 66 2.14. Payments and Computations 67 2.15. Taxes 69 2.16. Sharing of Payments, Etc. 73 2.17. Use of Proceeds 74 2.18. Defaulting Lenders 74 2.19. Evidence of Debt 77 ARTICLE III CONDITIONS OF LENDING 3.01. Conditions Precedent to Effectiveness of Amendment and Restatement 78 3.02. Initial Extension of Credit to Each Designated Subsidiary and Each Designated Italian Subsidiary 81 3.03. Conditions Precedent to Each Borrowing, Drawing and Issuance 83 3.04. Determinations Under Sections 3.01 and 3.02 84 3.05. Conditions Precedent to Delayed Effectiveness of Certain Provisions 84 ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.01. Representations and Warranties of the Borrowers 85 4.02. Additional Representations and Warranties of the Crompton A Borrowers and Uniroyal B-1 Borrower 89 ARTICLE V COVENANTS OF THE BORROWERS 5.01. Affirmative Covenants 89 5.02. Negative Covenants 92 5.03. Reporting Requirements 103 5.04. Financial Covenants 107 ARTICLE VI EVENTS OF DEFAULT 6.01. Events of Default 108 6.02. Actions in Respect of the Letters of Credit and Bankers' Acceptances upon Default 111 6.03. Actions in Respect of Working Capital B-1 Commitments Reserved Pursuant to Section 2.01(j) 112 ARTICLE VII THE AGENT 7.01. Authorization and Action 113 7.02. Agent's Reliance, Etc. 113 7.03. Citicorp and Affiliates 114 7.04. Lender Party Credit Decision 114 7.05. Indemnification 114 7.06. Successor Agents 115 ARTICLE VIII MISCELLANEOUS 8.01. Amendments, Etc. 116 8.02. Notices, Etc. 117 8.03. No Waiver; Remedies 118 8.04. Costs and Expenses 118 8.05. Right of Set-off 120 8.06. Binding Effect 120 8.07. Assignments and Participations 120 8.08. Designated Subsidiaries and Designated Italian Subsidiaries 124 8.09. Execution in Counterparts 124 8.10. No Liability of the Issuing Banks 124 8.11. Confidentiality 125 8.12. Jurisdiction, Etc. 125 8.13. Judgment 126 8.14. Power of Attorney 126 8.15. Governing Law 127 8.16. Limitation on B-2 Borrower Obligations, Italian Borrower Obligations and Canadian Borrower Obligations 127 8.17. Substitution of Currency 127 8.18. Waiver of Jury Trial 129 SCHEDULES Schedule I - Applicable Lending Offices Schedule II - Subsidiary Guarantors Schedule III - Minor Subsidiaries Schedule IV - B-2 Borrowers Schedule V - Italian Borrowers Schedule VI - Italian Lenders Schedule VII - Borrowers' Accounts Schedule 3.01(b) - Disclosed Litigation Schedule 3.02(b)(viii) - Foreign Local Counsel Schedule 4.01(b) - Subsidiaries Schedule 4.01(d) - Authorizations, Approvals, Actions, Notices and Filings Schedule 4.01(l) - Environmental Disclosure Schedule 4.01(o) - Surviving Debt Schedule 4.01(p) - Material Subsidiaries Schedule 5.02(a) - Existing Liens Schedule 5.02(e) - 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 A-4 - Form of Italian Borrower Note Exhibit A-5 - Form of Canadian Borrower Note Exhibit A-6 - Form of Generic Draft Exhibit B-1 - Form of Notice of Borrowing Exhibit B-2 - Form of Notice of Drawing Exhibit C - Form of Assignment and Acceptance Exhibit D-1 - Form of Parent Guarantor's Consent Exhibit D-2 - Form of Subsidiary Guarantors' Consent Exhibit E-1 - Form of Opinion of Counsel for the Loan Parties Exhibit E-2 - Form of Opinion of General Counsel to Crompton Corp. and its Subsidiaries Exhibit F - Form of Designation Letter Exhibit G - Form of Acceptance by Process Agent Exhibit H - Form of Opinion of Counsel to a Designated [Italian] Subsidiary Exhibit I - Form of Italian Lender Joinder Agreement THIRD AMENDED AND RESTATED CREDIT AGREEMENT THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of March 31, 1998 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 A Borrowers"), UNIROYAL CHEMICAL COMPANY, INC., a New Jersey corporation ("Uniroyal" or the "Uniroyal B-1 Borrower"), THE B-2 BORROWERS LISTED ON SCHEDULE IV HERETO (together with each Designated Subsidiary of Crompton Corp. that shall become a B-2 Borrower party to this Agreement pursuant to Section 8.08, the "B-2 Borrowers"), THE ITALIAN BORROWERS LISTED ON SCHEDULE V HERETO (together with each Designated Italian Subsidiary of Crompton Corp. that shall become an Italian Borrower party to this Agreement pursuant to Section 8.08, the "Italian Borrowers"), UNIROYAL CHEMICAL CO., a corporation organized under the laws of Nova Scotia, Canada (the "Canadian Borrower"), 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 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, CORESTATES BANK, N.A. and FIRST UNION NATIONAL BANK, as Managing Agents. PRELIMINARY STATEMENT. The Existing Lenders party to the Existing Credit Agreement and the Initial Borrowers have agreed to amend and restate the Existing Credit Agreement in order to extend the Commitments of the Lender Parties, to allow such Existing Lenders to assign a portion of their Commitments to the Lender Parties hereunder, to reflect the occurrence of the Collateral Release Date (as defined in the Existing Credit Agreement) and to amend certain covenants. The Lender Parties have indicated their willingness to agree to amend and restate the Existing Credit Agreement and 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 (a) in the case of Advances denominated in US Dollars (other than an Italian Borrower Advance), 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, (b) in the case of Advances denominated in any Foreign Currency (other than an Italian Borrower Advance or a Canadian Borrower Advance), the account of the Agent designated in writing from time to time by the Agent to Crompton Corp. and the Lender Parties for such purpose, (c) in the case of any Italian Borrower Advance, the account of the Agent in Milan, Italy designated in writing from time to time by the Agent to Crompton Corp. and the Lender Parties for such purpose and (d) in the case of any Canadian Borrower Advance denominated in Canadian Dollars, the account of the Agent in Toronto, Canada designated in writing from time to time by the Agent to Crompton Corp., and the Lender Parties for such purpose. "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, such Lender Party's Eurocurrency Lending Office in the case of a Eurocurrency Rate Advance, in the case of any Italian Borrower Advance, such Lender Party's Eurocurrency Lending Office located in Italy, in the case of any Canadian Borrower Advance, such Lender Party's Canadian Domestic Lending Office and, in the case of a Drawing, such Lender Party's BA Lending Office. "Applicable Margin" means a percentage per annum determined by reference to the Total Debt/EBITDA Ratio as set forth below: Base Rate Advances/ Eurocurrency Rate Total Debt/EBITDA Ratio Local Rate Advances 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 0.0% 0.750% ; provided, however, the Applicable Margin for each Italian Borrower Advance shall equal the sum of (a) the applicable percentage per annum determined by reference to the Total Debt/EBITDA Ratio set forth above plus (b) 0.05%. 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 percentage per annum determined by reference to the Total Debt/EBITDA Ratio as set forth below: Total Debt/EBITDA Commitment Trade Standby Ratio Fees Letter Letter of Credit of Credit Fees Fees/Drawing Fees Level I less than or equal 0.125% 0.125% 0.375% to 2.0:1.0 Level II greater than 2.0:1.0, 0.150% 0.250% 0.500% but less than or equal to 2.5:1.0 Level III greater than 2.5:1.0, but less than or 0.175% 0.375% 0.625% equal to 3.0:1.0 Level IV greater than 3.0:1.0 0.250% 0.500% 0.750% 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) any 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. "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(l) 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(f) 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(d) during the previous Fiscal Year and (e) US$100,000,000. "B-2 Borrowers" has the meaning specified in the recital of parties to this Agreement. "B-2 Facility Overage" means, as determined on the first Business Day of each month, the lesser of (a) US$10,000,000 minus the amount set forth in clause (b) of the definition "Italian Facility Overage" at such time and (b) the sum of (i) the excess, if any, of the aggregate principal US Dollar amount (or Equivalent in US Dollars, as applicable) of the Working Capital B-2 Advances, the Letter of Credit Advances made under the Letter of Credit B-2 Facility and the aggregate Available Amount under all Letters of Credit outstanding under the Letter of Credit B-2 Facility at such time over an amount equal to 97% of the Working Capital B-2 Facility on such Business Day and (ii) the aggregate principal US Dollar amount (or Equivalent in US Dollars, as applicable) sufficient to cause the aggregate amount on deposit in the relevant L/C Cash Collateral Account to equal the amount by which the aggregate Available Amount of all Letters of Credit then outstanding under the Letter of Credit B-2 Facility exceeds the Letter of Credit B-2 Facility on such Business Day. "BA Lending Office" means, with respect to each Canadian Lender, the office of such Lender set forth as its "BA Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender or such other office of such Lender in Canada as such Lender may from time to time specify to the Canadian Borrower and the Agent for such purpose. "BA Rate" means, for all Bankers' Acceptances comprising part of the same Drawing to be purchased by a Canadian Lender, the average rate (calculated on an annual basis of a year of 365 days and rounded up to the nearest multiple of 1/4 of 1%, if such average is not such a multiple) for Canadian Dollar Bankers' Acceptances having a comparable term that appears on the Reuters Screen CDOR Page (or such other page as is a replacement page for such bankers' acceptances) at 10:00 A.M. (Toronto time) or, if such rate is not available at such time, the applicable discount rate in respect of such Bankers' acceptances shall be the arithmetic average of the discount rates (calculated on an annual basis of a year of 365 days) and rounded up to the nearest multiple of 1/4 of 1%, if such average is not such a multiple, quoted by each Canadian Reference Lender at 9:30 a.m. (Toronto time) on the date of such Drawing as the discount rate at which such Canadian Reference Lender would purchase, on such date, its own bankers' acceptances having an aggregate Face Amount equal to and with a term to maturity the same as the Bankers' Acceptances to be acquired by such Canadian Lender as part of such Drawing. The BA Rate for each Bankers' Acceptance comprising part of the same Drawing shall be determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Canadian Reference Lenders on the date of the applicable Drawing, subject, however, to the provisions of Section 2.08. "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. "Banker's Acceptance" has the meaning specified in Section 2.01(f). "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 Section 2.08(b)(i). "Borrower's Account" means, with respect to any Borrower in respect of US Dollars, Canadian Dollars or any Foreign Currency, the account of such Borrower maintained by Citibank set forth opposite such Borrower for US Dollars, Canadian Dollars or the Foreign Currency, so designated, as applicable, on Schedule VII and such other accounts maintained on behalf of such Borrower as such Borrower with respect to any additional Foreign Currencies may notify the Agent from time to time. "Borrower's Share" of any amount means those fees, indemnities, expenses or other amounts arising from or directly or indirectly relating to any B-2 Borrower, any Italian Borrower or the Canadian Borrower at any time. "Borrowers" means, collectively, each Initial Borrower, each Designated Subsidiary and each Designated Italian Subsidiary that shall become a party to this Agreement pursuant to Section 8.08. "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 Eurocurrency Rate Advances, on which dealings are carried on in the London interbank market and in the country of issue of the currency of such Eurocurrency Rate Advance. "Canadian 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 higher of: (a) the average (rounded upward to the nearest whole multiple of 1/4 of 1% per annum, if such average is not such a multiple) of the rates per annum which the principal office of each of the Canadian Reference Lenders in Toronto, Ontario announces publicly from time to time as its reference rate of interest for commercial loans in US Dollars made by it to Canadian borrowers in Canada; and (b) 1/2 of 1% per annum above the Federal Funds Rate. "Canadian Base Rate Advance" means a Canadian Borrower Advance made in US Dollars that bears interest as provided in Section 2.08(b)(iv). "Canadian Borrower" has the meaning specified in the recital of parties to this Agreement. "Canadian Borrower Advance" has the meaning specified in Section 2.01(e). "Canadian Borrower Note" means a promissory note of the Canadian Borrower payable to the order of any Canadian Lender, in substantially the form of Exhibit A-5 hereto, evidencing the aggregate indebtedness of the Canadian Borrower to such Lender resulting from the Canadian Borrower Advances made by or otherwise owing to such Lender to the extent required to be issued pursuant to Section 2.19. "Canadian Borrowing" means a borrowing consisting of simultaneous Canadian Borrower Advances of the same Type made by the Canadian Lenders. "Canadian Business Day" means a day of the year on which banks are not required or authorized by law to close in Toronto, Ontario, Canada and New York, New York and, if the applicable Business Day relates to any Eurocurrency Rate Advances, on which dealings are carried on in the London interbank market. "Canadian Cash Collateral Account" means an interest- bearing cash collateral account to be established and maintained by the Agent, over which the Agent shall have sole dominion and control, upon terms as may be satisfactory to the Agent. "Canadian Commitment" means, with respect to any Canadian Lender at any time, the US Dollar amount set forth opposite such Lender's name on the signature pages hereof under the caption "Canadian 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 "Canadian Commitment", as such US Dollar amount may be reduced at or prior to such time pursuant to Section 2.06. "Canadian Dollar Advances" means Canadian Borrower Advances denominated in Canadian Dollars. "Canadian Dollars" and "CN$" each means lawful money of Canada. "Canadian Domestic Lending Office" means, with respect to each Canadian Lender, the office of such Lender 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 or such other office of such Lender as such Lender may from time to time specify to the Canadian Borrower and the Agent. "Canadian Eurocurrency Lending Office" means, with respect to each Canadian Lender, the office of such Lender specified as its "Eurocurrency Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender or such other office of such Lender as such Lender may from time to time specify to the Canadian Borrower and the Agent. "Canadian Facility" means, at any time, the aggregate amount of the Canadian Lenders' Canadian Commitments at such time. "Canadian Interbank Rate" means the interest rate, expressed as a percentage per annum, which is customarily used by the Agent when calculating interest due by it or owing to it arising from or in connection with correction of errors between it and other Canadian chartered banks. "Canadian Lender" means any Lender that (a) is a Canadian chartered bank lending and receiving payment through Canadian offices and (b) has a Canadian Commitment. "Canadian Facility Overage" means, as determined on the first Business Day of each month, the lesser of (a) US$10,000,000 and (b) the sum of (i) the excess, if any, of the aggregate principal US Dollar amount (or Equivalent in US Dollars, as applicable) of the Canadian Borrower Advances and the Face Amount of all Bankers' Acceptances outstanding under the Canadian Facility at such time over an amount equal to 97% of the Canadian Facility on such Business Day and (ii) the aggregate principal US Dollar amount (or Equivalent in US Dollars, as applicable) sufficient to cause the aggregate amount on deposit in the relevant Canadian Cash Collateral Account to equal the amount by which the aggregate Face Amount of all Bankers' Acceptances then outstanding under the Canadian Facility exceeds the Canadian Facility on such Business Day. "Canadian Prime 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 higher of: (a) the average (rounded upward to the nearest whole multiple of 1/4 of 1% per annum, if such average is not such a multiple) of the rates per annum which the principal office of each of the Canadian Reference Lenders in Toronto, Ontario announces publicly from time to time as its prime rate for determining rates of interest on commercial loans in Canadian Dollars made by it in Canada; and (b) 3/4 of 1% per annum above the rate quoted for 30-day Canadian Dollar bankers acceptances of Citibank Canada that appears on the Reuters Screen CDOR Page (or any replacement page) as of 10:00 a.m. (Toronto, Ontario time) on the date of determination. "Canadian Prime Rate Advance" means a Canadian Borrower Advance made in Canadian Dollars that bears interest as provided in Section 2.08(b)(iii). "Canadian Reference Lenders" means Citibank Canada, Canadian Imperial Bank of Commerce and The Toronto-Dominion Bank; provided that, if any of the foregoing shall cease to be a Canadian Lender, the term "Canadian Reference Lenders" shall no longer include such Canadian Lender and shall thereafter include such Canadian Lender as the Agent shall designate as a replacement Canadian Reference Lender, which designation shall be made with the consent of such replacement Canadian Reference Lender and the Canadian Borrower, which consent shall not be unreasonably withheld or delayed and provided, further, that if any Canadian Lenders are banks set forth in Schedule I of the Bank Act (Canada), at least one of the Canadian Reference Lenders will be such a Schedule I bank. "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 US$1 billion, (c) commercial paper in an aggregate amount of no more than US$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 or (d) in the case of any Foreign Subsidiary, any equivalent, prudent, short-term investment consistent with the foregoing. "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. "Commitment" means a Working Capital A Commitment, a Working Capital B-1 Commitment, a Working Capital B-2 Commitment, an Italian Commitment, a Canadian 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. "Consents" means the Consents to this Third Amended and Restated Credit Agreement in substantially the form of Exhibit D-1 and D-2 dated as of the date hereof by the Parent Guarantor (as defined in the Parent Guaranty) and each Subsidiary Guarantor. "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 2.10, 2.11 or 2.12. "Crompton A 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(i). "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 owing to the Daylight Overdraft Bank in respect of any daylight overdraft facility or in connection with any automated clearinghouse transfers of funds. "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 Section 2.01 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 Section 2.18(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 2.16 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 2.18(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). "Designated Italian Subsidiary" means any wholly-owned Subsidiary of Crompton Corp. designated for borrowing privileges as an Italian Borrower under this Agreement pursuant to Section 8.08. "Designated Subsidiary" means any wholly-owned Subsidiary of Crompton Corp. designated for borrowing privileges as a B-2 Borrower under this Agreement pursuant to Section 8.08. "Designation Letter" means, with respect to any Designated Subsidiary or Designated Italian Subsidiary, a letter in the form of Exhibit F hereto signed by such Designated Subsidiary or Designated Italian Subsidiary and Crompton Corp. "Disclosed Litigation" has the meaning specified in Section 3.01(b). "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. "Draft" means a blank bill of exchange, within the meaning of the Bills of Exchange Act (Canada), drawn by the Canadian Borrower on any Canadian Lender, in substantially the form of Exhibit A-6, and which, except as otherwise provided herein, has not been completed or accepted by such Lender. "Drawing" means the simultaneous acceptance of Drafts and purchase of Bankers' Acceptances by the Canadian Lenders, in accordance with Section 2.04(a). "Drawing Fee" means, with respect to each Bankers' Acceptance, an amount equal to (a) the Applicable Percentage in effect on the date of the Drawing or renewal, as the case may be, of such Bankers' Acceptance multiplied by (b) the Face Amount of such Bankers' Acceptance, calculated on the basis of the term to maturity of such Bankers' Acceptance and a year of 365 days. "Drawing Purchase Price" means, with respect to each Bankers' Acceptance to be purchased and/or accepted by any Canadian Lender at any time, the amount (adjusted to the nearest whole cent or, if there is no nearest whole cent, the next higher whole cent) obtained by dividing (i) the aggregate Face Amount of such Bankers' Acceptance, by (ii) the sum of (A) one and (B) the product of (1) the BA Rate in effect at such time (expressed as a decimal fraction) multiplied by (2) a fraction the numerator of which is the number of days in the term to maturity of such Bankers' Acceptance and the denominator of which is 365 days. "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) and (g) non-recurring restructuring charges in an amount not to exceed US$30,000,000 in any Fiscal Year or US$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 any date on or before March 31, 1998 on which the conditions set forth in Article III applicable to the effectiveness of this Agreement have been fulfilled or waived. "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; provided, however, any such Eligible Assignee under the Italian Facility shall have entered into an Italian Lender Joinder Agreement; 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. "Equivalent" in (a) US Dollars of any Foreign Currency on any date means the equivalent in US Dollars of such Foreign Currency determined by using the quoted spot rate for an equivalent amount at which Citibank's principal office in London offers to exchange US Dollars for such Foreign Currency in London prior to 11:00 A.M. (London time) on such date as is required pursuant to the terms of this Agreement, (b) in any Foreign Currency of US Dollars means the equivalent in such Foreign Currency of US Dollars determined by using the quoted spot rate for an equivalent amount at which Citibank's principal office in London offers to exchange such Foreign Currency for US Dollars in London prior to 11:00 A.M. (London time) on such date as is required pursuant to the terms of this Agreement, (c) in US Dollars of Canadian Dollars, on any date of determination, the equivalent thereof determined by using the quoted spot rate at which Citibank's principal office in Toronto, Ontario offers to exchange US Dollars for Canadian Dollars in Toronto, Ontario at 11:00 a.m. (New York City time) on such date and (d) in Canadian Dollars of US Dollars on any date of determination, the equivalent thereof determined by using the quoted spot rate at which Citibank's principal office in New York City, New York offers to exchange Canadian Dollars for US Dollars in New York City, New York at 11:00 a.m. (New York City time) on such date. "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. "Eurocurrency Lending Office" means, with respect to any Lender Party, the office of such Lender Party specified as its "Eurocurrency 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. "Eurocurrency Rate" means, for any Interest Period for all Eurocurrency 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 US Dollars, Canadian Dollars or the applicable Foreign Currency, as the case may be, are offered by the principal office of Citibank in Milan, Italy, with respect to any such Eurocurrency Rate Advance which is an Italian Borrower Advance, and London, England, with respect to all other Eurocurrency Rate Advances, to prime banks in the primary interbank eurocurrency market in which such eurocurrency deposits are traded 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 Eurocurrency Rate Advance comprising part of such Borrowing to be outstanding during such Interest Period (or, if Citibank shall not have such a Eurocurrency Rate Advance, US$1,000,000) and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurocurrency Rate Reserve Percentage (if applicable) for such Interest Period. "Eurocurrency Rate Advance" means an Advance that bears interest as provided in Section 2.08(b)(ii). "Eurocurrency Rate Reserve Percentage" for any Interest Period for all Eurocurrency 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 Eurocurrency Rate Advances is determined) having a term equal to such Interest Period. "Events of Default" has the meaning specified in Section 6.01. "Existing Credit Agreement" means the credit agreement dated as of August 21, 1996 among the Crompton A Borrowers, Uniroyal, the Existing Lenders, Citicorp Securities, Inc., as arranger, the Agent and the Managing Agent, as amended and restated as of December 19, 1996, as further amended and restated as of July 25, 1997 and as further amended, supplemented or otherwise modified through the date hereof. "Existing Lenders" means the lenders parties to the Existing Credit Agreement. "Face Amount" means, with respect to any Bankers' Acceptance, the amount payable to the holder of such Bankers' Acceptance on its then existing Maturity Date. "Facility" means any of any Working Capital Facility, either Swing Line Facility or any 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 Currencies" means lawful currency of the United Kingdom of Great Britain and Northern Ireland, lawful currency of the Republic of France, the lawful currency of the Federal Republic of Germany, the lawful currency of Italy, the lawful currency of Japan, the lawful currency of the Kingdom of Belgium, the lawful currency of the Swiss Confederation, the lawful currency of the Netherlands and such other freely transferable currencies as agreed upon by the Required Lenders from time to time. "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), (c), (d) and (e), 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. "Guarantied Parties" means the Agent, the Lender Parties, the Hedge Banks and the Daylight Overdraft Bank. "Guaranties" means the Parent Guaranty, the Subsidiary Guaranty and any other guaranty delivered pursuant to Section 5.01(i). "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). "Initial Borrowers" means the Crompton A Borrowers, Uniroyal, those B-2 Borrowers listed on Schedule IV hereto, those Italian Borrowers listed on Schedule V hereto and the Canadian Borrower. "Initial Extension of Credit" means the earliest to occur of the initial Borrowing, the initial issuance of a Letter of Credit and the initial Drawing 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 Eurocurrency Rate Advance comprising part of the same Borrowing, the period commencing on the date of such Eurocurrency Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurocurrency 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 (i) 11:00 A.M. (New York City time) in the case of Eurocurrency Rate Advances under the Working Capital A Facility, the Working Capital B-1 Facility or the Canadian Facility and (ii) 11:00 A. M. (London time) in the case of Eurocurrency Rate Advances under the Working Capital B-2 Facility or the Italian Facility, in each case 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 Eurocurrency 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, Canadian Base Rate Advances and Canadian Prime Rate Advances, as the case may be, and of Eurocurrency 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 Eurocurrency 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. "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 the signature pages hereof 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, (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 the signature pages hereof 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 and (c) with respect to the Letter of Credit B-2 Facility, Citibank, N.A., London and each Eligible Assignee to which a Letter of Credit B-2 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). "Italian Borrower Advance" has the meaning specified in Section 2.01(d). "Italian Borrower Note" means a promissory note of any Italian Borrower payable to the order of any Italian Lender, in substantially the form of Exhibit A-3 hereto, evidencing the aggregate indebtedness of such Italian Borrower to such Lender resulting from the Italian Borrower Advances made by such Lender to the extent required to be issued pursuant to Section 2.19. "Italian Borrowers" has the meaning specified in the recital of parties to this Agreement. "Italian Borrowing" means a borrowing consisting of simultaneous Italian Borrower Advances of the same Type made by the Italian Lenders. "Italian Commitment" means, with respect to any Italian Lender at any time, the Dollar amount set forth opposite such Lender's name on the signature pages hereof under the caption "Italian 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 "Italian Commitment", as such Dollar amount may be reduced at or prior to such time pursuant to Section 2.06. "Italian Facility" means, at any time, the aggregate amount of the Italian Lenders' Italian Commitments at such time. "Italian Facility Overage" means, as determined on the first Business Day of each month, the lesser of (a) US$10,000,000 minus the B-2 Facility Overage at such time and (b) the excess, if any, of the aggregate principal US Dollar amount (or Equivalent in US Dollars, as applicable) of the Italian Borrower Advances at such time over an amount equal to 97% of the Italian Facility on such Business Day. "Italian Lender" means any Lender that has an Italian Commitment. "Italian Lender Joinder Agreement" means a joinder agreement entered into by an Italian Lender and an Eligible Assignee, and accepted by the Agent, in accordance with Section 8.07 and in substantially the form of Exhibit I hereto. "ITC" has the meaning specified in the recital of parties to this Agreement. "L/C Cash Collateral Account" means an interest- bearing cash collateral account to be established and maintained by the Agent, over which the Agent shall have sole dominion and control, upon terms as may be satisfactory to the Agent. "L/C Related Documents" has the meaning specified in Section 2.05(h)(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. "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 the signature pages hereof 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 2.06. "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) US$50,000,000, as such amount may be reduced at or prior to such time pursuant to Section 2.06. "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 the signature pages hereof 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 2.06. "Letter of Credit B-2 Commitment" means, with respect to any Issuing Bank at any time, such amount, if any, as may be agreed upon from time to time between an Issuing Bank and a B-2 Borrower or, if such Issuing Bank has entered into one or more Assignments and Acceptances with respect to any such amount, the amount 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-2 Commitment", as such amount may be reduced at or prior to such time pursuant to Section 2.06. "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) US$20,000,000, as such amount may be reduced at or prior to such time pursuant to Section 2.06. "Letter of Credit B-2 Facility" means, at any time, an amount equal to the lesser of (a) the aggregate amount of the Issuing Banks' Letter of Credit B-2 Commitments at such time and (b) US$30,000,000, as such amount may be reduced at or prior to such time pursuant to Section 2.06. "Letter of Credit Commitment" means a Letter of Credit A Commitment, a Letter of Credit B-1 Commitment or a Letter of Credit B-2 Commitment. "Letter of Credit Facility" means the Letter of Credit A Facility, the Letter of Credit B-1 Facility or the Letter of Credit B-2 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, if any, and any amendment, supplement or modification hereof or thereof and for all other purposes other than for purposes of the Guaranties, (i) this Agreement, (ii) the Notes, if any, (iii) the Guaranties, (iv) each Letter of Credit Agreement and (v) the Consents and (b) for purposes of the Guaranties, (i) this Agreement, (ii) the Notes, if any, (iii) the Guaranties, (iv) each Letter of Credit Agreement, (v) each Bank Hedge Agreement, (vi) the Daylight Overdraft Documents and (vii) the Consents, in each case as amended, supplemented or otherwise modified from time to time. "Loan Parties" means the Borrowers and the Guarantors. "Local Rate" means (a) with respect to any Working Capital B-2 Advance denominated in any Foreign Currency, the rate of interest from time to time publicly announced by Citibank in the jurisdiction of issuance of such Foreign Currency as its base rate (or its equivalent thereof) for loans denominated in such Foreign Currency at the principal lending office of Citibank in the jurisdiction of issuance of such Foreign Currency, (b) with respect to any Italian Borrower Advance, the rate of interest from time to time publicly announced by the principal office of Citibank in Milan, Italy as the base rate (or its equivalent thereof) for loans denominated in such Foreign Currency at the principal lending office of Citibank in the jurisdiction of issuance of such Foreign Currency and (c) with respect to any Canadian Borrower Advance denominated in Canadian Dollars, the Canadian Prime Rate. "Local Rate Advance" shall mean each Working Capital B-2 Advance, Italian Borrower Advance or Canadian Borrower Advance hereunder at such time as it is made and/or being maintained at a rate of interest based upon the Local Rate for the relevant Foreign Currency or Canadian Dollars, as the case may be. "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 (c) the ability of any Loan Party to perform its Obligations under any Loan 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 US$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 US$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. "Maturity Date" means, for each Bankers' Acceptance comprising part of the same Drawing, the date on which the Face Amount for such Bankers' Acceptance becomes due and payable in accordance with the provisions set forth below, which shall be a Business Day occurring one, two or three months or, if available to all Canadian Lenders purchasing Bankers' Acceptances in connection with the applicable Drawing, six months after the date on which such Bankers' Acceptance is purchased and/or accepted as part of any Drawing, as the Canadian Borrower may select upon notice received by the Agent not later than 10:00 a.m. (New York City time) on a Canadian Business Day at least three Canadian Business Days prior to the date on which such Bankers' Acceptance is to be accepted and purchased (whether as a new Drawing, by renewal or by Conversion); provided, however, that: (a) such Borrower may not select any Maturity Date for any Bankers' Acceptance that occurs after the then scheduled Termination Date; (b) the Maturity Date for all Bankers' Acceptances comprising part of the same Drawing shall occur on the same date; and (c) whenever the Maturity Date for any Bankers' Acceptance would otherwise occur on a day other than a Canadian Business Day, such Maturity Date shall be extended to occur on the next succeeding Canadian Business Day. "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, a Working Capital B-2 Note, an Italian Borrower Note or a Canadian Borrower Note, in each case to the extent required to be issued pursuant to Section 2.19. "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 Section 6.01(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 2.15(b). "Parent Guaranty" has the meaning specified in Section 3.01(f)(iii). "Payment Office" means with respect to any Working Capital B-2 Advance, Italian Borrower Advance or Canadian Borrower Advance, the office of Citibank set forth opposite the caption "Working Capital B-2 Advances", "Italian Borrower Advances" and "Canadian Borrower Advances", respectively, on Schedule VII, or such other office as shall be from time to time selected by the 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, provided that each Payment Office designated for Canadian Borrower Advances shall be located in Canada. "PBGC" means the Pension Benefit Guaranty Corporation or any successor agency or entity performing substantially the same functions. "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. "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, (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, (d) with respect to any Italian Lender at any time, the product of such amount times a fraction the numerator of which is the amount of such Lender's Italian Commitment at such time and the denominator of which is the Italian Facility and (e) with respect to any Canadian Lender at any time, the product of such amount times a fraction the numerator of which is the amount of such Lender's Canadian Commitment at such time and the denominator of which is the Canadian Facility. "Process Agent" has the meaning specified in Section 8.12(a). "Receivables Securitization" has the meaning specified in Section 5.02(d). "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. "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, Working Capital B-2 Commitments, Italian Commitments and Canadian Commitments at such time, or, if the Working Capital A Commitments, Working Capital B-1 Commitments, Working Capital B-2 Commitments, Italian Commitments and Canadian Commitments have been terminated, 51% of the sum of the aggregate outstanding Working Capital A Advances, Working Capital B-1 Advances, Working Capital B-2 Advances, Italian Advances and Canadian Borrower Advances and Face Amount of Bankers' Acceptances (in each case, based on the Equivalent in US Dollars at such time) 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, Working Capital B-2 Commitment, Italian Commitment and Canadian 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, Inc. "Seoul Guaranty" means the guaranty made by Uniroyal in favor of Citibank Seoul, which has issued bank guaranties of the obligations of Unikor Chemical Inc. (Korea), a joint venture 50% owned by Uniroyal, to certain banks organized and located in Korea. "Seoul Guaranty Amount" means a fluctuating dollar amount equal to the amount of Uniroyal's obligations under the Seoul Guaranty, not to exceed US$2,000,000 or such other amount (not to exceed, in any event, US$5,000,000) as agreed from time to time by Citibank, Uniroyal 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. "Standby Letter of Credit" means any Letter of Credit issued under any 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(g)(iv). "Surviving Debt" means the Debt identified on Schedule 4.01(o). "Swing Line A Advance" means an advance made by (a) the Swing Line Bank pursuant to Section 2.01(g) 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(g). "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(h) or (b) any Working Capital B-1 Lender pursuant to Section 2.02(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(h). "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 2.15(a). "Termination Date" means the earlier of September 30, 2003 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, the Italian Commitments, the Canadian Commitments and the Letter of Credit Commitments pursuant to Section 2.06 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 Eurocurrency Rate and, with respect to Canadian Borrower Advances, refers to the distinction among such Advances bearing interest at the Canadian Base Rate, such Advances bearing interest at the Canadian Prime Rate and such Advances bearing interest at the Eurocurrency Rate. "Uniroyal" has the meaning specified in the recital of parties to this Agreement. "Uniroyal B-1 Borrower" has the meaning specified in the recital of parties to this Agreement. "Uniroyal Corp." means Uniroyal Chemical Corporation, a Delaware corporation. "Uniroyal Corp. Senior Notes" means the 10-1/2% Senior Notes due 2002 in an aggregate principal amount of US$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 US$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 US$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(i). "Uniroyal Indentures" means the Indentures pursuant to which the Uniroyal Corp. Senior Notes, Uniroyal Corp. Senior Subordinated Notes, Uniroyal Corp. Subordinated Discount Notes and 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 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 (without duplication) of (i) the aggregate principal amount in US Dollars 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 but not in its capacity as an Issuing Bank or a Swing Line Bank) 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 in US Dollars 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 in US Dollars of all Swing Line Advances made under such Working Capital Facility by the Swing Line Bank pursuant to Section 2.01(g) or (h), as the case may be, and outstanding at such time, (D) in the case of the Working Capital B-1 Facility, the amount of the Working Capital B-1 Commitments then reserved pursuant to Section 2.01(j), (E) in the case of the Working Capital A Facility, the amount of the Working Capital A Commitments then reserved pursuant to Sections 2.01(k) and 2.01(l) and (F) in the case of the Canadian Facility, the aggregate Face Amount of all Bankers' Acceptances purchased and/or accepted by such Lender and outstanding at such time. "US Dollars" and the "US$" sign each means lawful money of the United States of America. "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 Dollar amount set forth opposite such Lender's name on the signature pages hereof 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 Section 8.07(d) as such Lender's "Working Capital A Commitment", as such Dollar amount may be reduced at or prior to such time pursuant to Section 2.06. "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 A 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 to the extent required to be issued pursuant to Section 2.19. "Working Capital Advance" means a Working Capital A Advance, a Working Capital B-1 Advance, a Working Capital B-2 Advance, an Italian Borrower Advance or a Canadian Borrower 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 Dollar amount set forth opposite such Lender's name on the signature pages hereof 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 Dollar amount may be reduced at or prior to such time pursuant to Section 2.06. "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 B-1 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 B- 1 Borrower to such Lender resulting from the Working Capital B-1 Advances made by such Lender to the extent required to be issued pursuant to Section 2.19. "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 Dollar amount set forth opposite such Lender's name on the signature pages hereof 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 Dollar amount may be reduced at or prior to such time pursuant to Section 2.06. "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 any B-2 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 such B-2 Borrower to such Lender resulting from the Working Capital B-2 Advances made by such Lender to the extent required to be issued pursuant to Section 2.19. "Working Capital Borrowing" means a Working Capital A Borrowing, a Working Capital B-1 Borrowing, a Working Capital B- 2 Borrowing, an Italian Borrowing or a Canadian Borrowing. "Working Capital Commitment" means a Working Capital A Commitment, a Working Capital B-1 Commitment, a Working Capital B-2 Commitment, an Italian Commitment or a Canadian Commitment. "Working Capital Facility" means the Working Capital A Facility, the Working Capital B-1 Facility, the Working Capital B-2 Facility, the Italian Facility or the Canadian Facility. "Working Capital Lender" means a Working Capital A Lender, a Working Capital B-1 Lender, a Working Capital B-2 Lender, an Italian Lender or a Canadian 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) ("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 A 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 US$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 A Borrower pursuant to Section 2.01(g), US$1,000,000) or an integral multiple of US$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. Each Working Capital A Advance shall be denominated in US Dollars. 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 A Borrowers may borrow under this Section 2.01(a), prepay pursuant to Section 2.07(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 B-1 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 US$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 B-1 Borrower pursuant to Section 2.01(h), US$1,000,000) or an integral multiple of US$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. Each Working Capital B-1 Advance shall be denominated in US Dollars. 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 B-1 Borrower may borrow under this Section 2.01(b), prepay pursuant to Section 2.07(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 any B-2 Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date in an amount (based in respect of any Working Capital B-2 Advance denominated in a Foreign Currency on the Equivalent in US Dollars on the Business Day such Advance is made) 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 US$1,000,000 (or the Equivalent thereof in any Foreign Currency) or an integral multiple of US$100,000 (or the Equivalent thereof in any Foreign Currency) 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, any B-2 Borrower may borrow under this Section 2.01(c), prepay pursuant to Section 2.07(a) and reborrow under this Section 2.01(c). (d) The Italian Borrower Advances. Each Italian Lender severally agrees, on the terms and conditions hereinafter set forth, to make advances (each an "Italian Borrower Advance") to any Italian Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date in an amount (based in respect of any Italian Borrower Advance denominated in a Foreign Currency on the Equivalent in US Dollars on the Business Day such Advance is made) for each such Advance not to exceed such Lender's Unused Working Capital Commitment under the Italian Facility at such time. Each Italian Borrowing shall be in an aggregate amount of US$1,000,000 (or the Equivalent thereof in any Foreign Currency) or an integral multiple of US$100,000 (or the Equivalent thereof in any Foreign Currency) in excess thereof and shall consist of Italian Borrower Advances made simultaneously by the Italian Lenders ratably according to their Italian Commitments. Within the limits of each Italian Lender's Unused Working Capital Commitment under the Italian Facility in effect from time to time, any Italian Borrower may borrow under this Section 2.01(d), prepay pursuant to Section 2.07(a) and reborrow under this Section 2.01(d). (e) Canadian Borrower Advances. Each Canadian Lender severally agrees, on the terms and conditions hereinafter set forth, to make advances (each a "Canadian Borrower Advance") in either US Dollars or Canadian Dollars to the Canadian Borrower, in each case, 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 (based in respect of any Canadian Borrower Advance denominated in Canadian Dollars, on the Equivalent in US Dollars on the Business Day such Advance is made) not to exceed such Lender's Unused Working Capital Commitment under the Canadian Facility at such time. Each Canadian Borrowing (other than a Canadian Borrowing the proceeds of which will be used solely to repay a Borrowing of Canadian Prime Rate Advances pursuant to Section 2.04(a) in connection with any Drawing) under this Section 2.01(e) shall be in an aggregate amount of US$5,000,000 (or the Equivalent thereof in Canadian Dollars), or an integral multiple of US$1,000,000 (or the Equivalent thereof in Canadian Dollars), in excess thereof and shall consist of Canadian Borrower Advances made simultaneously by the Canadian Lenders ratably according to their Canadian Commitments. Within the limits of each Canadian Lender's Unused Working Capital Commitment under the Canadian Facility in effect from time to time, the Canadian Borrower may borrow under this Section 2.01(e), prepay pursuant to Section 2.07(a) and reborrow under this Section 2.01(e). (f) Drawings. Each Canadian Lender severally agrees, on the terms and conditions hereinafter set forth, to accept Drafts (each Draft so accepted, a "Bankers' Acceptance") for the account of the Canadian Borrower, and to purchase such Bankers' Acceptances from time to time on any Business Day during the period from the date hereof until the Termination Date having a Face Amount (determined in the Equivalent thereof in US Dollars) for all such Bankers' Acceptances purchased by such Lender at the time of such Drawing not to exceed such Lender's Unused Working Capital Commitment under the Canadian Facility at such time. Each Drawing shall be comprised solely of Canadian Dollars, shall be in an aggregate Face Amount which, together with any Canadian Prime Rate Advances made in connection with such Drawing, equals CN$5,000,000 or an integral multiple of CN$1,000,000 in excess thereof and shall consist of the creation and purchase of Bankers' Acceptances at or about the same time by the Canadian Lenders ratably in accordance with their respective Canadian Commitments. Within the limits of each Canadian Lender's Unused Working Capital Commitment under the Canadian Facility in effect from time to time, amounts drawn by the Canadian Borrower under this Section 2.01(f) and repaid or prepaid from time to time may be redrawn by the Canadian Borrower under this Section 2.01(f). (g) The Swing Line A Advances. Any Crompton A 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 A 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 US$15,000,000 (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 US$500,000 or an integral multiple of US$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 A Borrowers may borrow under this Section 2.01(g), repay pursuant to Section 2.05(g) or prepay pursuant to Section 2.07(a) and reborrow under this Section 2.01(g). (h) The Swing Line B-1 Advances. The Uniroyal B-1 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 B-1 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 US$15,000,000 (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 US$500,000 or an integral multiple of US$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 B-1 Borrower may borrow under this Section 2.01(h), repay pursuant to Section 2.05(g) or prepay pursuant to Section 2.07(a) and reborrow under this Section 2.01(h). (i) Letters of Credit. Each Issuing Bank severally agrees, on the terms and conditions hereinafter set forth, to issue letters of credit (the "Letters of Credit") for the account of any Borrower under the Letter of Credit A Facility, Letter of Credit B-1 Facility or Letter of Credit B-2 Facility, as the case may be, 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 aggregate Unused Working Capital Commitments of the Working Capital A Lenders under the Working Capital A Facility at such time, (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 aggregate Unused Working Capital Commitments of the Working Capital B-1 Lenders under the Working Capital B-1 Facility at such time and (iv) in an Available Amount for each such Letter of Credit to be issued under the Letter of Credit B-2 Facility not to exceed the lesser of (x) the Letter of Credit B-2 Facility at such time and (y) the aggregate Unused Working Capital Commitments of the Working Capital B-2 Lenders under the Working Capital B-2 Facility at such time. Letters of Credit issued under the Letter of Credit A Facility shall be issued for the account of any Crompton A Borrower, Letters of Credit issued under the Letter of Credit B-1 Facility shall be issued for the account of the Uniroyal B-1 Borrower and Letters of Credit issued under the Letter of Credit B-2 Facility shall be issued for the account of any B-2 Borrower. No Letters of Credit shall be issued under the Italian Facility or the Canadian Facility. 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, the Letter of Credit B-1 Facility or the Letter of Credit B-2 Facility, as the case may be, and subject to the limits referred to above, any Crompton A Borrower, the Uniroyal B-1 Borrower, any B-2 Borrower, as the case may be, may request the issuance of Letters of Credit under this Section 2.01(i), 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(i). (j) 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 Uniroyal 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(j) shall equal the Seoul Guaranty Amount from time to time. (k) Set Aside of Working Capital A Commitments in Respect of B-2 Facility Overage. Each Working Capital A Lender's Pro Rata Share of an aggregate amount of Working Capital A Commitments equal to the B-2 Facility Overage shall be reserved against the Working Capital A Commitment. The aggregate amount of Working Capital A Commitments reserved under this Section 2.01(k) shall equal the B-2 Facility Overage from time to time. (l) Set Aside of Working Capital A Commitments in Respect of Italian Facility Overage. Each Working Capital A Lender's Pro Rata Share of an aggregate amount of Working Capital A Commitments equal to the Italian Facility Overage shall be reserved against the Working Capital A Commitment. The aggregate amount of Working Capital A Commitments reserved under this Section 2.01(l) shall equal the Italian Facility Overage from time to time. (m) Set Aside of Working Capital A Commitments in Respect of Canadian Facility Overage. Each Working Capital A Lender's Pro Rata Share of an aggregate amount of Working Capital A Commitments equal to the Canadian Facility Overage shall be reserved against the Working Capital A Commitment. The aggregate amount of Working Capital A Commitments reserved under this Section 2.01(m) shall equal the Canadian Facility Overage 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 (v) 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurocurrency Rate Advances under the Working Capital A Facility or the Working Capital B-1 Facility, (w) 11:00 A.M. (London time) on the third Business Day prior to the date of the proposed Borrowing in the case a Borrowing consisting of Eurocurrency Rate Advances under the Working Capital B-2 Facility or the Italian Facility, (x) 11:00 A.M. (New York City time) on the third Canadian Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurocurrency Rate Advances under the Canadian Facility, (y) 11:00 A.M. (New York City time) on the first Canadian Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Canadian Base Rate Advances or Canadian Prime Rate Advances or (z) 11:00 A.M. (New York City time) on 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(g) or (h), 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-1 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 Eurocurrency Rate Advances, initial Interest Period and currency for each such Advance. Each Appropriate Lender shall, (x) before 11:00 A.M. (New York City time), in the case of a Borrowing under the Working Capital A Facility, Working Capital B-1 Facility or Canadian Facility and (y) before 11:00 (London time), in the case of a Borrowing under the Working Capital B-2 Facility or Italian Facility, in each case, on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Agent at the applicable 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. If for any reason set forth in Section 2.13, any Lender is unable to make, maintain or fund any Eurocurrency Rate Advance, such Lender shall make available for the account of its Applicable Lending Office to the Agent at the applicable 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; provided, however, such Lender shall make such Eurocurrency Rate Advance available in US Dollars or such other currency as such Lender and the applicable Borrower may agree upon. 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 or at the applicable Payment Office, as the case may be. (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 Eurocurrency Rate Advances for any Borrowing if the aggregate amount of such Borrowing is less than (A) US$5,000,000 in the case of any Working Capital A Advance or any Working Capital B-1 Advance and (B) US$1,000,000 (or the Equivalent thereof in any Foreign Currency or Canadian Dollars) in the case of any Working Capital B-2 Advance, any Italian Borrower Advance or any Canadian Borrower Advance, or if the obligation of the Appropriate Lenders to make Eurocurrency Rate Advances shall then be suspended pursuant to Section 2.12 or Section 2.13 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 Eurocurrency 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 2.08 to Advances comprising such Borrowing and (ii) in the case of such Lender, the higher of (A) the Federal Funds Rate and (b) the cost of funds incurred by the Agent in respect of such amount. 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) Uniroyal 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 Uniroyal, 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. Uniroyal 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 Uniroyal 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 Uniroyal for the purposes specified in the proviso to the first sentence of Section 2.17 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(j); 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 (i) 11:00 A.M. (New York City time) in the case of any proposed issuance under the Letter of Credit A Facility or Letter of Credit B-1 Facility and (ii) 11:00 A. M. (London time) in the case of any proposed issuance under the Letter of Credit B-2 Facility, in each case on the second Business Day prior to the date of the proposed issuance of such Letter of Credit, by any Crompton A Borrower to any Issuing Bank under the Letter of Credit A Facility, by the Uniroyal B-1 Borrower to any Issuing Bank under the Letter of Credit B-1 Facility or by any B-2 Borrower to any Issuing Bank under the Letter of Credit B-2 Facility, which shall give to the Agent and each Appropriate Lender prompt notice thereof by telex or telecopier. No Letter of Credit shall be issued hereunder for the account of any Italian Borrower. 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 and currency 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, Working Capital B-1 Commitments or Working Capital B-2 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 applicable 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. SECTION 2.04. Drawings of Bankers' Acceptances. (a) Request for Drawing. Each Drawing shall be made on notice, given not later than 12:00 noon (New York City time) on a Canadian Business Day at least two Canadian Business Days prior to the date of the proposed Drawing, by the Canadian Borrower to the Agent, which shall give each Canadian Lender prompt notice thereof by telex or telecopier. Each notice of a Drawing (a "Notice of Drawing") shall be in writing (including by telex or telecopier), in substantially the form of Exhibit B-2 hereto, and shall be confirmed by telephone immediately by the Canadian Borrower, specifying therein the requested (i) date of such Drawing (which shall be a Business Day), (ii) aggregate Face Amount of such Drawing and (iii) initial Maturity Date for each Bankers' Acceptance comprising part of such Drawing; provided, however, that, if the Agent determines in good faith (which determination shall be conclusive and binding upon the Canadian Borrower) that the Drafts to be accepted and purchased as part of any Drawing cannot, due solely to the requested aggregate Face Amount thereof, be accepted and/or purchased ratably by the Canadian Lenders in accordance with Section 2.01(f), then the aggregate Face Amount of such Drawing (or the Face Amount of Bankers' Acceptances to be created by any Canadian Lender) shall be reduced to such lesser amount as the Agent determines will permit such Drafts comprising part of such Drawing to be so accepted and purchased and, unless the Canadian Borrower shall have given written notice to the contrary to the Agent, each Canadian Lender shall fund the difference between such Lender's ratable portion of the original aggregate Face Amount of such Drawing and the Face Amount of the Bankers' Acceptances to be created by such Lender after giving effect to such reduction in the form of a Canadian Prime Rate Advance, which shall be deemed for all purposes hereof to be a Canadian Borrower Advance made pursuant to Section 2.01(f). The Agent agrees that it will, as promptly as practicable, notify the Canadian Borrower of the unavailability of Bankers' Acceptances and, if applicable, of the date and the amount of each Canadian Prime Rate Advance to be made or actually made in accordance with the immediately preceding sentence. Each Draft in connection with any requested Drawing (A) shall be in a minimum amount of CN$100,000 or an integral multiple of CN$100,000 in excess thereof, and (B) shall be dated the date of the proposed Drawing. Each Canadian Lender shall, before 1:00 p.m. (Toronto time) on the date of each Drawing, complete one or more Drafts in accordance with the related Notice of Drawing, accept such Drafts and purchase the Bankers' Acceptances created thereby for the Drawing Purchase Price and shall, before 1:00 p.m. (Toronto time) on such date, make available for the account of its Applicable Lending Office to the Agent at its appropriate Agent's Account, in same day funds, the Drawing Purchase Price payable by such Lender for such Drawing less the Drawing Fee payable to such Lender with respect thereto under Section 2.09(d). Upon the fulfillment of the applicable conditions set forth in Article III, the Agent will make the funds it has received from the Canadian Lenders available to the Canadian Borrower by crediting the relevant Borrower's Account or at the applicable Payment Office, as the case may be. (b) Limitations on Drawings. Anything in Section 2.04(a) to the contrary notwithstanding, the Canadian Borrower may not select a Drawing if the obligation of the Canadian Lenders to purchase and accept Bankers' Acceptances shall then be suspended pursuant to Section 2.04(d) or 2.13. (c) Binding Effect of Notices of Drawing. Each Notice of Drawing shall be irrevocable and binding on the Canadian Borrower. In the case of any proposed Drawing, the Canadian Borrower shall indemnify each Canadian 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 the Notice of Drawing for such Drawing 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 Drawing Purchase Price to be paid by such Lender as part of such Drawing when, as a result of such failure, such Drawing is not made on such date. (d) Circumstances Making Bankers' Acceptances Unavailable. (i) If, with respect to any proposed Drawing, the Agent determines in good faith that circumstances affecting the money markets at the time any related Notice of Drawing is delivered or is outstanding will result in no market for the Bankers' Acceptances to be created in connection with such Drawing or an insufficient demand for such Bankers' Acceptances to allow the Lenders creating such Bankers' Acceptances to sell or trade the Bankers' Acceptances to be created and purchased or discounted by them hereunder in connection with such Drawing, then, upon notice to the Canadian Borrower and the Canadian Lenders thereof, (A) the Notice of Drawing with respect to such proposed Drawing shall be cancelled and the Drawing requested therein shall not be made and (B) the right of the Canadian Borrower to request a Drawing shall be suspended until the Agent shall notify such Borrower that the circumstances causing such suspension no longer exist. In the case of any such cancellation of a Notice of Drawing, unless the Canadian Borrower shall give written notice to the contrary to the Agent, the cancellation of any such Notice of Drawing shall be deemed to be the giving by the Canadian Borrower of a Notice of Borrowing for Canadian Borrower Advances consisting of Canadian Prime Rate Advances in an aggregate principal amount equal to the aggregate Face Amount of such proposed Drawing and the Canadian Lenders shall, subject to the terms and conditions hereof applicable to the making of Canadian Borrower Advances, make such Advances available to the Canadian Borrower, if practicable, on the same Business Day, and otherwise on the next Business Day. The Agent agrees that it will, as promptly as practicable, notify the Canadian Borrower of the unavailability of Bankers' Acceptances and, if applicable, of the date and the amount of each Canadian Prime Rate Advance to be made or actually made in accordance with the immediately preceding sentence. (ii) Upon the occurrence and during the continuance of any Default, the obligation of the Canadian Lenders to purchase and/or accept Bankers' Acceptances shall be suspended. (e) Assumptions of the Agent. Unless the Agent shall have received notice from a Canadian Lender prior to the date of any Drawing that such Lender will not make available to it such Lender's ratable share of such Drawing in accordance with Section 2.04(a), the Agent may assume that such Lender has made such ratable share available to it on the date of such Drawing in accordance with Section 2.04(a) and the Agent may, in reliance upon such assumption, make available to the Canadian Borrower on such date a corresponding amount. If and to the extent that any such Lender shall not have so made such ratable share available to the Agent, such Lender and the Canadian Borrower severally agree to repay or pay to the Agent forthwith on demand such corresponding amount, together with 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 Canadian Borrower, a rate per annum equal to the BA Rate used in calculating the Drawing Purchase Price with respect to such Drawing, and (ii) in the case of such Lender, the Canadian Interbank Rate. If such Lender shall pay to the Agent such corresponding amount, such amount so paid shall constitute such Lender's Bankers' Acceptance as part of such Drawing for all purposes under this Agreement. (f) Presigned Draft Forms. To enable the Canadian Lenders to create Bankers' Acceptances in accordance with Section 2.01(f) and this Section 2.04, (i) the Canadian Borrower shall supply each Canadian Lender, upon the Canadian Borrower's execution of this Agreement, with such number of Drafts provided to the Canadian Borrower by the Agent as the Agent may from time to time reasonably request, duly endorsed and executed on behalf of the Canadian Borrower by any one or more of its duly authorized officers. Each Canadian Lender shall exercise such care in the custody and safekeeping of any Drafts in its possession from time to time as it would exercise in the custody and safekeeping of similar property owned by it. The signatures of officers of the Canadian Borrower on Drafts may be mechanically reproduced in facsimile and Bankers' Acceptances bearing such facsimile signatures shall be binding upon the Canadian Borrower as if they had been manually signed by such officers. Notwithstanding that any of the individuals whose manual or facsimile signature appears on any Draft as one of such officers may no longer hold office at the date of such draft or at the date of its acceptance by a Lender hereunder or at any time thereafter, any Draft or Bankers' Acceptance so signed shall be valid and binding upon, and enforceable against, the Canadian Borrower. (g) Distribution of Bankers' Acceptances. Bankers' Acceptances purchased by a Canadian Lender in accordance with the terms of Section 2.01(f) and this Section 2.04 may, in such Lender's sole discretion, be held by such Lender for its own account until the applicable Maturity Date or sold, rediscounted or otherwise disposed of by it at any time prior thereto in any relevant market therefor. (h) Failure to Fund in Respect of Drawings. The failure of any Canadian Lender to fund the Drawing Purchase Price to be funded by it as part of any Drawing shall not relieve any other Canadian Lender of its obligation hereunder to fund its Drawing Purchase Price on the date of such Drawing, but no Canadian Lender shall be responsible for the failure of any other Canadian Lender to fund the Drawing Purchase Price to be funded by such other Canadian Lender on the date of any Drawing. SECTION 2.05. Repayment of Advances. (a) Working Capital A Advances. Each Crompton A 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 A Borrower and then outstanding. (b) Working Capital B-1 Advances. The Uniroyal B- 1 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. Each B-2 Borrower shall repay to the Agent for the ratable account of the Working Capital B-2 Lenders on the Termination Date the aggregate principal amount of the Working Capital B-2 Advances made to such B-2 Borrower and then outstanding, provided that such B-2 Borrower shall repay such amount in the currency in which such Working Capital B-2 Advance was made. (d) Italian Borrower Advances. Each Italian Borrower shall repay to the Agent for the ratable account of the Italian Lenders on the Termination Date the aggregate principal amount of the Italian Borrower Advances made to such Italian Borrower and then outstanding, provided that such Italian Borrower shall repay such amount in the currency in which such Italian Borrower Advance was made. (e) Canadian Borrower Advances. The Canadian Borrower shall repay to the Agent for the ratable account of the Canadian Lenders on the Termination Date the aggregate principal amount of the Canadian Borrower Advances then outstanding; provided that the Canadian Borrower shall repay such amount in the currency in which such Canadian Borrower Advance was made. (f) Bankers' Acceptances. The Canadian Borrower shall, subject to Sections 2.11(a) and 2.11(b), pay to the Agent for the ratable account of the Canadian Lenders on the Maturity Date of any Bankers' Acceptances an amount equal to the aggregate Face Amount of all such Bankers' Acceptances maturing on such date. Any payment by the Canadian Borrower of any Bankers' Acceptances in accordance with this Section 2.05(f) shall, to the extent of such payment, satisfy the obligations of the Canadian Borrower under the Bankers' Acceptances to which it relates and, in the case of a Bankers' Acceptance, the Lender that has accepted such Bankers' Acceptance shall, to the extent of such payment to such Lender, thereafter be solely responsible for the payment thereof. (g) 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 to such Borrower 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. (h) Letter of Credit Advances. (i) Each Borrower shall repay in like funds advanced to the Agent for the account of each Issuing Bank and each other Working Capital Lender that has made a Letter of Credit Advance to such Borrower on the earlier of the second Business Day following the date on which the related 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 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 2.06. 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 any Letter of Credit Facility, any 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 US$10,000,000 or an integral multiple of US$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 Letter of Credit A Facility, Letter of Credit B-1 Facility or Letter of Credit B-2 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, Working Capital B-1 Facility or Working Capital B-2 Facility, as the case may be, by the amount, if any, by which the amount of the Letter of Credit A Facility, Letter of Credit B-1 Facility or Letter of Credit B-2 Facility, as the case may be, exceeds the Working Capital A Facility, Working Capital B-1 Facility or Working Capital B-2 Facility, as the case may be, after giving effect to such reduction of such Working Capital Facility. (ii) 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. (iii) 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(d), 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 2.07. 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 Eurocurrency 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 (A) with respect to any Working Capital A Advance or any Working Capital B-1 Advance, in an aggregate principal amount of US$5,000,000 or an integral multiple of US$1,000,000 in excess thereof or (B) with respect to any Working Capital B-2 Advance or any Italian Borrower Advance, in an aggregate principal amount of US$1,000,000 (or the Dollar Equivalent in the Foreign Currency of such Advance) or an integral multiple of US$100,000 (or the Dollar Equivalent in the Foreign Currency of such Advance), in each case in US Dollars or the applicable Foreign Currency of such Advance, determined on the day such notice is given and (y) if any prepayment of a Eurocurrency 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 A 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 B-1 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) Notwithstanding anything herein to the contrary, each B-2 Borrower shall, on the first Business Day of each month, prepay such B-2 Borrower's Borrower's Share of any amount set forth in clause (b) of the definition "B-2 Facility Overage" that exceeds the lesser of (A) US$10,000,000 minus the Italian Facility Overage at such time and (B) the aggregate Unused Working Capital Commitments of the Working Capital A Lenders at such time. (iv) Notwithstanding anything herein to the contrary, each Italian Borrower shall, on the first Business Day of each month, prepay such Italian Borrower's Borrower's Share of any amount set forth in clause (b) of the definition "Italian Facility Overage" that exceeds the lesser of (A) US$10,000,000 minus the B-2 Facility Overage at such time and (B) the aggregate Unused Working Capital Commitments of the Working Capital A Lenders at such time. (v) The Canadian Borrower shall, on each Business Day, prepay an aggregate principal amount of the Canadian Borrower Advances comprising part of the same Borrowings equal to the amount by which (A) the sum of (x) the aggregate principal amount of the Canadian Borrower Advances and (y) the aggregate Face Amount of Bankers' Acceptances then outstanding exceeds (B) the Canadian Facility on such Business Day. (vi) Notwithstanding anything herein to the contrary, the Canadian Borrower shall, on the first Business Day of each month, prepay any amount set forth in clause (b) of the definition "Canadian Facility Overage" that exceeds the lesser of (A) US$10,000,000 and (B) the aggregate Unused Working Capital Commitments of the Working Capital A Lenders at such time. (vii) The Crompton A 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. (viii) The Uniroyal B-1 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. (ix) The Canadian Borrower shall, on each Business Day, pay to the Agent for deposit in the Canadian Cash Collateral Account an amount sufficient to cause the aggregate amount on deposit in such Account to equal the amount by which the aggregate Face Amount of all Bankers' Acceptances then outstanding under the Canadian Facility exceeds the Canadian Facility on such Business Day. (x) Prepayments of the Working Capital A Facility, Working Capital B-1 Facility, Working Capital B-2 Facility, Italian Facility or Canadian Facility made pursuant to clause (i), (ii), (iii), (iv), (v) or (vi) 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 or, in the case of the Canadian Facility, deposited in the Canadian Cash Collateral Account to cash collateralize 100% of the Face Amount of all Bankers' Acceptances then outstanding. (xi) 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 2.08. Interest. (a) Availability of Types of Advances. Subject in each case to the provisions of Sections 2.10 and 2.13, Canadian Borrower Advances in US Dollars may be Canadian Base Rate Advances or Eurocurrency Rate Advances only and Canadian Borrower Advances in Canadian Dollars may be Canadian Prime Rate Advances only. (b) 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) Eurocurrency Rate Advances. During such periods as such Advance is a Eurocurrency Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of (A) the Eurocurrency Rate for such Interest Period for such Advance plus (B) the Applicable Margin in effect from time to time, payable in US Dollars or the applicable Foreign Currency, as the case may be, 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 Eurocurrency Rate Advance shall be Converted or paid in full. (iii) Local Rate Advances. During such periods as such Advance is a Local Rate Advance, a rate per annum equal at all times to the sum of (A) the Local Rate in effect from time to time plus (B) the Applicable Margin for Local Rate Advances 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 Local Rate Advance shall be Converted or paid in full. (iv) Canadian Base Rate Advances. During such periods as such Advance is a Canadian Base Rate Advance, a rate per annum equal at all times to the sum of (A) the Canadian Base Rate in effect from time to time plus (B) the Applicable Margin for Canadian Base Rate Advances 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 Canadian Base Rate Advance shall be Converted or paid in full. (c) 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 US Dollars or the applicable Foreign Currency, as the case may be, in arrears on the dates referred to in clause (b)(i) through (b)(iv) 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 (b)(i) through (b)(iv) 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 US Dollars or the applicable Foreign Currency, as the case may be, 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 (b)(i) through (b)(iv) above, and, in all other cases, on Base Rate Advances pursuant to clause (b)(i) above. (d) 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). (e) Interest Rate Determination. (i) If the Reuters Screen CDOR Page is not available for the timely determination of the BA Rate, each Canadian Reference Lender agrees to furnish to the Agent timely information for the purpose of determining the BA Rate. If any one or more of such Canadian Reference Lenders shall not furnish such timely information to the Agent for the purpose of determining any such interest rate, the Agent shall determine such interest rate on the basis of timely information furnished by the remaining Canadian Reference Lenders. (ii) If the Reuters Screen CDOR Page is not available for the timely determination of the BA Rate, and fewer than two Canadian Reference Lenders are able to furnish timely information to the Agent for determining the BA Rate for any Bankers' Acceptances, (A) the Agent shall forthwith notify the Canadian Borrower and the Canadian Lenders that the interest rate cannot be determined for such Bankers' Acceptances, and (B) the obligation of the Canadian Lenders to make, or to renew, Bankers' Acceptances shall be suspended until the Agent shall notify the Canadian Borrower and the Canadian Lenders that the circumstances causing such suspension no longer exist. (f) Interest Act (Canada). Whenever a rate of interest hereunder is calculated on the basis of a year (the "deemed year") which contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest shall be expressed as a yearly rate for purposes of the Interest Act (Canada) by multiplying such rate of interest by the actual number of days in the calendar year of calculation and dividing it by the number of days in the deemed year. (g) Nominal Rates; No Deemed Reinvestment. The principle of deemed reinvestment of interest shall not apply to any interest calculation under this Agreement; all interest payments to be made hereunder shall be paid without allowance or deduction for reinvestment or otherwise, before and after maturity, default and judgment. The rates of interest specified in this Agreement are intended to be nominal rates and not effective rates. Interest calculated hereunder shall be calculated using the nominal rate method and not the effective rate method of calculation. (h) Interest Paid by the Canadian Borrower. Notwithstanding any provision of this Agreement, in no event shall the aggregate "interest" (as defined in Section 347 of the Criminal Code (Canada)) payable by the Canadian Borrower under this Agreement exceed the effective annual rate of interest on the "credit advanced" (as defined in the Section) under this Agreement lawfully permitted by that Section and, if any payment, collection or demand pursuant to this Agreement in respect of "interest" (as defined in that Section) is determined to be contrary to the provisions of that Section, such payment, collection or demand shall be deemed to have been made by mutual mistake of the Canadian Borrower and the Canadian Lenders and the amount of such payment or collection shall be refunded to the Canadian Borrower. For the purposes of this Agreement, the effective annual rate of interest shall be determined in accordance with generally accepted actuarial practices and principles over the relevant term and, in the event of a dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by the Canadian Lenders will be prima facie evidence of such rate. SECTION 2.09. 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 US Dollars in arrears quarterly on the first Business Day of each January, April, July and October, commencing October 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 clauses (b)(ii)(D) and (b)(ii)(E) 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; 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; and provided further that, notwithstanding anything herein to the contrary and pursuant to Section 8.16, each B-2 Borrower, each Italian Borrower and the Canadian Borrower shall only be responsible for such B-2 Borrower's, such Italian Borrower's or the Canadian Borrower's Borrower's Share of such Commitment Fee. (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 each Working Capital B-1 Lender and each Working Capital B-2 Lender a commission, payable in US Dollars 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, Working Capital B-1 Facility and Working Capital B-2 Facility, respectively, and outstanding from time to time at the rate per annum equal to the Applicable Percentage in effect from time to time; provided that, notwithstanding anything herein to the contrary and pursuant to Section 8.16, each B-2 Borrower shall only be responsible for such B-2 Borrower's Borrower's Share of such Letter of Credit Fees. (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; provided that, notwithstanding anything herein to the contrary and pursuant to Section 8.16, each B-2 Borrower, each Italian Borrower and the Canadian Borrower shall only be responsible for such B-2 Borrower's, such Italian Borrower's or the Canadian Borrower's Borrower's Share of such Agent's Fees. (d) Drawing Fees. The Canadian Borrower shall, on the date of each Drawing and on the date of each renewal of any outstanding Bankers' Acceptances, pay to the Agent, in Canadian Dollars, for the ratable account of the Canadian Lenders accepting Drafts and purchasing Bankers' Acceptances, the Drawing Fee with respect to such Bankers' Acceptances. The Canadian Borrower irrevocably authorizes each such Lender to deduct the Drawing Fee payable with respect to each Bankers' Acceptance of such Lender from the Drawing Purchase Price payable by such Lender in respect of such Bankers' Acceptance in accordance with Section 2.04 and to apply such amount so withheld to the payment of such Drawing Fee for the account of the Canadian Borrower and, to the extent such Drawing Fee is so withheld and legally permitted to be so applied, the Canadian Borrower's obligations under the preceding sentence in respect of such Drawing Fee shall be satisfied. SECTION 2.10. Conversion of Advances. (a) Optional. Any Borrower may on any Business Day, upon notice given to the Agent not later than (i) 11:00 A.M. (New York City time) in the case of Base Rate Advances or Eurocurrency Rate Advances under the Working Capital A Facility, the Working Capital B-1 Facility or the Canadian Facility and (ii) 11:00 A. M. (London time) in the case of Eurocurrency Rate Advances under the Working Capital B-2 Facility or the Italian Facility, on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.08 and 2.13, 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 Eurocurrency Rate Advances into Base Rate Advances or Canadian Base Rate Advances, as the case may be, shall be made only on the last day of an Interest Period for such Eurocurrency Rate Advances, any Conversion of Base Rate Advances or Canadian Base Rate Advances, as the case may be, into Eurocurrency 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 Eurocurrency 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 Eurocurrency Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than US$5,000,000, or US$1,000,000 (or the Equivalent thereof) in the case of Working Capital B-2 Advances, Italian Borrower Advances and Canadian Borrower Advances, such Advances shall automatically (A) if such Eurocurrency Rate Advances are denominated in US Dollars, be Converted into Base Rate Advances and (B) if such Eurocurrency Rate Advances are denominated in any Foreign Currency, be Converted into Local Rate Advances. (ii) If any Borrower shall fail to select the duration of any Interest Period for any Eurocurrency 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 Eurocurrency Rate Advance will automatically, on the last day of the then existing Interest Period therefor, (A) if such Eurocurrency Rate Advances are denominated in US Dollars, be Converted into Base Rate Advances and (B) if such Eurocurrency Rate Advances are denominated in any Foreign Currency, be Converted into a Local Rate Advance. (iii) Upon the occurrence and during the continuance of any Event of Default, (x) each Eurocurrency Rate Advance will automatically, on the last day of the then existing Interest Period therefor, (A) if such Eurocurrency Rate Advances are denominated in US Dollars, be Converted into Base Rate Advances and (B) if such Eurocurrency Rate Advances are denominated in any Foreign Currency, be redenominated into an Equivalent amount of US Dollars and be Converted into a Base Rate Advance and (y) the obligation of the Lenders to make, or to Convert Advances into, Eurocurrency Rate Advances and the obligation of the Canadian Lenders to create or renew Bankers' Acceptances shall be suspended. SECTION 2.11. Renewal and Conversion of Bankers' Acceptances. (a) Optional Renewal. The Canadian Borrower may on any Business Day, upon notice given to the Agent not later than 12:00 noon (New York City time) on a Business Day at least two Canadian Business Days prior to the date of the proposed renewal and subject to the provisions of Section 2.13, renew all or any portion of the Bankers' Acceptances comprising part of the same Drawing; provided, however, that: (i) any renewal of Bankers' Acceptances shall be made only on the then existing Maturity Date for such Bankers' Acceptances; (ii) each renewal of Bankers' Acceptances comprising part of the same Drawing shall be made ratably among the Lenders holding such Bankers' Acceptances in accordance with the respective amount of such Bankers' Acceptances so held; and (iii) no renewal of any Bankers' Acceptance may be made at any time that a Default has occurred and is continuing. Each such notice of renewal shall, within the restrictions set forth above, specify (A) the date of such renewal (which shall be the then existing Maturity Date of such Bankers' Acceptances and shall be a Canadian Business Day), (B) the Bankers' Acceptances to be renewed, (C) if less than all of the Bankers' Acceptances comprising part of any Drawing are to be renewed, the aggregate Face Amount for such renewal and (D) the term to maturity of the renewed Bankers' Acceptances (which shall comply with the definition of "Maturity Date" in Section 1.01); provided, however, that, if the Agent determines in good faith (which determination shall be conclusive and binding upon the Canadian Borrower) that the Bankers' Acceptances cannot, due solely to the requested aggregate Face Amount thereof, be renewed ratably by the Canadian Lenders, the aggregate Face Amount of such renewal (or the Face Amount of Bankers' Acceptances to be created by any Canadian Lender) shall be reduced to such lesser amount as the Agent determines will permit such renewal to be so made and each Canadian Lender shall fund the difference between such Lender's ratable portion of the original aggregate Face Amount of such renewal and the Face Amount of the Bankers' Acceptances to be created by such Lender after giving effect to such reduction in the form of a Canadian Prime Rate Advance, which shall be deemed for all purposes hereof to be a Canadian Borrower Advance made pursuant to Section 2.01(e)(ii). Each notice of renewal under this Section 2.11 shall be irrevocable and binding on the Canadian Borrower. Upon any renewal of Bankers' Acceptances comprising part of any Drawing in accordance with this Section 2.11(a), the Lenders holding the Bankers' Acceptances to be renewed shall exchange such maturing Bankers' Acceptances for new Bankers' Acceptances containing the terms set forth in the applicable notice of renewal, and the Drawing Purchase Price payable for each such renewal shall be applied, together with other funds, if necessary, available to the Canadian Borrower, to reimburse the Bankers' Acceptances otherwise maturing on such date in accordance with Section 2.05(f). The Canadian Borrower hereby irrevocably authorizes and directs each Canadian Lender to apply the proceeds of each renewed Bankers' Acceptance owing to it to the reimbursement, in accordance with this Section 2.11(a), of the Bankers' Acceptances owing to such Lender and maturing on such date. (b) Optional Conversion. The Canadian Borrower may on any Business Day, upon notice given to the Agent not later than 12:00 noon (New York City time) on a Business Day at least two Canadian Business Days prior to the date of the proposed Conversion and subject to the provisions of Section 2.13, Convert all or any portion of the Bankers' Acceptances comprising part of the same Drawing to a Canadian Borrowing comprised of Canadian Prime Rate Advances; provided, however, that: (i) any Conversion of Bankers' Acceptances shall be made only on the then existing Maturity Date for such Bankers' Acceptances; (ii) each Conversion of Bankers' Acceptances comprising part of the same Drawing shall be made ratably among the Lenders holding such Bankers' Acceptances in accordance with the respective amounts of such Bankers' Acceptances so held; and (iii) no Conversion may be made if (A) the amount of the Advance to be made by any Canadian Lender in connection with such Conversion would exceed such Lender's Unused Working Capital Commitment under the Canadian Facility in effect at the time of such Conversion, or (B) after giving effect to such Conversion, the sum of the aggregate principal amount of outstanding Canadian Borrower Advances plus the aggregate Face Amount of Bankers' Acceptances then outstanding would exceed the Canadian Facility. Each such notice of Conversion shall, within the restrictions set forth above, specify (A) the date of such Conversion (which shall be the then existing Maturity Date of such Bankers' Acceptances and shall be a Business Day), (B) the Bankers' Acceptances to be Converted and (C) if less than all of the Bankers' Acceptances comprising part of any Drawing are to be Converted, the aggregate Face Amount of such Conversion. Each notice of Conversion under this Section 2.11 shall be irrevocable and binding on the Canadian Borrower. Upon any Conversion of Bankers' Acceptances comprising part of the same Drawing in accordance with this Section 2.11(b), the obligation of the Canadian Borrower to reimburse the Lenders under Section 2.14 in respect of the Bankers' Acceptances otherwise maturing on such date shall, to the extent of such conversion, be Converted to an obligation to reimburse the Lenders making the Canadian Borrower Advances made in respect of such maturing Bankers' Acceptances on such date ratably in accordance with the amount of the Advances held by such Lender at the time of reimbursement. The Canadian Borrower hereby irrevocably authorizes and directs each Canadian Lender to apply the net proceeds of each Canadian Prime Rate Advance made by such Lender pursuant to this Section 2.11(b) to the reimbursement of the Bankers' Acceptances owing to such Lender and maturing on such date. (c) Mandatory Conversion. If any Default shall have occurred and be continuing or if the Canadian Borrower shall fail (i) to deliver a properly completed notice of renewal under Section 2.11(b) or a properly completed notice of Conversion under Section 2.11(b) indicating its intention to renew or to Convert any maturing Bankers' Acceptances or (ii) to reimburse the Canadian Lenders for any Bankers' Acceptances comprising part of the same Drawing pursuant to Section 2.05, the Agent will forthwith so notify the Canadian Borrower and the Canadian Lenders, whereupon each such Bankers' Acceptance will automatically, on the then existing Maturity Date of such Bankers' Acceptances, Convert into a Canadian Prime Rate Advance. SECTION 2.12. 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: (A) any increase in the cost to any Lender Party of agreeing to make or of making, funding or maintaining Eurocurrency 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; (B) any increase in the cost to any Lender Party of agreeing to perform or of performing its obligations under this Agreement under or in respect of Bankers' Acceptances; or (C) any reduction in any amount payable to, or any increase in any payment required to be made by, or any forgiveness or reduction of effective return to, any Lender Party under this Agreement under or in respect of any Bankers' Acceptances (excluding for purposes of this Section 2.12 any such increased costs resulting from (i) Taxes or Other Taxes (as to which Section 2.15 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; provided further that, notwithstanding anything herein to the contrary and pursuant to Section 8.16, each B-2 Borrower, each Italian Borrower and the Canadian Borrower shall only be responsible for such B-2 Borrower's, such Italian Borrower's or the Canadian Borrower's Borrower's Share of such additional amounts. (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, to accept, purchase and/or discount Bankers' Acceptances or to issue Letters of Credit hereunder and other commitments of such type or the purchase and/or acceptance and maintenance of Bankers' Acceptances 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, to accept, purchase and/or discount Bankers' Acceptances or to issue Letters of Credit hereunder or to the purchase and/or acceptance and maintenance of Bankers' Acceptances or 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; provided further that, notwithstanding anything herein to the contrary and pursuant to Section 8.16, each B-2 Borrower and the Canadian Borrower shall only be responsible for such B-2 Borrower's or the Canadian Borrower's Borrower's Share of such additional amounts. (c) If, with respect to any Eurocurrency 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 Eurocurrency Rate for any Interest Period for such Advances will not adequately reflect the cost to such Lenders of making, funding or maintaining their Eurocurrency Rate Advances for such Interest Period, the Agent shall forthwith so notify the Borrowers and the Appropriate Lenders, whereupon (i) each such Eurocurrency 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, Eurocurrency Rate Advances shall be suspended until the Agent shall notify the Borrowers that the Required Lenders have determined that the circumstances causing such suspension no longer exist. SECTION 2.13. Illegality. (a) If, after the date of this Agreement, the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender Party (or its Eurocurrency Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Lender Party (or its Eurocurrency Lending Office) to make, maintain or fund its Eurocurrency Rate Advances in US Dollars or any Foreign Currency hereunder such Lender Party shall so notify the Agent and Crompton Corp., whereupon until such Lender Party notifies the Agent and Crompton Corp. that the circumstances giving rise to such suspension no longer exist, the obligation of such Lender Party to make such Eurocurrency Rate Advances shall be suspended. Before giving any notice to the Agent and Crompton Corp pursuant to this Section, such Lender Party shall designate a different Eurocurrency Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Lender Party, be otherwise disadvantageous to such Lender Party. If such Lender Party shall determine that it may not lawfully continue to maintain and fund any of its outstanding Eurocurrency Rate Advances to maturity and shall so specify in such notice, each such Eurocurrency Rate Advance made by such Lender Party will automatically, upon such demand, (a) if such Eurocurrency Rate Advance is denominated in US Dollars, be converted into a Base Rate Loan and (b) if such Eurocurrency Advance is denominated in any Foreign Currency, be redenominated into an Equivalent amount of US Dollars and converted into a Local Rate Advance. (b) Notwithstanding any other provision of this Agreement, if the introduction of or any change in the interpretation of any law or regulation (including, without limitation, any change in acceptance limits imposed on any Lender) shall make it unlawful, or any central bank or other governmental authority shall assert that it is unlawful, for any Lender or any of their respective BA Lending Offices to perform its obligations hereunder to complete and accept Drafts, to purchase Bankers' Acceptances or to continue to fund or maintain Bankers' Acceptances hereunder, then, upon notice thereof and demand therefor by such Lender to the Canadian Borrower through the Agent (i) an amount equal to the aggregate Face Amount of all Bankers' Acceptances outstanding at such time shall, upon such demand (which shall only be made if deemed necessary by the applicable Lender to comply with applicable law), be deposited by the Canadian Borrower into the Canadian Cash Collateral Account until the Maturity Date of each such Bankers' Acceptance, (ii) upon the Maturity Date of any Bankers' Acceptance in respect of which any such deposit has been made, the Agent shall be, and hereby is, authorized (without notice to or any further action by any Borrower) to apply, or to direct the Agent to apply, such amount (or the applicable portion thereof) to the reimbursement of such Bankers' Acceptance and (iii) the obligation of the Canadian Lenders to complete and accept Drafts and/or to purchase Bankers' Acceptances shall be suspended until the Agent shall notify the Canadian Borrower that such Lender has determined that the circumstances causing such suspension no longer exist. SECTION 2.14. Payments and Computations. (a) Each Borrower (other than any B-2 Borrower or any Italian Borrower) shall make each payment hereunder, irrespective of any right of counterclaim or set-off (except as otherwise provided in Section 2.18), not later than 11:00 A.M. (New York City time) on the day when due in US Dollars to the Agent at the applicable Agent's Account in same day funds. Each B-2 Borrower and Italian Borrower shall make each payment hereunder, irrespective of any right of counterclaim or set-off (except as otherwise provided in Section 2.18), not later than 11:00 A.M. (London time) on the day when due in like funds as advanced to the Agent in same day funds by deposit of such funds to the applicable Agent's Account maintained at such Payment Office. 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 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 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, the Face Amount of all outstanding Bankers' Acceptances 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 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, the Local Rate and the Canadian Base Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, all computations of interest based on the Eurocurrency Rate (other than such Eurocurrency Rate on any Advances denominated in the lawful currency of the United Kingdom of Great Britain and Northern Ireland) 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, and all computations of interest based on the BA Rate and the Eurocurrency Rate on any Advances denominated in the lawful currency of the United Kingdom of Great Britain and Northern Ireland shall be made by the Agent on the basis of a year of 365 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 in respect of Bankers' Acceptances shall be stated to be due on a day other than a Business Day or a Canadian Business Day, as the case may be, 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 Eurocurrency 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 higher of (A) the Federal Funds Rate and (b) the cost of funds incurred by the Agent in respect of such amount. SECTION 2.15. Taxes. (a) Any and all payments by any Borrower hereunder or in respect of any Bankers' Acceptance shall be made, in accordance with Section 2.14, 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 (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 but not excluding any such taxes required to be withheld by an Italian Lender or Borrower with respect to any payments due to a Lender Party or the Agent from such Italian Lender or Borrower pursuant to this Agreement (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or in respect of a Bankers' Acceptance 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 paid or payable hereunder or in respect of any Bankers' Acceptance to any Lender Party or the Agent, or, if the Agent shall be required by law to deduct any Taxes from or in respect of any sum paid or payable hereunder or in respect of any Bankers' Acceptance to any Lender Party, (i) the sum payable by such Borrower shall be increased by such Borrower as may be necessary so that, after making all required deductions (including deductions, whether by such Borrower or the Agent, applicable to additional sums payable under this Section 2.15) such Lender Party and the Agent each receive an amount equal to the sum they each would have received had no such deductions been made (for example, and without limitation, if the sum paid or payable hereunder from or in respect of which a Borrower or the Agent shall be required to deduct any Taxes is interest, the interest payable by such Borrower shall be increased by such Borrower as may be necessary so that, after making all required deductions (including deductions applicable to additional interest), such Lender Party and the Agent each receive interest equal to the interest they each would have received had no such deduction been made), (ii) such Borrower (or, as the case may be and as required by applicable law, the Agent) shall make such deductions and (iii) such Borrower (or, as the case may be and as required by applicable law or the Agent) shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, each Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder to such Borrower or in respect of any Bankers' Acceptance or from the execution, delivery or registration of, performance under, or otherwise with respect to, this Agreement or any Bankers' Acceptance (hereinafter referred to as "Other Taxes"). (c) Each Borrower shall indemnify each Lender Party and the Agent for and hold harmless against the full amount of Taxes or Other Taxes (as well as, without limitation, any taxes imposed by any jurisdiction on amounts payable under this Section 2.15) imposed on or paid by such Lender Party or the Agent (as the case may be) and any liability (including penalties, 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, each Borrower shall furnish to the Agent at its address referred to in Section 8.02, the original or a certified copy of a receipt evidencing payment thereof. In the case of any payment hereunder or in respect of any Bankers' Acceptance by or on behalf of any Borrower through an account or branch outside the United States, the United Kingdom, the Republic of France, the Kingdom of The Netherlands, the Federal Republic of Germany, Italy, Belgium and Canada or by or on behalf of any Borrower by a payor that is not a United States person or a corporation organized under the laws of the United Kingdom, the Republic of France, the Kingdom of The Netherlands, the Federal Republic of Germany, Italy, Belgium or Canada, 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 reasonably acceptable to the Agent stating that such payment is exempt from Taxes. For purposes of this subsection (d), 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, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender 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 any Borrower (but only so long as such Lender Party remains lawfully able to do so), shall provide such Borrower and the Agent with any form or certificate that is required by any taxing authority including, if applicable, two original Internal Revenue Service forms 1001 or 4224, as appropriate, or any successor form prescribed by the Internal Revenue Service 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 or any successor form prescribed by the Internal Revenue Service (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 (if it is the case) that such Lender Party is exempt from or entitled to a reduced rate of Home Jurisdiction Withholding Taxes (as defined below) on payments pursuant to this Agreement or in respect of any Bankers' Acceptances (or, in the case of a Lender Party that initially becomes a party to this Agreement pursuant to an assignment under Section 8.07, exempt from or entitled to a reduced rate of Home Jurisdiction Withholding Taxes on payments made pursuant to this Agreement or in respect of any Bankers' Acceptances that is no greater than the rate to which the assigning Lender Party was subject (assuming such assigning Lender Party provided such forms or certificates as may be required by this subsection (e))); provided, however, that such Lender Party shall have been advised in writing by each Borrower (including at the time any renewal form is due) of the form or certificate applicable to it, determined by reference to the jurisdiction of organization and Applicable Lending Office of such Lender Party set forth on Schedule I hereto, in the case of each Initial Lender, or to the jurisdiction of organization and Applicable Lending Office of such Lender Party set forth in the Assignment and Acceptance pursuant to which it became a Lender Party, in the case of each other Lender Party, or such other branch or office of any Lender Party designated by such Lender Party from time to time. If any form or document referred to in this subsection (e) requires the disclosure of information not substantially similar to the information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service form 1001 or 4224 or United Kingdom Inland Revenue Form FD13, and which a Lender Party reasonably considers to be confidential, such Lender Party shall give notice thereof to the Borrower and shall not be obligated to include in such form or document such confidential information. 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. "Home Jurisdiction Withholding Taxes" means (a) in the case of Crompton Corp., Crompton Colors, Davis-Standard, ITC and Uniroyal, withholding taxes imposed by the United States, (b) in the case of any Borrower incorporated under the laws of the United Kingdom of Great Britain and Northern Ireland, withholding taxes imposed by the United Kingdom of Great Britain and Northern Ireland or who is a tax resident in the United Kingdom of Great Britain and Northern Ireland because of central management and control being located in the United Kingdom of Great Britain and Northern Ireland, (c) in the case of any Borrower incorporated under the laws of Republic of France, withholding taxes imposed by the Republic of France, (d) in the case of any Borrower incorporated under the laws of the Kingdom of The Netherlands, withholding taxes imposed by the Kingdom of The Netherlands, (e) in the case of any Borrower incorporated under the laws of the Federal Republic of Germany, withholding taxes imposed by the Federal Republic of Germany, (f) in the case of any Borrower incorporated under the laws of Italy, but solely with respect to the Italian Lenders, withholding taxes imposed by Italy, (g) in the case of C & K Services SA (a Belgian coordination center) withholding taxes imposed by Belgium and (h) in the case of the Canadian Borrower, withholding taxes imposed by Canada. (f) For any period with respect to which a Lender Party has failed, within 30 days of such Lender Party's receipt of written request therefor from any Borrower, to provide such Borrower with the appropriate form or certificate described in Section 2.15(e) (other than if such failure is due to a change in law (including, without limitation, any change in regulation or change in the interpretation of any statute or regulation or other rule of law) occurring subsequent to the date on which a form originally was required to be provided, such Lender Party shall not be entitled to indemnification under Section 2.15(a) or (c) with respect to Taxes imposed by the United States, the United Kingdom, the Republic of France, the Kingdom of The Netherlands, the Federal Republic of Germany, Italy, Belgium or Canada, as applicable, by reason of such failure); provided, however, that should a Lender Party become subject to Taxes because of its failure to deliver a form or certificate required hereunder, each Borrower shall take such steps as such Lender Party shall reasonably request, and at such Lender Party's expense, to assist such Lender Party to recover such Taxes. (g) Each Lender Party shall promptly upon the request of the Agent take all action (including without limitation the completion of forms and the provision of information to the appropriate taxing authorities or to the Agent), of the kind prescribed in regulations promulgated under Section 118H of the U.K. Income and Corporation Taxes Act of 1988 (and any statements published by the Inland Revenue relating thereto and having general application) and consistent with such Lender Party's legal and regulatory restrictions, reasonably requested by the Agent, and the Agent shall upon reasonable request from any Borrower make such request of each Lender Party and shall itself (consistent with the Agent's legal and regulatory restrictions), to the extent appropriate and reasonable, take similar action, to secure the benefit of any exemption from, or relief with respect to, Taxes or Other Taxes imposed by the United Kingdom under Section 118H of the U.K. Income and Corporation Taxes Act of 1988 in relation to any amounts payable under this Agreement. (h) Any Lender Party or the Agent (as the case may be) claiming any additional amounts payable pursuant to this Section 2.15 agrees to use reasonable efforts (consistent with such Lender Party's or the Agent's (as the case may be) internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office or the office of the Agent (as the case may be) 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 sole judgment of such Lender Party or in the reasonable judgment of the Agent (as the case may be), be otherwise disadvantageous to such Lender Party or the Agent (as the case may be). Each Borrower shall promptly upon request by any Lender Party or the Agent take all actions (including, without limitation, the completion of forms and the provision of information to the appropriate taxing authorities) reasonably requested by such Lender Party or the Agent to secure the benefit of any exemption from, or relief with respect to, Taxes or Other Taxes in relation to any amounts payable under this Agreement. (i) 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 2.15(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 or to disclose to any party any information regarding their proprietary information regarding tax affairs and computations. SECTION 2.16. 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 any Bankers' Acceptances 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 any Bankers' Acceptances at such time) of payments on account of the Obligations due and payable to all Lender Parties hereunder and under any Bankers' Acceptances 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 any Bankers' Acceptances 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 any Bankers' Acceptances at such time) of payments on account of the Obligations owing (but not due and payable) to all Lender Parties hereunder and under any Bankers' Acceptances 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 2.16 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 2.17. Use of Proceeds. The proceeds of the Advances and issuances of Letters of Credit under the Working Capital Facilities 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 this Agreement, redeem or repurchase certain public Surviving 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 Uniroyal solely for the purpose of satisfying its obligations under the Seoul Guaranty. SECTION 2.18. 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, a Canadian Base Rate Advance or a Local Rate Advance, as the case may be, 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 Eurocurrency 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 2.18. (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 2.18. (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 2.18 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. SECTION 2.19. Evidence of Debt. (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Advance owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. Each Borrower agrees that upon notice by any Lender to such Borrower (with a copy of such notice to the Agent) to the effect that a Note is required or appropriate in order for such Lender to evidence (whether for purposes of pledge, enforcement or otherwise) the Advances owing to, or to be made by, such Lender, such Borrower shall promptly execute and deliver to such Lender a Working Capital A Note, a Working Capital B-1 Note, a Working Capital B-2 Note, an Italian Borrower Note or a Canadian Borrower Note, as the case may be, payable to the order of such Lender in a principal amount equal to the applicable Commitment of such Lender. (b) The Register maintained by the Agent pursuant to Section 8.07(d) shall include a control account, and a subsidiary account for each Lender, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, the Type of Advances comprising such Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder and (iv) the amount of any sum received by the Agent from each Borrower hereunder and each Lender's share thereof. (c) Entries made in good faith by the Agent in the Register pursuant to subsection (b) above, and by each Lender in its account or accounts pursuant to subsection (a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from each Borrower to, in the case of the Register, each Lender and, in the case of such account or accounts, such Lender, under this Agreement, absent manifest error; provided, however, that the failure of the Agent or such Lender to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of any Borrower under this Agreement. (d) References herein to Notes shall mean and be references to Working Capital A Notes, Working Capital B-1 Notes, Working Capital B-2 Notes, Italian Borrower Notes or Canadian Borrower Notes, unless otherwise specifically indicated, in each case to the extent issued hereunder. ARTICLE III CONDITIONS OF LENDING SECTION 3.01. Conditions Precedent to Effectiveness of Amendment and Restatement. The amendment and restatement of the Existing Credit Agreement pursuant hereto shall become effective on and as of the Effective Date, which shall occur on such date on or prior to March 31, 1998, on which each of the following conditions precedent shall have been satisfied: (a) The Lenders (as defined in the Existing Credit Agreement) shall have consented to this Third Amended and Restated Credit Agreement. (b) 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(b) (the "Disclosed Litigation") or (ii) purports to affect the legality, validity or enforceability of this Agreement, any Note, any other Loan 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(b). (c) 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. (d) 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 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. (e) 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). (f) The Agent shall have received on or before the Effective Date the following, each dated such day (unless otherwise specified), in form and substance satisfactory to the Agent (unless otherwise specified) and in sufficient copies for each Lender Party: (i) Certified copies of the resolutions (or analogous authorizations) of the Board of Directors (or other authorized legal representatives) of each Borrower and each other Loan Party approving this Agreement, any Notes and each other Loan 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 this Agreement, any Notes and each other Loan Document. (ii) To the extent that any such information is changed from that previously delivered under the Existing Credit Agreement, a copy of a certificate of the applicable regulatory authority of the jurisdiction of its incorporation, dated on or before the Effective Date listing the charter of each Borrower and each other Loan Party and each amendment thereto on file in his office and certifying that such amendments are the only amendments to such Borrower's or such Loan Party's charter on file in his office. (iii) 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 or an authorized legal representative of such Borrower or such other Loan Party, as the case may be, dated on or before the Effective Date (the statements made in which certificate shall be true on and as of such date), 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 certificate referred to in Section 3.01(f)(ii) or any similar certificate previously delivered under the Existing Credit Agreement, (B) to the extent changed from such documents previously delivered under the Existing Credit Agreement, a true and correct copy of the bylaws (or analogous organizational documents) of such Borrower or such other Loan Party as in effect on such date, (C) to the extent applicable in such jurisdiction, the due incorporation and good standing of such Borrower or such other Loan Party organized under the laws of the jurisdiction of its incorporation, and the absence of any proceeding for the dissolution or liquidation of such Borrower or such other Loan Party, and the payment of all franchise taxes by such Borrower or such Loan Party, as the case may be, (D) the truth of the representations and warranties made by such Borrower or such other Loan Party contained in the Loan Documents as though made on and as of such date and (E) the absence of any event occurring and continuing on the Effective Date that constitutes a Default. (iv) To the extent that any such information is changed from that previously delivered under the Existing Credit Agreement, a certificate of the Secretary or an Assistant Secretary or an authorized legal representative 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, any Notes and each other Loan Document to which it is or is to be a party and the other documents to be delivered hereunder and thereunder. (v) A consent in substantially the form of Exhibit D-1, by Crompton Corp. in favor of the Guarantied Parties under the guaranty dated August 21, 1996 made by Crompton Corp. in favor of the Guarantied Parties (as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Parent Guaranty"), duly executed by Crompton Corp., consenting to the amendment and restatement contemplated by this Agreement. (vi) A consent in substantially the form of Exhibit D-2, by the Subsidiary Guarantors in favor of the Guarantied Parties under the subsidiary guaranty dated August 21, 1996 made by the Subsidiary Guarantors in favor of the Guarantied Parties (together with each other guaranty delivered pursuant to Section 5.01(i), 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, consenting to the amendment and restatement contemplated by this Agreement. (vii) 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 dated December 28, 1997, interim financial statements dated the end of the most recent fiscal quarter for which financial statements are available, and forecasts prepared by management of the Borrowers, in form and substance satisfactory to the Lender Parties, on a Consolidated basis of balance sheets, income statements and cash flow statements for the first year following January 1, 1998 and on an annual basis for each year thereafter until the Termination Date. (viii) 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. (ix) A favorable opinion of Wachtell, Lipton, Rosen & Katz, special counsel for the Borrowers, in substantially the form of Exhibit E-1 hereto and as to such other matters as any Lender Party through the Agent may reasonably request. (x) 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 E-2 hereto and as to such other matters as any Lender Party through the Agent may reasonably request. (xi) A favorable opinion of Shearman & Sterling, counsel for the Agent, in form and substance satisfactory to the Agent. SECTION 3.02. Initial Extension of Credit to Each Designated Subsidiary and Each Designated Italian Subsidiary. The obligation of each Lender Party to make an Initial Extension of Credit to (a) each Designated Subsidiary following any designation of such Designated Subsidiary as a B-2 Borrower hereunder pursuant to Section 8.08 and (b) each Designated Italian Subsidiary following any designation of such Designated Italian Subsidiary as an Italian Borrower hereunder pursuant to Section 8.08 is, in each case, subject to the Agent's receipt on or before the date of such Initial Extension of Credit of each of the following with respect to such Designated Subsidiary or Designated Italian Subsidiary, as the case may be, in form and substance satisfactory to the Agent and dated such date, and in sufficient copies for each Lender Party: (i) Certified copies of the resolutions (or analogous authorizations) of the Board of Directors (or other authorized legal representatives) of such B-2 Borrower or Italian Borrower approving this Agreement, any Working Capital B-2 Notes or Italian Borrower Notes, as the case may be, and each other Loan 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 this Agreement, any Notes and each other Loan Document. (ii) To the extent applicable in such jurisdiction, a copy of a certificate of the applicable regulatory authority of the jurisdiction of its incorporation, dated reasonably near the date of the Initial Extension of Credit to such B-2 Borrower or Italian Borrower, as the case may be, listing the charter of such B-2 Borrower or Italian Borrower and each amendment thereto on file in his office and certifying that (A) such amendments are the only amendments to such B-2 Borrower's or Italian Borrower's charter on file in his office, (B) each such B-2 Borrower or Italian Borrower has paid all franchise taxes to the date of such certificate and (C) each such B-2 Borrower or Italian Borrower is duly incorporated and in good standing under the laws of the jurisdiction of its incorporation. (iii) A certificate of such B-2 Borrower or Italian Borrower, signed on behalf of such B-2 Borrower or Italian Borrower, as the case may be, by its President or a Vice President and its Secretary or any Assistant Secretary or an authorized legal representative of such B-2 Borrower or Italian Borrower, dated the date of the Initial Extension of Credit to such B-2 Borrower or Italian Borrower, relating to such B-2 Borrower or Italian Borrower (the statements made in which certificate shall be true on and as of such date), certifying as to (A) the absence of any amendments to the charter of such B-2 Borrower or Italian Borrower, as the case may be, since the date of the certificate referred to in Section 3.02(b)(iii), (B) a true and correct copy of the bylaws (or analogous organizational documents) of such B-2 Borrower or Italian Borrower as in effect on such date, (C) to the extent applicable in such jurisdiction, the due incorporation and good standing of such B-2 Borrower or Italian Borrower organized under the laws of the jurisdiction of its incorporation, and the absence of any proceeding for the dissolution or liquidation of such B-2 Borrower or Italian Borrower, (D) the truth of the representations and warranties made by such B-2 Borrower or Italian Borrower contained in the Loan Documents as though made on and as of such date and (E) the absence of any event occurring and continuing, or resulting from the Initial Extension of Credit to such B-2 Borrower or Italian Borrower, that constitutes a Default. (iv) A certificate of the Secretary or an Assistant Secretary or an authorized legal representative of such B-2 Borrower or Italian Borrower, as the case may be, certifying the names and true signatures of the officers of such B-2 Borrower or Italian Borrower authorized to sign this Agreement, any Working Capital B-2 Notes or Italian Borrower Notes, as the case may be, and each other Loan Document to which they are or are to be parties and the other documents to be delivered hereunder and thereunder. (v) The Designation Letter of such Designated Subsidiary or Designated Italian Subsidiary, as the case may be, substantially in the form of Exhibit F hereto. (vi) Evidence of the Process Agent's acceptance of its appointment pursuant to Section 8.12(a) as the agent of such B-2 Borrower or Italian Borrower, substantially in the form of Exhibit G hereto. (vii) A favorable opinion of counsel (which may be in-house counsel) to such Designated Subsidiary or Designated Italian Subsidiary, dated the date of such Initial Extension of Credit to such B-2 Borrower or Italian Borrower, substantially in the form of Exhibit H hereto or in form and substance reasonably acceptable to the Agent. (viii) Such other approvals, opinions or documents as any Lender Party, through the Agent, may reasonably request. SECTION 3.03. Conditions Precedent to Each Borrowing, Drawing and Issuance. The right of the Borrowers to request and the obligation of each Appropriate Lender to make an Advance or to purchase, accept or renew a Bankers' Acceptance (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, Drawing or issuance (a) the following statements shall be true (and each of the giving of the applicable Notice of Borrowing, Notice of Drawing, Notice of Swing Line Borrowing or Notice of Issuance and the acceptance by the relevant Borrower of the proceeds of such Borrowing, Drawing or 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, Drawing 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, Drawing 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, Drawing 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, Drawing 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 3.04. Determinations Under Sections 3.01 and 3.02. For purposes of determining compliance with the conditions specified in Sections 3.01 and 3.02, 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 such Initial Extension of Credit consists of a Borrowing or a Drawing, such Lender Party shall not have made available to the Agent such Lender Party's ratable portion of such Borrowing or Drawing. SECTION 3.05. Conditions Precedent to Delayed Effectiveness of Certain Provisions. Notwithstanding anything to the contrary in this Third Amended and Restated Credit Agreement, in the event that the conditions set forth in clauses (i), (ii), (iii), (iv), (viii), (ix), (x) and (xi) of Section 3.01(f) are not satisfied on or prior to March 31, 1998, but all other conditions precedent set forth in Section 3.01 are satisfied on or prior to such date, the Effective Date shall be modified as follows: (a) All provisions of this Third Amended and Restated Credit Agreement shall become effective on such date except as set forth in this Section 3.05. (b) The definitions of "Working Capital A Commitments", "Working Capital B-1 Commitments" and "Termination Date" shall not be amended but shall continue to have the meanings of such terms set forth in the Existing Credit Agreement until such date as the conditions set forth in clauses (i), (ii), (iii), (iv), (viii), (ix), (x) and (xi) of Section 3.01 are satisfied, which date shall not be later the May 31, 1998. (c) On the date that the Agent shall have received each of the items set forth in clauses (i), (ii), (iii), (iv), (viii), (ix), (x) and (xi) of Section 3.01(f), on or before May 31, 1998, each dated as of such date, the definitions of "Working Capital A Commitments", "Working Capital B-1 Commitments" and "Termination Date" shall have the meanings set forth in this Third Amended and Restated Credit Agreement. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Borrowers. Each Borrower represents and warrants as follows; provided, however, each B-2 Borrower, each Italian Borrower and the Canadian Borrower represents and warrants solely with respect to itself: (a) To the extent applicable under the laws of the jurisdiction of incorporation of each Loan Party, 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 as of the Effective Date of all Subsidiaries of each Loan Party, showing as of the Effective Date (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 Effective Date 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 Effective Date. 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. 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, any Notes and each other Loan Document to which it is or is to be a party, 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) 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, any Notes or any other Loan Document to which it is or is to be a party, or for the transactions contemplated hereby or (ii) the exercise by the Agent or any Lender Party of its rights under the Loan 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. (e) This Agreement has been, and each other Loan Document when delivered hereunder will have been, duly executed and delivered by each Loan Party party thereto. This Agreement is, and each other Loan 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 28, 1997, 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, copies of which have been furnished to each Lender Party, fairly present the Consolidated financial condition of Crompton Corp. and its Subsidiaries as at such date and the Consolidated results of operations of Crompton Corp. and its Subsidiaries for the periods ended on such date, all in accordance with generally accepted accounting principles applied on a consistent basis, and since December 28, 1997, there has been no Material Adverse Change. (g) The Consolidated forecasted balance sheets, income statements and cash flows statements of Crompton Corp. and its Subsidiaries delivered to the Lender Parties pursuant to Section 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. (h) No 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. (i) 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 this Agreement, any Note or any other Loan 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(b). (j) No proceeds of any Advance, any Drawing 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. (k) 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, any Drawing 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. (l) (i) Except as disclosed in Part I of Schedule 4.01(l) 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 (A) 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 (B) 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(l) 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(l) 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. (m) 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. (n) Each Loan Party is, individually and together with its Subsidiaries, Solvent. (o) Set forth on Schedule 4.01(o) hereto is a complete and accurate list as of the Effective Date of all Surviving Debt, showing as of the Effective Date the principal amount outstanding thereunder. (p) Set forth on Schedule 4.01(p) hereto is a complete and accurate list of all Material Subsidiaries existing as of the Effective Date. SECTION 4.02. Additional Representations and Warranties of the Crompton A Borrowers and Uniroyal B-1 Borrower. Each Crompton A Borrower and the Uniroyal B-1 Borrower represents and warrants as follows: (a) The aggregate revenues of the Minor Subsidiaries, on a Consolidated basis, do not exceed US$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, on a Consolidated basis, as at the end of the most recent fiscal quarter of Crompton Corp. does not exceed US$250,000. (b) (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. (c) 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. ARTICLE V COVENANTS OF THE BORROWERS SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain unpaid, any Letter of Credit or Bankers' Acceptance 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 US$3,000,000. (c) Maintenance of Insurance. Maintain (or have maintained on its behalf 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 any merger or consolidation permitted under Section 5.02(c); provided further that neither any Borrower nor any of its Subsidiaries shall be required to preserve any existence, 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. (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) 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(f), (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 (h) which in the aggregate involve amounts not in excess of US$500,000 per year. (i) Covenant to Guarantee Obligations. (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 US$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 US$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) 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 Guarantied Parties, of counsel for the Loan Parties acceptable to the Agent as to the guaranties referred to in clause (i) 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 (iii) 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 the guaranties referred to in clause (i) above. SECTION 5.02. Negative Covenants. So long as any Advance shall remain unpaid, any Letter of Credit or Bankers' Acceptance 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) with respect to any Person, all of the following: (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. (ii) Liens existing on the Effective Date and described on Schedule 5.02(a) hereto; (iii) purchase money Liens upon or in real property or personal property 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 (iii) shall not exceed the amount permitted under Section 5.02(b)(iv)(B) at any time outstanding and that any such Debt shall not otherwise be prohibited by the terms of the Loan Documents; (iv) Liens arising in connection with Capitalized Leases permitted under Section 5.02(b)(iv)(C); provided that no such Lien shall extend to or cover any assets other than the assets subject to such Capitalized Leases; (v) 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; (vi) Liens arising in connection with any lease of real or personal property, provided that no such Lien shall extend to or cover any assets other than the assets subject to such lease; (vii) Liens securing Debt incurred by Foreign Subsidiaries pursuant to Section 5.02(b)(iv)(G); (viii) Liens on accounts receivable (and in property securing or otherwise supporting such accounts receivable together with proceeds thereof) of Crompton Corp. and its Subsidiaries in connection with a Receivables Securitization or in connection with sales of accounts receivable to Crompton Corp. or any of its Subsidiaries; (ix) Liens securing Obligations of Crompton Corp. or any of its Subsidiaries in an aggregate amount not to exceed US$5,000,000 at any time outstanding; (x) filings for information purposes only under the Uniform Commercial Code, as amended, of any state in connection with a lease of property or similar arrangement (other than Capitalized Leases); (xi) 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 (ii) through (vi), provided that (A) 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 (B) 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; and (xii) Liens on the assets of any B-2 Borrower, any Italian Borrower or the Canadian Borrower or cash collateral to secure any obligation set forth in Section 5.02(b)(v). (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 Uniroyal in respect of the Seoul Guaranty, provided that the US Dollar equivalent of the amount of such Debt shall not exceed US$5,000,000, (B) Debt in respect of non-speculative 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, (C) Debt in respect of non-speculative 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, and (D) Debt owed to Crompton Corp. or to a wholly owned Subsidiary of Crompton Corp, (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, (iii) in the case of Crompton Corp. and its Domestic Subsidiaries, Debt not otherwise permitted under this Section 5.02(b) in an aggregate amount not to exceed in the aggregate US$150,000,000 at any time outstanding, provided that, with respect to Debt of Uniroyal and its Domestic Subsidiaries under this clause (iii), such Debt shall not exceed $50,000,000 in the aggregate at any time outstanding, (iv) 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)(iii) not to exceed in the aggregate, together with Debt referred to in clause (C) below, US$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, US$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 and any Debt extending the maturity of, or refunding or refinancing, in whole or in part, any Surviving Debt other than Debt outstanding under the Uniroyal Indentures, provided 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, 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 and the direct and contingent obligors therefor shall not be changed as a result of or in connection with such extension, refunding or refinancing, (E) Debt of any Person that becomes a Subsidiary of any Borrower after the Effective Date in accordance with the terms of Section 5.02(e) 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 US$10,000,000 in the case of the Crompton A Borrowers and US$10,000,000 in the case of Uniroyal, (G) (i) Debt of any Foreign Subsidiary including any B-2 Borrower, any Italian Borrower or any of their respective Subsidiaries incurred for business purposes in an aggregate amount not to exceed US$150,000,000 at any time outstanding and (ii) Debt of any Borrower of the type described in clause (i) of the definition of "Debt" guaranteeing the Obligations of Foreign Subsidiaries outstanding under clause (i) above, (H) Debt, if any, of Crompton Corp. and its Subsidiaries incurred in connection with a Receivables Securitization or in connection with sales of accounts receivable to Crompton Corp. or any of its Subsidiaries, (I) endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, (J) unsecured Debt of Minor Subsidiaries in an aggregate amount not to exceed US$1,000,000 at any time outstanding, and (K) guaranties of Debt set forth in Section 5.02(b)(v), (v) in the case of the B-2 Borrowers, Italian Borrowers and Canadian Borrower, Debt in an amount not to exceed US$30,000,000 in respect of letters of credit; provided that the sum of (A) the aggregate amount of such Debt outstanding at any time and (B) the aggregate amount of the Letter of Credit B-2 Commitments in effect at any time shall not exceed US$30,000,000, and (vi) in the case of Crompton Corp., Debt extending the maturity of, or refunding or refinancing, in whole or in part, any Surviving Debt outstanding under the Uniroyal Corp. Senior Notes and the Uniroyal Senior Notes, provided 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, and 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 or, or tender offer or exchange offer for, or open market purchase of, such Surviving Debt. (c) 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) Uniroyal Corp. may merge into or consolidate with Crompton Corp., (ii) any Foreign Subsidiary may merge into or consolidate with any other Subsidiary of Crompton Corp. so long as if any Domestic Subsidiary is party to such merger or consolidation, such Domestic Subsidiary shall survive such merger or consolidation, (iii) 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, (iv) any Subsidiary of Crompton Corp. 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, a Borrower shall survive such merger or consolidation, (v) in connection with any acquisition permitted under Section 5.02(e), 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 so long as if the Person surviving such merger is a Borrower, such Borrower shall be a wholly owned Subsidiary of Crompton Corp. and (vi) in connection with any sale or other disposition permitted under Section 5.02(d) (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. (d) 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(c) (other than clause (vi) thereof), (iii) sales of assets and for fair value in an aggregate amount not to exceed US$100,000,000 in any Fiscal Year or $150,000,000 in the aggregate from and after the Effective Date, (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) to the extent permitted by Section 5.02(b)(iv)(G) and (H), (vi) sales of assets after the Effective Date having an aggregate fair market value of not more than the greater of (A) US$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(e) or Capital Expenditures permitted under Section 5.02(l) or to prepay permanently Debt of Crompton Corp. or any of its Subsidiaries, (vii) sales of accounts receivable of Crompton Corp. and its Subsidiaries in connection with agreements for limited recourse or non-recourse sales by Crompton Corp. or any of its 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 US$25,000,000 shall be applied to the permanent reduction of the Facilities in accordance with Section 2.06(b)(iii) (a "Receivables Securitization"), (viii) the transfer of assets among Loan Parties to the extent permitted under Section 5.02(e)(vii), and (ix) sales of accounts receivable of Crompton Corp. and its Subsidiaries to any Loan Party or any of its Subsidiaries, provided that such sales of accounts receivable shall be made in accordance with Section 5.01(h). (e) 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 Effective Date and additional equity investments in wholly owned Subsidiaries (other than any Minor Subsidiary), which Subsidiaries were in existence on the Effective Date; (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 US$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 Effective Date and described on Part I of Schedule 5.02(e) hereto; (vii) Investments consisting of the contribution of assets of (A) any Foreign Subsidiary to Crompton Corp. or any of its Subsidiaries, (B) Uniroyal or any Domestic Subsidiary of Uniroyal to Crompton Corp. or any of its Subsidiaries and (C) Crompton Corp. and its Domestic Subsidiaries (other than Uniroyal and its Domestic Subsidiaries) to any of Crompton Corp. or any of its Subsidiaries, provided that the aggregate amount of Investments permitted by this clause (C) to Uniroyal and its Subsidiaries or to any Foreign Subsidiary shall not exceed US$150,000,000 at any time outstanding; (viii) Investments by Crompton Corp. and its Subsidiaries in (A) the joint ventures listed on Part II of Schedule 5.02(e) 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 US$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 US$5,000,000 in the aggregate from the Effective Date. (f) 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 any Fiscal Year the greater of (I) US$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. (g) 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 Effective Date. (h) Charter Amendments. Amend its certificate of incorporation or bylaws in any material respect. (i) 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. (j) 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 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 (ii) in connection with any lease of real or personal property solely to the extent that such lease prohibits a Lien on the lease or the property subject to such lease. (k) 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. (l) 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 US$100,000,000 December 31, 1997 US$100,000,000 December 31, 1998 US$110,000,000 December 31, 1999 US$110,000,000 December 31, 2000 US$110,000,000 December 31, 2001 and thereafter US$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(d)(vi), solely to the extent such Net Cash Proceeds are not used to make Investments permitted under Section 5.02(e) 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. (m) Minor Subsidiaries. Permit any Minor Subsidiary (other than Naugatuck) 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 or Bankers' Acceptance 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, a Consolidated balance sheet of Crompton Corp. and its Subsidiaries as of the end of such quarter and a Consolidated statement of income and a Consolidated statement of cash flows of Crompton Corp. and its Subsidiaries, for the period commencing at the end of the previous fiscal quarter and ending with the end of such fiscal quarter and a Consolidated statement of income and a Consolidated statement of cash flows of Crompton Corp. and its Subsidiaries, 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 Crompton Corp. as having been prepared in accordance with GAAP, together with (i) a certificate of the chief financial officer or treasurer of Crompton Corp. 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, 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 Crompton Corp. 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 June 30 in each year, forecasts prepared by management of Crompton Corp., in form satisfactory to the Agent, of balance sheets, income statements and cash flow statements for Crompton Corp. and its Subsidiaries on an annual basis for the then current Fiscal Year and for each Fiscal Year thereafter until the Termination Date. (e) Annual Budget. As soon as available and in any event within 45 days after the end of each Fiscal Year, an annual budget for Crompton Corp. and its Subsidiaries, prepared by management of Crompton 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(i), 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(b). (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 indenture, loan or credit or similar agreement. (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 US$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 or Bankers' Acceptance 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 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 and 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 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 or any portion of any Bankers' Acceptance 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 (including, without limitation, any Designated Subsidiary and any Designated Italian Subsidiary) or any of its officers under or in connection with any Loan Document, or by any Designated Subsidiary or any Designated Italian Subsidiary in the Designation Letter pursuant to which such Designated Subsidiary or Designated Italian Subsidiary became a Borrower hereunder, 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 2.17, 5.01(d), (e) or (i), 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 30 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 US$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 US$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(i) 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) (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 (k) (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 US$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 US$10,000,000 in any given calendar year; or (l) 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 US$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 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 US$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)), of each Canadian Lender to accept and/or purchase Bankers' Acceptances 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 Advances, all interest thereon and all other amounts payable under this Agreement and the other Loan Documents to be forthwith due and payable, whereupon the Advances, 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 Advances, 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 and Bankers' Acceptances 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, (a) 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; provided that, notwithstanding anything herein to the contrary and pursuant to Section 8.16, each B-2 Borrower, each Italian Borrower and the Canadian Borrower shall only be responsible for such B-2 Borrower's, such Italian Borrower's or the Canadian Borrower's Borrower's Share of such amount and (b) make demand upon the Canadian Borrower to, and forthwith upon such demand, such Borrower will, pay to the Agent on behalf of the Canadian Lenders in same day funds at the Agent's office designated in such demand, for deposit in the Canadian Cash Collateral Account, an amount equal to the aggregate Face Amount of all Bankers' Acceptances then outstanding. If at any time the Agent determines that any funds held in such L/C Cash Collateral Account or Canadian 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 or the aggregate Face Amount of all outstanding Bankers' Acceptances, the Borrowers jointly and severally agree to, forthwith upon demand by the Agent, (x) 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; provided that, notwithstanding anything herein to the contrary and pursuant to Section 8.16, each B-2 Borrower, each Italian Borrower and the Canadian Borrower shall only be responsible for such B-2 Borrower's, such Italian Borrower's or the Canadian Borrower's Borrower's Share of such amount and (y) pay to the Agent, as additional funds to be deposited and held in the Canadian Cash Collateral Account, an amount equal to the excess of (i) such aggregate Face Amount of all outstanding Bankers' Acceptances over (ii) the total amount of funds, if any, then held in the Canadian Cash Collateral Account that the Agent determines to be free and clear of any such right and claim; provided that, notwithstanding anything herein to the contrary and pursuant to Section 8.16, each B-2 Borrower, each Italian Borrower and the Canadian Borrower shall only be responsible for such B-2 Borrower's, such Italian Borrower's or the Canadian Borrower's Borrower's Share of such amount. SECTION 6.03. Actions in Respect of Working Capital B-1 Commitments Reserved Pursuant to Section 2.01(j). If, at any time and from time to time, any Working Capital B-1 Commitments are reserved pursuant to Section 2.01(j) 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 Uniroyal to, and forthwith upon such demand Uniroyal 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 Debt resulting from the Advances), 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 Lender that made any Advance as the holder of the Debt resulting therefrom until the Agent receives and accepts an Assignment and Acceptance entered into by such Lender, 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 any 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 US$250,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent as to all of the Facilities, 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, 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 any 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 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 to any Designated Subsidiary or Designated Italian Subsidiary, 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) amend this Section 8.01 or (v) 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 Advances payable to 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 Advances payable to 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 2.07 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: Carolyn Sheridan; 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); provided that, notwithstanding anything herein to the contrary and pursuant to Section 8.16, each B-2 Borrower, each Italian Borrower and the Canadian Borrower shall only be responsible for such B-2 Borrower's, such Italian Borrower's or the Canadian Borrower's Borrower's Share of such costs and expenses. (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, 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; provided that, notwithstanding anything herein to the contrary and pursuant to Section 8.16, each B-2 Borrower, each Italian Borrower and the Canadian Borrower shall only be responsible for such B-2 Borrower's, such Italian Borrower's or the Canadian Borrower's Borrower's Share of such amount. 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 Eurocurrency 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 2.10(b)(i) or 2.12(a), acceleration of the maturity of the Advances 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 2.12 and 2.15 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 Advances 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 2.12 or 2.15 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 any 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 US$20,000,000 or, if the aggregate amount of the Commitment of such assigning Lender is less than US$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 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 US$3,500; provided further that for the purposes of making Working Capital B-2 Advances, any Working Capital B-2 Lender may assign its rights and obligations under the Working Capital B-2 Facility to any Affiliate of such Working Capital B-2 Lender. (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 or genuineness of, 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 and Italian Lender Joinder Agreement 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 and, in the case of an assignment of any Italian Commitment, an Italian Lender Joinder Agreement, in each case executed by an assigning Lender Party and an assignee, together with any Note or Notes subject to such assignment, the Agent shall, if each such Assignment and Acceptance and Italian Lender Joinder Agreement (if applicable) has been completed and is in substantially the form of Exhibit C hereto, (i) accept such Assignment and Acceptance and such Italian Lender Joinder Agreement (if applicable), (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrowers. (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 US$10,000,000 and shall be in an integral multiple of US$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 US$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 such Advances and 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 Advances or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or postpone any date fixed for any payment of principal of, or interest on, the Advances or any fees or other amounts payable hereunder, in each case to the extent subject to such participation. (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 any 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. Designated Subsidiaries and Designated Italian Subsidiaries. Crompton Corp. may at any time, and from time to time, by delivery to the Agent of a Designation Letter duly executed by Crompton Corp. and the respective Subsidiary and substantially in the form of Exhibit F hereto, designate such Subsidiary as a "Designated Subsidiary" or a "Designated Italian Subsidiary" for purposes of this Agreement and such Subsidiary shall thereupon become a "Designated Subsidiary" or a "Designated Italian Subsidiary", respectively, for purposes of this Agreement and, as such, shall have all of the rights and obligations of a Borrower hereunder; provided, however, that no such Subsidiary incorporated under the laws of any United States jurisdiction may be appointed a "Designated Subsidiary" or a "Designated Italian Subsidiary". The Agent shall promptly notify each Lender of each such designation by Crompton Corp. and the identity of the respective Subsidiary. SECTION 8.09. 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 8.10. 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 8.11. 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 Initial Borrower hereby agrees that service of process in any such action or proceeding brought in any such New York State court or in such federal court may be made upon CT Corporation System at its offices at 1633 Broadway, New York, New York 10019 (the "Process Agent") and each Designated Subsidiary and Designated Italian Subsidiary hereby irrevocably appoints the Process Agent its authorized agent to accept such service of process, and agrees that the failure of the Process Agent to give any notice of any such service shall not impair or affect the validity of such service or of any judgment rendered in any action or proceeding based thereon. Each Borrower hereby further irrevocably consents to the service of process in any action or proceeding in such courts by the mailing thereof by any parties hereto by registered or certified mail, postage prepaid, to such Borrower at its address specified pursuant to Section 8.02. 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. Judgment. (a) If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder or under any Notes in US Dollars into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Agent could purchase US Dollars with such other currency at Citibank's principal office in London at 11:00 A.M. (London time) on the Business Day preceding that on which final judgment is given. (b) If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder or under any Notes in a Foreign Currency into US Dollars, the parties agree to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Agent could purchase such Foreign Currency with US Dollars at Citibank's principal office in London at 11:00 A.M. (London time) on the Business Day preceding that on which final judgment is given. (c) The obligation of any Borrower in respect of any sum due from it to any Lender Party or the Agent hereunder or under a Note held by such Lender Party shall, notwithstanding any judgment in a currency other than US Dollars, be discharged only to the extent that on the Business Day following receipt by such Lender Party or the Agent (as the case may be) of any sum adjudged to be so due in such other currency, such Lender Party or the Agent (as the case may be) may in accordance with normal banking procedures purchase US Dollars with such other currency; if the US Dollars so purchased are less than such sum due to such Lender Party or the Agent (as the case may be) in US Dollars, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender Party or the Agent (as the case may be) against such loss, and if the US Dollars so purchased exceed such sum due to any Lender Party or the Agent (as the case may be) in US Dollars, such Lender Party or the Agent (as the case may be) agrees to remit to such Borrower such excess. SECTION 8.14. Power of Attorney. Each Subsidiary of Crompton Corp. may from time to time authorize and appoint Crompton Corp. as its attorney-in-fact to execute and deliver (a) any amendment, waiver or consent in accordance with Section 8.01 on behalf of and in the name of such Subsidiary and (b) any notice or other communication hereunder, on behalf of and in the name of such Subsidiary. Such authorization shall become effective as of the date on which such Subsidiary delivers to the Agent a power of attorney enforceable under applicable law and any additional information to the Agent as necessary to make such power of attorney the legal, valid and binding obligation of such Subsidiary. SECTION 8.15. Governing Law. This Agreement, each Designation Letter and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York, except as referred to in Section 8.17. SECTION 8.16. Limitation on B-2 Borrower Obligations, Italian Borrower Obligations and Canadian Borrower Obligations. Notwithstanding anything herein to the contrary, to the extent a B-2 Borrower, an Italian Borrower or the Canadian Borrower is purported to owe any amounts hereunder, such B-2 Borrower, such Italian Borrower or the Canadian Borrower, as the case may be, shall only owe such amount solely with respect to its own Obligations. In addition, if any of the undertakings or obligations of any B-2 Borrower, any Italian Borrower or the Canadian Borrower under this Agreement, the Loan Documents or any contract, document or instrument entered into in connection therewith or relating thereto would otherwise be or become unenforceable in full or in part as a result of, or because of any mandatorily applicable provisions of the law of the jurisdiction under which such B-2 Borrower, such Italian Borrower or the Canadian Borrower is incorporated, then such undertakings and obligations of such B-2 Borrower, such Italian Borrower or the Canadian Borrower shall be deemed to be limited to the extent necessary to make them valid, legal and enforceable under such law. For the avoidance of doubt, if any of the obligations of any B-2 Borrower, any Italian Borrower or the Canadian Borrower to make payments would otherwise be or become invalid, illegal or unenforceable because of the provisions contained in provisions of applicable statutory law aimed at preserving such B-2 Borrower's, such Italian Borrower's or the Canadian Borrower's share capital, such B-2 Borrower, such Italian Borrower or the Canadian Borrower, respectively, shall be obligated to make payments only to the extent it would be legal for such payments to be made under such provision. SECTION 8.17. Substitution of Currency. If any countries parties to the Treaty on the European Economic and Monetary Union adopts the Euro in substitution for its national currency in effect on the date hereof, the regulations of the European Commission relating to the Euro shall apply to this Agreement and any Notes. The circumstances and consequences described in this Section 8.17 entitle none of the Borrowers, any other Loan Parties, the Agent nor any Lender to rescission, notice, repudiation, adjustment or renegotiation of the terms and conditions of this Agreement or any Notes or to raise other defenses or to request any additional compensation claim, nor will they affect any of the other obligations of any Borrower or any other Loan Party under this Agreement and the Notes. SECTION 8.18. 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/Frank Manganella Name: Frank Manganella Title: Authorized Legal Representative CROMPTON & KNOWLES COLORS INCORPORATED By/s/Frank Manganella Name: Frank Manganella Title: Authorized Legal Representative DAVIS-STANDARD CORPORATION By/s/Frank Manganella Name: Frank Manganella Title: Authorized Legal Representative INGREDIENT TECHNOLOGY CORPORATION By/s/Frank Manganella Name: Frank Manganella Title: Authorized Legal Representative UNIROYAL CHEMICAL COMPANY, INC. By/s/Frank Manganella Name: Frank Manganella Title: Authorized Legal Representative C & K SERVICES SA By/s/Frank Manganella Name: Frank Manganella Title: Authorized Legal Representative DAVIS-STANDARD (DEUTSCHLAND) GMBH By/s/Frank Manganella Name: Frank Manganella Title: Authorized Legal Representative DAVIS STANDARD (FRANCE) SARL By/s/Frank Manganella Name: Frank Manganella Title: Authorized Legal Representative ER-WE-PA DAVIS-STANDARD GMBH By/s/Frank Manganella Name: Frank Manganella Title: Authorized Legal Representative UNIROYAL CHEMICAL B.V. By/s/Frank Manganella Name: Frank Manganella Title: Authorized Legal Representative UNIROYAL CHEMICAL CO. By/s/Frank Manganella Name: Frank Manganella Title: Authorized Legal Representative UNIROYAL CHIMICA S.R.L.. By/s/Frank Manganella Name: Frank Manganella Title: Authorized Legal Representative CITICORP USA, INC., as Agent By/s/Robin F. Lenna Name: Robin F. Lenna Title: Attorney-In-Fact Working Capital A Lenders Working Capital B-1 Lenders Working Capital Working Capital A Commitment B-1 Commitment $41,200,000 $13,800,000 CITICORP USA, INC. By/s/Robin F. Lenna Name: Robin F. Lenna Title: Attorney-In-Fact Working Capital Working Capital A Commitment B-1 Commitment $31,300,000 $ 6,200,000 THE CHASE MANHATTAN BANK By/s/Robert T. Sacks Name: Robert T. Sacks Title: Managing Director $25,000,000 $ 5,000,000 ABN AMRO BANK N.V., NEW YORK BRANCH By/s/Pauline McHugh Name: Pauline McHugh Title: Vice President By/s/George Dugan Name: George Dugan Title: Vice President $12,500,000 $0 BANCA COMMERCIALE ITALIANA - NEW YORK BRANCH By/s/K. Purelis Name: K. Purelis Title: Vice President By/s/Charles Dougherty Name: Charles Dougherty Title: Vice President $25,000,000 $ 5,000,000 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By/s/Donald J. Chin Name: Donald J. Chin Title: Managing Director Working Capital Working Capital A Commitment B-1 Commitment $25,000,000 $ 5,000,000 THE BANK OF NEW YORK By/s/ William G.C. Dakin Name: William G.C. Dakin Title: Vice President $25,000,000 $ 5,000,000 BANK BOSTON, N.A. By/s/JoAnn Keller Name: JoAnn Keller Title: Senior Vice President $25,000,000 $ 5,000,000 BHF - BANK AKTIENGESELLSCHAFT By/s/Linda Pace Name: Linda Pace Title: Vice President By/s/Thomas Scifo Name: Thomas Scifo Title: Assistant Vice President $25,000,000 $ 5,000,000 CIBC INC. By/s/Timothy Doyle Name: Timothy Doyle Title: Managing Director $25,000,000 $ 5,000,000 CORESTATES BANK, N.A. By/s/Robert A. Brown Name: Robert A. Brown Title: Vice President Working Capital Working Capital A Commitment B-1 Commitment $25,000,000 $ 5,000,000 CREDIT LYONNAIS NEW YORK BRANCH By/s/Vladimir Labun Name: Vladimir Labun Title: First Vice President-Manager $25,000,000 $ 5,000,000 FIRST UNION NATIONAL BANK By/s/Reyno A. Giullonge, Jr. Name: Reyno A. Giullonge Title: SVP $40,000,000 $ 5,000,000 FLEET NATIONAL BANK By/s/Robert C. Rubino Name: Robert C. Rubino Title: Senior Vice President $25,000,000 $ 5,000,000 TORONTO DOMINION (NEW YORK), INC. By/s/Jorge A. Garcia Name: Jorge A. Garcia Title: Vice President Working Capital B-2 Lenders Working Capital B-2 Commitment $ 4,500,000 CITIBANK, N.A. By/s/Harry W. Corkran Name: harry W. Corkran Title: Vice President $ 3,750,000 THE CHASE MANHATTAN BANK By/s/Robert T. Sacks Name: Robert T. Sacks Title: Managing Director $ 6,750,000 ABN AMRO BANK N.V., NEW YORK BRANCH By/s/Pauline McHugh Name: Pauline McHugh Title: Vice President By/s/George Dugan Name: George Dugan Title: Vice President $ 3,000,000 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By/s/Donald J. Chin Name: Donald J. Chin Title: Managing Director $3,000,000 THE BANK OF NEW YORK By/s/William G.C. Dakin Name: William G.C. Dakin Title: Vice President Working Capital B-2 Commitment $ 3,000,000 BANK BOSTON, N.A. By/s/JoAnn Keller Name: JoAnn Keller Title: Senior Vice President $ 3,000,000 BHF - BANK AKTIENGESELLSCHAFT By/s/Linda Pace Name: Linda Pace Title: Vice President By/s/Thomas Scifo Name: Thomas Scifo Title: Assistant Vice President $ 3,000,000 CIBC WOOD GUNDY PLC By/s/Timothy Doyle Name: Timothy Doyle Title: Managing Director $ 3,000,000 CORESTATES BANK, N.A. By/s/Robert A. Brown Name: Robert A. Brown Title: Vice President $ 3,000,000 CREDIT LYONNAIS NEW YORK BRANCH By/s/Vladimir Labun Name: Vladimir Labun Title: First Vice President-Manager Working Capital B-2 Commitment $ 3,000,000 FIRST UNION NATIONAL BANK By/s/Reyno A. Giallonge, Jr. Name: Reyno A. Giallonge, Jr. Title: SVP $ 3,000,000 FLEET NATIONAL BANK By/s/Robert C. Rubino Name: Robert C. Rubino Title: Senior Vice President $ 3,000,000 TORONTO DOMINION (NEW YORK), INC. By/s/Jorge A. Garcia Name: Jorge A. Garcia Title: Vice President Italian Lenders Italian Commitment $6,750,000 CITIBANK, N.A., MILAN BRANCH By/s/Nicoletta Zappatini Name: Nicoletta Zappatini Title: Vice President Italian Commitment $12,500,000 BANCA COMMERCIALE ITALIANA, LATINA BRANCH By/s/Charles Dougherty Name: Charles Dougherty, VP Title: As Power of Attorney By/s/Karen Purelis Name: Karen Purelis, VP Title: As Power of Attorney $ 7,000,000 BANK OF AMERICA NT&SA, MILAN BRANCH By/s/Luis A. Moncada Name: Luis A. Moncada Title: Vice President $ 8,750,000 CHASE MANHATTAN BANK, MILAN BRANCH By/s/Joseph E. Orza Name: Joseph E. Orza Title: Vice President Canadian Lenders Canadian Commitment $18,750,000 CITIBANK CANADA By/s/Eric Name: Eric Title: Vice President $ 5,000,000 BANK OF AMERICA CANADA By/s/Richard J. Hall Name: Richard J. Hall Title: Vice President Canadian Commitment $15,000,000 CANADIAN IMPERIAL BANK OF COMMERCE By/s/Mauro Spagolo Name: Mauro Spagolo Title: Executive Director $11,250,000 CHASE MANHATTAN BANK OF CANADA By/s/Christine Chan Name: Christine Chan Title: Vice President By/s/Arun K. Bery Name: Arun K. Bery Title: Vice President $ 5,000,000 CREDIT LYONNAIS CANADA By/s/Helen A. Thomas Name: Helen A. Thomas Title: Vice-President By/s/David J. Farmer Name: David J. Farmer Title: Vice-President and Manager, Central Region $15,000,000 TORONTO DOMINION By/s/Jorge A. Garcia Name: Jorge A. Garcia Title: Mgr. Cr. Admin. Initial Issuing Banks Letter of Credit Commitment (Facility) $25,000,000 (A) CITIBANK, N.A. By/s/Mary W. Corkran Name: Mary W. Corkran Title: Vice President Letter of Credit Commitment (Facility) $25,000,000 (A) BANK BOSTON, N.A. $10,000,000 (B-1) By/s/JoAnn Keller Name: JoAnn Keller Title: Senior Vice President $10,000,000 (B-1) CITIBANK, N.A., LONDON BRANCH By/s/Mary W. Corkran Name: Mary W. Corkran Title: Vice President SCHEDULE I APPLICABLE LENDING OFFICES Name Domestic Canadian Eurocur. Eurocur. Eurocur. Eurocur. of Lending/ Domestic Lending Lending Lending Lending Initial Issuing Lending Office Office Office Office Lender/ Office Office For For For For Initial Working Working Italian Canadian Issuing Capital Capital Borrower Borrower Bank A & B-1 B-2 Advances Advances Advances Advances Citicorp USA, Inc. 399 Park Ave N/A 399 Park Ave N/A N/A N/A NY, NY 10043 NY, NY 10043 Attn Robin Lenna Attn Robin Lenna TEL212-559-3974 TEL212-559-3974 FAX212-793-1290 0F AX212-793-1290 Citibank N.A. 399 Park Avenue N/A P.O. Box 12068 N/A N/A NY, NY 10043 Counting House Attn Robin Lenna 53 Pooley Street TEL212-559-3974 London SE12GA FAX212-793-1290 Atn Ken Purchase/ David Williams TEL44-171-500-9675 FAX44-171-500-9701 Citibank, N.A., Milan Branch N/A N/A N/A N/A Foro Bounaparte 16 N/A 20121 Milan, Italy Atn N.Nicoletta Zappatini TEL39-2-86474-583 FAX39-2-86474-200 Citibank Canada N/A 123 Front St W N/A N/A N/A 123 Front St W 10th Fl. 10th Fl. Toronto, Ontario Toronto, Ontario Canada M5J 2M3 Canada M5J 2M3 The Chase Manhattan Bank 270 Park Avenue N/A 270 Park Avenue 1 Chaseside N/A N/A NY, NY 10017 NY, NY 10017 Bournemouth, Dorset Atn Robert Sacks Atn Robert Sacks BH77DB TEL212-270-4118 TEL212-270-4118 Atn European Loans FAX212-270-7939 FAX212-270-7939 TEL0120-234-2020 FAX0120-234-3706 The Chase Manhattan Bank, Milan Branch N/A N/A N/A N/A Via Catena, No. 4 N/A 20121 Milan, Italy Attn: Luca Preziose TEL: 39-2-8895-2007 FAX: 39-2-8895-2567 The Chase Manhattan Bank of Canada N/A 1 1st Canadian Pl N/A N/A N/A 1 1st Canadian Pl 100 King St West 100 King St West Suite 6900 PO Box 106 Suite 6900 PO Box 106 Toronto, Ontario Toronto, Ontario Canada M5X1A4 Canada M5X1A4 ABN AMRO Bank N.V., New York Branch 500 Park Ave N/A 500 Park Ave 500 Park Ave N/A N/A NY, NY 10022 NY, NY 10022 NY, NY 10022 Atn: M. Jeter Atn: M. Jeter Atn M. Jeter TEL212-446-4224 TEL212-446-4224 TEL212-446-4224 FAX212-832-7468 FAX212-832-7468 FAX212-832-7468 Banca Commerciale Italiana, New York Branch 1 William St N/A 1 William St N/A N/A N/A NY, NY 10004 NY, NY 10004 Atn:B. Carlson Atn:B. Carlson TEL212-607-3886 TEL212607-3886 FAX212-809-2124 FAX212809-2124 Banca Commerciale Italiana, Latina Branch N/A N/A N/A N/A Via Cerveteri, 2 N/A 04100 Latina, Italy Atn S. Barmucci TEL:39-7-73-486-034 FAX:39-7-73-694-109 w/ copy to B. Carlson 1 William St NY, NY 10004 Bank of America NT&SA 200 W Jackson Blvd N/A 200 W Jackson Blvd N/A N/A N/A Chicago, IL 60697 Chicago, IL 60697 Atn: R. DiMatteo Atn: R.DiMatteo TEL312-828-1988 TEL312-828-1988 FAX312-974-9626 FAX312-974-9626 Bank of America NT&SA, London Branch N/A N/A N/A 1 Alie Street N/A N/A London E1 8DE England Attn: Keith Thomas TEL: 44-171-634-4436 FAX: 44-171-634-4707 Bank of America NT&SA, Milan Branch N/A N/A N/A N/A Corso Matteotti, 10 N/A 20121 Milan, Italy Attn: Louis Moncada TEL: 39-2-760-69-341 FAX: 39-2-760-69-210 Bank of America Canada N/A 200 Front St W, N/A N/A N/A 200 Front St W, Suite 2700 Suite 2700 Toronto, Ontario Toronto, Ontario Canada M5V 8L2 Canada M5V 8L2 Bank of Boston 1 Landmark Sq N/A 1 Landmark Sq 1 Landmark Square N/A N/A 20th Floor 20th Floor 20th Floor Stamford, CT 06901 Stamford, CT 06901 Stamford, CT 06901 Atn: JoAnn Keller Atn: JoAnn Keller Atn: JoAnn Keller TEL:(203) 973-1941 TEL:(203) 973-1941 TEL:(203) 973-1941 FAX:(203) 967-8169 FAX:(203) 967-8169 FAX:(203) 967-8169 The Bank of New York 1 Wall Street N/A 1 Wall Street 1 Wall Street N/A N/A 22nd Floor 22nd Floor 22nd Floor NY, NY 10286 NY, NY 10286 NY, NY 10286 Atn:David Judge Atn:David Judge NY, NY 10286 TEL:212635-6861 TEL:212635-6861 TEL:212635-6861 FAX:212635-6999 FAX:212635-6999 FAX:212635-6999 BHF-Bank Aktiengesellschaft 590 Madison Ave N/A 590 Madison Ave 590 Madison Ave N/A N/A NY, NY 10022 NY, NY 10022 NY, NY 10022 Atn: L. Pace Atn: L. Pace Atn: L. Pace TEL212-756-5915 TEL212-756-5915 TEL212-756-5915 FAX212-756-5536 FAX212-756-5536 FAX212-756-5536 CIBC Inc. 2727 Paces Ferry Rd N/A 2727 Paces Ferry Road N/A N/A N/A Suite 1200 Suite 1200 Atlanta, GA 30339 Atlanta, GA 30339 Attn:Sheila Hogan Attn: Sheila Hogan TEL:(770) 319-4820 TEL:(770) 319-4820 FAX:(770) 319-4950 FAX:(770) 319-4950 CIBC Wood Gundy Plc N/A N/A N/A CIBC, Cottons Centre N/A N/A Cottons Lane SE1 2QL London, England Attn: Andy Rose TEL:44-171-234-6151 FAX:44-171-234-6433 Canadian Imperial Bank of Commerce N/A Commerce Court W, N/A N/A N/A Commerce Court W, 7th Floor 7th Floor Toronto, Ontario Toronto, Ontario Canada M5L 1A2 Canada M5L 1A2 CoreStates Bank, N.A. 1345 Chestnut St N/A 1345 Chestnut St 24 Monument St N/A N/A PO Box 7618 PO Box 7618 London EC3R 8AJ Phil., PA 19101 Phil., PA 19101 England Attn: Robert Brown Attn: Robert Brown Atn: Ruth Hunter TEL:(215) 973-2372 TEL:(215) 973-2372 TEL:44-171-962-2821 FAX:(215) 973-7820 FAX:(215) 973-7820 FAX:44-171-962-2877 Credit Lyonnais, NY Branch 1301 Ave. N/A 1301 Ave. 1301 Ave. N/A N/A of Americas of Americas of Americas NY, NY 10019 NY, NY 10019 NY, NY 10019 Attn:T. Randolph Attn:T. Randolph Attn:T. Randolph TEL:(212)261-7344 TEL:(212)261-7344 TEL:(212)261-7344 FAX:(212)459-3179 FAX:(212)459-3179 FAX:(212)459-3179 Credit Lyonnais Canada N/A 1 Financial Pl N/A N/A N/A 1 Financial Pl 1 Adelaide St E, 1 Adelaide St E, Suite 2505 Suite 2505 Toronto, Ontario Toronto, Ontario Canada M5C 2V9 Canada M5C 2V9 First Union National Bank 550 Broad St, 550 Broad St, 550 Broad St, N/A N/A NJ1535 NJ1535 NJ1535 Newark, NJ 07102 Newark, NJ 07102 Newark, NJ 07102 Attn: Mary Tenore Attn: Mary Tenore Attn:Mary Tenore TEL:(201)565-3607 TEL:(201)565-3607 TEL:(201)565-3607 FAX:(201)565-3978 FAX:(201)565-3978 FAX:(201)565-3978 Fleet National Bank 1 Landmark Sq 1 Landmark Sq 1 Landmark Sq N/A N/A 12th Floor 12th Floor 12th Floor Stamford, CT 06904 Stamford, CT 06904 Stamford, CT 06904 Attn: G. Rockwood Attn:G. Rockwood Attn:G. Rockwood TEL:(203)358-6146 TEL:(203)358-6146 TEL:(203)358-6146 FAX:(203)358-6111 FAX:(203)358-6111 FAX:(203)358-6111 Societe Generale, New York Branch 1221 Ave. of N/A 1221 Ave. of N/A N/A N/A Americas Americas NY, NY 10020 NY, NY 10020 Attn:M. O'Donnell Attn:M. O'Donnell TEL:(212) 278-6853 TEL:(212) 278-6853 FAX:(212) 278-7490 FAX:(212) 278-7490 Societe Generale, Milan Branch N/A N/A N/A N/A Sedi di Milano N/A Foro Bounparte, 66 20121 Milan, Italy Attn: Mauro Lucchesi TEL: 39-2-854-9320 FAX: 39-2-854-9245 with a copy to: Alan Zinser 1301 Ave. of the Americas New York, NY 10020 Societe Generale (Canada) N/A 100 Yonge Street N/A N/A N/A 100 Yonge Street Suite 1002 Suite 1002 Toronto, Ontario Toronto, Ontario Canada M5C 2W1 Canada M5C 2W1 Toronto Dominion (New York), Inc. 909 Fannin, Suite 1700 N/A 909 Fannin, Suite 1700 N/A N/A N/A 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 The Toronto-Dominion Bank N/A P.O. Box 1 N/A Triton Court N/A P.O. Box 1 Toronto Dominion 14/18 Finsbury Sq Toronto Dominion Center London EC2A-1DB Center 55 King Street England 55 King Street Toronto, Ontario Attn:D. Payne Toronto, Canada M5K 1A2 TEL:011-44-171-920-0272 Ontario FAX:011-44-171-638-2551 Canada M5K 1A2 SCHEDULE II TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT PART I: CROMPTON GUARANTORS CK Holding Corporation CNK Disposition Corp. Crompton & Knowles Colors Incorporated Davis-Standard Corporation Ingredient Technology Corporation Kem Manufacturing Corporation PART 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. SCHEDULE III MINOR SUBSIDIARIES CNK Disposition Corporation/ Florida Crompton & Knowles Acceptance Corp./Massachusetts Crompton & Knowles Chemical Realty/Pennsylvania Crompton & Knowles International Inc./Virgin Islands Killion Extruders, Inc. (Being dissolved)/New Jersey Orlex Chemicals Corp. (Being dissolved)/New Jersey C&K Specialities Holding B.V./ Netherlands Crompton & Knowles (Espana) SL/Espain Crompton & Knowles (Hong Kong) Ltd./Hong Kong Crompton & Knowles (International) SARL/France Crompton & Knowles (Italia) SRL/Italy Crompton & Knowles (Korea) Ltd/Korea Crompton & Knowles (Luxembourg) S.A./Luxembourg Crompton & Knowles (Portugal) LDA/Portugal Ifatex Chemische Produkte GmbH/Germany 9056-0921 Quebec Inc./Canada CNK One B.V. (No assets-inactive)/Netherlands CNK Two B.V. (No assets-inactive)/Netherlands CNK S.R.L. (Liquidated)/Italy Italiana S.R.L. (Being Liquidated)/Italy Uniroyal Chemical Leasing Co., Inc./Delaware Naugatuck Treatment Company/Connecticut Interbel Trading, Inc./Florida Uniroyal Chemical Specialties, Inc./Delaware Uniroyal Chemical Asia, Ltd./Delaware Lokar Enterprises, Inc./Delaware Imobiliaria Hulquimex S.A. de C.V./Mexico Uniroyal Quimica S.A.C.I./Argentina Uniroyal Chemical Technology B.V./Netherlands Uniroyal Chemical S.A.R.L./ Switzerland Uniroyal Chemical S.A./Spain Uniroyal Chem. International Sales Corp./Barbados Uniroyal Chemical Limited/Scotland Hancock Tire Company Limited/Canada Uniroyal Chemical Asia Pte Ltd/Singapore SCHEDULE IV TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT B-2 BORROWERS Borrower Country of Incorporation C & K Services SA Belgium Davis-Standard (Deutschland) GmbH Germany Davis Standard (France) SARL France ER-WE-PA Davis-Standard GmbH Germany Uniroyal Chemical B.V. Netherlands Uniroyal Chemical Ltd. United Kingdom SCHEDULE V TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT ITALIAN BORROWERS Borrower Country of Incorporation Uniroyal Chimica S.r.L. Italy SCHEDULE VI TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT ITALIAN LENDERS Citibank, N.A., Milan Branch The Chase Manhattan Bank, Milan Branch Bank of America NT & SA, Milan Branch Banca Commerciale Italiana, Latina Branch SCHEDULE VII TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT BORROWER'S ACCOUNTS Borrower Currency Account No. Crompton & Knowles U.S. Dollars 4070-6411 Corporation 399 Park Avenue New York, NY 10043 Crompton & Knowles U.S. Dollars 4070-6438 Colors Incorporated 399 Park Avenue New York, NY 10043 Davis-Standard U.S. Dollars 4070-6462 Corporation 399 Park Avenue New York, NY 10043 Ingredient Technology U.S. Dollars 4070-6446 Corporation 399 Park Avenue New York, NY 10043 Uniroyal Chemical U.S. Dollars 4049-8376 Company, Inc. 399 Park Avenue New York, NY 10043 Uniroyal Chimica S.P.A. Italian Lira 10789/04 c/o MONTE DEI PASCHI DI SIENA, Latina Branch Uniroyal Italian Lira 0/114349/011 Chimica S.P.A. c/o CITIBANK MILAN Uniroyal Chemical Co. Canadian Dollars PAYMENT OFFICES Working Capital B-2 Facility: Citibank, N.A., London Branch P.O. Box 12068 Counting House 53 Pooley Street London SE12GA Attention: Ken Purchase/David Williams Italian Facility: Citibank, N.A., Milan Branch Foro Bounaparte 16 20121 Milan, Itlay Attention: Nicoletta Zappatini Canadian Facility Citibank Canada 123 Front Street West 10th Floor Toronto, Ontario Canada M5J 2M3 Attention: David Wingfelder SCHEDULE 3.01 (b) DISCLOSED LITIGATION None, except as disclosed in the (i) Annual Report on Form 10K of Crompton & Knowles Corporation for the fiscal year ended December 31, 1996, and the Quarterly Reports on Form 10Q of such company for the quarters ended March, June and September of 1996, (ii) Annual Report on Form 10K of Uniroyal Chemical Company, Inc. for the fiscal year ended December 31, 1996, and the Quarterly Reports on Form 10Q of such company for the quarters ended March, June and September of 1996, (iii) the report of Beveridge and Diamond, P.C. dated March 9, 1995, (iv) any report issued pursuant to Section 3.01 of this Credit Agreement and (v) Schedule 4.01(l). SCHEDULE 3.02(b)(viii) TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT FOREIGN LOCAL COUNSEL ITALY GIANNI, ORIGONI & PARTNERS BELGIUM FRESHFIELDS GERMANY FRESHFIELDS FRANCE FRESHFIELDS THE NETHERLANDS LOEFF CLAEYS VERBEKE SCOTLAND DUNDAS & WILSON SCHEDULE 4.01 (b) SUBSIDIARIES (UNIROYAL CHEMICAL CORPORATION) Percentage Shares of Securities Number of Issued and Owned by its Name/Place Shares/Class Outstanding Immediate of Incorporation Authorized Capital Stock Parent Uniroyal Chemical 1,000 Common Corporation/Delaware Stock Shares 100 100% Purchase Rights - None Warrants - All warrants exercised on 1/03/98 Option - None Domestic Subsidiaries Uniroyal Chemical 2,500 Common Company, Inc. / Stock Shares 100 Shares 100% New Jersey (A) Uniroyal Chemical 1,000 Common Leasing Co., Inc./ Stock Shares 100 Shares 100% Delaware (B) Naugatuck Treatment 100 Common Company/Connecticut(B) Stock Shares 100 Shares 100% Interbel Trading, Inc. 50 Common 50 Shares 100% /Florida (B) Stock Shares Gustafson, Inc./ 150,000 Common 116,310 Shares 100% Minnesota (B) Stock Shares Uniroyal Chemical 100 Common 100 Shares 100% Specialties, Inc./ Stock Shares Delaware (B) Uniroyal Chemical 1,000 Common 100 Shares 100% Brazil Holding Inc./ Stock Shares Delaware (B) 1,000 Preferred 0 0% Stock Shares Uniroyal Chemical 1,000 Common 176 Shares 100% International Company/ Stock Shares Texas (C) 1,000 Preferred 0 0% Stock Shares Gustafson International 100 Common 100 Shares 100% Company/Texas (E) Stock Shares Uniroyal Chemical Asia, 3,000 Common Ltd. / Delaware (B) Stock Shares 100 Shares 100% Lokar Enterprises, Inc./ 3,000 Common 100 Shares 100% Delaware (A) Stock Shares Trace Chemicals, Inc./ 1,000 Common 80 Shares 100% Nevada (B) Stock Shares Uniroyal Chemical 1,000 Common 100 Shares 100% Export Ltd./Delaware(B) Stock Shares Foreign Subsidiaries Novaquim Holding S.A. 50,000 Series B 50,000 Shares 100% de C.V. / Mexico (B) Capital Stock Shares Novaquim S.A. de C.V./ 5,150,750 5,150,750 100% Mexico (D) Series B Shares Capital Stock Shares 683,255,080 683,255,080 100% Shares of Shares Sub-Series B Capital Stock Imobiliaria Hulquimex 250 Series A 250 Shares 100% S.A. de C.V./Mexico(Q) Capital Stock Shares 37,750 Series B 37,750 Shares 100% Capital Stock Shares Unicorb Limited/ 636,945 Common Stock 636,945 100% England (B) Shares Shares Uniroyal Quimica 3,000 Common 3,000 100% S.A.C.I./Argentina (B) Stock Shares Shares Uniroyal Chemical 1,000 Common 100 100% Investment Ltd./ Stock Shares Shares Canada (B) Uniroyal Chemical Co./ 4,000,000 Common 450,500 100% Canada (O) Stock Share Uniroyal Chemical 2,700,996,670 2,700,996,670 100% Participacoes Ltda./ Quotas Quotas Brazil (F) Uniroyal Quimica S.A./ 2,798,781,305 2,798,781,305 100% Brazil (G) Common Shares Stock Shares Uniroyal Chemical Taiwan 3,970,740 Common 3,970,740 100% Ltd./ Taiwan (B) Stock Shares Shares Uniroyal Chemical 250,000 Common 50,000 100% Holdings B.V. / Stock Shares Shares The Netherlands (H) Uniroyal Chimica S.r.L./ 10,000 Common 10,000 100% Italy (I) Stock Shares Shares Uniroyal Chemical 500,000 Common 296,500 100% European Holdings Stock Shares Shares B.V. / Netherlands Uniroyal Chemical 500,000 Common 305,500 100% Overseas B.V./ Stock Shares Shares Netherlands Uniroyal Chemical 500,000 Common 305,500 100% Netherlands B.V./ Stock Shares Shares Netherlands (P) Uniroyal Chemical B.V./ 500 Common 500 100% Netherlands (J) Stock Shares Shares Uniroyal Chemical 2,000 Common 400 100% Technology B.V./ Stock Shares Shares Netherlands (B) Uniroyal Chemical 25,000 Common 25,000 100% (Proprietary) Ltd./ Stock Shares Shares South Africa (B) Uniroyal Chemical 20 Quota Units 20 Quota Units 100% S.A.R.L. / Switzerland (B) Uniroyal Chemical S.A./ 10,000 Common 10,000 Shares 100% Spain (B) Stock Shares Uniroyal Chemical Pty. 1,000,000 Common 500,000 Shares 100% Ltd / Australia (B) Stock Share Hannaford Seedmaster 10,000 Common 10,000 Shares 100% Services Pty./ Stock Shares Australia (K) Industrias Gustafson 50 Common 50 Shares 100% S.A. de C.V./Mexico (L) Stock Shares Uniroyal Chem. Unlimited number 1,000 Shares 100% International Sales of Common Shares Corp./Barbados (M) Uniroyal Chemical 5,000,000 Common 1,697,372 100% Limited/Scotland (B) Stock Shares Shares Uniroyal Chemical 100,000 Common 4,000 Shares 100% Co. Ltd /Bahamas/ Stock Shares Delaware (B) Hancock Tire Company 400 Common 3 Shares 100% Limited. Canada (F) Stock Shares 15 Shares of 0 Preferred Stock Uniroyal Chemical 1,000 Common 100 Shares 100% Asia Pte Ltd/ Stock Shares Singapore (N) Domestic Affiliates Monochem, Inc./ 500 Shares 500 Shares 100%(*) Louisiana (B) of Class A Common Stock 500 Shares of Class B 500 Shares 0% Common Stock 1,500,500 Shares of Class C 501,020 Shares 33.1% Common Stock Rubicon Inc./ 5,000,000 Shares 400,000 100%(*) Louisiana (B) of Class A Shares Common Stock 500 Shares of Class B 400,000 Shares 0% Common Stock NPC Services, Inc. 100 Common Stock 100 Shares 12.75% / Louisiana (B) Shares Rapid, Inc. / 110,000 Common 110,000 0.0058% Delaware (B) Stock Shares Shares Foreign Affiliates TOA UNI Chemical 490,000 Group A 490,000 Shares100%(*) Manufacturing Ltd/ Shares Thailand (B) 510,000 Group B 510,000 Shares 0% Shares TOA UNI Chemical Ltd. / Thailand (B) 14,700 Group 14,700 100 %(*) Shares 15,300 Group 15,300 Shares 0% A Shares Orchem (Proprietary) Limited / South Africa (B) 1,050,000 1,050,000 Shares of Class A Shares 0% Common Shares 450,000 Shares of 450,000 100 %(*) Class B Common Shares Shares Herdillia Unimers 35,000,000 Equity 33,000,000 10% Limited / India (F) Shares Shares Unikor Chemical Inc. 408,000 Common 408,000 / Korea (B) Stock Shares Shares 50% (A) Owned by Uniroyal Chemical Corporation (B) Owned by Uniroyal Chemical Company Inc. (C) 71.6% owned by Uniroyal Chemical Company, Ind. and 28.4% 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 Co./Cie. (G) Owned by Uniroyal Chemical Participacoes Ltda. (H) 85% owned by Uniroyal Chemical European Holdings B.V. and 15% by Uniroyal Chemical Co./Cie. (I) Owned by Uniroyal Chemical Holdings B.V. (J) Owned by Uniroyal Chimica S.r.L. (K) Owned by Uniroyal Chemical Pty. Ltd. (L) Owned by Gustafson, Inc. (M) Owned by Uniroyal Chemical Export Limited (N) Owned by Uniroyal Chemical Asia, Ltd. (O) Owned by Uniroyal Chemical Netherlands B.V. (P) Owned by Uniroyal Chemical European Holdings B.V. (Q) Owned by Novaquim S.A. de C.V. (*) Uniroyal Chemical Company, Inc. holds the following combined voting power at entities indicated: 50% Monochem, Inc. 50% Rubicon Inc. 48.9% TOA UNI Chemical Manufacturing Ltd. 49% TOA UNI Chemical Ltd. 30% Orchem (Proprietary) Ltd. SCHEDULE 4.01 (b) SUBSIDIARIES (CROMPTON & KNOWLES CORPORATION) Percentage Shares of Securities Number of Issued and Owned by its Name/Place Shares/Class Outstanding Immediate of Incorporation Authorized Capital Stock Parent Domestic Subsidiaries CK Holding Corporaption/Delaware (A) 1,000 750 100% CNK Disposition Corporation/Florida (A) 100 100 100% Crompton & Knowles Acceptance Corp./Massachusets (A) 7,500 100 100% Crompton & Knowles Chemical Realty/Pennsylvania (A) 100 100 100% Crompton & Knowles Colors Incorp./Delaware (B) 1,000 500 100% Davis-Standard Corporation/Delaware (B) 1,000 500 100% Ingredient Technology Corporation/Delaware (B) 1,000 10 100% KEM International Corporation/Delaware (E) 2,000 250 100% KEM Manufacturing Corporation/Georgia (A) 1,000 100 100% Crompton & Knowles International Inc./Virgin Islands (A) 100 100 100% Killing Extruders, Inc. (Being dissolved)/New Jersey (C) 14,997,240 3,006,700 100% Shares 1,400 Preferred 1,050 100% "A" 1,360 Preferred 1,360 100% "B" Orlex Chemicals Corp. (Being dissolved)/New Jersey (A) 1,000 100 100% Foreign Subsidiaries C&K Services (Luxembourg) S.A./Luxembourg (D) 1,250 1,249 100% C&K Specialities Holding B.V. / Netherlands (E) 1,000 100 100% Crompton & Knowles of Canada Ltd/Canada (A) Unlimited 150 100% Crompton & Knowles (Deutschland) GmbH / Germany (D) 50 50 100% Crompton & Knowles (Espana) SL/ Espain (I) 2,300,000 2,300,000 100% Crompton & Knowles Europe S.P.R.L./Belgium (J) 60,000 60,000 100% Crompton & Knowles (France) S.A./France (D) 1,021,470 1,021,464 100% Crompton & Knowles (Hong Kong) Ltd./Hong Kong (D) 1 1 100% Crompton & Knowles (International)SARL/France (A) 20 20 100% Crompton & Knowles (Italia) SRL/Italy (H) 20,000 20,000 100% Crompton & Knowles (Korea) Ltd/Korea (D) 20,000 10,000 100% Crompton & Knowles (Luxembourg) S.A. /Luxembourg (D) 1,250 1,250 100% Crompton & Knowles (Nederland) B.V. / Netherlands (D) 100 100 100% Crompton & Knowles (Portugal) LDA / Portugal (L) 5,000,000 5,000,000 100% Crompton & Knowles Services SPRL / Belgium (M) 150,000 150,000 100% Crompton & Knowles (U.K.) / U.K. (N) 800,000 800,000 100% Davis-Standard (Deutschland) GmbH / Germany (C) 1,000 500 100% Davis-Standard (France) SARL / France (K) 7,326 7,326 100% ER-WE-PA Davis-Standard GmbH / Germany (O) 10,000,000 10,000,000 100% Ifatex Chemische Produkte GmbH / Germany (F) 4 4 100% 9056-0921 Quebec Inc. / Canada (G) Unlimited Common 251 100% Unlimited 1,000 100% Preferred "A" CNK One B.V. (No assets - inactive) / Netherlands CNK Two B.V. (No assets - inactive) / Netherlands CNK S.R.L. (Liquidated) / Italy Italiana S.R.L. ( Being Liquidated) / Italy (A) Owned by Crompton & Knowles Corporation (B) Owned by CK Holding Corporation (C) Owned by Davis-Standard Corporation (D) Owned by Crompton & Knowles Europe S.P.R.L. (E) Owned by KEM Manufacturing Corporation (F) Owned by Crompton & Knowles (Deutschland) GmbH (G) owned by Ingredient Technology Corporation (H) 70% Owned by Crompton & Knowles Europe S.P.R.L. and 30% by Crompton & Knowles (Nederland) B.V. (I) 95% Owned by Crompton & Knowles Europe S.P.R.L. and 5% by Crompton & Knowles (Nederland) B.V. (J) 99% Owned by Uniroyal Chemical European Holding B.V. and 1% by Uniroyal Chemical Overseas B.V. (K) 32.76% Owned by Crompton & Knowles Corporation and 67.24% by 9056-0921 Quebec Inc. (L) 70% Owned by Crompton & Knowles Europe S.P.R.L. and 30% by Crompton & Knowles (Nederland) B.V. (M) 76% Owned by Uniroyal Chemical Co./Cie. 23% Owned by Crompton & Knowles European Holdings B.V. Less than 1% by Uniroyal Chemical European Holdings B.V. (N) 99% Owned by Crompton & Knowles Europe S.P.R.L. and 1% by Crompton & Knowles (Nederland) B.V. (O) 99% Owned by Davis-Standard (Deutschland) GmbH and 1% by ER-WE-PA Davis-Standard Beteiligungs GmbH SCHEDULE 4.01 (d) TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT AUTHORIZATIONS, APPROVALS, ACTIONS, NOTICES AND FILINGS None. SCHEDULE 4.01 (l) ENVIRONMENTAL DISCLOSURE 1. See (i) the environmental report of Beveridge & Diamond dated March 9, 1995 ("B & D Report"), (ii) the public filings of Uniroyal Chemical Corporation including but not limited to its Annual Report on Form 10K for the fiscal year ended December 31, 1996, its Quarterly Reports on Form 10Q for the quarters ended March, June and September of 1996 and Annual Report on Form 10 K for the fiscal year ended December 27, 1997 and (iii) the public filings of Crompton & Knowles Corporation ("C&K") including but not limited to its Annual Report on Form 10K for the fiscal year ended December 31, 1996 and its Quarterly Reports on Form 10Q for the quarters ended March, June and September of 1996 and its Annual Report on Form 10 K for the fiscal year ended December 27, 1997. 2. In connection with establishing appropriate reserves for environmental liabilities, C&K regularly updates its estimates of costs associated with the restoration of identified off-site and on-site disposal sites and other environmental requirements. C&K believes that the most likely future amount of its currently known environmental liabilities is approximately $102.6 million which was reserved as of December 27, 1997, for the cost associated with liabilities for past off-site and on-site disposal of hazardous materials, based on Crompton & Knowles' interpretation of current environmental laws and regulations. C&K intends to assert all meritorious legal defenses and all other equitable factors which are available to it with respect to these matters. 3. Uniroyal Chemical and its subsidiaries are 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 relating to or alleging environmental liabilities, including clean up costs associated with hazardous waste disposal sites, property damage and personal injuries. a. Beacon Heights and Laurel Park - Uniroyal Chemical is a member of the Beacon Heights Coalition, a group of entities engaged in remedial work at the Beacon Heights site in the State of Connecticut pursuant to a Consent Decree entered in 1987. The actions required by this Consent Decree have been essentially completed. There is a continuing requirement for operation and maintenance at the site. Remedial construction began at the Laurel Park site in July 1996, and is anticipated to be completed in 1998. b. Cleve Reber Uniroyal Chemical and three other corporations named in an Administrative Order issued by the EPA have complied with such Order which governs remediation of the site located in the State of Louisiana. The cooperating parties are negotiating a consent agreement with the EPA for operation and maintenance of the site and to resolve all of the EPA's past claims. c. Petro Processors This matter relating to a site in the State of Louisiana was initiated in 1981. Litigation was instituted by the EPA against a number of parties, including Uniroyal, Inc. (which Uniroyal Chemical has agreed to indemnify), seeking cleanup of the Petro Processors site. A Consent Decree was entered to settle the case in 1984, which required the defendants to clean up the site to the satisfaction of the EPA under supervision of the court. A settlement among the ten defendants, dated December 16, 1983, defines the percentage to be borne by each defendant of the currently estimated future cost of $100 million to complete remediation of the site. Although the allocations are subject to a confidentiality order, Uniroyal Chemical believes that the amount it will pay will not be material to its financial condition or results of operation. d. Vertac Uniroyal Chemical and its Canadian subsidiary, Uniroyal Chemical Co., were joined with others as defendants in consolidated civil actions brought in the United States District Court, Eastern District of Arkansas, Western Division by the United States of America, the State of Arkansas and Hercules Incorporated ("Hercules") relating to a Vertac Chemical Corporation site in Jacksonville, Arkansas allegedly contaminated by dioxins. Uniroyal Chemical has been dismissed from the litigation. On May 21, 1997, the Court entered an order finding that Uniroyal Chemical Co, is jointly and severally liable to the United States, and finding that Hercules and Uniroyal Chemical Co. are liable to each other in contribution. The allocation phase of the proceedings has begun with discovery ongoing and trial scheduled to begin in 1998. No ultimate determination of the amount of Uniroyal Chemical Co.'s liability, if any, is expected prior to the middle of 1999. e. Sandor Canada Inc. On July 13, 1990, Sundor Canada Inc. ("Sundor") instituted suit against Uniroyal Chemical Co. ("Uniroyal") and others including the Ontario Ministry of the Environment and the Regional Municipality of Waterloo in the Ontario Court of Justice (General Division) at Toronto claiming that Uniroyal and others are responsible for losses resulting from Sundor's recall of packaged juices and fruit due to Sundor's use of the public water derived from Elmira groundwater which was allegedly contaminated by Uniroyal. A tentative settlement has been reached with Sundor by which the defendants, including Uniroyal and its insurer will pay CD$3,500,000 in the aggregate to Sundor. f. Painesville Reference is made to Item 1 (i) of Part II of the Registrants' Quarterly Report on Form 10-Q for the quarterly period ended June 28, 1997, for information relating to (a) Uniroyal Chemical's Painesville, Lake County, Ohio facility which manufactures nitrile rubber and discharge of Painesville's wastewater to the Lake County sanitary sewer system for treatment at Lake County's Greater Mentor Wastewater Treatment Plant ("GMWTP") ; and (b) a proposed Local Limit aimed at regulating the amount of substances which absorb at 230 manometers that are discharged in wastewater to the GMWTP. From July 1996 through December 31, 1997, Lake County has assessed against the Painesville facility a total of $487,000 in administrative fines and has ordered Uniroyal Chemical to reimburse it for $106,295 in fines Lake County has paid to the State of Ohio for the GMWTP's violations of its NPDES permit. The Painesville facility appealed Lake County's Reimbursement Order and its initial assessment of administrative fines to the Lake County Court of Common Pleas. Since the parties commenced settlement negotiations in December 1996, all legal proceedings concerning the above-described matters have been stayed voluntarily by agreement of the parties. Uniroyal Chemical anticipates that any fines and/or reimbursements paid to Lake County in connection with the resolution of this matter will not exceed $175,000 in the aggregate. 4. Crompton Corporation has been designated along with others as a potentially responsible party under CERCLA or comparable state statutes. a. 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. b. In CPS Chemical Co, Inc. v. Evor Phillips Leasing Co, Inc., et al., 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, the plaintiffs seek to recover cleanup and other response costs and to obtain contribution from Crompton Corporation and the other defendants in connection with the Industrial Solvent & Chemical Company solvents reprocessing facility located in York County, Pennsylvania. c. KEM Manufacturing Corporation ("KEM"), a wholly-owner 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. SCHEDULE 4.01(o) - SURVIVING DEBT AS OF 2/28/98 - $000 DESCRIPTION LINE OUTSTANDING I. BONDS VARIOUS BONDHOLDERS 9% SENIOR SECURED 226,000 226,000 NOTES DUE 2000 VARIOUS BONDHOLDERS 10 1/2% SENIOR NOTES 217,000 217.000 DUE 2202 VARIOUS BONDHOLDERS 11% SENIOR SUBORDINATED 232,000 232,000 NOTES DUE 2003 VARIOUS BONDHOLDERS 12% SUBORDINATED DIS- 120,000 120,000 COUNT NOTES DUE 2005 II. REVOLVER CREDIT FACILITY CROMPTON & KNOWLES TRANCHE A 300,000 25,000 CORPORATION UNIROYAL CHEMICAL TRANCHE B-1 150,000 62,000 COMPANY EUROPEAN TRANCHE TRANCHE B-2 45,000 3,000 ITALIAN TRANCHE TRANCHE B-3 35,000 20,219 UNIROYAL CHEMICAL CANADIAN TRANCHE 70,000 0 III. OTHER CREDIT FACILITIES CROMPTON & KNOWLES CORPORATION BANK OF NEW YORK UNSECURED SHORT-TERM DEBT 10,000 0 NEW ENGLAND LIFE LIFE INSURANCE POLICY 6,986 0 INS. CO, LOANS CROMPTON & KNOWLES COLORS, INC. DAVIS-STANDARD CORP & INGREDIENT TECHNOLOGY CORP. CHASE MANHATTAN UNSECURED SHORT-TERM, 5,000 0 BANK DEBT CROMPTON & KNOWLES EUROPE S.A. CREDIT LYONNAIS NOTES PAYABLE & OVERDRAFT 15,363 0 BANK BRUSSELS NOTES PAYABLE & OVERDRAFT 2,048 0 LAMBERT GENERAL DE BANQUE NOTES PAYABLE & OVERDRAFT 768 0 ER-WE-PA DAVIS STANDARD GmbH COMMERZBANK NOTES PAYABLE & OVERDRAFT 4,200 0 WESTDEUTSCHE NOTES PAYABLE & OVERDRAFT 200 0 LANDESBANK BHF NOTES PAYABLE & OVERDRAFT 10,000 0 DAVIS-STANDARD (FRANCE) S.A.R.L. CITIBANK REVOLVING LINE 2,300 0 UNIROYAL CHEMICA S.p.A. (ITALY) BANCO DI NAPOLI OVERDRAFT & CURRENCY LOANS 557 1 MONTE DEI PASCHE OVERDRAFT & CURRENCY LOANS 4,178 111 DI SIENA BANCA COMMERCIAL OVERDRAFT & CURRENCY LOANS 2,785 ITALIANA BANCA DI ROMA OVERDRAFT & CURRENCY LOANS 2,785 ISTITUTO BACARIO OVERDRAFT & CURRENCY LOANS 4,345 S. PAOLO DI TORINO BANCA NAZIONALE DEL OVERDRAFT & CURRENCY LOANS 2,785 LAVORO BANCA NAZIONALE DEL LONG TERM-DEBT 3,289 2,941 LAVORO (**) UNIROYAL CHEMICAL, LIMITED (U.K.) NATIONAL WESTMINSTER OVERDRAFT FACILITY 850 0 UNIROYAL CHEMICAL, LTD. (CANADA) ROYAL BANK OF REVOLVER 7,000 0 CANADA(**) PREMIER CHEMICAL, LTD, (TAIWAN) ROYAL BANK OF MULTI-PURPOSE 2,000 2,000 CANADA HONG KONG BANK MULTI-PURPOSE 545 405 UNIROYAL CHEMICAL PTY, LTD. (AUSTRALIA) NATIONAL AUSTRALIA OVERDRAFT 789 0 BANK HANNAFORD SEEDMASTER SERVICES PTY. LTD (AUSTRALIA) WESTPAC OVERDRAFT 1,066 0 WESTPAC(**) EQUIPMENT FINANCE 395 0 WESTPAC REMITTANCE L/C 8 0 WESTPAC BANKERS' UNDERTAKING 8 0 WESTPAC FORWARD EXCHANGE CONTRACT(S) 494 0 WESTPAC TAPE NEGOTIATION AUTHORITY 40 0 UNIROYAL QUIMICA S.A. (BRAZIL) ITAU SHORT-TERM DEBT 200 39 CITIBANK RURAL CREDIT 1,000 0 UNIROYAL CHEMICAL B.V. ABN-AMRO UNSECURED OVERDRAFT FACILITY 1,200 0 TOTAL DEBT CROMPTON & KNOWLES CORPORATION 1,488,184 910,716 IV. LETTERS OF CREDIT AMOUNT OF L/C CROMPTON & KNOWLES CORPORATION NEW JERSEY DEPT. OF EPA 3,558 PENNSYLVANIA DEPT. OF EPA 3,504 ENVIRONMENTAL PROTECTION AGENCY 196 CONTINENTAL CASUALTY COMPANY 2,800 HARTFORD INSURANCE COMPANY 20 BARCLAY'S BANK, LTD. 27 COPERTRADING COMERCIO 1,761 VARIOUS - CUSTOMERS/VENDORS 489 ______ 12,355 UNIROYAL CHEMICAL COMPANY, INC. (USA) NATIONAL UNION FIRE INS. 2,411 NATIONAL UNION FIRE INS. 964 PREMIER/BAYOU SORREL TRUST 229 NUCLEAR REGULATORY COMMISSION 150 KREDIETBANK/CHEMICAL FORWARDERS 150 KREDIETBANK/CHEMICAL FORWARDERS 175 L. MARQUEZ 10 BADC (BANGLADSH AGRICULTURAL PERFORMANCE BOND 4 DEVELOPMENT CO) _____ 4,093 PREMIER CHEMICAL COMPANY LTD, (TAIWAN) ROYAL BANK OF CANADA USANCE 381 TOTAL LETTERS OF CREDIT CROMPTON & KNOWLES CORPORATION 16,829 V. LETTERS OF GUARANTY DESCRIPTION AMOUNT OF CROMPTON & KNOWLES CORPORATION CHASE MANHATTAN BANK UNSECURED S-T SUB LOANS 5,000 CITIBANK UNIROYAL QUIMICA S/A - 1,000 RURAL CREDIT BHF-BANK ER-WE-PA GERMANY 10,000 CROMPTON & KNOWLES COLORS INC., DAVIS STANDARD CORP, & INGREDIENT TECHNOLOGY CORP. CHASE MANHATTAN BANK L/C'S ISSUED FOR CROMPTON 6,827 & KNOWLES CORP. DAVIS-STANDARD (FRANCE) S.A.R.L. BANK NATIONAL PARIS VARIOUS CUSTOMERS 2,300 BANK POPULAIRE VARIOUS CUSTOMERS 100 UNIROYAL CHEMICAL COMPANY, INC. (USA) ICI (RUBICON/RCRA) LA. EPA OBLIGATIONS 2,780 CITIBANK UNIKOR LOCAL LINES OF 1,800 CREDIT SIAM COMMERCIAL BANK THAILAND J.V.- OVERDRAFT 490 & SHORT-TERM LOAN SIAM COMMERCIAL BANK THAILAND J.V.- OVERDRAFT 98 SIAM COMMERCIAL BANK THAILAND J.V.- SHORT-TERM 588 LOAN SIAM COMMERCIAL BANK THAILAND J.V.- L/C TRUST 392 RECEIPT SIAM COMMERCIAL BANK THAILAND J.V. - OFFSHORE 2,940 LOAN SIAM COMMERCIAL BANK THAILAND J.V. - LEGAL 98 GUARANTY UNIROYAL CHIMICA S.p.A. (ITALY) BANCA NAZIONALE DEL LAVORO METAN GAS USAGE 50 BANCA NAZIONALE DEL LAVORO CUSTOM DUTY VAT - ANTWERP 39 BANCA NAZIONALE DEL LAVORO REGIONE LAZIO (LOCAL 29 GOVERNMENT) ISITUTO BANCARIO S. PAOLO CUSTOM DUTY VAT - ROME 84 DI TORINA ISITUTO BANCARIO S. PAOLO CUSTOM DUTY VAT - APRILIA 168 DI TORINA ISTITUTO BANCARIO S. PAOLO WASTE DISPOSAL (LOCAL 112 DI TORINA GOVERNMENT) ISITUTO BANCARIO S. PAOLO GOVERNMENT RAILWAYS 6 DI TORINA BANCO DI NAPOLI TELEX EXPENSES COVERAGE 1 IN FAVOR OF POST & TELECOMMUNICATIONS IND. UNIROYAL CHEMICAL, LTD. (U.K.) NATIONAL WESTMNSTER BANK MINISTRY OF AGRICULTURE 204 PISCO ESTABLISHMENT 137 PISCO ESTABLISHMENT 35 H.M. CUSTOMS & EXCUSE 600 UNIROYAL CHEMICAL B.V. (HOLLAND) ABN - AMRO BANK SONAPRA COTUSION 68 ASSC. TEHERAN 10 ENVIRONMENTAL DEPARTMENT 22 TAX DEPARTMENT (VAT) 21 CUSTOMS 97 TOTAL LETTERS OF GUARANTY CROMPTON & KNOWLES CORPORATION 35,878 SCHEDULE 4.01 (p) MATERIAL SUBSIDIARES Crompton & Knowles Corporation Subsidiaries CK Holding Corporation/Delaware Crompton & Knowles Colors Incorp./Delaware Davis-Standard Corporation/Delaware Ingredient Technology Corporation/Delaware KEM International Corporation/Delaware KEM Manufacturing Corporation/Georgia C&K Services (Luxembourg) S.A./Luxembourg Crompton & Knowles of Canada Ltd/Canada Crompton & Knowles (Deutschland) GmbH/Germany Crompton & Knowles Europe S.P.R.L./Belgium Crompton & Knowles (France) S.A./France Crompton & Knowles (Nederland) B.V./Netherlands Crompton & Knowles Services SPRL/Belgium Davis-Standard (Deutschland)GmbH/Germany Davis-Standard (France) SARL/France ER-WE-PA Davis-Standard GmbH/Germany Uniroyal Chemical Corporation Subsidiaries Uniroyal Chemical Company, Inc./New Jersey Gustafson, Inc./Minnesota Uniroyal Chemical Brazil Holding Inc./Delaware Uniroyal Chemical International Company/Texas Gustafson International Company/Texas Trace Chemicals Inc./Nevada Uniroyal Chemical Export Ltd./Delaware Novaquim Holding S.A. de C.V./Mexico Novaquim S.A. de C.V./Mexico Unicorb Limited/England Uniroyal Chemical Investment Ltd./Canada Uniroyal Chemical Co./Canada Uniroyal Chemical Participacoes Ltda./Brazil Uniroyal Quimica S.A./Brazil Uniroyal Chemical Taiwan Ltd./Taiwan Uniroyal Chemical Holdings B.V./ The Netherlands Uniroyal Chimica S.r.L./Italy Uniroyal Chemical European Holdings B.V./Netherlands Uniroyal Chemical Overseas B.V./Netherlands Uniroyal Chemical Netherlands B.V./Netherlands Uniroyal Chemical B.V./Netherlands Uniroyal Chemical (Proprietary) Ltd./South Africa Uniroyal Chemial Pty. Ltd/Australia Hannford Seedmaster Services Pty./Australia Industrias Gustafson S.A. de C.V./Mexico Uniroyal Chemical Co. Ltd/Bahamas/Delaware SCHEDULE 5.02 (a) EXISTING LIENS Index Filing Filing Secured Jurisdiction Date Date Number Party Collateral North Carolina- Mecklemburg County 08/09/96 07/10/90 346323 Cyclone Machanic Roofing Lien Claim company of $15,962 Minnesota- Hennepin County 06/07/96 12/23/87 87-23337 Larue, Judgement Nancy A. of $1,308 et al. New York- 07/24/96 05/14/91 099755 Internal Federal Sec. Of Revenue Tax Lien State Service of $2,471.19 Various Vendors Specified and Equipments Leasing Companies Liens Securing Debt identified on Schedule 4.01 (o) by the designation (**) SCHEDULE 5.02(e) INVESTMENTS (as of February 28, 1998) Crompton & Knowles Corporation Investee Amount $ Ingretec S.A. de C.V. Mexico 215,000 Uniroyal Chemical Company Investee Amount $ Rubicon 29,954 Monochem 3,539 Naugatuck Treatment Co. 2 Rapid Inc. 23 Orchem 540 Herdillia 1,305 Toa Uni Ltd. -560 Toa Uni Mfg. -916 Unikor 805 TOTAL 25,701 EXHIBIT A-1 FORM OF WORKING CAPITAL A 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 Third Amended and Restated Credit Agreement dated as of March 31, 1998 (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, certain other borrowers party thereto, 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 Amount of Working Amount of Unpaid Capital A Principal Paid Principal Notation Date Advance Or Prepaid Balance Made By EXHIBIT A-2 FORM OF WORKING CAPITAL B-1 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 Third Amended and Restated Credit Agreement dated as of March 31, 1998 (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, certain other borrowers party thereto, 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 Amount of Working Amount of Unpaid Capital B-1 Principal Paid Principal Notation Date Advance Or Prepaid Balance Made By EXHIBIT A-3 FORM OF WORKING CAPITAL B-2 NOTE $_______________ Dated: _________ __, ____ FOR VALUE RECEIVED, the undersigned, [NAME OF B-2 BORROWER] ("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 Third Amended and Restated Credit Agreement dated as of March 31, 1998 (as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Credit Agreement", the terms defined therein being used herein as therein defined) among the Borrower, certain other borrowers party thereto, the Lender, certain other Lender Parties party thereto, Citicorp USA, Inc., as Agent for the 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 in respect of each of the Working Capital B-2 Advances (i) in Dollars are payable in lawful money of the United States of America to Citicorp USA, as Agent, at its account maintained at 399 Park Avenue, New York, New York, 10043, in same day funds and (ii) in any Foreign Currency are payable in such currency at the applicable Payment Office in same day funds. Each Working Capital B-2 Advance owing to the Lender by the Borrower pursuant to the Credit Agreement, 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 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 Dollar amount first above mentioned or the Equivalent thereof in one or more Foreign Currencies, the indebtedness of the Borrower resulting from each such Working Capital B-2 Advance being evidenced by this Promissory Note, (ii) contains provisions for determining the Dollar Equivalent of Working Capital B-2 Advances denominated in Foreign Currencies and (iii) 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. The Borrower hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights. This promissory note shall be governed by, and construed in accordance with the laws of the State of New York. [NAME OF B-2 BORROWER] By Title: ADVANCES AND PAYMENTS OF PRINCIPAL Amount of Amount of Principal Unpaid Type of Advance in Interest Paid Principal Notation Date Advance Currency Rate or Prepaid Balance Made By EXHIBIT A-4 FORM OF ITALIAN BORROWER NOTE $_______________ Dated: _________ __, ____ FOR VALUE RECEIVED, the undersigned, [NAME OF ITALIAN BORROWER] ("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 Italian Borrower Advances (as defined below) owing to the Lender by the Borrower pursuant to the Third Amended and Restated Credit Agreement dated as of March 31, 1998 (as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Credit Agreement", the terms defined therein being used herein as therein defined) among the Borrower, certain other borrowers party thereto, the Lender, certain other Lender Parties party thereto, Citicorp USA, Inc., as Agent for the 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 Italian Borrower Advance from the date of such Italian Borrower 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 in respect of each of the Italian Borrower Advances are payable in like funds advanced at the applicable Payment Office, in same day funds. Each Italian Borrower Advance owing to the Lender by the Borrower pursuant to the Credit Agreement, 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 Italian Borrower Advances by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the Dollar amount first above mentioned or the Equivalent thereof in one or more Foreign Currencies, the indebtedness of the Borrower resulting from each such Italian Borrower Advance being evidenced by this Promissory Note, (ii) contains provisions for determining the Dollar Equivalent of Italian Borrower Advances denominated in Foreign Currencies and (iii) 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. The Borrower hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights. This promissory note shall be governed by, and construed in accordance with the laws of the State of New York. [NAME OF ITALIAN BORROWER] By Title: ADVANCES AND PAYMENTS OF PRINCIPAL Amount of Amount of Principal Unpaid Type of Advance in Interest Paid Principal Notation Date Advance Currency Rate or Prepaid Balance Made By EXHIBIT A-5 FORM OF CANADIAN BORROWER NOTE $_______________ Dated: _________ __, ____ FOR VALUE RECEIVED, the undersigned, UNIROYAL CHEMICAL CO. (the "Canadian 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 Canadian Borrower Advances (as defined below) owing to the Lender by the Canadian Borrower pursuant to the Third Amended and Restated Credit Agreement dated as of March 31, 1998 (as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Credit Agreement", the terms defined therein being used herein as therein defined) among the Canadian Borrower, certain other borrowers party thereto, the Lender, certain other Lender Parties party thereto, Citicorp USA, Inc., as Agent for the Lender Parties, and The Chase Manhattan Bank, as Managing Agent, on the dates and in the amounts specified in the Credit Agreement. The Canadian Borrower promises to pay interest on the unpaid principal amount of each Canadian Borrower Advance from the date of such Canadian Borrower 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 in respect of each of the Canadian Borrower Advances are payable in like funds advanced at the applicable Payment Office, in same day funds. Each Canadian Borrower Advance owing to the Lender by the Canadian Borrower pursuant to the Credit Agreement, 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 the "Canadian Borrower Advances" by the Lender to the Canadian Borrower from time to time in an aggregate amount not to exceed at any time outstanding the US Dollar amount first above mentioned or the Equivalent thereof in Canadian Dollars, the indebtedness of the Canadian Borrower resulting from each such Canadian Borrower Advance being evidenced by this Promissory Note, (ii) contains provisions for determining the US Dollar Equivalent of Canadian Borrower Advances denominated in Canadian Dollars and (iii) 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 Canadian 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. The Canadian Borrower hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights. This promissory note shall be governed by, and construed in accordance with the laws of the State of New York. UNIROYAL CHEMICAL CO. By Title: ADVANCES AND PAYMENTS OF PRINCIPAL Amount of Amount of Principal Unpaid Type of Advance in Interest Paid Principal Notation Date Advance US Dollars Rate or Prepaid Balance Made By EXHIBIT A-6 FORM OF DRAFT BANKERS' ACCEPTANCE DUE_______________ No. BA___ Toronto, Canada _____________, 19__ ON ___________________________, (WITHOUT GRACE), FOR VALUE RECEIVED PAY TO THE ORDER OF THE UNDERSIGNED DRAWER THE SUM OF $ DOLLARS TO: [NAME OF BANK] UNIROYAL CHEMICAL CO. Per: Authorized Signing Officer EXHIBIT B-1 FORM OF NOTICE OF BORROWING Citicorp USA, Inc., as Agent for the Lenders parties to the Credit Agreement referred to below 399 Park Avenue [Date] New York, NY 10022 Attention: Robin Lenna [for Working Capital B-2 Borrowings] [Citibank, N.A., London Branch P.O. Box 12068 Counting House 53 Pooley Street London SE12GA Attention: Ken Purchase/David Williams] [for Italian Borrowings] [Citibank, N.A., Milan Branch Foro Bounaparte 16 20121 Milan, Italy Attention: Nicoletta Zappatini] [for Canadian Borrowings] [Citibank Canada 123 Front Street West 10th Floor Toronto, Ontario Canada M5J 2M3 Attention: David Wingfelder] Ladies and Gentlemen: The undersigned, [Name of Borrower], refers to the Third Amended and Restated Credit Agreement, dated as of March 31, 1998 among 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 B- 2 Borrowers named therein, the Italian Borrowers named therein, Uniroyal Chemical Co., a corporation organized under the laws of Nova Scotia, Canada, certain Lender Parties party thereto, Citicorp USA, Inc., as Agent for the 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) Facility under which the Proposed Borrowing is requested is the _________ Facility.1 (iii) The Type of Advances comprising the Proposed Borrowing is [Base Rate Advances] [Eurocurrency Rate Advances]. (iv) The aggregate amount of the Proposed Borrowing is [$_______________] [for a Proposed Borrowing in a Foreign Currency, list currency and amount of Borrowing]. [(v) The initial Interest Period for each Eurocurrency Rate Advance made as part of the Proposed Borrowing is _____ month[s].] [(vi) The Proposed Borrowing is comprised of [Working Capital B-2 [Italian] [Canadian] Advances.] 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: 1. For Working capital A Advances and Working Capital B-1 Advances only. (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, [NAME OF BORROWER] By Title: EXHIBIT B-2 FORM OF NOTICE OF DRAWING Citicorp USA, Inc. Agent under the Credit Agreement referred to below Attention: ________________________ Ladies and Gentlemen: The undersigned, UNIROYAL CHEMICAL CO., a corporation organized under the laws of Nova Scotia, Canada, refers to the Third Amended and Restated Credit Agreement dated as of March 31, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; terms defined therein unless otherwise defined herein being used herein as therein defined) among the undersigned, 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 B-2 Borrowers named therein, the Italian Borrowers named therein and the undersigned, the Lender Parties parties thereto, Citicorp USA, Inc., as agent for the Lender Parties, and the Chase Manhattan Bank, as Managing Agent, and hereby gives you notice, irrevocably, pursuant to Section 2.04 of the Credit Agreement that the undersigned hereby requests a Drawing under the Credit Agreement and, in that connection, sets forth below the information relating to such Drawing (the "Proposed Drawing") as required by Section 2.04(a) of the Credit Agreement: (i) The Business Day of the Proposed Drawing is ___________, ____. (ii) The aggregate Face Amount of the Proposed Drawing is CN$__________. (iii) The initial Maturity Date for each Banker's Acceptance comprising part of the Proposed Drawing is [one][[two][three][six] months. The undersigned hereby certifies that the following statements are true on the date hereof and will be true on the date of the Proposed Drawing: (A) the representations and warranties contained in each Loan Document are complete and correct on and as of the date of the Proposed Drawing, before and after giving effect to such Proposed Drawing and to the application of the proceeds therefrom, as though made on and as of such date other than any such representations and warranties that, by their terms, refer to a specific date other than the date of the Proposed Drawing, in which case, as of such specific date; and (B) no event has occurred and is continuing, or would result from the Proposed Drawing or from the application of the proceeds therefrom, that constitutes a Default. Very truly yours, UNIROYAL CHEMICAL CO. By_______________________________________ Name: Title EXHIBIT C FORM OF ASSIGNMENT AND ACCEPTANCE Reference is made to the Third Amended and Restated Credit Agreement dated as of March 31, 1998 (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, the B-2 Borrowers named therein, the Italian Borrowers named therein and Uniroyal Chemical Co., a corporation organized under the laws of Nova Scotia, Canada (collectively, 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 Section 2.13 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: __________% Assignor's Commitment assigned to Assignee: $__________ 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): 2 ________ __, ____ [NAME OF ASSIGNOR], as Assignor By Title: Dated: _________ __, ____ [NAME OF ASSIGNEE], as Assignee By Title: Dated: _________ __, ____ Domestic Lending Office: Eurodollar Lending Office: 2 This date should be no earlier than five Business Days after the delivery of this Assignment. Accepted 3 [and Approved] this ____ day of ___________, ____ CITICORP USA, INC. By Title: 2 [Approved this ____ day of _____________, ____ CROMPTON & KNOWLES CORPORATION By Title: ] 3 Required if the Assignee is an Eligible Assignee solely by reason of clause (a)(iii) or (b) of the definition of Eligible Assignee. EXHIBIT D-1 FORM OF CONSENT Dated as of March 31, 1998 The undersigned, (a) Crompton & Knowles Corporation, ("Crompton Corp."), the Parent Guarantor under the Parent Guaranty and (b) each of the Guarantors under the Subsidiary Guaranty and designated on the signature pages hereof as a "Subsidiary Guarantor", in each case in favor of the Agent, for its benefit and the benefit of the Lender Parties party to the Existing Credit Agreement as amended and restated by the Third Amended and Restated Credit Agreement dated as of March 31, 1998 (as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Third Amended and Restated Credit Agreement"; terms not otherwise defined herein shall have the meaning herein as therein ascribed to them) among Crompton Corp., 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, B-2 Borrowers named therein, the Italian Borrowers named therein and Uniroyal Chemical Co., a corporation organized under the laws of Nova Scotia, Canada, the Lender Parties party thereto, Citicorp USA, Inc., as Agent for the Lender Parties, and The Chase Manhattan Bank, as Managing Agent, hereby consent to such Third Amended and Restated Credit Agreement and hereby confirm and agree that notwithstanding the effectiveness of such Third Amended and Restated Credit Agreement, each of the Parent Guaranty and the Subsidiary Guaranty shall continue to be in full force and effect and is hereby ratified and confirmed in all respects, except that, on and after the effectiveness of such Third Amended and Restated Credit Agreement, each reference in the Parent Guaranty and the Subsidiary Guaranty to the "Credit Agreement", "thereunder", "thereof" or words of like import shall mean and be a reference to the Third Amended and Restated Credit Agreement. CROMPTON & KNOWLES CORPORATION By_________________________ Title: SUBSIDIARY GUARANTORS 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: EXHIBIT D-2 [SEE EXHIBIT D-1] EXHIBIT E-1 May 5, 1998 To the Initial Lenders party to the Credit Agreement referred to below and to Citicorp USA, Inc., as Agent Ladies and Gentlemen: We have acted as special New York counsel to Citicorp USA, Inc., as Agent, in connection with the preparation, execution and delivery of the Third Amended and Restated Credit Agreement dated as of March 31, 1998 (the "Credit Agreement"), among Crompton & Knowles Corporation, a Massachusetts corporation, Crompton & Knowles Colors Incorporated, a Delaware corporation, Ingredient Technology Corporation, a Delaware corporation, Uniroyal Chemical Company, Inc., a New Jersey corporation, the B-2 Borrowers parties thereto, the Italian Borrowers parties thereto, Uniroyal Chemical Co., a corporation organized under the laws of Nova Scotia, Canada (collectively, the "Borrowers"), and each of you (each a "Lender"). Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as therein defined. In that connection, we have examined a counterpart of the Credit Agreement executed by each of the Borrowers and, to the extent relevant to our opinion expressed below, the other documents delivered by the Borrowers pursuant to Section 3.01 of the Credit Agreement. In our examination of the Credit Agreement and such other documents, we have assumed, without independent investigation (a) the due execution and delivery of the Credit Agreement by all parties thereto, (b) the genuineness of all signatures, (c) the authenticity of the originals of the documents submitted to us and (d) the conformity to originals of any documents submitted to us as copies. In addition, we have assumed, without independent investigation, that (i) each of the Borrowers is duly organized and validly existing under the laws of the jurisdiction of its organization and has full power and authority (corporate and otherwise) to execute, deliver and perform the Credit Agreement and (ii) the execution, delivery and performance by each of the Borrowers of the Credit Agreement have been duly authorized by all necessary action (corporate or otherwise) and do not (A) contravene the certificate of incorporation, bylaws or other constituent documents of any Borrower, (B) conflict with or result in the breach of any document or instrument binding on any Borrower or (C) violate or require any governmental or regulatory authorization or other action under any law, rule or regulation applicable to any Borrower other than New York law or United States federal law applicable to borrowers generally or, assuming the correctness of the Borrowers' statements made as representations and warranties in Section 4.01(d) of the Credit Agreement, applicable to any Borrower. We have also assumed that the Credit Agreement is the legal, valid and binding obligation of each Lender, enforceable against such Lender in accordance with its terms. Based upon the foregoing examination and assumptions and upon such other investigation as we have deemed necessary and subject to the qualifications set forth below, we are of the opinion that the Credit Agreement is the legal, valid and binding obligation of each Borrower, enforceable against each such Borrower in accordance with its terms. Our opinion above is subject to the following qualifications: (i) Our opinion above is subject to the effect of any applicable bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar law affecting creditors' rights generally. (ii) Our opinion above is also subject to the effect of general principles of equity, including (without limitation) concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law). (iii) We express no opinion as to the enforceability of the indemnification provisions set forth in Section 8.04 of the Credit Agreement to the extent enforcement thereof is contrary to public policy regarding the application of this opinion letter at such time. Very truly yours, EB:SLH EXHIBIT E-2 March 31, 1998 To the Initial Lenders party to the Credit Agreement referred to below and to 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 Section 3.01(f)(xi) of the Third Amended and Restated Credit Agreement dated as of the date hereof (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"), Uniroyal Chemical Company, Inc. ("Uniroyal"), the B- 2 Borrowers named therein, the Italian Borrowers named therein and Uniroyal Chemical Co., the Lender Parties party thereto, Citicorp USA, Inc., as Agent (the "Agent") and The Chase Manhattan Bank, Corestates Bank N.A. and First Union National Bank, as Managing Agents. 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 the Loan Parties in connection with (a) the Credit Agreement, (b) the Subsidiary Guaranty, dated as of August 21, 1996 (the "Subsidiary Guaranty") made by the Guarantors party thereto in favor of the Guaranteed Parties, (c) the Parent Guaranty, dated as of August 21, 1996 (the "Parent Guaranty"), made by Crompton in favor of the Guaranteed Parties, (d) each of the consents executed by the Loan Parties in connection with the Credit Agreement (the "Consents", and together with the Credit Agreement, the Subsidiary Guaranty, and the Parent Guaranty, the "Agreements") and (e) 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 Crompton and Uniroyal. 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 on 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 to which any Loan Party is a party or any of the transactions contemplated by the Credit Agreement. 3. Each of Crompton and Uniroyal (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 and Uniroyal of each Loan 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 by-laws. 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 the due execution, delivery, recordation, filing or performance by Crompton or Uniroyal of any Loan Document to which it is a party, or for the consummation of the other transactions contemplated thereby. 6. Each Loan Document to which any of Crompton or Uniroyal 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, EXHIBIT F FORM OF DESIGNATION LETTER [DATE] To each of the Lenders parties to the Credit Agreement (as defined below), to Citicorp USA, Inc. as Agent for such Lenders and to The Chase Manhattan Bank, as Managing Agent Ladies and Gentlemen: Reference is made to the Third Amended and Restated Credit Agreement dated as of March 31, 1998 (as amended, supplemented or otherwise modified from time to time in accordance with its terms, 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, Uniroyal Chemical Company, Inc., a New Jersey corporation, the B- 2 Borrowers named therein, the Italian Borrowers named therein and Uniroyal Chemical Co., a corporation organized under the laws of Nova Scotia, Canada (collectively, the "Borrowers"), certain Lender Parties party thereto, Citicorp USA, Inc., as Agent for the Lender Parties, and The Chase Manhattan Bank, as Managing Agent. Terms used herein and defined in the Credit Agreement shall have the respective meanings ascribed to such terms in the Credit Agreement. Please be advised that Crompton Corp hereby designates its undersigned Subsidiary, ____________ ("Designated [Italian] Subsidiary"), as a "Designated [Italian] Subsidiary" under and for all purposes of the Credit Agreement. The Designated [Italian] Subsidiary, in consideration of each Lender's agreement to extend credit to it under and on the terms and conditions set forth in the Credit Agreement, does hereby assume each of the obligations imposed upon a ["Designated Subsidiary" and a "B-2 Borrower" ]["Designated Italian Subsidiary" and an "Italian Borrower"] under the Credit Agreement and agrees to be bound by the terms and conditions of the Credit Agreement. In furtherance of the foregoing, the Designated [Italian] Subsidiary hereby represents and warrants, solely with respect to itself, to each Lender Party as follows: (a) The Designated [Italian] Subsidiary, to the extent applicable under the laws of the jurisdiction of incorporation, (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 I hereto is a complete and accurate list as of the date hereof of all Subsidiaries of the Designated [Italian] Subsidiary, 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 Designated [Italian] Subsidiary 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 Designated [Italian] Subsidiary and its Subsidiaries has been validly issued, is fully paid and non-assessable and is owned by such Designated [Italian] Subsidiary 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 the Designated [Italian] Subsidiary 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 other transactions contemplated hereby, are within such Designated [Italian] Subsidiary's corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene such Designated [Italian] Subsidiary'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 Designated [Italian] Subsidiary, 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 Designated [Italian] Subsidiary or any of its Subsidiaries. The Designated [Italian] Subsidiary or any of its Subsidiaries is not 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 the Designated [Italian] Subsidiary 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 transactions contemplated hereby, (ii) the grant by the Designated [Italian] Subsidiary 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. (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 the Designated [Italian] Subsidiary 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 the Designated [Italian] Subsidiary party thereto, enforceable against such Designated [Italian] Subsidiary in accordance with its terms. (f) There is no action, suit, investigation, litigation or proceeding affecting the Designated [Italian] Subsidiary 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 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 the Designated [Italian] Subsidiary or any of its Subsidiaries, of the Disclosed Litigation from that described on Schedule 3.01(f). (g) (i) Except as disclosed in Part I of Schedule 4.01(o) to the Credit Agreement, the operations and properties of the Designated [Italian] Subsidiary 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 the Designated [Italian] Subsidiary 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) to the Credit Agreement 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 the Designated [Italian] Subsidiary or any of its Subsidiaries is listed or, to the best knowledge of the Designated [Italian] Subsidiary, 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 the Designated [Italian] Subsidiary or any of its Subsidiaries or, to the best of its knowledge, on any property formerly owned or operated by the Designated [Italian] Subsidiary or any of its Subsidiaries; there is no asbestos or asbestos-containing material on any property currently owned or operated by the Designated [Italian] Subsidiary 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 the Designated [Italian] Subsidiary or any of its Subsidiaries. (iii) Except as disclosed in Part III of Schedule 4.01(o) to the Credit Agreement, neither the Designated [Italian] Subsidiary 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 the Designated [Italian] Subsidiary or any of its Subsidiaries have been disposed of in a manner not reasonably expected to result in material liability to the Designated [Italian] Subsidiary or any of its Subsidiaries. (h) The Designated [Italian] Subsidiary is, individually and together with its Subsidiaries, Solvent. (i) The Designated [Italian] Subsidiary is incorporated under the laws of a jurisdiction other than the United States of America. THIS DESIGNATION LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. This Designation Letter 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 this Designation Letter by telecopier shall be effective as delivery of a manually executed counterpart of this Designation Letter. Very truly yours, CROMPTON & KNOWLES CORPORATION By _________________________ Name: Title: [DESIGNATED [ITALIAN] SUBSIDIARY] By__________________________ Name: Title: EXHIBIT G FORM OF ACCEPTANCE BY PROCESS AGENT [Letterhead of Process Agent] [Date] To each of the Lenders parties to the Credit Agreement (as defined below), to Citicorp USA, Inc., as Agent for said Lenders and The Chase Manhattan Bank, as Managing Agent [Name of Designated [Italian] Subsidiary] Ladies and Gentlemen: Reference is made to (i) that certain Third Amended and Restated Credit Agreement dated as of March 31, 1998 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, Uniroyal Chemical Company, Inc., a New Jersey corporation, the B-2 Borrowers named therein, the Italian Borrowers named therein and Uniroyal Chemical Co., a corporation organized under the laws of Nova Scotia, Canada (collectively, the "Borrowers"), certain Lender Parties party thereto, Citicorp USA, Inc., as Agent for the Lender Parties, and The Chase Manhattan Bank, as Managing Agent (such Credit Agreement as it may hereafter be amended, supplemented or otherwise modified from time to time, being the "Credit Agreement"; the terms defined therein being used herein as therein defined), and (ii) to the Designation Letter, dated _________, pursuant to which __________ (the "Designated [Italian] Subsidiary") has become [a B-2 Borrower][an Italian Borrower]. Pursuant to Section 8.08 of the Credit Agreement to which the Designated [Italian] Subsidiary has become subject pursuant to its Designation Letter, the Designated [Italian] Subsidiary has appointed _______________ (with an office on the date hereof at _______________, Attention: __________) as Process Agent to receive on behalf of the Designated [Italian] Subsidiary and its property service of copies of the summons and complaint and any other process which may be served in any action or proceeding in any New York State or Federal court sitting in New York City arising out of or relating to the Credit Agreement. The undersigned hereby accepts such appointment as Process Agent and agrees with each of you that (i) the undersigned will maintain an office in ________________ through the Termination Date and will give the Agent prompt notice of any change of address of the undersigned, (ii) the undersigned will perform its duties as Process Agent to receive on behalf of the Designated [Italian] Subsidiary and its property service of copies of the summons and complaint and any other process which may be served in any action or proceeding in any New York State or Federal court sitting in New York City arising out of or relating to the Credit Agreement and (iii) the undersigned will forward forthwith to the Designated [Italian] Subsidiary at its address at ________________ or, if different, its then current address, copies of any summons, complaint and other process which the undersigned receives in connection with its appointment as Process Agent. This acceptance and agreement shall be binding upon the undersigned and all successors of the undersigned. Very truly yours, [NAME OF PROCESS AGENT] By_______________________ EXHIBIT H FORM OF OPINION OF COUNSEL TO A DESIGNATED [ITALIAN] SUBSIDIARY [Effective Date] To each of the Lenders parties to the Credit Agreement referred to below, to Citicorp USA, Inc., as Agent and to The Chase Manhattan Bank, as Managing Agent [Name of Designated [Italian] Subsidiary] Ladies/Gentlemen: This opinion is furnished to you at the direction of our client, Crompton & Knowles Corporation ("Crompton Corp."), pursuant to Section 3.03 of the Third Amended and Restated Credit Agreement dated as of March 31, 1998 among Crompton Corp., 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 B-2 Borrowers named therein, the Italian Borrowers named therein and Uniroyal Chemical Co., a corporation organized under the laws of Nova Scotia, Canada (collectively, the "Borrowers"), certain Lender Parties party thereto, Citicorp USA, Inc., as Agent for the Lender Parties, and The Chase Manhattan Bank, as Managing Agent (such Credit Agreement as it may hereafter be amended, supplemented or otherwise modified from time to time, being the "Credit Agreement"). Terms defined in the Credit Agreement are used herein as therein defined. We have acted as counsel for __________ (the "Designated [Italian] Subsidiary") in connection with the preparation, execution and delivery of the Designation Letter executed by the Designated [Italian] Subsidiary. In that connection we have examined: (1) the Designation Letter executed by the Designated [Italian] Subsidiary; (2) the Credit Agreement; (3) the documents furnished by the Designated [Italian] Subsidiary pursuant to Article III of the Credit Agreement; (4) the Certificate of Incorporation (or analogous authorizations) of the Designated [Italian] Subsidiary and all amendments thereto (the "Charter"); and (5) the by-laws (or analogous authorizations) of the Designated [Italian] Subsidiary and all amendments thereto (the "By-laws"). We have also examined the originals, or copies certified to our satisfaction, of the documents listed in a certificate of the chief financial officer of the Designated [Italian] Subsidiary, dated the date hereof (the "Certificate"), certifying that the documents listed in such certificate are all of the indentures, loan or credit agreements, leases, mortgages, security agreements, bonds, notes and other agreements or instruments, and all of the orders, writs, judgments, awards, injunctions and decrees, which affect or purport to affect the Designated [Italian] Subsidiary's right to borrow money or the Designated [Italian] Subsidiary's obligations under the Credit Agreement, its Designation Letter or its [Working Capital B-2][Italian Borrower] Notes. In addition, we have examined the originals, or copies certified to our satisfaction, of such other corporate records of the Designated [Italian] Subsidiary, certificates of public officials and of officers of the Designated [Italian] Subsidiary, and agreements, instruments and documents, as we have deemed necessary as a basis for the opinions hereinafter expressed. 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 Designated [Italian] Subsidiary or its officers or of public officials (including telex and telephone confirmations of such certificates), and in such instances we have made no independent inquiry with respect to such factual matters. In our examination of the documents referred to above, we 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 Designated [Italian] Subsidiary, (ii) the authenticity of all documents submitted to us as originals and (iii) the conformity to originals of all documents submitted to us as copies. We are qualified to practice law in [name of country] and we do not purport to be experts on any laws other than the laws of [name of country]. Based upon the foregoing and upon such investigation as we have deemed necessary, we are of the following opinion: 1. The Designated [Italian] Subsidiary (a) is a corporation duly organized, validly existing and in good standing under the laws of [name of country] and (b) has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. 2. The execution, delivery and performance by the Designated [Italian] Subsidiary 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 the Designated [Italian] Subsidiary's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene the Designated [Italian] Subsidiary's charter or bylaws. 3. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery, recordation, filing or performance by the Designated [Italian] Subsidiary of any Loan Document or any Related Document to which it is a party, or for the consummation of the other transactions contemplated thereby. 4. Each Loan Document and each Related Document to which the Designated [Italian] Subsidiary is a party has been duly executed and delivered by the Designated [Italian] Subsidiary. 5. The appointment of Crompton Corp. as the Designated [Italian] Subsidiary's attorney-in-fact pursuant to Section 8.15 of the Credit Agreement constitutes the legal, valid and binding obligation of the Designated [Italian] Subsidiary under [name of country]'s law, enforceable against such [B-2] [Italian] Borrower in accordance with its terms. 6. To the best of my knowledge, there are no pending or overtly threatened actions or proceedings against the Designated [Italian] Subsidiary or any of its subsidiaries before any court, governmental agency or arbitrator which are likely to materially adversely affect (i) the financial condition or operations of the Designated [Italian] Subsidiary or any of its Subsidiaries or (ii) the ability of the Designated [Italian] Subsidiary to perform its obligations under the Loan Documents or Related Documents to which it is a party, or which purport to affect the legality, validity, binding effect or enforceability of such Loan Documents or Related Documents. 7. The submission to the jurisdiction of the New York State and Federal courts sitting in New York City (and any appellate court from any thereof) contained in Section 8.13 of the Credit Agreement and contained in the other Loan Documents to which the Designated [Italian] Subsidiary is a party are irrevocably binding on the Designated [Italian] Subsidiary. 8. In any action or proceeding arising out of or relating to the Credit Agreement or any other Loan Document to which the Designated [Italian] Subsidiary is a party in any court sitting in [name of country], such court would recognize and give effect to the provisions of Section 8.16 of the Credit Agreement and such identical provisions contained in such other Loan Documents wherein the Designated [Italian] Subsidiary agrees that the Credit Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, U.S.A. Without limiting the generality of the foregoing, a court sitting in the [name of country] would apply the usury law of the State of New York, and would not apply the usury law of [name of country], to the Credit Agreement and such Loan Documents. However, if a court were to hold that the Credit Agreement or such Loan Documents are governed by, and are to be construed in accordance with, the laws of [name of country], the Credit Agreement and such Loan Documents would be, under the laws of the [name of country], the legal, valid and binding obligations of the Designated [Italian] Subsidiary enforceable against the Designated [Italian] Subsidiary in accordance with their terms, subject, however, to (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors' rights generally and (ii) the effect of general principles of equity. 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. Delivery of an executed copy of this opinion letter by telecopier shall be effective as delivery of a manually executed copy of this opinion letter. Very truly yours, EXHIBIT I FORM OF ITALIAN LENDER JOINDER AGREEMENT ITALIAN LENDER JOINDER AGREEMENT, dated as of _______, ___, 19__, made by the Italian Lender named below (the "Italian Lender") and the Eligible Assignee named below (the "Eligible Assignee") pursuant to the Third Amended and Restated Credit Agreement dated as of March 31, 1998 (as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Credit Agreement") among 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 B-2 Borrowers named therein, the Italian Borrowers named therein and Uniroyal Chemical Co., a corporation organized under the laws of Nova Scotia, Canada (collectively, the "Borrowers"), certain Lender Parties party thereto, Citicorp USA, Inc., as Agent for the Lender Parties, and The Chase Manhattan Bank, as Managing Agent. Terms used herein and defined in the Credit Agreement shall have the respective meanings ascribed to such terms in the Credit Agreement. For good and valid consideration, the sufficiency of which hereby is acknowledged, the undersigned Eligible Assignee hereby agrees (for the benefit of the Lender Parties and the Loan Parties) that it shall serve as an "Italian Lender" under the Credit Agreement upon the terms and subject to the conditions set forth therein. The undersigned hereby: (a) represents and warrants that it is legally authorized to enter into this Italian Lender Joinder Agreement and is an Eligible Assignee under the Credit Agreement; (b) represents and warrants that it is located in Italy; (c) confirms that is has received and reviewed a copy of the Credit Agreement and the other Loan Documents relevant to it; and (d) agrees that it will (i) be bound by the provisions of the Credit Agreement and each other Loan Document, in each case, applicable to it as an Italian Lender and (ii) perform all obligations which are required to be performed by it as an Italian Lender pursuant to the Credit Agreement and each other Loan Document. From and after Effective Date set forth on Schedule I hereto the undersigned shall (a) be an "Italian Lender" with respect to the Currency set forth on Schedule I hereto for all purposes under the Loan Documents and (b) have the rights and obligations of an Italian Lender thereunder and under the other Loan Documents and (c) be bound by the provisions of the Loan Documents. THIS ITALIAN LENDER JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the undersigned have caused this Italian Lender Joinder Agreement to be executed by a duly authorized officer as of the date set forth above. [NAME OF ITALIAN LENDER] By: Title: [NAME OF ELIGIBLE ASSIGNEE] By: Title: ACKNOWLEDGED AND AGREED: CITICORP USA, INC. as Agent By: Title: SCHEDULE I TO EXHIBIT I DATE OF ITALIAN LENDER JOINDER AGREEMENT: NAME OF DESIGNATED ITALIAN LENDER: JURISDICTION: AMOUNT OF OUTSTANDING ITALIAN ADVANCES ASSIGNED: ____________[Foreign Currency][US$] NAME OF DESIGNATED [ITALIAN] SUBSIDIARY: EFFECTIVE DATE OF ITALIAN LENDER JOINDER AGREEMENT: EX-4.1 3 Exhibit 4.1 AMENDMENT TO RIGHTS AGREEMENT AMENDMENT, dated as of January 20, 1998, to the Rights Agreement, dated as of July 20, 1988, as amended March 28, 1991, and October 1, 1992, (the "Rights Agreement"), between Crompton & Knowles Corporation, a Massachusetts corporation (the "Company"), and Mellon Bank, N.A., as Rights Agent (the "Rights Agent"). The Company and the Rights Agent have heretofore executed and entered into the Rights Agreement. Pursuant to Section 27 of the Rights Agreement, the Company and the Rights Agent may from time to time supplement or amend the Rights Agreement in accordance with the provisions of Section 27 thereof. All acts and things necessary to make this Amendment a valid agreement, enforceable according to its terms, have been done and performed, and the execution and delivery of this Amendment by the Company and the Rights Agent have been in all respects duly authorized by the Company and the Rights Agent. In consideration of the foregoing and the mutual agreements set forth herein, the parties agree as follows: 1. Section 7 (a) (i) shall be deleted in its entirety and replaced with the following: (i) the close of business on August 4, 2008 (the "Final Expiration Date") 2. Section 7(b) shall be deleted in its entirety and replaced with the following: (b) The Purchase Price for each one one-hundredth of a Preferred Share pursuant to the exercise of a Right shall initially be $800, shall be subject to adjustment from time to time as provided in Sections 11 and 13 hereof and shall be payable in lawful money of the United States of America in accordance with paragraph (c) below. 3. This Amendment to the Rights Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts and for all purposes shall be governed by and construed with the laws of such Commonwealth applicable to contracts to be made and performed entirely within such Commonwealth. 4. This Amendment to the Rights Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed an original and all such counterparts shall together constitute but one and the same instrument. Terms not defined herein shall, unless the context otherwise requires, have the meanings assigned to such terms in the Rights Agreement. 5. Except as expressly noted herein, this Amendment to the Rights Agreement shall not be implication or otherwise alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Rights Agreement, all of which are ratified and affirmed in all respects and shall continue in full force and effect. 6. If any term, provision, covenant or restriction of this Amendment to the Rights Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Amendment to the Rights Agreement, and of the Rights Agreement, shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 7. This Amendment and the Rights Agreement constitute the entire agreement among the parties with respect to the subject matter thereof and supersedes all prior agreements and understandings, both oral and written, among the parties with respect to such subject matter. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and attested, all as of the date and year first written above. Attest: CROMPTON & KNOWLES CORPORATION By: /s/Elizabeth K. Krumeich By: /s/Marvin H. Happel Attest: RIGHTS AGENT By: /s/Lee Tinto, A.V.P. By: /s/Tracie Vicki EX-11 4 CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES EXHIBIT 11 - STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (In thousands, except per share data) Quarters Ended Six Months Ended June 27, June 28, June 27, June 28, 1998 1997 1998 1997 BASIC Earnings Earnings before extraordinary loss $ 39,795 $ 31,768 $ 71,738 $ 58,379 Extraordinary loss on early extinguishment of debt (13,843) (1,227) (15,794) (1,227) Net earnings $ 25,952 $ 30,541 $ 55,944 $ 57,152 Shares Weighted average shares outstanding 74,430 73,341 74,267 73,210 Per share Earnings before extraordinary loss $ .53 $ .44 $ .96 $ .80 Extraordinary loss on early extinguishment of debt (.18) (.02) (.21) (.02) Net earnings $ .35 $ .42 $ .75 $ .78 DILUTED Earnings Earnings before extraordinary loss $ 39,795 $ 31,768 $ 71,738 $ 58,379 Extraordinary loss on early extinguishment of debt (13,843) (1,227) (15,794) (1,227) Net earnings $ 25,952 $ 30,541 $ 55,944 $ 57,152 Shares Weighted average shares outstanding 74,430 73,341 74,267 73,210 Common stock equivalents 2,383 1,834 2,346 1,738 Average shares outstanding 76,813 75,175 76,613 74,948 Per share Earnings before extraordinary loss $ .52 $ .43 $ .94 $ .78 Extraordinary loss on early extinguishment of debt (.18) (.02) (.21) (.02) Net earnings $ .34 $ .41 $ .73 $ .76 EX-27 5
5 0000025757 CROMPTON & KNOWLES CORPORATION 1,000 6-MOS DEC-26-1998 JUN-27-1998 14,831 0 268,786 9,640 359,307 717,768 467,457 442,246 1,531,283 364,801 832,578 0 0 7,733 33,026 1,531,283 951,556 951,556 594,556 794,753 (1,547) 1,857 44,118 114,232 42,494 71,738 0 (15,794) 0 55,994 0.75 0.73 Reflects Basic earnings per share.
EX-27 6
5 0000025757 CROMPTON & KNOWLES CORPORATION 1,000 6-MOS DEC-27-1997 JUN-28-1997 28,637 0 291,765 8,493 362,149 768,583 476,768 398,259 1,635,136 355,079 993,237 0 0 7,733 (57,392) 1,635,136 968,015 968,015 617,010 819,540 781 1,093 53,534 94,160 35,781 58,379 0 (1,227) 0 57,152 0.78 0.76 Reflects Basic earnings per share. Restated for FAS 128. Restated for FAS 128.
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