-----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, FtBZ2w07z+AH6ETOGqea4sv85wZVFaLMnZtpFZ2xOZIOWS8/3rEYHST0t7Ft+QA1 1e/k0wZ5kFL5C/tJNCXQqg== 0000950152-04-004660.txt : 20040616 0000950152-04-004660.hdr.sgml : 20040616 20040616150439 ACCESSION NUMBER: 0000950152-04-004660 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20040603 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040616 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LUBRIZOL CORP CENTRAL INDEX KEY: 0000060751 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 340367600 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05263 FILM NUMBER: 04866169 BUSINESS ADDRESS: STREET 1: 29400 LAKELAND BLVD CITY: WICKLIFFE STATE: OH ZIP: 44092 BUSINESS PHONE: 2169434200 MAIL ADDRESS: STREET 1: 29400 LAKELAND BLVD CITY: WICKLIFFE STATE: OH ZIP: 44092 8-K 1 l08074ae8vk.txt THE LUBRIZOL CORPORATION - ------------------------------------------------------------------------------ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): June 3, 2004 ---------- THE LUBRIZOL CORPORATION ------------------------ (Exact Name of Registrant as Specified in Charter) Ohio 1-5263 34-0367600 - ---------------------------- ----------- ------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 29400 Lakeland Boulevard, Wickliffe, Ohio 44092 - ------------------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (440) 943-4200 --------------- Not Applicable -------------- (Former Name or Former Address, if Changed Since Last Report) - ------------------------------------------------------------------------------ ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On June 3, 2004, pursuant to the Agreement and Plan of Merger, dated April 15, 2004 (the "Merger Agreement"), by and among The Lubrizol Corporation ("Lubrizol"), Lubrizol Acquisition Corporation and Noveon International, Inc. ("Noveon International"), Lubrizol Acquisition Corporation was merged with and into Noveon International. In connection with the merger, Noveon International was the surviving corporation and became a wholly owned subsidiary of Lubrizol. Noveon International is a global producer and marketer of technologically advanced specialty chemicals for a broad range of consumer and industrial applications. Lubrizol intends to utilize the assets of Noveon International and its subsidiaries to produce substantially the same specialty chemicals sold by the acquired businesses prior to the merger. Lubrizol paid approximately $920.0 million for the equity of Noveon International, minus certain transaction expenses of Noveon International, and expects to pay an aggregate of approximately $1.1 billion in connection with the refinancing of the outstanding indebtedness of Noveon International and its subsidiaries. The amount of consideration paid for the equity of Noveon International was determined through arms-length negotiations between Lubrizol and Noveon International. Lubrizol financed the acquisition of Noveon International, and will be refinancing the indebtedness of Noveon International and its subsidiaries, through draws under Lubrizol's 364-Day Credit Agreement, dated May 28, 2004 (the "364-Day Credit Agreement"), entered into with Citicorp North America, Inc., KeyBank National Association, ABN AMRO Bank N.V., Wachovia Capital Investments, Inc., The Bank of Tokyo-Mitsubishi, Ltd. and PNC Bank, National Association. Prior to the merger, Noveon International was controlled by AEA Investors LLC, Credit Suisse First Boston LLC, MidOcean Capital/PMD Investors, LLC and their respective affiliates. Copies of the Merger Agreement, certain ancillary agreements, the 364-Day Credit Agreement and the press release announcing the completion of the merger are filed as Exhibits 2.1, 2.2, 2.3, 10.1 and 99.1 to this Current Report on Form 8-K, and are incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a)-(b) Financial statements and pro forma financial information will be filed, pursuant to the provisions of Items 7(a)(4) and 7(b)(2) of Form 8-K, in an amendment to this Current Report on Form 8-K filed within 60 days after the date that this filing was required to be made. (c) The following are filed as exhibits to this Current Report on Form 8-K: 2.1 Agreement and Plan of Merger, dated April 15, 2004, by and among The Lubrizol Corporation, Lubrizol Acquisition Corporation and Noveon International, Inc.* 2.2 Side Letter Agreement, dated April 15, 2004, delivered by Fried, Frank, Harris, Shriver & Jacobson LLP on behalf of Noveon International, Inc.* 2.3 Side Letter Agreement regarding payment procedures, dated June 2, 2004, by and among The Lubrizol Corporation, Lubrizol Acquisition Corporation, Noveon International, Inc. and Fried, Frank, Harris, Shriver & Jacobson LLP. 10.1 364-Day Credit Agreement, dated May 28, 2004, by and among The Lubrizol Corporation, Citicorp North America, Inc., KeyBank National Association, ABN AMRO Bank N.V., Wachovia Capital Investments, Inc., The Bank of Tokyo-Mitsubishi, Ltd. and PNC Bank, National Association. 99.1 Press Release, dated June 3, 2004. - ----------- * The schedules to these agreements have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Copies of these schedules will be provided to the Securities and Exchange Commission upon request. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE LUBRIZOL CORPORATION By: /s/ Leslie M. Reynolds --------------------------------- Name: Leslie M. Reynolds Title: Corporate Secretary and Counsel Date: June 16, 2004 EXHIBIT INDEX Exhibit Number Exhibit Description - -------------- ------------------- 2.1 Agreement and Plan of Merger, dated April 15, 2004, by and among The Lubrizol Corporation, Lubrizol Acquisition Corporation and Noveon International, Inc. 2.2 Side Letter Agreement, dated April 15, 2004, delivered by Fried, Frank, Harris, Shriver & Jacobson LLP on behalf of Noveon International, Inc. 2.3 Side Letter Agreement regarding payment procedures, dated June 2, 2004, by and among The Lubrizol Corporation, Lubrizol Acquisition Corporation, Noveon International, Inc. and Fried, Frank, Harris, Shriver & Jacobson LLP. 10.1 364-Day Credit Agreement, dated May 28, 2004, by and among The Lubrizol Corporation, Citicorp North America, Inc., KeyBank National Association, ABN AMRO Bank N.V., Wachovia Capital Investments, Inc., The Bank of Tokyo-Mitsubishi, Ltd. and PNC Bank, National Association. 99.1 Press Release, dated June 3, 2004. EX-2.1 2 l08074aexv2w1.txt EX-2.1 AGREEMENT AND PLAN OF MERGER Exhibit 2.1 ================================================================================ AGREEMENT AND PLAN OF MERGER BY AND AMONG NOVEON INTERNATIONAL, INC., THE LUBRIZOL CORPORATION AND LUBRIZOL ACQUISITION CORPORATION APRIL 15, 2004 ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE I. DEFINITIONS...................................................................................1 Section 1.1 Definitions............................................................................1 Section 1.2 Terms Generally........................................................................7 ARTICLE II. THE MERGER....................................................................................8 Section 2.1 The Merger.............................................................................8 Section 2.2 Conversion of Securities...............................................................8 Section 2.3 Payment of Cash for Merger Shares......................................................9 Section 2.4 Treatment of Options..................................................................11 Section 2.5 Dissenting Company Stock..............................................................11 ARTICLE III. THE SURVIVING CORPORATION....................................................................12 Section 3.1 Articles of Incorporation.............................................................12 Section 3.2 Bylaws................................................................................12 Section 3.3 Directors and Officers................................................................12 ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................12 Section 4.1 Corporate Existence and Power.........................................................12 Section 4.2 Corporate Authorization...............................................................13 Section 4.3 Governmental Authorization............................................................14 Section 4.4 Non-Contravention.....................................................................14 Section 4.5 Capitalization........................................................................14 Section 4.6 Company Subsidiaries..................................................................15 Section 4.7 Reports and Financial Statements......................................................15 Section 4.8 Absence of Certain Changes or Events..................................................16 Section 4.9 Litigation............................................................................18 Section 4.10 Taxes.................................................................................18 Section 4.11 ERISA.................................................................................20 Section 4.12 Labor Matters.........................................................................22 Section 4.13 Compliance with Laws..................................................................22 Section 4.14 Finders' Fees.........................................................................23 Section 4.15 Environmental Matters.................................................................23 Section 4.16 Insurance.............................................................................24 Section 4.17 Contracts.............................................................................24 Section 4.18 Legal Matters.........................................................................26 Section 4.19 Intellectual Property.................................................................26 Section 4.20 Related Party Transactions............................................................27 Section 4.21 Real Property.........................................................................28 Section 4.22 No Other Information..................................................................28 ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB......................................29 Section 5.1 Corporate Existence and Power.........................................................29
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Section 5.2 Corporate Authorization...............................................................29 Section 5.3 Governmental Authorization............................................................29 Section 5.4 Non-Contravention.....................................................................30 Section 5.5 Finders' Fees.........................................................................30 Section 5.6 Adequate Funds........................................................................30 ARTICLE VI. COVENANTS OF THE COMPANY.....................................................................30 Section 6.1 Conduct of the Company and Subsidiaries...............................................30 Section 6.2 Other Actions by the Company..........................................................32 Section 6.3 Access to Information; Right of Inspection............................................32 Section 6.4 Other Potential Acquirers.............................................................33 Section 6.5 Resignation of Directors..............................................................34 Section 6.6 ISRA Filings..........................................................................34 Section 6.7 FIRPTA Certificate....................................................................34 ARTICLE VII. COVENANTS OF PARENT AND MERGER SUB...........................................................34 Section 7.1 Director and Officer Liability........................................................34 ARTICLE VIII. COVENANTS OF THE PARTIES.....................................................................35 Section 8.1 Reasonable Best Efforts...............................................................35 Section 8.2 Certain Filings.......................................................................36 Section 8.3 Public Announcements..................................................................37 Section 8.4 Further Assurances....................................................................37 Section 8.5 Notices of Certain Events.............................................................37 Section 8.6 Disposition of Litigation.............................................................38 Section 8.7 Employee Matters......................................................................38 Section 8.8 Confidentiality Agreement.............................................................39 ARTICLE IX. CONDITIONS TO THE MERGER.....................................................................39 Section 9.1 Conditions to the Obligations of Each Party...........................................39 Section 9.2 Conditions to the Obligations of Parent and Merger Sub................................40 Section 9.3 Conditions to the Obligations of the Company..........................................40 ARTICLE X. TERMINATION..................................................................................41 Section 10.1 Termination...........................................................................41 Section 10.2 Effect of Termination.................................................................42 ARTICLE XI. MISCELLANEOUS................................................................................42 Section 11.1 Notices...............................................................................42 Section 11.2 Survival of Representations and Warranties............................................43 Section 11.3 Amendments No Waivers.................................................................43 Section 11.4 Expenses..............................................................................43 Section 11.5 Transfer Taxes........................................................................43 Section 11.6 Successors and Assigns................................................................44 Section 11.7 Governing Law.........................................................................44 Section 11.8 Counterparts; Effectiveness; Third Party Beneficiaries................................44 Section 11.9 Severability..........................................................................44
-ii- Section 11.10 Specific Performance..................................................................44 Section 11.11 Entire Agreement......................................................................44 Section 11.12 Jurisdiction; Waiver of Jury Trial....................................................44 Section 11.13 Authorship............................................................................45
-iii- AGREEMENT AND PLAN OF MERGER ---------------------------- This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and entered into as of this 15th day of April, 2004 by and among Noveon International, Inc., a Delaware corporation (the "COMPANY"), The Lubrizol Corporation, an Ohio corporation ("PARENT"), and Lubrizol Acquisition Corporation, a Delaware corporation and direct or indirect subsidiary of Parent ("MERGER SUB"). RECITALS -------- A. The parties intend that Merger Sub be merged with and into the Company (the "MERGER"), with the Company surviving the Merger as a direct or indirect subsidiary of Parent (the "SURVIVING CORPORATION"). B. The Board of Directors of the Company has unanimously determined that the Merger and this Agreement are fair to and in the best interests of the Company. C. The Board of Directors of the Company also has unanimously (i) approved this Agreement and declared its advisability and (ii) resolved to recommend that the Company shareholders adopt this Agreement. D. The shareholders of the Company, by the vote or written consent of the holders of at least a majority of the outstanding Common Shares of the Company, have adopted this Agreement and approved and authorized the Merger. E. The Board of Directors of Merger Sub has approved this Agreement and declared its advisability. Parent, as the sole shareholder of Merger Sub, has adopted this Agreement and has approved the Merger and the transactions contemplated hereby. F. The Company, Parent and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe certain conditions to the Merger, as set forth herein. AGREEMENT NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: ARTICLE I. DEFINITIONS Section 1.1 Definitions. For purposes of this Agreement, the following terms have the respective meanings set forth below: "AFFILIATE" means, with respect to any Person, any other Person, directly or indirectly, controlling, controlled by, or under common control with, such Person. For purposes of this definition, the term "CONTROL" (including the correlative terms "CONTROLLING," "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "AFFILIATED ENTITY" of a Person means any joint venture, corporation or other entity, including a Subsidiary, of which securities or other ownership interests representing 10% or more of the total outstanding securities or other ownership interests, or having 10% or more of the ordinary voting power to elect a majority of the Board of Directors or other persons performing similar functions, are at the time directly or indirectly owned by such Person. "BALANCE SHEET" means the consolidated balance sheet of the Company as of December 31, 2003 (and the notes thereto) set forth in the Company S-1. "BALANCE SHEET DATE" means December 31, 2003. "BUSINESS DAY" means any day on which banks are not required or authorized to close in the City of New York. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act. "CLOSING" has the meaning set forth in Section 2.1(d). "CLOSING DATE" has the meaning set forth in Section 2.1(d). "CODE" means the Internal Revenue Code of 1986, as amended. "COMMON SHARES" means the shares of Common Stock. "COMMON STOCK" means the common stock of the Company, par value $0.01 per share. "COMPANY" has the meaning set forth in the Preamble. "COMPANY EMPLOYEES" has the meaning set forth in Section 8.7(a). "COMPANY OPTIONS" means outstanding options to acquire Common Shares, whether vested or unvested. "COMPANY SEC REPORTS" has the meaning set forth in Section 4.7(a). "COMPANY SECURITIES" has the meaning set forth in Section 4.5(b). "COMPANY S-1" means Amendment No. 1 to the registration statement of the Company on Form S1/A as filed with the SEC (Commission File No. 333-112991). "CONFIDENTIALITY AGREEMENT" means, the Confidentiality Agreement dated March 24, 2004, between the Company and Parent. "CONTRACTS" has the meaning set forth in Section 4.17(b). -2- "CURRENT COMPANY SEC REPORTS" means Noveon, Inc.'s annual report on Form 10-K for the fiscal year ended December 31, 2003, and the Company S-1. "CURRENT POLICIES" has the meaning set forth in Section 7.1(a). "DELAWARE LAW" means the General Corporation Law of the State of Delaware. "DESIGNATED PRODUCTS" has the meaning set forth in Section 4.15(f). "DISBURSING AGENT" has the meaning set forth in Section 2.3(b). "DISCLOSURE LETTER" has the meaning set forth in the preamble to Article IV. "EFFECTIVE TIME" has the meaning set forth in Section 2.1(b). "EMPLOYEE BENEFIT PLAN" has the meaning set forth in Section 4.11(a). "EMPLOYMENT AGREEMENT" means a contract, offer letter or agreement of the Company or any of its Subsidiaries with or addressed to any individual who is rendering or has rendered services thereto as an employee or consultant pursuant to which the Company or any of its Subsidiaries has any liability or obligation to provide compensation and/or benefits in consideration for past, present or future services. "END DATE" means July 15, 2004. "ENVIRONMENTAL LAWS" means any and all applicable federal, state, local, municipal and foreign Laws relating to the protection of the environment or to Releases of Hazardous Substances or the notification, investigation or remediation thereof. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "ERISA AFFILIATE" means, with respect to any entity, any trade or business (whether or not incorporated) that is a member of a controlled group including such entity or that is under common control with such entity within the meaning of Section 414 of the Code. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "EXECUTIVE CHANGE OF CONTROL AGREEMENTS" means the executive change of control agreements provided to Parent. "EXISTING CONTRACTS" has the meaning set forth in Section 6.1(b). "GAAP" means United States generally accepted accounting principles. "GOODRICH" has the meaning set forth in Section 4.17(e). "GOODRICH AGREEMENTS" has the meaning set forth in Section 4.17(e). -3- "GOODRICH APA" has the meaning set forth in Section 4.17(e). "GOVERNMENTAL AUTHORITY" means any agency, public or regulatory authority, instrumentality, department, commission, court, arbitrator, ministry, tribunal or board of any nation or government or political subdivision thereof, whether foreign or domestic and whether national, supranational, federal, tribal, provincial, state, regional, local or municipal. "HAZARDOUS SUBSTANCES" means any wastes, substances or materials which are defined as "hazardous materials," "hazardous wastes," "hazardous substances," "wastes" or other similar designations in any Environmental Laws, including, without limitation, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead-based paints and petroleum or petroleum products (including, without limitation, crude oil). "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "INSURANCE POLICIES" means all material fire and casualty, general liability, business interruption, workers compensation, product liability, and sprinkler and water damage insurance policies and other forms of insurance or bonds currently maintained by the Company or any of its Subsidiaries. "INTELLECTUAL PROPERTY" means all material patents, patent applications, including utility and design patents and patent applications, trademark registrations and applications for registration thereof, including service mark and trade name registrations and applications, and registered copyrights that are owned and currently in use by the Company or its Subsidiaries. "INTELLECTUAL PROPERTY AGREEMENT" means all material agreements relating to the use by the Company or any of its Subsidiaries of the intellectual property rights of others, or the use by any third party of the Intellectual Property rights. "KNOWLEDGE," when used in reference to the Company, shall mean the actual knowledge of the following officers and employees of the Company: (i) Mr. Steven J. Demetriou, (ii) Mr. Christopher R. Clegg, (iii) Mr. Michael D. Friday, (iv) Mr. Kumar Shah, (v) Mr. Sean M. Stack, (vi) Mr. Scott McKinley and (vii) Mr. Kenneth Willings. "LAW" means applicable statutes, common laws, rules, ordinances, regulations, codes, orders, judgments, injunctions, writs, decrees, licenses, permits, rules and bylaws, in each case, of a Governmental Authority. "LEASED REAL PROPERTY" has the meaning set forth in Section 4.21(b). "LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. "MANAGEMENT AND ADVISORY SERVICES AGREEMENTS" means the Amended and Restated Management Agreement dated as of June 26, 2001 by and between Noveon, Inc. (formerly PMD Group, Inc.) and DLJ Merchant Banking Partners III, LP, the Management Agreement dated as of February 5, 2001 by and between Noveon, Inc. and MidOcean Capital/PMD Investors LLC -4- (formerly DB Capital/PMD Investors, LLC), the Management Agreement dated as of February 5, 2001 by and between Noveon, Inc. and AEA Investors, Inc. and the Advisory Services Letter Agreement dated as of February 5, 2001 executed by Noveon, Inc. and Credit Suisse First Boston Corporation, as the same may be assigned or amended from time to time. "MATERIAL ADVERSE EFFECT ON THE COMPANY" has the meaning set forth in Section 4.8(a). "MATERIAL EMPLOYMENT AGREEMENT" means (i) an Employment Agreement pursuant to which the Company or any of its Subsidiaries has or could reasonably be expected to have any obligation to provide base salary compensation in an amount in excess of $200,000 per year and (ii) the Executive Change of Control Agreements. "MERGER" has the meaning set forth in the Recitals. "MERGER CONSIDERATION" means an amount per Common Share equal to the result obtained by dividing (a) $920.2 million, plus the aggregate exercise price of all of the Company Options, minus (i) the amount of payments made or required to be made at or before the Effective Time by the Company or any of its Subsidiaries pursuant to the last sentence of Section 6.1 of this Agreement, including all payments that are to be made at or before the Effective Time pursuant to the Executive Change of Control Agreements, and (ii) Transaction Costs in excess of $2.5 million by (b) the number of Common Shares outstanding as at the Effective Time plus the number of Common Shares issuable upon exercise of all then outstanding Company Options, without interest thereon. "MERGER SHARES" has the meaning set forth in Section 2.2(c). "MERGER SUB" has the meaning set forth in the Preamble. "MERGER SUB COMMON SHARES" means the common stock of Merger Sub, par value $0.01 per share. "MULTIEMPLOYER PLAN" has the meaning set forth in Section 4.11(c). "NEW PLANS" has the meaning set forth in Section 8.7(b). "NJDEP" has meaning set forth in Section 6.6. "NOVEON, INC." means Noveon, Inc., a Delaware corporation and a wholly owned subsidiary of the Company. "OLD PLANS" has the meaning set forth in Section 8.7(b). "OTHER ANTITRUST LAWS" means any Law enacted by any Governmental Authority relating to antitrust matters or regulating competition, including Council Regulation No. 4064/89 of the European Community and any analogous or similar Laws of any foreign jurisdiction. "OWNED REAL PROPERTY" has the meaning set forth in Section 4.21(b). -5- "PARENT" has the meaning set forth in the Preamble. "PERMITS" means any governmental licenses, franchises, permits, certificates, consents, approvals or other similar authorizations required under applicable Law. "PERMITTED LIENS" means (i) the liens and security interests set forth in Section 4.21 of the Disclosure Letter, (ii) liens for taxes not yet due and payable or that are being contested in good faith and by appropriate proceedings and for which the Company has maintained adequate reserves, (iii) mechanics', materialmen's or other liens or security interests arising in the ordinary course of business for sums that are immaterial in amount and not yet due and payable, or (iv) any other liens, encumbrances, security interests, easements, rights-of-way, encroachments, restrictions, conditions and similar encumbrances arising in the ordinary course of business that are not material in amount and do not materially detract from the value of or materially impair the existing use of the property affected by such encumbrance. "PERSON" means any individual, corporation, limited liability company, partnership, association, trust or any other entity or organization, including any government or political subdivision or any agency or instrumentality thereof. "PROCEEDING" has the meaning set forth in Section 4.9. "RELATED PARTIES" has the meaning set forth in Section 4.20. "RELEASE" means any emission, spill, seepage, leak, escape, leaching, discharge, injection, ejection, pumping, pouring, emptying, dumping, disposal, or release of Hazardous Substances into or upon the environment, including the air, soil, surface water or groundwater. "REPLACEMENT POLICIES" has the meaning set forth in Section 7.1(a). "SEC" means the Securities and Exchange Commission. "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "SINGLE EMPLOYER PLAN" has the meaning set forth in Section 4.11(g). "SUBSIDIARY" of a Person means any corporation or other entity of which securities or other ownership interests representing 50% or more of the total outstanding securities or other ownership interests is owned, directly or indirectly, by such Person and/or of which securities or other ownership interests having ordinary voting power to elect a majority of the Board of Directors or other persons performing similar functions are at the time owned, directly or indirectly, by such Person. "SURVIVING CORPORATION" has the meaning set forth in the Recitals. "TAX" (including "TAXES") means (i) all federal, state, local, foreign and other taxes of any kind, levies or other like kind assessments, customs, duties, imposts, charges or fees, including net income, gross income, gross receipts, gains, ad valorem, value added, excise, -6- import, export, registration duties, real or personal property, asset, sales, use, stock transfer, real estate transfer, documentary, stamp, recording, license, payroll, transaction, capital, net worth, franchise, estimated, employment, social security, workers compensation, occupation, utility, severance, production, unemployment compensation, occupation, premium, environmental, windfall profits and withholding taxes, together with any interest and any penalties, additions to tax or additional amounts imposed by any Governmental Authority responsible for the imposition of any such tax (a "TAX AUTHORITY" or "TAXING AUTHORITY"), (ii) any liability for payment of amounts described in clause (i) whether as a result of transferee liability, joint and several liability for being a member of an affiliated, consolidated, combined or unitary group for any period, or otherwise by operation of law and (iii) any liability for the payment of amounts described in clause (i) or (ii) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to pay or indemnify any other person. "TAX RETURN" means any return, report or statement filed with any Governmental Authority with respect to Taxes. "THIRD PARTY" means any Person (which includes a "person" as such term is defined in Section 13(d)(3) of the Exchange Act) other than Parent, Merger Sub or their respective Affiliates. "THIRD PARTY ACQUISITION" means the occurrence of any of the following events: (i) the acquisition of the Company by merger or otherwise by any Third Party, (ii) the acquisition by a Third Party of twenty percent (20%) or more of the assets of the Company and its Subsidiaries taken as a whole, other than the sale of products in the ordinary course of business or (iii) the acquisition by a Third Party of twenty percent (20%) or more of the outstanding Common Shares or the issuance by the Company of preferred stock of a new series. "TRANSACTION COSTS" means any fees, costs and expenses incurred by the Company or any of its Subsidiaries to third parties relating to the transactions contemplated by this Agreement and in connection with the Company's proposed initial public offering (including fees and disbursements of counsel, accountants and other advisors), other than, for the avoidance of doubt, the fees, costs and expenses to be paid pursuant to the last sentence of Section 6.1. "TRANSFER TAXES" has the meaning set forth in Section 11.5. Section 1.2 Terms Generally. The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation," unless the context expressly provides otherwise. All references herein to Sections, paragraphs, subparagraphs, clauses, Exhibits or Schedules shall be deemed references to Sections, paragraphs, subparagraphs or clauses of, or Exhibits or Schedules to this Agreement, unless the context requires otherwise. Unless otherwise expressly defined, terms defined in this Agreement have the same meanings when used in any Exhibit or Schedule hereto, including when used in the Disclosure Letter. The words "herein," "hereof," "hereto" and "hereunder" and other words of similar import refer to this Agreement as a whole (including the Schedules and Exhibits) and not to any particular provision of this Agreement. -7- ARTICLE II. THE MERGER Section 2.1 The Merger. (a) At the Effective Time, in accordance with the Delaware Law, and upon the terms and subject to the conditions set forth in this Agreement, Merger Sub shall be merged with and into the Company, at which time the separate existence of Merger Sub shall cease and the Company shall survive the Merger as a direct or indirect subsidiary of Parent. (b) As soon as reasonably practicable on the Closing Date, the Company and Merger Sub will file a certificate of merger meeting the requirements of the Delaware Law with the Secretary of State of the State of Delaware. The Merger shall become effective at such time as the certificate of merger is duly filed with the Secretary of State of the State of Delaware, or at such later time as the Company and Merger Sub may agree and specify in the certificate of merger (such time as the Merger becomes effective, the "EFFECTIVE TIME"). (c) From and after the Effective Time, the Surviving Corporation shall possess all the rights, powers, privileges and franchises and be subject to all of the obligations, liabilities, restrictions and disabilities of the Company and Merger Sub, all as provided under the Delaware Law. (d) The closing of the Merger (the "CLOSING") shall take place (i) at the offices of Fried, Frank, Harris, Shriver & Jacobson LLP located at One New York Plaza, New York, New York, as soon as practicable (but in any event no later than the second Business Day) after the day on which the last condition to the Merger is satisfied or validly waived (other than those conditions that by their nature cannot be satisfied until the Closing, but subject to the satisfaction or valid waiver of such conditions) or (ii) at such other place and time or on such other date as the Company and Merger Sub may agree in writing (the actual date of the Closing, the "CLOSING DATE"). Section 2.2 Conversion of Securities. At the Effective Time, pursuant to this Agreement and by virtue of the Merger and without any action on the part of the Company, Parent, Merger Sub or the holders of the Common Stock: (a) Each share of Common Stock held by the Company as treasury stock or owned by Parent, Merger Sub or any Company Subsidiary immediately prior to the Effective Time, if any, shall be canceled and retired and shall cease to exist, and no payment or distribution shall be made or delivered with respect thereto. (b) Each Merger Sub Common Share issued and outstanding immediately prior to the Effective Time shall be converted into and become one newly issued, fully paid and non-assessable share of common stock of the Surviving Corporation, and the foregoing shall constitute the only outstanding shares of capital stock of the Surviving Corporation. (c) Each Common Share issued and outstanding immediately prior to the Effective Time, other than Common Shares to be canceled pursuant to Section 2.2(a), automatically shall be canceled and converted into the right to receive the Merger Consideration, -8- payable to the holder thereof upon surrender of the stock certificate formerly representing such Common Share in the manner provided in Section 2.3. Such Common Shares, other than those canceled pursuant to Section 2.2(a), sometimes are referred to herein as the "MERGER SHARES." (d) If between the date of this Agreement and the Effective Time, the number of outstanding Common Shares is changed into a different number of shares or a different class by reason of any stock dividend, subdivision, reclassification, recapitalization, split-up, combination, exchange of shares or the like, other than pursuant to the Merger, the amount of Merger Consideration payable per Common Share shall be correspondingly adjusted. (e) The Company Options shall be treated as provided in Section 2.4 below. Section 2.3 Payment of Cash for Merger Shares. (a) Parent and the Company will use good faith efforts to agree upon a form of letter of transmittal promptly after the date hereof, in accordance with the provisions set forth in Section 2.3(c). If the Company determines to do so, it may mail the agreed form of letter of transmittal to each or any record holder of Merger Shares prior to the Closing Date. No later than five days prior to the Closing Date, the Company may deliver to Parent a schedule (the "Section 2.3 Schedule") setting forth the names of those Persons who have returned duly executed letters of transmittal, the number of Merger Shares held by those Persons and wire instructions for those Persons. At the Closing and upon surrender by the Person(s) named in the Section 2.3 Schedule of the stock certificate or certificates representing the Merger Shares held by such Person(s) and a properly completed and duly executed letter of transmittal and any other documents Parent may reasonably request, Parent shall pay (by wire transfer in immediately available funds to the account specified in the Section 2.3 Schedule) to the Persons complying with the foregoing, the Merger Consideration payable in exchange for the Merger Shares so surrendered, less any amounts required to be withheld under any applicable Tax Law. (b) Prior to the Closing Date, Parent shall designate a bank or trust company that is reasonably satisfactory to the Company, that is organized and doing business under the laws of the United States or any state thereof and that has a combined capital and surplus of at least $1,000,000,000 to serve as the disbursing agent for the Merger Consideration and payments in respect of Company Options (the "DISBURSING AGENT"). At or prior to the Closing, Parent will cause to be deposited with the Disbursing Agent cash in the aggregate amount sufficient to pay the Merger Consideration in respect of all Merger Shares outstanding immediately prior to the Effective Time (less any amount to be paid at Closing pursuant to Section 2.3(a)), and any cash necessary to pay for Company Options pursuant to Section 2.4. Pending distribution of the cash deposited with the Disbursing Agent and subject to the completion of the Merger, such cash shall be held in trust for the benefit of the holders of Merger Shares and such Company Options and shall not be used for any other purposes; provided however, that Parent may direct the Disbursing Agent to invest such cash in obligations of or guaranteed by the United States of America, as long as no such investments have maturities that could prevent or delay payments to be made pursuant to Section 2.3(c) or Section 2.4 hereof. (c) As promptly as practicable after the Effective Time (but no later than two Business Days after the Effective Time), the Surviving Corporation shall send, or cause the -9- Disbursing Agent to send, to each record holder of Merger Shares as of immediately prior to the Effective Time which have not already returned a letter of transmittal under Section 2.3(a) a letter of transmittal and instructions for exchanging their Merger Shares for the Merger Consideration payable therefor. The letter of transmittal will be in customary form and will specify that delivery of Merger Shares will be effected, and risk of loss and title will pass, only upon delivery of the stock certificates representing the Merger Shares to the Disbursing Agent. In addition to the terms and conditions set forth in this Section 2.3, the letter of transmittal will include other customary terms and conditions applicable to the surrender of stock certificates and payment of the Merger Consideration, including, without limitation, as may be required under the Delaware Law, notice of appraisal rights to such holders of Common Shares entitled thereto. Upon surrender of such stock certificate or certificates to the Disbursing Agent together with a properly completed and duly executed letter of transmittal and any other documentation as the Disbursing Agent may reasonably require, the record holder thereof shall be entitled to receive the Merger Consideration payable in exchange therefor, less any amounts required to be withheld under any applicable Tax Law. Until so surrendered and exchanged, each such certificate shall, after the Effective Time, be deemed to represent only the right to receive the Merger Consideration, and until such surrender and exchange, no cash shall be paid to the holder of such outstanding certificate in respect thereof. (d) If payment is to be made to a Person other than the registered holder of the Merger Shares represented by the certificate or certificates surrendered in exchange therefor, it shall be a condition to such payment that the certificate or certificates so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the Person requesting such payment shall pay to the Parent or Disbursing Agent (as the case may be) any applicable stock transfer taxes or establish to the satisfaction of the Parent or Disbursing Agent (as the case may be) that such stock transfer taxes have been paid or are not payable. (e) After the Effective Time, there shall be no further transfers on the stock transfer books of the Surviving Corporation of the Common Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time, certificates representing Merger Shares are presented to the Surviving Corporation, such shares shall be canceled and exchanged for the consideration provided for, and in accordance with the procedures set forth, in this Article II. (f) If any cash deposited with the Disbursing Agent remains unclaimed six months after the Effective Time, such cash shall be returned to the Surviving Corporation upon demand, and any such holder who has not surrendered his Merger Shares certificates for the Merger Consideration prior to that time shall thereafter look only to the Surviving Corporation for payment of the Merger Consideration. Notwithstanding the foregoing, the Surviving Corporation shall not be liable to any holder of Merger Shares for an amount paid to a public official pursuant to any applicable unclaimed property laws. Any amounts remaining unclaimed by holders of Merger Shares, as of a date immediately prior to such time that such amounts would otherwise escheat to or become property of any Governmental Authority, shall to the extent permitted by applicable Law, become the property of the Surviving Corporation free and clear of any claims or interest of any Person previously entitled thereto. -10- (g) No dividends or other distributions with respect to capital stock of the Surviving Corporation with a record date after the Effective Time shall be paid to the holder of any unsurrendered certificate for Common Shares. (h) From and after the Effective Time, the holders of Common Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Common Shares, other than the right to receive the Merger Consideration as provided in this Agreement. (i) In the event that any Merger Share certificate has been lost, stolen or destroyed, and upon the making of an affidavit of that fact by the Person claiming such Merger Share certificate to be lost, stolen or destroyed, in addition to the posting by such holder of any bond in such reasonable amount as the Surviving Corporation may direct as indemnity against any claim that may be made against the Surviving Corporation with respect to such Merger Share certificate, the Disbursing Agent will issue in exchange for such lost, stolen or destroyed Merger Share certificate the proper amount of the Merger Consideration. (j) Parent, Surviving Corporation and the Disbursing Agent shall be entitled to deduct and withhold from the Merger Consideration otherwise payable hereunder any amounts required to be deducted and withheld under any applicable Tax Law. To the extent any amounts are so withheld, such withheld amounts shall be treated for all purposes as having been paid to the holder from whose Merger Consideration the amounts were so deducted and withheld. Section 2.4 Treatment of Options. (a) As of the Effective Time, each Company Option will be cancelled, and the holder thereof will receive an amount equal to the excess of (A) the Merger Consideration times the number of Common Shares subject to the Company Option over (B) the aggregate exercise price of such Company Option, without interest and less any amounts required to be deducted and withheld under any applicable Tax Law. All payments with respect to canceled Company Options shall be made by the Disbursing Agent as promptly as reasonably practicable after the Effective Time from funds deposited with the Disbursing Agent by or at the direction of Parent to pay such amounts. (b) Prior to the Effective Time, the Company (i) will cause the Company's stock option plans to be terminated effective at or prior to the Effective Time and to otherwise make any amendments permitted by such plans and the agreements thereunder to the terms of such stock option plans or the grants made thereunder necessary to effectuate the actions contemplated by this Section 2.4 and (ii) will effectuate the actions contemplated by this Section 2.4. Section 2.5 Dissenting Company Stock. Notwithstanding any provision of this Agreement to the contrary, Common Shares that are issued and outstanding immediately prior to the Effective Time and which are held by holders of such Common Shares who have properly exercised appraisal rights with respect thereto in accordance with Section 262 of the Delaware Law (the "Dissenting Company Stock") will not be exchangeable for the right to receive the Merger Consideration, and holders of such shares of Dissenting Company Stock will be entitled -11- to receive payment of the appraised value of such Common Shares in accordance with the provisions of such Section 262 unless and until such holders fail to perfect or effectively withdraw or lose their rights to appraisal and payment under the Delaware Law. If, after the Effective Time, any such holder fails to perfect or effectively withdraws or loses such rights, such Common Shares will thereupon be treated as if they had been converted into and to have become exchangeable for, at the Effective Time, the right to receive the Merger Consideration, without any interest thereon. The Company will give Parent prompt notice of any demands received by the Company for appraisals of Common Shares prior to the Effective Time. The Company shall not, except with the prior written consent of Parent, make any payment with respect to any demands for appraisal or offer to settle or settle any such demands. ARTICLE III. THE SURVIVING CORPORATION Section 3.1 Articles of Incorporation. The articles of incorporation of Merger Sub as in effect immediately prior to the Effective Time shall be the articles of incorporation of the Surviving Corporation until thereafter amended in accordance with the terms thereof and as provided by applicable Law. Section 3.2 Bylaws. The bylaws of Merger Sub in effect at the Effective Time shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with the terms thereof and as provided by applicable Law. Section 3.3 Directors and Officers. From and after the Effective Time, (i) the directors of Merger Sub at the Effective Time shall be the directors of the Surviving Corporation, and (ii) the officers of the Company at the Effective Time shall be the officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified in accordance with applicable Law. ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as set forth in this Agreement, the Current Company SEC Reports (other than the matters described under the caption "Risk Factors" in the Company S-1 and other similar general cautionary language set forth in the Current Company SEC Reports) or in the corresponding sections of the Disclosure Letter delivered to Merger Sub by the Company concurrently with entering into this Agreement (the "DISCLOSURE LETTER") (it being understood that any information set forth in a particular section of the Disclosure Letter shall be deemed to be disclosed to each other section thereof to which the relevance of such information is reasonably apparent and on which a reasonably clear cross reference is made), the Company hereby represents and warrants to Parent and Merger Sub: Section 4.1 Corporate Existence and Power. (a) Each of the Company and its Subsidiaries is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation. The Company has all corporate powers and authority required to own, lease and operate its properties and to carry on its business as now conducted. The Subsidiaries of the -12- Company have all corporate powers and authority required to own, lease and operate their respective properties and to carry on their business as now conducted. (b) Each of the Company and its Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company. (c) The Company has made available to Parent and Merger Sub true and complete copies of the currently effective articles of incorporation and bylaws or similar organizational and governing documents of the Company and its material domestic Subsidiaries. (d) Section 4.1(d) of the Disclosure Letter sets forth a list of all the directors and officers of the Company and Noveon, Inc. Section 4.2 Corporate Authorization. (a) The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Merger and the other transactions contemplated hereby have been duly and validly authorized by the Board of Directors and shareholders of the Company, and no Company corporate or shareholder action is necessary to authorize this Agreement or to consummate the Merger and the other transactions contemplated hereby, except for the filing of the certificate of merger as provided in Section 2.1(b). The only Company shareholder action required to adopt this Agreement is an affirmative vote in favor, or approval, of this Agreement by the holders of a majority of the outstanding Common Shares, which shareholder action has been duly taken. (b) This Agreement has been duly and validly executed and delivered by the Company and, assuming the due and valid execution and delivery by Parent and Merger Sub, constitutes a legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except (i) as rights to indemnity hereunder may be limited by federal or state securities Laws or the public policies embodied therein, (ii) as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the enforcement of creditors' rights generally and (iii) as the remedy of specific performance and other forms of injunctive relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (c) On or prior to the date hereof, the Board of Directors of the Company, has unanimously adopted resolutions (i) approving this Agreement and declaring that the Merger and the other transactions contemplated by this Agreement are advisable and (ii) resolving to recommend that the Company shareholders adopt this Agreement. All such resolutions are in full force and effect and have not been amended or superseded as of the date hereof. (d) The shareholders who have voted in favor of adoption of this Agreement as of the date hereof are holders of at least 98% of the Common Shares outstanding as of the date hereof, and no such shareholder shall have taken any action to rescind or revoke its vote prior to the Effective Time. -13- Section 4.3 Governmental Authorization. The execution, delivery and performance by the Company of this Agreement and the consummation of the Merger by the Company require no action by the Company in respect of, or filing by the Company with, any Governmental Authority other than (i) the filing of the certificate of merger described in Section 2.1(b), (ii) compliance with any applicable requirements of the HSR Act and any applicable Other Antitrust Laws specified on Section 4.3 of the Disclosure Letter, (iii) compliance with any applicable requirements of the Exchange Act and Securities Act, (iv) compliance with any applicable foreign or state securities or Blue Sky Laws, (v) the filing of appropriate documents with the relevant authorities of the jurisdictions in which the Company and its Subsidiaries are qualified to do business and (vi) other actions or filings, which if not taken or made, would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on the Company and would not, individually or in the aggregate, reasonably be expected to adversely affect in any material respect, or materially to delay, the Company's ability to observe and perform its obligations hereunder. Section 4.4 Non-Contravention. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby do not and will not (i) contravene or conflict with the organizational or governing documents of the Company or any of its Subsidiaries, (ii) assuming compliance with the matters referenced in Section 4.3, contravene or conflict with or constitute a violation of any provision of any Law binding upon or applicable to the Company or any of its Subsidiaries or any of their respective properties or assets, (iii) constitute a default under or give rise to a right of termination, cancellation or acceleration of any right or obligation of the Company or any of its Subsidiaries or to a loss of any benefit to which the Company or any of its Subsidiaries is entitled under any provision of any agreement, contract or other instrument applicable to or binding upon the Company or any of its Subsidiaries except those set forth on Section 4.4(iii) of the Disclosure Letter or (iv) result in the creation or imposition of any Lien on any material asset of the Company or any of its Subsidiaries (other than any such Lien arising from any actions taken by Parent or Merger Sub), except, in the case of clauses (ii), (iii) and (iv), as would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on the Company. Section 4.5 Capitalization. (a) The authorized capital stock of the Company consists of (i) 4,100,000 Common Shares, of which, as of the date hereof, there are 3,606,133 shares issued and outstanding. As of the date hereof, there are outstanding Company Options to purchase an aggregate of 350,611 Common Shares. Section 4.5(a) of the Disclosure Letter sets forth a list of all of the outstanding Company Options, indicating the holder of each Company Option, the number of Common Shares corresponding to each Company Option and the exercise prices applicable to each Company Option. All outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable and were not issued in violation of any preemptive or similar rights. (b) Except as set forth in this Section 4.5 and except for changes after the date hereof resulting from the exercise of Company Options outstanding on such date, there are no outstanding, and there have not been reserved for issuance, any (i) shares of capital stock or other voting securities of the Company, (ii) securities of the Company or any Subsidiary convertible -14- into or exchangeable for shares of capital stock or voting securities of the Company or its Subsidiaries, (iii) Company Options or other rights or options to acquire from the Company or its Subsidiaries, or obligations of the Company or its Subsidiaries to issue, any shares of capital stock, voting securities or securities convertible into or exchangeable for shares of capital stock or voting securities of the Company or such Subsidiaries or (iv) equity equivalent interests in the ownership or earnings of the Company or its Subsidiaries or other similar rights (the items in clauses (i) through (iv) collectively, "COMPANY SECURITIES"). There are no outstanding obligations of the Company or any Subsidiary to repurchase, redeem or otherwise acquire any Company Securities. Except as set forth in Section 4.5(b) of the Disclosure Letter, there are no stockholder agreements, voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party or by which it is bound relating to the voting or registration of any shares of capital stock of the Company or any of its Subsidiaries or preemptive rights with respect thereto. Except as set forth in Section 4.5(b) of the Disclosure Letter, to the Knowledge of the Company, there are no agreements among the stockholders of the Company relating to the transfer or voting of any shares of capital stock of the Company or the management of the business and affairs of the Company. (c) Other than the issuance of Common Shares upon exercise of Company Options, and except as set forth in Section 4.5(c) of the Disclosure Letter, since the Balance Sheet Date, the Company has not declared or paid any dividend or distribution in respect of any Company Securities, and neither the Company nor any Subsidiary of the Company has issued, sold, repurchased, redeemed or otherwise acquired any Company Securities, and their respective Boards of Directors have not authorized any of the foregoing. Section 4.6 Company Subsidiaries. (a) Except for such Company Subsidiaries and the investments described in Section 4.6(a) of the Disclosure Letter, (i) each of the Company Subsidiaries is wholly owned (directly or indirectly) by the Company and (ii) the Company does not directly or indirectly own any equity interest in any other Person. (b) All equity interests held by the Company or any of its Subsidiaries in any Affiliated Entity of the Company or any of its Subsidiaries are fully paid and non-assessable and were not issued in violation of any preemptive or similar rights. Except as described on Section 4.6(b) of the Disclosure Letter, all such equity interests are free and clear of any Liens or any other limitations or restrictions on such equity interests (including any limitation or restriction on the right to vote, pledge or sell or otherwise dispose of such equity interests). Section 4.7 Reports and Financial Statements. (a) The Company has filed, or has caused Noveon, Inc. to file, with or otherwise furnished to the SEC all forms, reports, schedules, statements, certifications and other documents required to be filed or furnished by it or Noveon, Inc. under the Securities Act or the Exchange Act since February 28, 2001 (such documents, as supplemented or amended since the time of filing, the "COMPANY SEC REPORTS"). No Company Subsidiary, other than Noveon, Inc., is required to file with or furnish to the SEC any such forms, reports, schedules, statements, certifications or other documents. As of their respective dates, the Company SEC Reports, -15- including any financial statements or schedules included or incorporated by reference therein, at the time filed (and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of mailing, respectively) (i) complied as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) The audited consolidated financial statements and unaudited consolidated interim financial statements included in the Company S-1 (including any related notes and schedules) fairly present, in all material respects, the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods set forth therein, and in each case were prepared in accordance with GAAP consistently applied during the periods involved (except as otherwise disclosed in the notes thereto and subject, in the case of financial statements for quarterly periods, to normal year-end adjustments that would not be material in amount). (c) There are no liabilities or obligations of the Company or any Company Subsidiary (whether accrued, contingent, absolute, determined, determinable or otherwise) which would be required by GAAP to be reflected on a consolidated balance sheet (or in the notes thereto) of the Company other than (i) liabilities or obligations disclosed or provided for in the Company Balance Sheet or disclosed in the notes thereto, (ii) liabilities or obligations incurred after the Balance Sheet Date in the ordinary course of business consistent with past practice, (iii) liabilities or obligations under this Agreement or incurred in connection with the transactions contemplated hereby or disclosed in Section 4.14 of the Disclosure Letter and (iv) other liabilities or obligations that do not, individually or in the aggregate, have a Material Adverse Effect on the Company. (d) The Quarterly Report on Form 10-Q of Noveon, Inc. for the quarterly period ended March 31, 2004, when filed with the SEC, including any financial statements or schedules included or incorporated by reference therein (i) will comply as to form in all material respects with the applicable requirements of the Exchange Act and (ii) will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements included in such Quarterly Report on Form 10-Q (including any related notes and schedules), when filed with the SEC, will fairly present, in all material respects, the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods set forth therein, and in each case will have been prepared in accordance with GAAP consistently applied during the periods involved (except as otherwise disclosed in the notes thereto and subject to normal year-end adjustments that would not be material in amount). Section 4.8 Absence of Certain Changes or Events. (a) Except as set forth in Section 4.8 of the Disclosure Letter, since the Balance Sheet Date and prior to the date hereof, the business of the Company and its -16- Subsidiaries has been conducted in all material respects in the ordinary course of business consistent with past practice. Since the Balance Sheet Date, there has not been any event, occurrence or development that, individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect on the Company. For purposes of this Agreement, "MATERIAL ADVERSE EFFECT ON THE COMPANY" means any circumstance, event, change, development or occurrence that, either individually or in the aggregate with all other circumstances, events, changes, developments or occurrences, has had, constitutes or would reasonably be expected to result in a material adverse effect on (i) the business, results of operations or financial condition of the Company and its Subsidiaries, taken as a whole, but excluding any such circumstance, event, change, development or occurrence resulting from or arising out of (A) general national, international or regional economic, financial or business conditions, (B) conditions (including changes in economic, financial market, regulatory or political conditions and any change in Law or GAAP) affecting generally the industries in which the Company and its Subsidiaries participate or (C) the execution, announcement and performance of this Agreement, or any actions taken, delayed or omitted to be taken by the Company in accordance with the terms and conditions of this Agreement or at the written request of Parent, Merger Sub or any of their representatives or (ii) the ability of the Company to consummate the Merger in accordance with the terms and conditions of this Agreement. (b) Without limiting the generality of the foregoing Section 4.8(a), since the Balance Sheet Date and prior to the date hereof, other than in the ordinary course of business, there has not been: (i) any material damage, destruction or loss to any of the material assets or properties of the Company or any of its material Subsidiaries (whether or not insured); (ii) any amendment or change in the Company's organizational or governing documents; (iii) any declaration, setting aside or payment of any dividend or distribution or capital return in respect of any shares of the Company's capital stock or any redemption, purchase or other acquisition by the Company or any of its Subsidiaries of any shares of the Company's capital stock or any amendment of any material term of any outstanding capital stock of the Company or any of its Subsidiaries; (iv) any sale, assignment, transfer, lease or other disposition or agreement to sell, assign, transfer, lease or otherwise dispose of any Owned Real Property, Leased Real Property or any other asset of the Company that is material, individually or in the aggregate, other than the sale of inventory in the ordinary course of business; (v) any acquisition (by merger, consolidation, or acquisition of stock or assets) by the Company or any of its Subsidiaries of any corporation, partnership or other business organization or division thereof or any equity interest therein; -17- (vi) any (A) incurrence of or guarantee with respect to or provision of credit support for any indebtedness for borrowed money by the Company or any of its Subsidiaries, other than pursuant to the Company's or any Company Subsidiary's existing credit facilities in the ordinary course of business, (B) event of default or default under the Company's or any Company Subsidiary's existing credit facilities or outstanding loans, or (C) creation, sufferance or assumption by the Company or any of its Subsidiaries of any material Lien on any material asset, other than Permitted Liens; (vii) any change in any method of accounting or accounting principle or practice used by the Company or any of its Subsidiaries, other than such changes required by Law or a change in GAAP; (viii) any material Tax election or the institution of or any compromise or settlement of any proceeding or proposed adjustment with respect to any material Tax liability of the Company and its Subsidiaries; (ix) any material loan, advance or capital contribution made by the Company or any of its Subsidiaries to, or investment in, any Person other than loans, advances or capital contributions made to a Company Subsidiary or by a Company Subsidiary to the Company; (x) any amendment, alteration or modification in any material term of any currently outstanding Company Options, or any issuance by the Company or any of its Subsidiaries of any options, warrants or other rights to purchase any capital stock or other equity interests in the Company or such Subsidiaries (as the case may be) or any securities exchangeable or exercisable for or convertible into the same; or (xi) any agreement to take any actions specified in this Section 4.8(b), except for this Agreement. Section 4.9 Litigation. Except as set forth in Section 4.9 of the Disclosure Letter, there is no material action, material suit, material claim, material investigation, material arbitration or material proceeding pending or, to the Knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries or their respective assets or properties before any arbitrator or Governmental Authority (a "PROCEEDING"). No grand jury proceedings or criminal indictments are pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries or any of the Company's directors or officers relating to the actions or omissions of any such individuals in connection with their respective roles as directors or officers of the Company. Section 4.10 Taxes. (a) The Company and each of its Subsidiaries have timely filed or caused to be timely filed or will timely file or cause to be timely filed with the appropriate Taxing Authorities all material Tax Returns that are required to be filed on or prior to the Closing Date (taking into account extensions) by, or with respect to, the Company and its Subsidiaries. The Tax Returns have accurately reflected and will accurately reflect all material liability for Taxes of the Company and its Subsidiaries for the periods covered thereby. -18- (b) All material Taxes of the Company and each of its Subsidiaries for all taxable years or periods that end as of or before the Effective Time, and, with respect to any taxable year or period beginning before and ending after the Effective Time, the portion of such taxable year or period ending as of the Effective Time, have been timely paid or accrued on the books and records of the Company in accordance with GAAP. The provision for Taxes in the Balance Sheet is sufficient in all material respects to cover all Tax liabilities, fixed or contingent, attributable to all taxable years or periods ending on or prior to the Balance Sheet Date. (c) Except as set forth in Section 4.10 of the Disclosure Letter, since the date of formation of the Company, neither the Company nor any of its Subsidiaries has been included in any "consolidated," "unitary" or "combined" Tax Return provided for under the law of the United States or any nation, state, locality or other jurisdiction with respect to Taxes for any taxable period for which the statute of limitations has not expired, other than a "consolidated," "unitary" or "combined" group of which the Company or any of its Subsidiaries was the common parent. (d) All material Taxes which the Company or any of its Subsidiaries is (or was) required by law to withhold or collect have been duly withheld or collected and have been timely paid over to the proper authorities to the extent due and payable. (e) The Company has not been a "United States real property holding corporation" within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. (f) There are no tax sharing, allocation, indemnification or similar agreements or arrangements in effect as between the Company or any predecessor or Affiliate or Subsidiary thereof and any other party (including any of the Company's shareholders, but excluding the Company and its Subsidiaries) under which the Company or any of its Subsidiaries could be liable for any Taxes or other claims of any such other party. (g) Neither the Company nor any of its Subsidiaries has applied for, been granted, or agreed to any accounting method change for which it will be required to take into account any adjustment under Section 481 of the Code (or, to the Knowledge of the Company, any similar provision of the Code or the corresponding tax laws of any nation, state, locality or other jurisdiction). (h) There are no Liens for Taxes upon the assets of the Company or any of its Subsidiaries except Liens for current Taxes not yet due. (i) Except for those transactions fully disclosed in Section 4.10 of the Disclosure Letter for which full documentation has been provided to Parent, to the Knowledge of the Company, neither the Company nor any of its Subsidiaries has participated in a reportable transaction under Section 6011 of the Code and Treasury Regulations promulgated thereunder. (j) Except as set forth in Section 4.10(j) of the Disclosure Letter, neither the Company nor any of its Subsidiaries is a party to any agreement that would require it to make any payment that would constitute an "excess parachute payment" for purposes of Sections 280G and 4999 of the Code. -19- (k) Since March 1, 2001, excluding the transactions contemplated by this Agreement, to the Knowledge of the Company, there has not been an ownership change (within the meaning of Section 382 of the Code) of the Company. Section 4.11 ERISA. (a) Section 4.11(a) of the Disclosure Letter contains an accurate and complete list of (i) all material domestic "employee benefit plans," within the meaning of Section 3(3) of ERISA, (ii) all material domestic bonus, stock option, stock purchase, restricted stock, incentive, profit-sharing, pension, retirement, deferred compensation, medical, life, disability, severance and supplemental retirement plans, programs and/or arrangements (whether or not insured) (other than the Executive Change of Control Agreements) and (iii) all Material Employment Agreements (other than the Executive Change of Control Agreements) for active, retired or former employees or directors that are maintained or contributed to (or with respect to which an obligation to contribute has been undertaken) and with respect to which any potential liability is borne by the Company or any of its Subsidiaries (each such plan or program an "EMPLOYEE BENEFIT PLAN"). Except for the Executive Change of Control Agreements and the agreements and arrangements set forth in Section 4.11(a) of the Disclosure Letter, neither the Company nor its Subsidiaries is a party to any Material Employment Agreement. (b) Except as set forth in Section 4.11(b) of the Disclosure Letter, and except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, each Employee Benefit Plan has at all times been maintained and operated in compliance in all material respects with its terms and the requirements of all applicable Laws, including, without limitation, ERISA and the Code. Except as set forth in Section 4.11(b) of the Disclosure Letter, neither the Company nor any of its Subsidiaries has any commitment, intention or understanding to create, modify or terminate any Employee Benefit Plan. (c) Except as set forth in Section 4.11(c) of the Disclosure Letter, and except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, neither the Company nor any of its ERISA Affiliates has incurred any withdrawal liability (including any contingent or secondary withdrawal liability) within the meaning of Section 4201 or 4204 of ERISA to any Employee Benefit Plan which is a "multiemployer plan" (as such term is defined in Section 4001(a)(3) of ERISA) ("MULTIEMPLOYER PLAN") and no event has occurred and no condition or circumstance has existed that presents a material risk of the occurrence of any withdrawal from or the partition, termination, reorganization or insolvency of any such Multiemployer Plan which could result in any liability of the Company or any of its Subsidiaries to any such Multiemployer Plan. (d) Except as set forth in Section 4.11(d) of the Disclosure Letter or as described in the Company SEC Reports, neither the Company nor any of its ERISA Affiliates maintains any Employee Benefit Plan (whether qualified or nonqualified within the meaning of Section 401(a) of the Code) providing for retiree health and/or life benefits. (e) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect (i) there are no actions, suits or claims pending, or, to the Knowledge of the Company, threatened, anticipated or expected to be asserted against any -20- Employee Benefit Plan or the assets of any such plan (other than routine claims for benefits and appeals of denied routine claims), (ii) no civil or criminal action brought pursuant to the provisions of Title I, Subtitle B, Part 5 of ERISA is pending, threatened, anticipated, or expected to be asserted against the Company or any of its Subsidiaries or any fiduciary of any Employee Benefit Plan, in any case with respect to any Employee Benefit Plan and (iii) and except as set forth in Section 4.11(e) of the Disclosure Letter, no Employee Benefit Plan or any fiduciary thereof has been the direct or indirect subject of an audit, investigation or examination by any governmental or quasi-governmental agency. (f) Except as set forth in Section 4.11(f) of the Disclosure Letter, full payment has been made of all amounts which the Company or any of its Subsidiaries is required, under applicable Law or under any Employee Benefit Plan or any agreement relating to any Employee Benefit Plan to which the Company or any of its Subsidiaries is a party, to have paid as contributions thereto as of the last day of the most recent fiscal year of such Employee Benefit Plan ended prior to the date hereof. (g) Except as set forth in Section 4.11(g) of the Disclosure Letter, since the Balance Sheet Date, there has been (i) no material adverse change in the financial condition of any Employee Benefit Plan which is covered by Title IV of ERISA and which is a "Single Employer Plan" (as such term is defined in Section 4001(a)(15) of ERISA) ("SINGLE EMPLOYER PLAN") by reason of any increase in benefits, (ii) no change in the actuarial assumptions with respect to any Single Employer Plan and (iii) no increase in benefits under any Single Employer Plan as a result of plan amendments, written interpretations or announcements (whether written or not), change in applicable Law or otherwise. (h) Neither the Company nor any of its ERISA Affiliates sponsors, maintains or contributes to or has any obligation to contribute to any Multiemployer Plan. (i) Each Employee Benefit Plan intended to be qualified under Section 401(a) of the Code has been determined to be so qualified, as to form, by the Internal Revenue Service. Each trust established in connection with any Employee Benefit Plan which is intended to be exempt from Federal income taxation under Section 501(a) of the Code has been determined to be so exempt by the Internal Revenue Service. Since the date of each most recent determination referred to in this paragraph (i), to the Knowledge of the Company, no event has occurred and no condition or circumstance has existed that resulted or is reasonably likely to result in the revocation of any such determination or that could adversely affect the qualified status of any such Employee Benefit Plan or the exempt status of any such trust in a manner that cannot be corrected without material liability. (j) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, neither the Company nor any of its Subsidiaries nor any of their respective directors, officers, employees or, to the Knowledge of the Company, other persons who participate in the operation of any Employee Benefit Plan or related trust or funding vehicle has engaged in any transaction with respect to any Employee Benefit Plan or breached any applicable fiduciary responsibilities or obligations under Title I of ERISA that (i) would subject any of them to a tax, penalty or liability for prohibited transactions under ERISA or the -21- Code or (ii) would result in any claim being made under, by or on behalf of any such Employee Benefit Plan by any party with standing to make such claim. (k) Except as set forth in Section 4.11(k) of the Disclosure Letter (i) the execution of this Agreement and the consummation of the transactions contemplated hereby do not constitute a triggering event under any Employee Benefit Plan, policy, arrangement, statement, commitment or agreement, whether or not legally enforceable, which (either alone or upon the occurrence of any additional or subsequent event) will or may result in any payment (whether of severance pay or otherwise), acceleration, vesting or increase in benefits to any employee or former employee or director of the Company or any of its Subsidiaries or (ii) no Employee Benefit Plan provides for the payment of severance benefits upon the termination of an employee's employment. (l) The Company has made available to Parent true and complete copies of all material plan documents in connection with each Employee Benefit Plan, including, without limitation (where applicable): (i) all Employee Benefit Plans as in effect on the date hereof, together with all amendments thereto, including, in the case of any Employee Benefit Plan not set forth in writing, a written description thereof, (ii) all current summary plan descriptions and summaries of material modifications, (iii) all current trust agreements, declarations of trust and other documents establishing other funding arrangements (and all amendments thereto), (iv) the most recent Internal Revenue Service determination letter obtained with respect to each Employee Benefit Plan intended to be qualified under Section 401(a) of the Code or exempt under Section 501(a) of the Code, (v) the annual report on Internal Revenue Service Form 5500-series for the last year for each Employee Benefit Plan required to file such form, (vi) the most recently prepared actuarial valuation report for each Employee Benefit Plan covered by Title IV of ERISA and (vii) the most recently prepared financial statements. Section 4.12 Labor Matters. (a) Except as would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on the Company (i) the Company and each of its Subsidiaries is in material compliance with all federal, state and other applicable Laws, domestic or foreign, respecting employment and employment practices, terms and conditions of employment and wages and hours. No material unfair labor practice complaint against the Company or any of its Subsidiaries is pending or, to the Knowledge of the Company, threatened before the National Labor Relations Board or any comparable Governmental Authority in any nation, state or other jurisdiction. (b) Except as set forth in Section 4.12 of the Disclosure Letter (i) there is no labor strike, dispute, slowdown or stoppage actually pending against, or, to the Knowledge of the Company, threatened against or involving, the Company or any of its Subsidiaries, and during the past year there has not been any such action and (ii) in respect of the United States only, neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement and no collective bargaining agreement is currently being negotiated by the Company or any of its Subsidiaries. Section 4.13 Compliance with Laws. -22- (a) Except as would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on the Company, the Company and each of its Subsidiaries are in compliance with all Laws applicable to the Company, its Subsidiaries and their respective businesses and activities. Except as would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on the Company, neither the Company nor any of its Subsidiaries has Knowledge of its being under investigation with respect to, or has it been threatened in writing to be charged with or been given notice of any violation of, any applicable Law. (b) Except as would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on the Company, (i) the Company and each Company Subsidiary has and maintains in full force and effect, and is in compliance with, all Permits necessary for the Company and each Subsidiary to carry on their respective businesses as currently conducted and (ii) neither the Company nor any Subsidiary has received notice that the Person issuing or authorizing any such Permit intends to terminate or will refuse to renew or reissue any such Permit upon its expiration. Section 4.14 Finders' Fees. Except as set forth in Section 4.14 of the Disclosure Letter, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of the Company or any of its Subsidiaries and that might be entitled to any fee or commission from the Company or any of its Affiliates in connection with the transactions contemplated by this Agreement. The Company has provided Parent with true and complete copies of all engagement letters or other agreements providing for the payment of the fees and commissions described in Section 4.14 of the Disclosure Letter, and no such letters or agreements have been amended or superseded. Section 4.15 Environmental Matters. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company, and except as disclosed in Section 4.15 of the Disclosure Letter: (a) the Company and each of its Subsidiaries are in compliance with all applicable Environmental Laws and have no liability, fixed or contingent, for a violation of any Environmental Law, except for such noncompliance and/or liabilities that are adequately reserved against in the Balance Sheet; (b) there are no pending or, to the Company's Knowledge, threatened actions, suits, requests for information, orders, judgments, investigations, claims or proceedings by or before any Governmental Authority or any other Person against the Company or any of its Subsidiaries that pertain to (i) any obligations or liabilities under any Environmental Law, (ii) any alleged violations of any Environmental Law or (iii) responsibility, or potential responsibility, for the clean-up of any Hazardous Substances, including off site contamination; (c) (i) all Permits required to be obtained or filed by the Company or any of its Subsidiaries under any Environmental Laws have been duly obtained or filed and are in full force and effect and (ii) the Company and each of its Subsidiaries are in compliance with all such Permits applicable to it; -23- (d) to the Company's Knowledge, none of the real property currently owned or leased by the Company or any of its Subsidiaries is listed or proposed to be listed on the National Priorities List pursuant to CERCLA or on an equivalent state or foreign list of sites required to be investigated or cleaned up under any Environmental Law; (e) to the Company's Knowledge, no Person has treated, stored, disposed of, transported to or released any Hazardous Substances on or under any real property currently owned or leased by the Company or any of its Subsidiaries, in each case, except in material compliance with applicable Environmental Laws; (f) (i) since February 28, 2001, neither the Company nor any of its Subsidiaries has manufactured or sold any asbestos, lead or products that incorporate asbestos or lead ("DESIGNATED PRODUCTS") and (ii) no claim is pending or, to the Company's Knowledge, threatened against the Company or any of its Subsidiaries with respect to the use of, handling of, exposure to or the manufacture, sale or disposal of any Designated Products; or (g) neither the Company nor any of its Subsidiaries has taken or caused to be taken any action that (i) is reasonably likely pursuant to Section 11.3(g)(ii) of the Goodrich APA to limit or impair in any material respect the rights of the Company against Goodrich under Section 11.3(e) or Section 11.3(f) of the Goodrich APA, (ii) is reasonably likely pursuant to Section 11.3(d)(v) of the Goodrich APA to limit or impair in any material respect the rights of the Company against Goodrich under Section 11.3(d) of the Goodrich Agreements, or (iii) is reasonably likely to limit or impair in any material respect the rights of the Company against third parties, or any rights of the Company against Goodrich, in connection with any indemnification obligation that is the subject of Section 11.3(k) of the Goodrich APA. Section 4.16 Insurance. All Insurance Policies are with reputable insurance carriers and are in character and amount and with such deductibles and exclusions at least equivalent to that carried by persons engaged in similar businesses and subject to the same or similar perils or hazards. A correct and accurate list of all Insurance Policies has been made available to Parent. To the Company's Knowledge, each Insurance Policy is in full force and effect, valid and enforceable, and sufficient for compliance by the Company and its Subsidiaries with all requirements of applicable Law. Except as set forth in Section 4.16 of the Disclosure Letter, in the period from February 28, 2001 until the date hereof, no material claim on any Insurance Policy has been made by the Company or any of its Subsidiaries. Section 4.17 Contracts. (a) The Company has made available to Parent the following contracts (other than purchase orders and ordinary course vendor contracts): (i) contracts for the sale of goods and services with the ten customers with the highest dollar volume of purchases from the Company and its Subsidiaries, taken as a whole, during 2003; (ii) contracts for the purchase of goods or services with the ten suppliers with the highest dollar volume of sales to the Company and its Subsidiaries, taken as a whole, during 2003; -24- (iii) each partnership or joint venture agreement to which the Company or any of its Subsidiaries is a party (other than such agreements where the Company or its Subsidiaries are the only partners); and (iv) contracts for the acquisition or sale of a material business or line of products (other than in the ordinary course of business), whether through the purchase of stock, assets or otherwise, under which the Company or any of its Subsidiaries or any other party thereto has continuing rights or obligations. (b) Neither the Company nor any of its Subsidiaries is a party to or bound by, as of the date hereof, any material contract, undertaking, commitment or agreement (other than the material contracts, undertakings, commitments or agreements set forth in Section 4.17 of the Disclosure Letter (collectively with the contracts referred to in clause (a) of this Section 4.17, the "CONTRACTS"), the employee benefit matters set forth in Section 4.11(a) of the Disclosure Letter, the real property leases set forth in Section 4.21 of the Disclosure Letter and any vendor contracts entered in the ordinary course of business) of the following categories: (i) promissory notes, loans, agreements, indentures, evidences of indebtedness or other instruments providing for the borrowing or lending of money, whether as a borrower, lender or guarantor in excess of $1,000,000; (ii) contracts containing covenants that materially limit the freedom of the Company or any of its material Subsidiaries to engage in any line of business or compete with any Person in any product line or line of business, or to operate at any location other than distributorship agreements entered into in the ordinary course of business; (iii) contracts between the Company or any of its Subsidiaries and any of the Company's stockholders other than an Employee Benefit Plan or Material Employment Agreement; or (iv) any other contract, agreement, arrangement or understanding that is material to the Company or any of its respective material Subsidiaries, the termination, or breach or default of which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company. (c) As of the date hereof, each of the Contracts (which defined term shall include the Goodrich Agreements) is a valid and binding obligation of the Company (or the Subsidiaries party thereto), and to the Company's Knowledge, the other parties thereto, enforceable against the Company and its Subsidiaries and, to the Company's Knowledge, the other parties thereto in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium, reorganization, arrangement or similar laws affecting creditors' rights generally and by general principles of equity. (d) As of the date hereof, neither the Company nor any of its Subsidiaries is, nor to the Knowledge of the Company is any other party, in material breach, default or violation (and no event has occurred or not occurred through the Company's action or inaction or, to the Knowledge of the Company, through the action or inaction of any third parties, which with -25- notice or the lapse of time or both could constitute a material breach, default or violation) of any term, condition or provision of any Contract to which the Company or any of its Subsidiaries is now a party, or by which any of them or any of their respective properties or assets may be bound. (e) Without limiting the foregoing, the Agreement for Sale and Purchase of Assets, dated as of November 28, 2000, between The B.F. Goodrich Company ("GOODRICH") and the Company (the "GOODRICH APA") relating to the acquisition by the Company of the Performance Materials business segment of Goodrich, the "Confidentiality Agreement" (as defined therein) and the other documents contained in the transaction "bible" relating to such acquisition (together the "GOODRICH AGREEMENTS)," that the Company made available to Parent constitute the entire agreement among the parties to the Goodrich Agreement pertaining to such transaction. Copies of the Phase I environmental studies performed by URS for or on behalf of the Company in connection with the aforementioned Goodrich transaction have been made available to Parent. Other than the amendments and supplements included in the "bible" or set forth in Section 4.17(e) of the Disclosure Letter, the Goodrich Agreements have not been amended or supplemented in any material respect. All of the pending indemnity claims made pursuant to the Goodrich Agreements have been made available to Parent. Section 4.18 Legal Matters. The Company has taken all action necessary to exempt the Merger, this Agreement and the transactions contemplated hereby from Section 203 of the Delaware Law, and, accordingly, neither such Section nor any other antitakeover or similar statute or regulation in effect as of the date hereof applies or purports to apply to any such transactions. Section 4.19 Intellectual Property. (a) A list of all of the Intellectual Property has been made available to Parent. (b) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, and except as specified in Section 4.19 of the Disclosure Letter: (i) the Company or it Subsidiaries own or have a right to use all of the Intellectual Property; (ii) there are no material restrictions on the Company's or the relevant Subsidiary's right to use any Intellectual Property; (iii) the execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby do not and will not constitute a default giving rise to a right of termination, cancellation or acceleration of any right or obligation of the Company or any of its Subsidiaries or to a loss of any material benefit to which the Company or any of its Subsidiaries is entitled under any of the Intellectual Property Agreements; (iv) to the Company's Knowledge, neither the Company nor any of its Subsidiaries is infringing or misappropriating, and has not infringed or misappropriated, -26- any intellectual property rights of others, and neither the Company nor any of its Subsidiaries has received written notice of any such infringement or misappropriation; (v) there is no pending or, to the Company's Knowledge, threatened legal or governmental Proceeding challenging the validity of any Intellectual Property, and, to the Company's Knowledge, the Company has not received any written notice from a third party alleging that any Intellectual Property is invalid; (vi) neither the Company nor any of its Subsidiaries have entered into any material contract or made any material arrangement pursuant to which any third party is entitled to any royalty or other compensation for the use of any of the Intellectual Property; (vii) each Intellectual Property Agreement is a valid and binding obligation of the Company or the relevant Subsidiary and, to the Company's Knowledge, is a valid and binding obligation of the other parties thereto; (viii) to the Company's Knowledge, each Intellectual Property Agreement is in full force and effect and is enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium or other laws relating to or limiting creditors' rights generally or by general principles of equity, regardless of whether such enforceability is considered in a proceeding at law or in equity; or (ix) to the Company's Knowledge, neither the Company nor any of its Subsidiaries is in material breach of or in material default of its obligations under any of the Intellectual Property Agreements and none of the other parties to the Intellectual Property Agreements are in material breach of or material default under any of their obligations under the Intellectual Property Agreements. Section 4.20 Related Party Transactions. Except for (i) the Executive Change of Control Agreements, (ii) the Noveon, Inc. 11% senior subordinated notes, (iii) as will not continue after the Effective Time and (iv) arms-length arrangements between the Company or its Subsidiaries on the one hand and any "portfolio company" of any Related Party on the other hand, none of (a) any beneficial owner of 10% or more of the Company's outstanding capital stock, (b) any officer or director of the Company or (c) any Person (other than the Company) in which any such beneficial owner, officer or director owns any beneficial interest (other than a publicly held corporation whose stock is traded on a national securities exchange or in the over-the-counter market and less than 5% of the stock of which is beneficially owned by all such Persons) ((a) through (c) collectively, "RELATED PARTIES") has any interest in: (i) any contract, agreement, arrangement or understanding with, or relating to, the business or operations of, the Company or any of its Subsidiaries, (ii) any loan, arrangement, understanding, agreement or contract for or relating to indebtedness of the Company or any of its Subsidiaries or (iii) any property (real, personal or mixed), tangible or intangible, used in the business or operations of the Company or any of its Subsidiaries, or any property that benefits from a contract or other arrangement by which the Company or any of its Subsidiaries provides services or facilities or other benefits to such property, excluding any such contract, arrangement, understanding or -27- agreement constituting an Employee Benefit Plan. Following the Effective Time, except for (i) the Executive Change of Control Agreements, (ii) the Noveon, Inc. 11% senior subordinated notes, (iii) obligations expressly disclosed in Section 4.20 of the Disclosure Letter and (iv) any arrangements with Parent or its Affiliated Entities, neither the Company nor any of its Subsidiaries will have any obligations to any Related Party. As of the date hereof, neither the Company nor any of its Subsidiaries is party to any engagement letter with any investment bank that would entitle that investment bank or its Affiliates to a fee from the Company or its Affiliates after the Effective Time. Section 4.21 Real Property. (a) Section 4.21(a) of the Disclosure Letter sets forth a complete and accurate list of all real property owned in fee or real property leased as of the date hereof by each of the Company or any of its Subsidiaries. (b) Except as set forth in Section 4.21(b) of the Disclosure Letter and except as would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on the affected property: (x) as to the real property shown in Section 4.21(a) of the Disclosure Letter as owned in fee by the Company and/or its Subsidiaries (the "OWNED REAL PROPERTY"), (i) the Company and/or its Subsidiaries has good and marketable fee title to the Owned Real Property, (ii) the Owned Real Property is not subject to any mortgages, deeds of trust or other security instruments of a similar nature and (iii) since February 28, 2001, the Company or its Subsidiaries have not sold any material portion of the Owned Real Property and (y) as to the real property shown on Section 4.21(a) of the Disclosure Letter as leased by the Company and/or its Subsidiaries (the "LEASED REAL PROPERTY"), (i) the Leased Real Property is not subject to any mortgages, deeds of trust or other security instruments of a similar nature securing any indebtedness of the Company or its Subsidiaries, (ii) the Company and/or its Subsidiaries is in possession of the Leased Real Property and there are no subleases, subtenancies or other occupancies affecting the Leased Real Property in any material respect and (iii) the Company has made available to Parent true, correct and complete copies of all the leases or subleases which create the Leased Real Property located in the United States. (c) Except as set forth in Section 4.21(c) of the Disclosure Letter, neither the Company nor any of its Subsidiaries has received written notice of any pending or proposed condemnation or eminent domain proceedings affecting in any material respect any Owned Real Property and, to the Company's Knowledge, there are no such proceedings threatened. (d) Section 4.21(d) of the Disclosure Letter indicates those parcels of Owned Real Property that are the subject of any agreements pursuant to which the Company or its Subsidiaries is supplied with material utility services by another Person whose primary line of business is not supplying utility services. As of the date hereof, the plant services agreements to which the Company and its Subsidiaries are a party provide the Company and its Subsidiaries with the access to the plant services necessary for the conduct of their respective businesses as currently conducted. Section 4.22 NO OTHER INFORMATION. NEITHER THE COMPANY NOR ANY OTHER PERSON HAS MADE OR MAKES ANY REPRESENTATION OR WARRANTY -28- EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, AND SPECIFICALLY NEITHER THE COMPANY NOR ANY OTHER PERSON HAS MADE OR MAKES ANY REPRESENTATION OR WARRANTY WITH RESPECT TO ANY PROJECTIONS, ESTIMATES OR BUDGETS DELIVERED TO OR MADE AVAILABLE TO PARENT OR MERGER SUB OR TO ANY OF THEIR RESPECTIVE AFFILIATES OR ANY REPRESENTATION OF FUTURE REVENUES, FUTURE RESULTS OF OPERATIONS (OR ANY COMPONENT THEREOF), FUTURE CASH FLOWS OR FUTURE FINANCIAL CONDITION (OR ANY COMPONENT THEREOF) OF THE COMPANY AND ITS SUBSIDIARIES OR OF THE FUTURE BUSINESS AND OPERATIONS OF THE COMPANY AND ITS SUBSIDIARIES. ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB Parent and Merger Sub hereby jointly and severally represent and warrant to the Company that: Section 5.1 Corporate Existence and Power. Each of Parent and Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has all corporate powers and authority required to execute and deliver this Agreement and to consummate the Merger and the other transactions contemplated hereby and to perform each of its obligations hereunder. Section 5.2 Corporate Authorization. The execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the transactions contemplated hereby are within the respective corporate powers of Parent and Merger Sub and have been duly authorized by all necessary corporate and shareholder action. This Agreement has been duly and validly executed and delivered by Parent and Merger Sub and, assuming the due and valid execution and delivery of the Agreement by the Company, constitutes a valid and binding agreement of each of Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance with its terms, except (i) as rights to indemnity hereunder may be limited by federal or state securities Laws or the public policies embodied therein, (ii) as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the enforcement of creditors' rights generally and (iii) as the remedy of specific performance and other forms of injunctive relief may be subject to equitable defenses and subject to the discretion of any court before which any proceeding therefor may be brought. Section 5.3 Governmental Authorization. The execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the transactions contemplated by this Agreement will not require any action by Parent or Merger Sub in respect of, or filing by Parent or Merger Sub with, any Governmental Authority other than (i) the filing of the certificate of merger in accordance with Delaware Law, (ii) compliance with any applicable requirements of the HSR Act and any applicable Other Antitrust Law, (iii) compliance with the applicable requirements of the Exchange Act, (iv) compliance with the -29- applicable requirements of the Securities Act, (v) compliance with any applicable foreign or state securities or Blue Sky laws and (vi) such other items the failure of which to do or be obtained would not, individually or in the aggregate, reasonably be expected to adversely affect in any material respect, or materially to delay, Parent's or Merger Sub's ability to observe and perform the respective obligations of each hereunder. Section 5.4 Non-Contravention. The execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the transactions contemplated hereby do not and will not (i) contravene or conflict with the organizational or governing documents of Parent or Merger Sub, (ii) assuming compliance with the items specified in Section 5.3, contravene, conflict with or constitute a violation of any provision of Law binding upon Parent or Merger Sub or (iii) constitute a default under or give rise to any right of termination, cancellation or acceleration of any right or obligation of Parent or Merger Sub or to a loss of any material benefit to which Parent or Merger Sub is entitled under any agreement, contract or other instrument. Section 5.5 Finders' Fees. Except as otherwise disclosed in writing to the Company, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of Parent or Merger Sub or any of their respective Affiliates and that would be entitled to any fee or commission from Parent, Merger Sub, the Company, any Subsidiary of the Company or from any of their respective Affiliates in connection with the transactions contemplated by this Agreement. Section 5.6 Adequate Funds. Parent will have at the Effective Time sufficient funds for the payment of the aggregate Merger Consideration and to perform its obligations under this Agreement. ARTICLE VI. COVENANTS OF THE COMPANY Section 6.1 Conduct of the Company and Subsidiaries. Except for matters set forth in Section 6.1 of the Disclosure Letter or as specifically provided in this Agreement, unless Parent shall otherwise consent in writing (which consent shall not be unreasonably withheld, conditioned or delayed), from the date of this Agreement to the Effective Time, the Company shall, and shall cause its Subsidiaries to, conduct their respective businesses in all material respects in the ordinary and usual course consistent with past practice and shall use its reasonable best efforts to (i) preserve substantially intact the present business organization of the Company and its Subsidiaries, (ii) maintain in effect all material Permits that are required for the Company or any of its Subsidiaries to carry on their respective businesses, (iii) keep available the services of present officers and key employees (as a group) of the Company and its Subsidiaries and (iv) maintain the current relationships with its lenders, suppliers and other Persons with which the Company or its Subsidiaries have significant business relationships. Without limiting the generality of the foregoing, and except for matters set forth in Section 6.1 of the Disclosure Letter or in the ordinary and usual course of business consistent with past practice or as expressly contemplated or permitted by this Agreement, without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall not, and shall not permit its Subsidiaries to: -30- (a) enter into any new line of business, discontinue any line of business or, change in its organizational or governing documents; (b) except for transactions among the Company and its Subsidiaries, (i) acquire (by merger, consolidation, acquisition of stock or assets, joint venture or otherwise) any Person or a material amount of assets, or sell, lease or otherwise dispose of a material amount of assets (other than the purchase and sale of inventory and raw materials in the ordinary course of business), (ii) waive, release, grant, or transfer any rights of material value, (iii) modify or change in any material respect, allow to expire or lapse or fail to renew any material Permit or material Insurance Policy, (iv) incur, assume or prepay any indebtedness for borrowed money except pursuant to its existing credit facilities in the ordinary course of business, consistent with past practice, (v) assume, guarantee, endorse or take any action to otherwise become liable or responsible (whether directly, contingently or otherwise) for any indebtedness for borrowed money or trade payables of any other Person, except in the ordinary course of business consistent with past practice, (vi) make any loans, advances or capital contributions to, or investments in, any other Person, except in the ordinary course of business consistent with past practice or as required by existing contracts to which the Company or any of its Subsidiaries is a party ("EXISTING CONTRACTS"), (vii) authorize any material capital expenditures not designated on Section 6.1(b)(vii) of the Disclosure Letter, (viii) pledge or otherwise encumber shares of capital stock or other voting securities of any of the Company's Subsidiaries, (ix) mortgage or pledge any of its material assets, tangible or intangible, or create any Lien thereupon (other than Permitted Liens), (x) enter into any contract or agreement other than in the ordinary course of business consistent with past practice that would be material to the Company and its Subsidiaries, taken as a whole or (xi) amend, modify or waive in any material respects any material right under any material Existing Contract; (c) (i) split, combine or reclassify any Company Securities or amend the terms of any Company Securities, (ii) declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of Company Securities other than any distribution by a wholly owned Company Subsidiary to its parent corporation in the ordinary course of business, or (iii) redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any Company Securities, or issue any Company Options or other Company Securities, other than in connection with the exercise of Company Options outstanding on the date hereof; (d) adopt or materially amend any Employee Benefit Plan or any agreement with any director or employee of the Company or any of its Subsidiaries or materially increase in any manner the compensation or fringe benefits of any such director or employee, in each case, except as required by ERISA or other applicable Law or by existing contract in accordance with the terms of such contract in effect as of the date hereof; (e) (i) pay any bonus to any director or employee of the Company or any of its Subsidiaries, except pursuant to the terms of any existing agreement in accordance with the terms of such agreement as in effect as of the date hereof and except as contemplated by the Executive Change of Control Agreements, (ii) enter into any agreement, commitment or obligation to pay any bonus, change-of-control payment or severance payment to any director or employee of the Company or any of its Subsidiaries or (iii) enter into any employment -31- agreement with any director or officer of the Company or any of its Subsidiaries or with any employee of the Company or any of its Subsidiaries that provides for annual base salary in excess of $100,000; (f) pay, discharge or satisfy any material claims, liabilities or obligations (whether absolute, accrued, asserted or unasserted, contingent or otherwise) except as permitted by clause (i) below; (g) make any election relating to Taxes or settle or compromise any material Tax liability; (h) make any change in accounting methods, principles or practices materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except insofar as may have been required by a change in GAAP or Regulation S-X of the Exchange Act and after consulting with independent accountants; (i) alter the corporate structure or ownership of any of its Subsidiaries, through merger, liquidation, reorganization, restructuring or any other fashion; (j) settle, pay or discharge, any litigation, investigation, arbitration, proceeding or other claim, liability or obligation arising from the conduct of business except in the ordinary course; or (k) authorize, agree or commit to do any of the foregoing. Notwithstanding the foregoing, at Closing the Company shall, or shall cause Noveon, Inc. to, make the payments described in the letter delivered to Parent on or prior to the date hereof. Section 6.2 Other Actions by the Company. The Company will, and will cause its Subsidiaries to, at the request of Parent, provide such cooperation as Parent may reasonably request so that, at or as soon as practicable at or after the Effective Time, Parent can refinance the Noveon, Inc. 11% senior subordinated notes, the Company's 13% senior subordinated notes and any other indebtedness for borrowed money of the Company and its Subsidiaries. Section 6.3 Access to Information; Right of Inspection. (a) The Company will provide and will cause its Subsidiaries and its and their respective representatives to provide Parent and Merger Sub and their respective authorized representatives, during normal business hours and upon reasonable advance notice (i) access to the offices, properties, personnel (including without limitation the managers in charge of operations and the managers responsible for environmental, intellectual property, human resources, tax, insurance, accounting and treasury), books and records of the Company (so long as such access does not unreasonably interfere with the operations of the Company) as Parent or Merger Sub may reasonably request, (ii) access to the Owned Real Property and Leased Real Property (including any facilities located thereon) of the Company and each of its Subsidiaries for purposes of performing Phase I environmental site assessments as Parent shall determine to be necessary or appropriate in connection with its due diligence review (provided, however, that in no event shall Parent be permitted to conduct any sampling or intrusive investigation of air, -32- soil, sediment, groundwater or surface water in connection with such assessments) and (iii) all documents that Parent or Merger Sub may reasonably request relating to the Company or any of its Subsidiaries or any of their respective businesses including, without limitation, a list of all of the directors and officers of the Company's Subsidiaries and each representative of the Company or any of its Subsidiaries serving as a director or officer of any Affiliated Entity of the Company or any of its Subsidiaries and all Insurance Policies. Notwithstanding the foregoing, Parent, Merger Sub and their representatives shall not have access to any books, records and other information the disclosure of which would, in the Company's good faith opinion after consultation with legal counsel, result in the loss of attorney-client privilege with respect to such books, records and other information or cause the Company or any of its Subsidiaries or their representatives to violate Law or any contracts to which they are party (provided that, in the case of any contract that restricts the Company or its Subsidiaries from permitting third parties to review such contract, the Company shall use its reasonable best efforts to obtain the consent of the applicable parties under the contract to the review of such agreement by Parent and its representatives and provided further that the Company will not invoke the attorney-client privilege to prevent Parent from gaining access to the Company's environmental reports and assessments). Any information provided to Parent or Merger Sub or their representatives pursuant to this Section 6.3 shall be subject to the Confidentiality Agreement. (b) If Parent elects to obtain updated surveys of any or all of the Owned Real Property or the Leased Real Property, the Company shall provide access to the sites to be surveyed and shall cooperate with the Parent in arrangement for expeditious completion of the survey work on site. (c) At the request of the Parent, the Company shall request estoppel certificates, in form and substance reasonably acceptable to the Parent and the Company, from any party other than the Company and its Subsidiaries to the lease documents for Leased Real Properties, and shall use its reasonable efforts to assist the Parent in obtaining such estoppel certificates. (d) Between the date of this Agreement and the Closing, the Company shall from time to time, during normal business hours and upon the reasonable request of Parent, provide details to Parent and its officers regarding the operations and financial performance of the Company and its Subsidiaries. Section 6.4 Other Potential Acquirers. (a) The Company shall immediately terminate, and shall cause its Subsidiaries and its and their representatives to immediately terminate, all existing discussions or negotiations, if any, with any Person (other than Parent and Merger Sub) with respect to, or that would reasonably be expected to lead to, a Third Party Acquisition. (b) Neither the Company nor any of its Subsidiaries or controlled Affiliates shall, nor shall the Company authorize or permit any of its or their respective officers and directors to, and the Company shall use its reasonable best efforts to cause its and their respective non-controlled Affiliates, employees, representatives and agents not to, directly or indirectly, knowingly encourage, solicit or engage in discussions or negotiations with or provide -33- any non-public information to, or afford access to any of the properties, books or records of the Company or its Subsidiaries to, any Third Party or its representatives concerning any Third Party Acquisition. The Company shall promptly notify Parent and Merger Sub in the event it receives any proposal or inquiry concerning (or that would reasonably be expected to lead to) a Third Party Acquisition, including (to the extent permitted) the material terms and conditions thereof and the identity of the party making such proposal or inquiry, and shall keep them reasonably apprised as to the status and any material developments concerning the same. Section 6.5 Resignation of Directors. Prior to the Effective Time, the Company shall deliver to Parent and Merger Sub evidence reasonably satisfactory to Parent and Merger Sub of the resignations (effective as of the Effective Time) of (i) all directors of the Company and each of its Subsidiaries and (ii) the officers of the Company and each of its Subsidiaries, as shall be requested by Parent prior to the Effective Time. Section 6.6 ISRA Filings. Prior to Closing, the Company shall use reasonable efforts to cooperate to obtain, or cause to be obtained, in connection with the transactions contemplated by this Agreement, from the New Jersey Department of Environmental Protection ("NJDEP"), in accordance with the provisions of the New Jersey Industrial Site Recovery Act, N.J.S.A. Section 13:1K-6 et seq., (i) a "Negative Declaration," (ii) "No Further Action Letter," (iii) a "remedial action workplan," (iv) a "remediation agreement," (v) approval of an expedited review application under N.J.S.A. 13:1K-11.2, (vi) approval of a remediation in progress waiver application under N.J.S.A. 13:1K-11.5, or (vii) a determination that the transactions contemplated by this Agreement may proceed without further approvals by NJDEP and without further actions by the Company; in each case, with respect to the Owned Real Property and Leased Real Property, as the case may be, located in New Jersey. Section 6.7 FIRPTA Certificate. Prior to the Effective Time, (i) the Company shall deliver to Parent and Merger Sub a certificate signed under penalties of perjury by an officer of the Company to the effect that the Company is not or has not been a United States real property holding company, as defined in Section 897(c)(2) of the Code, during the applicable period described in Section 897(c)(1)(A)(ii) of the Code. ARTICLE VII. COVENANTS OF PARENT AND MERGER SUB Section 7.1 Director and Officer Liability. (a) The Surviving Corporation shall, and after the Effective Time Parent shall cause the Surviving Corporation to, comply with all of the Company's and its respective Subsidiaries' obligations to indemnify and hold harmless (including any obligations to advance funds for expenses) the present and former officers and directors thereof in respect of acts or omissions occurring prior to or at the Effective Time to the extent provided under the Company's or such Subsidiaries' respective organizational and governing documents in effect on the date hereof, and such obligations shall survive the Merger and shall continue in full force and effect in accordance with the terms of the Surviving Corporation's articles of incorporation and bylaws from the Effective Time until the expiration of the applicable statue of limitations with respect to any claims against such directors or officers arising out of such acts or omissions. Any -34- determination required to be made with respect to whether the conduct of an individual seeking indemnification has complied with the standards set forth under applicable Law shall be made by independent counsel mutually acceptable to the Surviving Corporation and such individual. For a period of six years after the Effective Time, the Surviving Corporation shall cause to be maintained in effect the current policies of officers' and directors' liability insurance maintained by the Company and its respective Subsidiaries (the "CURRENT POLICIES"); provided however, that the Surviving Corporation may, and in the event of the cancellation or termination of such policies the Surviving Corporation shall, substitute such policies with equally reputable and financially sound carriers and that are reasonably satisfactory to the covered persons providing at least the same coverage and amount and containing terms and conditions that are no less favorable to the covered persons (the "REPLACEMENT POLICIES") in respect of claims arising from facts or events that existed or occurred prior to or at the Effective Time under the Current Policies; provided further however, that in no event will the Surviving Corporation be required to expend annually in excess of 200% of the annual premium currently paid by the Company for such coverage (or to provide more than that amount of coverage as is available for no more than 200% of such current annual premium); provided further however, that in lieu of the foregoing insurance coverage, with the consent of Parent (which consent shall not be unreasonably withheld), the Company may purchase "tail" insurance coverage that provides coverage no less favorable than the coverage described above. (b) This Section 7.1 shall survive the consummation of the Merger and is intended to be for the benefit of, and shall be enforceable by, present or former directors or officers of the Company or its Subsidiaries, their respective heirs and personal representatives and shall be binding on the Surviving Corporation, Parent and their respective successors and assigns, and the agreements and covenants contained herein shall not be deemed to be exclusive of any other rights to which any such present or former director or officer is entitled, whether pursuant to Law, contract or otherwise. Nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors' and officers' insurance claims under any policy that is or has been in existence with respect to the Company or any of its Subsidiaries or their respective officers, directors and employees, it being understood and agreed that the indemnification provided for in this Section 7.1 is not prior to or in substitution for any such claims under any such policies. (c) If Parent or the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity or (ii) transfers or conveys substantially all of its properties and assets to any person, then and in each case to the extent reasonably necessary, proper provision shall be made so that the successors and assigns of Parent or the Surviving Corporation shall assume the obligations set forth in this Section 7.1. ARTICLE VIII. COVENANTS OF THE PARTIES The parties hereto agree that: Section 8.1 Reasonable Best Efforts. Subject to the terms and conditions of this Agreement, each party will (and will cause its Affiliates to) use its reasonable best efforts to take, -35- or cause to be taken, all actions, to file, or cause to be filed, all documents and to do, or cause to be done, all things necessary, proper or advisable to consummate the transactions contemplated by this Agreement, including obtaining all necessary consents, waivers, approvals, authorizations, Permits or orders from all Governmental Authorities or other Persons; provided that in no event shall the Company or any of its Affiliates be required to pay prior to the Effective Time any material fee, penalties or other consideration to any third party to obtain any consent or approval required for the consummation of the Merger under any material contracts. Each party shall also (and will cause its Affiliates to) refrain from taking, directly or indirectly any action (including making acquisitions), that would be reasonably likely to result in a failure of any of the conditions to the Merger in this Agreement being satisfied or restrict such party's ability to consummate the Merger and the other transactions contemplated hereby. Without limiting the foregoing, the Company shall use its reasonable best efforts (i) to take all action necessary so that no takeover, anti-takeover, moratorium, "fair price," "control share" or other similar statute or regulation is or becomes applicable to the Merger or any of the other transactions contemplated by this Agreement and (ii) if any such Law is or becomes applicable to any of the foregoing, to take all action necessary so that the Merger and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such statute or regulation on the Merger and the other transactions contemplated by this Agreement. Section 8.2 Certain Filings. (a) The parties shall cooperate with one another (i) in determining whether any action by or in respect of, or filing with, any Governmental Authority is required, or any actions, consents, approvals or waivers are required to be obtained from any parties to any material contracts, in connection with the consummation of the transactions contemplated by this Agreement and (ii) in seeking and obtaining any such actions, consents, approvals or waivers or making any such filings, furnishing information required in connection therewith; provided that the conditions to the parties' respective obligations to consummate the transactions contemplated hereby shall be limited to those conditions specified in Article IX. The parties shall have the right to review in advance, and to the extent reasonably practicable each will consult the other on, all the information relating to the other and each of their respective Subsidiaries that appears in any filing made with, or written materials submitted to, any Governmental Authority in connection with the Merger and the other transactions contemplated by this Agreement. Each of the Company and Parent shall promptly notify and provide a copy to the other party of any written communication received from any Governmental Authority with respect to any filing or submission or with respect to the Merger and the other transactions contemplated by this Agreement. Each of the Company and Parent shall give the other reasonable prior notice of any communication with, and any proposed understanding, undertaking or agreement with, any Governmental Authority regarding any such filing or any such transaction. Neither the Company nor Parent shall, nor shall they permit their respective representatives to, participate independently in any meeting or engage in any substantive conversation with any Governmental Authority in respect of any such filing, investigation or other inquiry without giving the other party prior notice of such meeting or conversation and without giving, unless prohibited by such Governmental Authority, the opportunity of the other party to attend or participate. The parties to this Agreement will consult and cooperate with one another in connection with any analyses, appearance, presentations, memoranda, briefs, arguments, opinions, and proposals made or -36- submitted by or on behalf of any party to this Agreement in connection with proceedings under or related to the HSR Act or Other Antitrust Laws. (b) The parties (i) shall use their respective reasonable best efforts to take or cause to be taken such actions as may be required to be taken under the Exchange Act and state securities or applicable Blue Sky Laws in connection with the Merger and (ii) shall promptly prepare and file all necessary documentation, effect all necessary applications, notices, petitions and filings, and use all reasonable efforts to obtain all necessary consents from any Governmental Authorities necessary to consummate the Merger (including, without limitation, any filing under the HSR Act or any applicable Other Antitrust Law). (c) If required, each of the Company, Parent and Merger Sub shall take all reasonable action necessary (i) to file as soon as practicable notifications or other required items under the HSR Act and any applicable Other Antitrust Law, (ii) to respond as promptly as practicable to any inquiries from the Federal Trade Commission and the Antitrust Division of the Department of Justice for additional information or documentation, (iii) to comply with the requirements of, and respond as promptly as reasonably practicable to all inquiries and requests for additional information received from any Governmental Authority in connection with, the HSR Act or Other Antitrust Laws related to the Merger or the other transactions contemplated by this Agreement and (iv) to use reasonable best efforts to avoid or eliminate each and every impediment under the HSR Act or any Other Antitrust Law that may be asserted by any Governmental Authority with respect to the Merger so as to enable the Closing to occur as soon as reasonably possible and in any event no later than the End Date. Section 8.3 Public Announcements. So long as this Agreement is in effect, the parties will use reasonable best efforts to consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and, except for any press release or public statement a party determines may be required by applicable Law or the New York Stock Exchange, will not issue any such press release or make any such public statement without the consent of the other parties (not to be unreasonably delayed, conditioned or withheld). Section 8.4 Further Assurances. At and after the Effective Time, the officers and directors of the Surviving Corporation will be authorized to execute and deliver, in the name on behalf of the Company or Merger Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company or Merger Sub, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets of the Company. Section 8.5 Notices of Certain Events. Each of the parties hereto shall reasonably promptly notify the other party of: (a) the receipt by such party of any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement; -37- (b) the receipt by such party of any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; and (c) its learning of any actions, suits, claims, investigations or proceedings commenced against, or affecting such party that, if they were pending on the date of this Agreement, would have been required to be disclosed pursuant to this Agreement or which relate to the consummation of the transactions contemplated by this Agreement. (d) its learning of any events, circumstances, developments or facts that would make any of the representations and warranties of such party contained in this Agreement untrue or any of the covenants or conditions contained in this Agreement incapable of being satisfied. Section 8.6 Disposition of Litigation. The Company will consult with Parent and Merger Sub with respect to any action by any Third Party to restrain or prohibit or otherwise oppose the Merger or the other transactions contemplated by this Agreement and will use reasonable best efforts to resist any such effort to restrain or prohibit or otherwise oppose the Merger or the other transactions contemplated by this Agreement. In addition, the Company will not encourage or cooperate with any Third Party to restrain or prohibit or otherwise oppose the Merger or the other transactions contemplated by this Agreement, and the Company will reasonably cooperate with Parent and Merger Sub to resist any such effort to restrain or prohibit or otherwise oppose the Merger or the other transactions contemplated by this Agreement. Section 8.7 Employee Matters. (a) From and after the Effective Time, Parent shall assume and honor, or shall cause the Company and its Subsidiaries to honor, all Employee Plans and all Employment Agreements in accordance with their terms as in effect immediately before the Effective Time. For a period of not less than one year following the Effective Time, Parent shall provide, or shall cause to be provided, to current and former employees of the Company and its Subsidiaries (the "COMPANY EMPLOYEES") employee benefits that are, in the aggregate, substantially comparable to those provided to the Company Employees immediately before the Effective Time, with the exception of those changes collectively bargained with authorized union representatives. The foregoing shall not be construed to prevent (i) the amendment or termination of any particular Employee Benefit Plan or Employment Agreement to the extent permitted by, and in accordance with, its terms and the terms of any contract related thereto, as in effect immediately before the Effective Time or (ii) the termination of employment of any individual Company Employee. (b) For all purposes (other than benefit accrual under defined benefit pension plans) under the employee benefit plans of Parent and its Subsidiaries providing benefits to any Company Employees after the Effective Time (the "NEW PLANS"), except as would result in a duplication of benefits, each Company Employee shall be credited with all years of service for which such Company Employee was credited before the Effective Time under any similar Employee Benefit Plans. In addition and without limiting the generality of the foregoing: (i) each Company Employee shall be immediately eligible to participate, without any waiting time or satisfaction of any other eligibility requirements, in any and all New Plans to the extent coverage under such New Plan replaces coverage under a comparable Employee Benefit Plan in -38- which such Company Employee participated immediately before the Effective Time (such plans, collectively, the "OLD PLANS") and (ii) for purposes of each New Plan providing medical, dental, pharmaceutical and/or vision benefits to any Company Employee, Parent shall cause all pre-existing condition exclusions and actively-at-work requirements of such New Plan to be waived for such employee and his or her covered dependents, and any expenses incurred by any Company Employee and his or her covered dependents during the portion of the plan year of the Old Plan ending on the date such employee's participation in the corresponding New Plan begins to be taken into account under such New Plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such New Plan. Section 8.8 Confidentiality Agreement. The parties acknowledge that the Company and Parent entered into the Confidentiality Agreement, which agreement shall be deemed incorporated herein as if it were set forth in its entirety, and shall continue in full force and effect in accordance with its terms until the earlier of (i) the Effective Time or (ii) the expiration of that Confidentiality Agreement according to its terms. Notwithstanding the foregoing or anything herein or in the Confidentiality Agreement to the contrary, any party to this Agreement (and their employees, representatives or other agents) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all material of any kind (including opinions or other tax analysis) that are provided to such party relating to such tax treatment and tax structure; provided however, that this sentence shall not permit any disclosure that otherwise is prohibited by this Agreement, the Confidentiality Agreement or any other confidentiality agreement between or among the parties as of the date hereof or where such disclosure would result in a violation of federal or state securities Laws or to the extent not related to the tax aspects of the transactions contemplated hereby. Moreover, nothing in this Agreement shall be construed to limit in any way any party's ability to consult any tax advisor regarding the tax treatment or tax structure of the transactions contemplated hereby. ARTICLE IX. CONDITIONS TO THE MERGER Section 9.1 Conditions to the Obligations of Each Party. The obligations of the Company, Parent and Merger Sub to consummate the Merger are subject to the satisfaction or, where permitted, waiver of the following conditions: (a) any applicable waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have expired or been terminated and any other consents, approvals or authorizations applicable to the Merger under the Other Antitrust Laws specified as Closing Conditions on Section 4.3 of the Disclosure Letter shall have been received or waived by the appropriate Governmental Authority or the applicable waiting period shall have expired or been terminated; and (b) no Law shall have been adopted, promulgated, issued or entered, which is then in effect and which prohibits, enjoins or renders illegal the consummation of the Merger. -39- Section 9.2 Conditions to the Obligations of Parent and Merger Sub. The obligations of Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver of the following further conditions: (a) (i) the Company shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Effective Time, (ii) the representations and warranties of the Company contained in Article IV of this Agreement shall be true and correct (without giving effect to any qualification therein as to "materiality" or as to whether any matter would or would be expected to have a Material Adverse Effect on the Company) as of the Closing Date (except that representations and warranties made as of a specific date are required to be true and correct only as of such date), except where the failure to be so true and correct would not, individually or in the aggregate, have, constitute or reasonably be expected to have a Material Adverse Effect on the Company and (iii) Parent and Merger Sub shall have received a certificate signed by a senior officer of the Company to the foregoing effect; (b) since the Balance Sheet Date, no event, change, development or occurrence shall have occurred that, individually or in the aggregate, has had or would be reasonably likely to have a Material Adverse Effect on the Company, and Parent and Merger Sub shall have received a certificate signed by a senior officer of the Company to the foregoing effect; (c) Parent shall have received (i) written confirmation from the Company regarding the amount of the payments required to be made pursuant to the Executive Change of Control Agreements, (ii) written confirmations from the Company's shareholders (or their Affiliates) and financial advisors regarding the amount of fees required to be paid to them by the Company or any of its Subsidiaries in connection with the transactions contemplated by this Agreement, and (iii) written confirmation from the Company that all such fees and expenses have been paid pursuant to the last sentence of Section 6.1; (d) the Management and Advisory Services Agreements and the Stockholders Agreement, dated November 28, 2000, between Noveon International, Inc. (formerly know as PMD Group Holdings, Inc.), PMD Investors I LLC, PMD Investors II LLC, DLJMB Funding III, Inc. and MidOcean Capital/PMD Investors, LLC (formerly known as DB Capital/PMD Investors, LLC) (the "STOCKHOLDERS AGREEMENT")shall have been terminated; and (e) Parent shall have received a certificate from the chief financial officer of the Company certifying as to the total amount of the Transaction Costs. Section 9.3 Conditions to the Obligations of the Company. The obligation of the Company to consummate the Merger is subject to the satisfaction or waiver of the following further conditions: (a) Each of Parent and Merger Sub shall have performed in all material respects all of its respective obligations hereunder required to be performed by it at or prior to the Effective Time; -40- (b) the representations and warranties of Parent and Merger Sub contained in this Agreement and in any certificate or other writing delivered by them pursuant hereto that are qualified as to materiality shall be true and correct in accordance with their terms as of the Closing Date, and those that are not qualified as to materiality will be true and correct in all material respects as of the Closing Date as if made at and as of such date (provided that representations made as of a specific date shall be required to be true as of such date only); and (c) the Company shall have received a certificate signed by a senior officer of each of Parent and Merger Sub to the foregoing effect. ARTICLE X. TERMINATION Section 10.1 Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (notwithstanding any prior approval of this Agreement by the shareholders of the Company): (a) by mutual written consent of the Company, on the one hand, and Parent and Merger Sub, on the other hand; (b) by any of the Company, Parent or Merger Sub, if: (i) the Merger has not been consummated by the End Date, provided that the failure of the Merger to be consummated by such date is not the result of, or caused by, the failure of the party seeking to exercise such termination right to fulfill any of its obligations under this Agreement; or (ii) there shall be any Law that makes consummation of the Merger illegal or otherwise permanently prohibited, provided that, in the case of any such Law issued by a court, it shall be final and non-appealable; provided however, that the right to terminate this Agreement pursuant to this Section 10.1(b)(ii) shall not be available to any party whose breach of any provision of this Agreement results in the application or imposition of such Law; (c) by the Company, if a breach of or failure to perform any representation, warranty, covenant or agreement on the part of Parent or Merger Sub set forth in this Agreement shall have occurred which would cause any of the conditions set forth in Sections 9.3(a) or (b) to be unable to be satisfied by the End Date; provided however, that the Company is not then in material breach of this Agreement; or (d) by Parent or Merger Sub, if a breach of or failure to perform any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement shall have occurred which would cause the condition set forth in Section 9.2(a) to be unable to be satisfied by the End Date; provided however, that Parent or Merger Sub is not then in material breach of this Agreement. -41- The party desiring to terminate this Agreement pursuant to Sections 10.1(b) through (d) shall give written notice of such termination to the other party in accordance with Section 11.1 of this Agreement. Section 10.2 Effect of Termination. If this Agreement is terminated pursuant to Section 10.1, this Agreement shall forthwith become null and void, and there shall be no liability or obligation on the part of the Company, Parent, Merger Sub or their respective Subsidiaries or Affiliates, except (i) Sections 10.2 and Article XI (other than Sections 11.2, 11.9 and 11.10) will survive the termination hereof and (ii) with respect to any liabilities for damages incurred or suffered by a party as a result of the breach by any other party of any of its representations, warranties, covenants or other agreements set forth in this Agreement. ARTICLE XI. MISCELLANEOUS Section 11.1 Notices. All notices, requests and other communications to any part hereunder shall be in writing (including facsimile or similar writing) and shall be given: if to Parent or Merger Sub, to: The Lubrizol Corporation 29400 Lakeland Boulevard Wickliffe, Ohio 44092-2298 Attention: Joseph W. Bauer Facsimile: 440-943-9063 with a copy (which shall not constitute notice) to: Thompson Hine LLP 3900 Key Center 127 Public Center Cleveland, Ohio 44114 Attention: James R. Carlson Facsimile: 216-566-5800 if to the Company, to: Noveon International, Inc. 9911 Brecksville Road Cleveland, Ohio 44141-3247 Attention: Christopher Clegg, Esq. Facsimile: 216-447-5730 with a copy (which shall not constitute notice) to: -42- Fried, Frank, Harris, Shriver & Jacobson LLP One New York Plaza New York, New York 1004 Attention: Christopher Ewan, Esq. Facsimile: (212) 859-4000 or such other address or facsimile number as such party may hereafter specify for by notice to the other parties hereto. Each such notice, request or other communication shall be effective (i) if given by facsimile, when such telecopy is transmitted to the telecopy number specified above and the appropriate facsimile confirmation is received or (ii) if given by any other means, when delivered at the address specified in this Section 11.1. Section 11.2 Survival of Representations and Warranties. The representations and warranties contained herein and in any certificate or other writing delivered pursuant hereto shall survive until (but not beyond) the Effective Time, such survival being the case prior to the Effective Time irrespective of whether any party undertakes any investigation into the subject matter of any representation or warranty. This Section 11.2 shall not limit any covenant or agreement of the parties that by its terms contemplates performance in whole or in part after the Effective Time. For the avoidance of doubt, the parties agree that the shareholders of the Company will have no liability to Parent or its Affiliates with respect to the transactions contemplated by this Agreement. Section 11.3 Amendments No Waivers. (a) Any provision of this Agreement may be amended or waived prior to the Effective Time only by amendment or waiver in writing and signed: (i) in the case of an amendment to this Agreement, by the Company, Parent and Merger Sub or (ii) in the case of a waiver, by the party against whom the waiver is to be effective; provided however, that any proposed amendment that by Law requires further approval by the shareholders of the Company shall not be effective without such further shareholder approval. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any other rights or remedies herein provided or available at Law or in equity. Section 11.4 Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. Section 11.5 Transfer Taxes. Subject to Section 2.3(c), all stock transfer, real estate transfer, documentary, stamp, recording and other similar taxes (including interest, penalties and additions to any such taxes) ("TRANSFER TAXES") incurred in connection with the transactions contemplated by this Agreement shall be paid by either Parent, Merger Sub or the Surviving Corporation, and such parties shall cooperate with each other in preparing, executing and filing any returns with respect to such Transfer Taxes. -43- Section 11.6 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other parties hereto. Any purported assignment in violation of this provisions shall be null and void ab initio. Section 11.7 Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of Delaware, without giving effect to the conflicts or choice of law principles of those states. Section 11.8 Counterparts; Effectiveness; Third Party Beneficiaries. This Agreement may be executed by facsimile signatures and in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective only when actually signed by each party hereto and each such party has received counterparts hereof signed by all of the other parties hereto. No provision of this Agreement is intended to or shall confer upon any Person other than the parties hereto any rights or remedies hereunder or with respect hereto, except with respect to the matters provided in Section 2.3 and Section 7.1. Section 11.9 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by virtue of any Law, or due to any public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner so that the transactions contemplated hereby are fulfilled to the extent possible. Section 11.10 Specific Performance. The parties hereby acknowledge and agree that the failure of any party to perform its agreements and covenants hereunder, including its failure to take all actions as are necessary on its part to consummate the Merger, will cause irreparable injury to the other parties, for which damages, even if available, will not be an adequate remedy. Accordingly, each party hereby consents to the issuance of injunctive relief by any court of competent jurisdiction to compel performance of such party's obligations and to the granting by any court of the remedy of specific performance of its obligations hereunder, in addition to any other rights or remedies available hereunder or at law or in equity. Section 11.11 Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto with respect to its subject matter and supersedes all oral or written prior or contemporaneous agreements and understandings among the parties with respect to such subject matter. Section 11.12 Jurisdiction; Waiver of Jury Trial. Except as otherwise expressly provided in this Agreement, the parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought exclusively in the Court of -44- Chancery of the State of Delaware, County of New Castle or, if such court does not have jurisdiction over the subject matter of such proceeding or if such jurisdiction is not available, in the United State District Court for the District of Delaware, and each of the parties hereby irrevocably consents to the exclusive jurisdiction of those courts (and of the appropriate appellate courts therefrom) in any suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that such party may now or hereafter have to the laying of the venue of any suit, action or proceeding in any of those courts or that any suit, action or proceeding that is brought in any of those courts has been brought in an inconvenient forum. Process in any suit, action or proceeding may be served on any party at the applicable address provided in Section 11.1, whether within or without the jurisdiction of any of the named courts. Without limiting the foregoing, each party agrees that service of process on it by notice as provided in Section 11.1 shall be deemed effective service of process. Each of the parties to this Agreement hereby irrevocably waives any right it may have to trial by jury in any court or jurisdiction in respect to any matter arising out of or relating to this Agreement or the transactions contemplated hereby. Section 11.13 Authorship. The parties agree that the terms and language of this Agreement were the result of negotiations between the parties, and as a result, there shall be no presumption that any ambiguities in this Agreement shall be resolved against any party. Any controversy over construction of this Agreement shall be decided without regard to events of authorship. [signature page follows] -45- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. THE COMPANY NOVEON INTERNATIONAL, INC. By: /s/ Steven J. Demetriou --------------------------------------- Name: Steven J. Demetriou Title: President & CEO PARENT THE LUBRIZOL CORPORATION By: /s/ W. G. Bares --------------------------------------- Name: W. G. Bares Title: Chairman and Chief Executive Officer MERGER SUB LUBRIZOL ACQUISITION CORPORATION By: /s/ James L. Hambrick ----------------------------------------- Name: James L. Hambrick Title: President -46- EX-2.2 3 l08074aexv2w2.txt EX-2.2 SIDE LETTER AGREEMENT EXHIBIT 2.2 FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP One New York Plaza New York, NY 10004-1980 Tel: 212.859.8000 Fax: 212.859.4000 www.friedfrank.com [FRIED FRANK LOGO] Direct Line 212.859.8875 Fax: 212.859.8588 ewanch@ffhsj.com April 15, 2004 By Facsimile Lubrizol Corporation c/o Thompson Hine LLP 3900 Key Center 127 Public Square Cleveland, Ohio 44114 Attention: Jim Carlson Re: NOVEON - AGREEMENT AND PLAN OF MERGER Dear Sirs: We refer to the Agreement and Plan of Merger ("Agreement") made and entered into as of the date hereof by and among Noveon International, Inc. (the "Company"), The Lubrizol Corporation and Lubrizol Acquisition Corporation. Capitalized terms used herein will bear the meaning ascribed thereto in the Agreement. We hereby notify you on behalf of the Company that, for purposes of the last sentence of Section 6.1 of the Agreement, the Company will or will cause its Subsidiaries to make the following payments on or prior to the Effective Time: 1. investment banking fees in an aggregate amount of $5.1 million; 2. advisory (mergers and acquisitions) fees in an aggregate amount of $20 million; and 3. the amounts payable under the Executive Change of Control Agreements at or before the Effective Time, as reflected on the attached schedule. The amounts set forth under the heading "Amounts paid if not offered position," the lump sum cash payments based on the value of pension, 401 (k), and other employee benefit plans and perquisites, and the gross-up for excise taxes will be included in this item 3 if the executive is notified, at or before the Effective Time, that he A Delaware Limited Liability Partnership New York - Washington - Los Angeles - London - Paris FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP Thompson Hine LLP April 15,2004 Page 2 will not be offered the specified position. In addition, any salary continuation or lump sum amount payable to Mr. Demetriou under his Employee Agreement upon termination will be included in this item 3. Yours faithfully, /s/ Christopher Ewan Christopher Ewan EX-2.3 4 l08074aexv2w3.txt EX-2.3 SIDE LETTER AGREEMENT RE: PAYMENT PROCDRS EXHIBIT 2.3 June 2,2004 Noveon International, Inc. Attn: Christopher R. Clegg, Esq. 9911 Brecksville Road Cleveland, Ohio 44141-3247 Fried, Frank, Harris, Shriver & Jacobson LLP Attn: Christopher Ewan, Esq. One New York Plaza New York, New York 10004 Re: Merger Agreement Payment Procedures Ladies and Gentlemen: This letter shall serve to set forth our agreement regarding the procedures applicable to the payments to be made in respect of Merger Shares and Company Options in connection with the Agreement and Plan of Merger, dated April 15, 2004 (the "Merger Agreement"), by and among The Lubrizol Corporation ("Lubrizol"), Lubrizol Acquisition Corporation and Noveon International, Inc. ("Noveon"). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Merger Agreement. The following procedures shall apply to payment of the Merger Consideration in respect of Merger Shares pursuant to Sections 2.2(c) and 2.3 of the Merger Agreement and amounts in respect of Company Options pursuant to Section 2.4 of the Merger Agreement: - Lubrizol has engaged, or will prior to the Effective Time engage, KeyBank National Association ("KeyBank") to act as the Disbursing Agent in connection with the Merger. KeyBank's engagement as Disbursing Agent will end as of six months after the Effective Time. Lubrizol and Noveon have entered into or will enter into an Escrow and Disbursement Agency Services Agreement with KeyBank relating to KeyBank's duties and obligations as Disbursing Agent (the "Disbursement Agent Agreement"). - Noveon has provided Lubrizol with a schedule (the "List of Holders and Amounts") that lists all of the holders of Merger Shares and/or Company Options (each, a "Holder") and sets forth the number of Merger Shares and/or Company Options held, and the amount of the payment to be received, by each of them. - Noveon has sent to each Holder a letter of transmittal pursuant to which the Holders can surrender their Merger Shares for payment and direct payment for their Company Options pursuant to the Merger Agreement (the "Letter of Transmittal"). Noveon International Inc. June 2,2004 Page 2 - Prior to the Effective Time, Noveon, and, after the Effective Time, Fried, Frank, Harris, Shriver & Jacobson LLP ("Fried Frank"), on behalf of the Holders, will be responsible for receiving Letters of Transmittal from the Holders, and will, in consultation with Lubrizol and its counsel, verify that each submitted Letter of Transmittal has been properly executed and is accompanied by all documentation required by the Letter of Transmittal ("Required Documentation"), which includes without limitation, in the case of the surrender of Merger Shares, valid share certificates representing the surrendered Merger Shares or affidavits in respect of lost, stolen or destroyed certificates as provided for in Section 2.3(i) of the Merger Agreement. - At least one day prior to the Effective Time, Noveon will provide to Lubrizol and KeyBank a schedule of the Holders entitled to receive payment in respect of Merger Shares and/or Company Options as of the Effective Time and the amount entitled to be received by each Holder (the "Closing Date Payment Schedule"). From time to time after the Effective Time and prior to the date that is six months therefrom, Lubrizol, based on Letters of Transmittal submitted to Fried Frank and delivered to Lubrizol, may provide to KeyBank schedules of the Holders not listed on the Closing Date Payment Schedule that become entitled to receive payment in respect of Merger Shares and/or are entitled to payment in respect of Company Options by having delivered Letters of Transmittal and all Required Documentation (the "Post-Closing Payment Schedules"). - KeyBank will not make any payments of Merger Consideration in respect of Merger Shares or Company Options until 24 hours following the delivery to Lubrizol and KeyBank of the Closing Date Payment Schedule or delivery to KeyBank of any Post-Closing Payment Schedule, as applicable, which relates to the payments. - Noveon and Fried Frank, as applicable, shall provide Lubrizol with copies and, upon the request of Lubrizol, originals of all Letters of Transmittal and all Required Documentation of the Holders that are listed on the Closing Date Payment Schedule or any Post-Closing Payment Schedule, as applicable. If Lubrizol has reasonable grounds to believe that any particular Holder is not entitled to the payment set forth on the Closing Date Payment Schedule or any Post-Closing Payment Schedule, as applicable, Lubrizol may, after giving notice to Fried Frank, instruct KeyBank to withhold payment to the applicable Holder until Lubrizol has been provided with evidence reasonably satisfactory to it of the amount of the payment that the applicable Holder is entitled to receive pursuant to the Merger Agreement. - With respect to payments relating to Company Options, the Closing Date Payment Schedule and each Post-Closing Payment Schedule shall specify the amount to be paid to the Holders net of all applicable withholding taxes, which Noveon International Inc. June 2,2004 Page 3 shall be withheld by Noveon and paid by Noveon to the applicable governmental authorities at the time and in the manner required by applicable law. - Noveon will not include any Holder or any payment on the Closing Date Payment Schedule if: (a) the Holder and/or the amount of the payment is not set forth on the List of Holders and Amounts, (b) the applicable Holder has not delivered a properly executed Letter of Transmittal and all Required Documentation; or (c) Noveon has reasonable grounds to believe that the applicable Holder's Letter of Transmittal or Required Documentation contains any material error or misstatement of fact or that the applicable Holder is not entitled to the payment set forth on the Closing Date Payment Schedule. - On or prior to the Closing Date, Lubrizol will deposit with KeyBank cash in an amount sufficient to pay the Merger Consideration in respect of all Merger Shares and the payments in respect of all Company Options required under the Merger Agreement. No funds will be released by KeyBank to Holders until Lubrizol and Noveon have given joint instructions to KeyBank that the Effective Time has occurred. Subject to the disbursement of such funds under the terms hereof, KeyBank will hold such funds for a period of six months from the Effective Time in accordance with the terms and conditions of the Disbursement Agent Agreement. - Subject to the provisions of this letter, the Disbursement Agent Agreement will instruct KeyBank to pay, on the Closing Date but after notification to KeyBank as described above that the Effective Time has occurred, to the Holders listed on the Closing Date Payment Schedule the amounts set forth on the Closing Date Payment Schedule by wire transfer in immediately available funds, direct deposit or by check according to the Holder's instructions in the Letter of Transmittal. - Subject to the provisions of this letter, from time to time after the Effective Time, KeyBank will promptly pay the Holders listed on any Post-Closing Payment Schedule the amounts set forth on the Post-Closing Payment Schedule by wire transfer in immediately available funds, direct deposit or by check according to the Holder's instructions in the Letter of Transmittal. - KeyBank will serve as Disbursing Agent in accordance with the terms and conditions of the Disbursement Agent Agreement for a period of six months from the Effective Time. Thereafter, any cash remaining with KeyBank shall be returned to the Surviving Corporation, and, subject to the terms and conditions of the Merger Agreement, Holders may look only to the Surviving Corporation for payment of the Merger Consideration and in respect of Company Options. - All interest and other earnings on the funds held by the Disbursing Agent will accrue for the benefit of and be paid to Lubrizol, except as provided in clause (ii) Noveon International Inc. June 2,2004 Page 4 of Section 7 of the Disbursement Agent Agreement. No Holder will be entitled to receive interest or any other payment from KeyBank, Noveon, Fried Frank or Lubrizol as a result of any delay in the payment of any Merger Consideration in respect of Merger Shares or any amount in respect of Company Options in connection with the Merger. To the extent it is inconsistent with the foregoing, the Merger Agreement is hereby amended, but shall otherwise remain in full force and effect in accordance with its terms. In the event of any conflict between the provisions of this letter, on the one hand, and the terms and conditions of the Merger Agreement or the Disbursement Agent Agreement, on the other hand, the provisions of this letter shall control. If you are in agreement with the provisions of this letter, please sign in the space indicated below. [signatures follow on the next page] Noveon International Inc. June 2,2004 Page 5 Sincerely, The Lubrizol Corporation Lubrizol Acquisition Corporation By: /s/ Rosanne S. Potter By: /s/ Leslie M. Reynolds ------------------------- ------------------------------------------------ Name: Rosanne S. Potter Name: Leslie M. Reynolds Title: Treasurer Title: Secretary AGREED AND ACCEPTED: Noveon International, Inc. Fried, Frank, Harris, Shriver & Jacobson LLP By: /s/ Steven J. Demetriou /s/ Fried, Frank, Harris, Shriver & Jacobson LLP ------------------------- ------------------------------------------------ Name: Steven J. Demetriou Title: President and Chief Executive Officer EX-10.1 5 l08074aexv10w1.txt EX-10.1 364-DAY CREDIT AGREEMENT EXHIBIT 10.1 EXECUTION COPY U.S. $2,450,000,000 364-DAY CREDIT AGREEMENT Dated as of May 28, 2004 Among THE LUBRIZOL CORPORATION as Borrower and THE INITIAL LENDERS NAMED HEREIN as Initial Lenders KEY BANK NATIONAL ASSOCIATION and ABN AMRO BANK N.V. as Syndication Agents WACHOVIA CAPITAL INVESTMENTS, INC. as Documentation Agent and CITICORP NORTH AMERICA, INC. as Agent CITIGROUP GLOBAL MARKETS INC. as Lead Arranger and Book Manager TABLE OF CONTENTS ARTICLE I SECTION 1.01. Certain Defined Terms 1 SECTION 1.02. Computation of Time Periods 11 SECTION 1.03. Accounting Terms 11 ARTICLE II SECTION 2.01. The Advances 11 SECTION 2.02. Making the Advances 12 SECTION 2.03. Fees 12 SECTION 2.04. Termination or Reduction of the Commitments 13 SECTION 2.05. Repayment of Advances 13 SECTION 2.06. Interest on Advances 13 SECTION 2.07. Interest Rate Determination 14 SECTION 2.08. Optional Conversion of Advances 14 SECTION 2.09. Prepayments of Advances 15 SECTION 2.10. Increased Costs 15 SECTION 2.11. Illegality 16 SECTION 2.12. Payments and Computations 16 SECTION 2.13. Taxes 17 SECTION 2.14. Sharing of Payments, Etc. 18 SECTION 2.15. Evidence of Debt 18 SECTION 2.16. Use of Proceeds 19 ARTICLE III SECTION 3.01. Conditions Precedent to Effectiveness of Section 2.01 19 SECTION 3.02. Conditions Precedent to the Initial Borrowing of Each Designated Subsidiary 21
SECTION 3.03. Conditions Precedent to Each Borrowing. 21 SECTION 3.04. Determinations Under Section 3.01 22 ARTICLE IV SECTION 4.01. Representations and Warranties of the Company 22 ARTICLE V SECTION 5.01. Affirmative Covenants 24 SECTION 5.02. Negative Covenants 25 SECTION 5.03. Financial Covenants 30 ARTICLE VI SECTION 6.01. Events of Default 30 ARTICLE VII SECTION 7.01. Guaranty 32 SECTION 7.02. Guaranty Absolute 32 SECTION 7.03. Waivers and Acknowledgments 33 SECTION 7.04. Subrogation 33 SECTION 7.05. Subordination 34 SECTION 7.06. Continuing Guaranty; Assignments 34 ARTICLE VIII SECTION 8.01. Authorization and Action 35 SECTION 8.02. Agent's Reliance, Etc. 35 SECTION 8.03. Citicorp and Affiliates 35 SECTION 8.04. Lender Credit Decision 35 SECTION 8.05. Indemnification 36 SECTION 8.06. Successor Agent 36 SECTION 8.07. Sub-Agent 36
ii SECTION 8.08. Other Agents. 36 ARTICLE IX SECTION 9.01. Amendments, Etc. 36 SECTION 9.02. Notices, Etc. 37 SECTION 9.03. No Waiver; Remedies 38 SECTION 9.04. Costs and Expenses 38 SECTION 9.05. Right of Set-off 39 SECTION 9.06. Binding Effect 39 SECTION 9.07. Assignments and Participations 39 SECTION 9.08. Confidentiality 41 SECTION 9.09. Governing Law 42 SECTION 9.10. Execution in Counterparts 42 SECTION 9.11. Jurisdiction, Etc. 42 SECTION 9.12. Designated Subsidiaries 42 SECTION 9.13. Waiver of Jury Trial 2
iii Schedules Schedule I - List of Applicable Lending Offices Schedule 3.01(b) - Disclosed Litigation Schedule 5.02(a) - Existing Liens Schedule 5.02(c) - Existing Debt Exhibits Exhibit A - Form of Note Exhibit B - Form of Notice of Borrowing Exhibit C - Form of Assignment and Acceptance Exhibit D - Form of Opinion of Counsel for the Company Exhibit E - Form of Designation Letter iv 364-DAY CREDIT AGREEMENT Dated as of May 28, 2004 THE LUBRIZOL CORPORATION, an Ohio corporation (the "Company"), the banks, financial institutions and other institutional lenders (the "Initial Lenders") listed on the signature pages hereof, CITIGROUP GLOBAL MARKETS INC., as sole lead arranger, and CITICORP NORTH AMERICA, INC. ("Citicorp"), as administrative agent (the "Agent") for the Lenders, agree as follows: PRELIMINARY STATEMENTS: 1. Pursuant to the Agreement and Plan of Merger dated April 15, 2004 (as amended, the "Merger Agreement") the Company has agreed to acquire Noveon International Inc. (the "Target") by the consummation of a merger of Lubrizol Acquisition Corporation, a Delaware corporation and direct or indirect subsidiary of the Company, with the Target, pursuant to which the Target will become a wholly-owned Subsidiary of the Company (the "Acquisition"). 2. The Company has requested that, concurrently with the consummation of the Acquisition, the Lenders lend to the Company up to $2,450,000,000 to pay the cash consideration required to consummate the Acquisition, pay transaction fees and expenses, refinance certain existing Debt (as hereinafter defined) of the Company and the Target and that, from time to time, the Lenders lend to the Borrowers to provide working capital for the Company and its Subsidiaries. The Lenders have indicated their willingness to agree to lend such amounts on the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Acquisition" has the meaning specified in the Preliminary Statements. "Advance" means an advance by a Lender to any Borrower as part of a Borrowing and refers to a Base Rate Advance or a Eurodollar Rate 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 5% 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's Account" means the account of the Agent maintained by the Agent at Citibank at its office at 399 Park Avenue, New York, New York 10043, Account No. 36852248, Attention: Bank Loan Syndications. "Applicable Lending Office" means, with respect to each Lender, such Lender's Domestic Lending Office in the case of a Base Rate Advance and such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance. "Applicable Margin" means, as of any date, a percentage per annum determined and calculated by reference to the Public Debt Rating in effect on such date as set forth below:
Public Debt Rating Applicable Margin for Applicable Margin for S&P/Moody's Base Rate Advances Eurodollar Rate Advances - ------------------ --------------------- ------------------------ Level 1 A- or A3 or above 0.000% 0.400% Level 2 BBB+ or Baa1 0.000% 0.500% Level 3 BBB or Baa2 0.000% 0.850% Level 4 BBB- and Baa3 0.000% 0.925% Level 5 BBB- or Baa3 0.000% 1.050% Level 6 BB+ or Ba1 0.200% 1.200% Level 7 BB or Ba2 0.600% 1.600% Level 8 BB- or Ba3 1.250% 2.250% Level 9 Lower than Level 8 2.000% 3.000%
"Applicable Percentage" means, as of any date, a percentage per annum determined and calculated by reference to the Public Debt Rating in effect on such date as set forth below:
Public Debt Rating Applicable S&P/Moody's Percentage - ------------------ ---------- Level 1 A- or A3 or above 0.100% Level 2 BBB+ or Baa1 0.125% Level 3 BBB or Baa2 0.150% Level 4 BBB- and Baa3 0.200% Level 5 BBB- or Baa3 0.200% Level 6 BB+ or Ba1 0.300% Level 7 BB or Ba2 0.400% Level 8 BB- or Ba3 0.500% Level 9 Lower than Level 8 0.500%
2 "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Agent, in substantially the form of Exhibit C hereto. "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 in the sound exercise of its commercially reasonable determination, 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; or (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 2.06(a)(i). "Borrowers" means, collectively, the Company and each Designated Subsidiary that shall become a Borrower hereunder pursuant to Section 9.12. "Borrowing" means a borrowing consisting of simultaneous Advances of the same Type made by each of the Lenders pursuant to Section 2.01. "Borrowing Minimum" means $10,000,000. "Borrowing Multiple" means $1,000,000. "Business Day" means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market. "Citibank" means Citibank, N.A. 3 "Closing Date" means the date of this Agreement. "Commitment" means as to any Lender (a) the amount set forth opposite such Lender's name on the signature pages hereof or (b) if such Lender has entered into any Assignment and Acceptance, the amount set forth for such Lender in the Register maintained by the Agent pursuant to Section 9.07(d). "Confidential Information" means information that the Company furnishes to the Agent or any Lender in a writing designated as confidential, but does not include any such information that is generally available to the public or that is available to the Agent or such Lender on a non-confidential basis from a source other than the Company that is, to the knowledge of the Agent or such Lender, not acting in breach of any confidentiality agreement. "Consolidated" refers to the consolidation of accounts in accordance with GAAP. "Consolidated EBITDA" means, for any period, (a) Consolidated net income, plus (b) to the extent deducted in determining such Consolidated net income, the sum of, on a Consolidated basis and without duplication: (i) interest expense, (ii) income tax expense, (iii) depreciation expense, (iv) amortization expense, (v) depletion expense, (vi) extraordinary, unusual or non-recurring non-cash losses, including goodwill expense and non-cash losses from the sale, exchange, transfer or other disposition of property of the Company or its Subsidiaries and the related tax effects in accordance with GAAP, (vii) extraordinary, unusual or non-recurring cash losses, expenses or charges incurred or paid in calendar years 2003 or 2004, and all fees and expenses incurred in connection with any acquisition consummated in calendar years 2003 or 2004 (including the acquisition of Noveon International Inc. ), minus (c) to the extent included in determining such Consolidated net income, the sum of, on a Consolidated basis and without duplication: (i) the income of any Person (other than a wholly-owned Subsidiary of the Company) in which any Person other than the Company or any of its Subsidiaries has a joint interest or a partnership interest or other ownership interest, except to the extent of the amount of dividends or other distributions actually paid to the Company or any of its Subsidiaries by such Person during such period, (ii) gains from the sale, exchange, transfer or other disposition of property or assets of the Company and its Subsidiaries (other than inventory sold in the ordinary course of business), and related tax effects in accordance with GAAP, (iii) any other extraordinary, unusual or non-recurring gains or other income not from the continuing operations of the Company and its Subsidiaries, and related tax effects in accordance with GAAP and (iv) the income of any Subsidiary of the Company to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary. For the purpose of calculating Consolidated EBITDA for any period, if during such period the Company or any Subsidiary shall have made an acquisition of any Person, Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto as if such acquisition occurred on the first day of such period. "Consolidated Tangible Net Worth" means, as at any date, the amount by which the sum of (a) the par value (or value stated on the books of the Company) of the capital stock of all classes of the Company, and (b) the amount of the Consolidated surplus, capital or earned, but excluding accumulated foreign exchange translation adjustments, of the Company and its Subsidiaries, exceeds the sum of (i) the amount of any write-up in the book value of any assets resulting from the revaluation thereof or any write-up in excess of the cost of assets acquired, and (ii) the aggregate of all amounts appearing on the asset side of the balance sheet for goodwill, patents, patent rights, trademarks, trade names, copyrights, franchises, treasury stock, organizational expenses, and other similar items, if any, of the Company and its Subsidiaries, all determined in accordance with GAAP. "Convert", "Conversion" and "Converted" each refers to a conversion of Advances of one Type into Advances of the other Type pursuant to Section 2.07 or 2.08. 4 "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 120 days incurred in the ordinary course of such Person's business; provided that trade payables which are overdue by more than 120 days shall not be included so long as payment of such is being contested in good faith and by proper proceedings), (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 leases that have been or should be, in accordance with GAAP, recorded as capital leases, (f) all obligations, contingent or otherwise, of such Person in respect of acceptances, letters of credit or similar extensions of credit, (g) all Invested Amounts, (h) all Debt of others referred to in clauses (a) through (g) above or clause (i) below and other payment obligations guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person ("Guaranteed Debt") through an agreement (1) to pay or purchase such Guaranteed Debt or to advance or supply funds for the payment or purchase of such Guaranteed Debt, (2) 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 Guaranteed Debt or to assure the holder of such Guaranteed Debt against loss, (3) 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 (4) otherwise to assure a creditor against loss, and (i) all Debt referred to in clauses (a) through (h) above 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; provided, that Debt shall not include transactions in the ordinary course of business by the Company or its directly or indirectly held Subsidiaries with customers and vendors in the form of (x) commitments to lend or loans to customers that are repayable either over an agreed period of time or at the time of purchases by the customers of products of the Company or its Subsidiaries and (y) advances made to vendors that are treated either repayable over a period of time or as advance payments for products to be purchased by the Company or its Subsidiaries from the vendor. "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. "Designated Subsidiary" means any Subsidiary organized within the United States, directly or indirectly wholly-owned by the Company and designated after the date of this Agreement for borrowing privileges hereunder pursuant to Section 9.12. "Designation Letter" means a letter entered into by a Designated Subsidiary, the Company and the Agent, in substantially the form of Exhibit E hereto, pursuant to which such Designated Subsidiary shall become a Borrower hereunder in accordance with Section 9.12. "Disclosed Litigation" has the meaning specified in Section 3.01(b). "Domestic Lending Office" means, with respect to any 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 Borrowers and the Agent. "Effective Date" has the meaning specified in Section 3.01. "Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a Lender; and (iii) any other Person (unless such Person is taking delivery of an assignment in connection with physical settlement of a credit derivative transaction) approved by the Agent and, unless an Event of Default has occurred and is 5 continuing at the time any assignment is effected in accordance with Section 9.07, the Company, such approval not to be unreasonably withheld or delayed; provided, however, that neither the Company nor an Affiliate of the Company shall qualify as an Eligible Assignee. "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, Environmental Permit or Hazardous Materials or arising from alleged injury or threat of injury 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 any 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, judgment, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials. "Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental Law. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "ERISA Affiliate" means any Person that for purposes of Title IV of ERISA is a member of the Company's controlled group, or under common control with the Company, 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 the Company or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by the Company 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 the 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, a Plan. "Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Eurodollar Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Eurodollar Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender (or, if no such office is specified, its Domestic 6 Lending Office), or such other office of such Lender as such Lender may from time to time specify to the Borrowers and the Agent. "Eurodollar Rate" means for any Interest Period for each Eurodollar Rate Advance 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 (rounded upward to the nearest whole multiple of 1/16 of 1% per annum) appearing on Telerate Markets Page 3750 (or any successor page) as the London interbank offered rate for deposits in U.S. dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period or, if for any reason such rate is not available, the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars is offered by the principal office of each of the Reference Banks in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to such Reference Bank's Eurodollar Rate Advance comprising part of such Borrowing to be outstanding during such Interest Period and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period. If the Telerate Markets Page 3750 (or any successor page), is unavailable, the Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance comprising part of the same Borrowing shall be determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject, however, to the provisions of Section 2.07. "Eurodollar Rate Advance" means an Advance that bears interest as provided in Section 2.06(a)(ii). "Eurodollar Rate Reserve Percentage" for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing means the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Advances is determined) having a term equal to such Interest Period. "Events of Default" has the meaning specified in Section 6.01. "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 on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. "GAAP" has the meaning specified in Section 1.03. "Guaranteed Obligations" has the meaning specified in Section 7.01. "Guaranty" means the guaranty of the Company set forth in Article VII. "Hazardous Materials" means (a) petroleum and petroleum products, byproducts or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and 7 (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. "Interest Period" means, for each Eurodollar Rate Advance comprising part of the same Borrowing, the period commencing on the date of such Eurodollar Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance and ending on the last day of the period selected by the applicable Borrower pursuant to the provisions below and, thereafter, with respect to Eurodollar Rate Advances, 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, and subject to clause (c) of this definition, one week or nine months, as such Borrower may, upon notice received by the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that: (a) such Borrower may not select any Interest Period that ends after the Termination Date; (b) Interest Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Borrowing shall be of the same duration; (c) in the case of any such Borrowing, such Borrower shall not be entitled to select an Interest Period having a duration of one week or nine months unless, by 2:00 P.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, each Lender notifies the Agent that such Lender will be providing funding for such Borrowing with such Interest Period (the failure of any Lender to so respond by such time being deemed for all purposes of this Agreement as an objection by such Lender to the requested duration of such Interest Period); provided that, if any or all of the Lenders object to the requested duration of such Interest Period, the duration of the Interest Period for such Borrowing shall be one, two, three or six months, as specified by the Borrower requesting such Borrowing in the applicable Notice of Borrowing as the desired alternative to an Interest Period of one week or nine months; (d) 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 (e) 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. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "Invested Amounts" means the amounts invested by investors that are not Affiliates of the Company in connection with a receivables securitization program and paid to the Company or any of its Subsidiaries, as reduced by the aggregate amounts received by such investors from the payment of receivables and applied to reduce such invested amounts. "Investment" in any Person means any loan or advance to such Person, any purchase or other acquisition of any capital stock, warrants, rights, options, obligations or other securities or all or substantially all of the assets of such Person, any capital contribution to such Person or any other 8 investment in such Person, including, without limitation, any arrangement pursuant to which the investor incurs Debt of the types referred to in clauses (g) and (h) of the definition of "Debt" in respect of such Person. "Lenders" means the Initial Lenders and each Person that shall become a party hereto pursuant to Section 9.07. "Lien" means any lien, security interest or other charge or encumbrance of any kind, including, without limitation, the lien or retained security title of a conditional vendor and any security interest or mortgage granted in real property. "Marketable Securities" means any of the following, to the extent owned by the Company or any of its Subsidiaries free and clear of all Liens and having a maturity of not greater than 360 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 or a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause (c), is organized under the laws of the United States or any State thereof and has combined capital and surplus of at least $1 billion, (c) commercial paper in an aggregate amount of no more than $10,000,000 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, (d) fully collateralized repurchase agreements having a term of not more than 30 days and covering securities described in subsection (a) above entered into with any Lender or bank meeting the qualifications specified in (b) above or (e) investments in money market funds substantially all of the assets of which are comprised of securities described in subsection (a) through (d) above. "Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole (including the Target and its Subsidiaries after giving effect to the Acquisition). "Material Adverse Effect" means a material adverse effect on (a) the business, condition (financial or otherwise) or operations of the Company and its Subsidiaries taken as a whole (including the Target and its Subsidiaries after giving effect to the Acquisition), (b) the rights and remedies of the Agent or any Lender under this Agreement or any Note or (c) the ability of any Borrower to perform its obligations under this Agreement or any Note. "Merger Agreement" has the meaning specified in the Preliminary Statements. "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 the Company 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 the Company or any ERISA Affiliate and at least one Person other than the Company and the ERISA Affiliates or (b) was so maintained and in respect of which the Company 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. "Net Cash Proceeds" means, with respect to any sale, lease, transfer or other disposition of any asset or the incurrence or issuance of any Debt or the sale or issuance of any equity interests (including, without limitation, any capital contribution) by any Person, the aggregate amount of cash received from 9 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 and accounting fees, filing 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 and (c) the amount of any Debt secured by a Lien on such asset that, by the terms of the agreement or instrument governing such Debt, is required to be repaid upon such disposition, 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 and are properly attributable to such transaction or to the asset that is the subject thereof. "Note" means a promissory note of a Borrower payable to any Lender, delivered pursuant to a request made under Section 2.15 in substantially the form of Exhibit A hereto, evidencing the aggregate indebtedness of such Borrower to such Lender resulting from the Advances made by such Lender. "Notice of Borrowing" has the meaning specified in Section 2.02(a). "PBGC" means the Pension Benefit Guaranty Corporation (or any successor). "Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof. "Plan" means a Single Employer Plan or a Multiple Employer Plan. "Public Debt Rating" means, as of any date, the 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 the Company or, if either of S&P or Moody's has issued more than one such rating, the lowest such rating issued by such rating agency. For purposes of the foregoing, (a) if only one of S&P and Moody's shall have in effect a Public Debt Rating, the Applicable Margin and the Applicable Percentage shall be determined by reference to the available rating; (b) if neither S&P nor Moody's shall have in effect a Public Debt Rating, the Applicable Margin and the Applicable Percentage will be set in accordance with Level 9 under the definition of "Applicable Margin"' or "Applicable Percentage", as the case may be; (c) if any rating established by S&P or Moody's shall be changed, such change shall be effective as of the date on which such change is first announced publicly by the rating agency making such change; (d) if S&P or Moody's shall change the basis on which ratings are established, each reference to the Public 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; and (e) if the ratings established by S&P and Moody's shall fall within different levels above Level 4 or within different levels below Level 4, the Applicable Margin and the Applicable Percentage shall be based upon the higher rating, unless the lower of such ratings is more than one level below the higher of such ratings, in which case the Applicable Margin and the Applicable Percentage shall be based upon the level that is one level above the lower of such ratings. "Reduction Amount" has the meaning specified in Section 2.09(b). "Reference Banks" means Citibank and KeyBank. "Register" has the meaning specified in Section 9.07(d). "Required Lenders" means at any time Lenders owed at least 66 2/3% of the then aggregate unpaid principal amount of the Advances owing to Lenders, or, if no such principal amount is then outstanding, Lenders having at least 66 2/3% of the Commitments. "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies, Inc. 10 "Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Company or any ERISA Affiliate and no Person other than the Company and the ERISA Affiliates or (b) was so maintained and in respect of which the Company or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. "Subordinated Obligations" has the meaning specified in Section 7.05. "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 limited liability company, partnership or joint venture 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. "Target" has the meaning specified in the Preliminary Statements. "Termination Date" means the earlier of (a) May 27, 2005 and (b) the date of termination in whole of the Commitments pursuant to Section 2.04 or 6.01. "Type" refers to the distinction between Base Rate Advances and Eurodollar Rate Advances. "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. 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. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with generally accepted accounting principles in the United States, as in effect from time to time ("GAAP"); provided that, if the Company notifies the Agent that the Company requests an amendment to any provision hereof as a result of a change in GAAP or in the application thereof on the operation of such provision (or if the Agent notifies the Company that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES SECTION 2.01. The Advances. Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Advances to the Borrowers from time to time on any Business Day during the period from the Effective Date until the Termination Date in an aggregate amount not to exceed at any time outstanding such Lender's Commitment. Each Borrowing shall be in an amount not less than the Borrowing Minimum or a Borrowing Multiple in excess thereof and shall consist of Advances of the same Type made on the same day by the Lenders ratably according to their respective Commitments. Within the limits of each Lender's Commitment, the 11 Borrowers may borrow under this Section 2.01, prepay pursuant to Section 2.09 and reborrow under this Section 2.01. SECTION 2.02. Making the Advances. (a) Each Borrowing shall be made on notice, given not later than (x) 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 Eurodollar Rate Advances or (y) 11:00 A.M. (New York City time) on the date of the proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances, by the applicable Borrower to the Agent, which shall give to each Lender prompt notice thereof by telecopier or telex. Each such notice of a Borrowing (a "Notice of Borrowing") shall be by telephone, confirmed immediately in writing, or telecopier or telex in substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such Borrowing, (ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such Advance. Each Lender shall, before 1:00 P.M. (New York City time) on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Agent at the Agent's Account, in same day funds, such Lender's ratable portion of such Borrowing. After the Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Section 3.03, the Agent shall make such funds available to the Borrower that requested such Advance by depositing such funds to such account as such Borrower shall specify. (b) Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrowers may not select Eurodollar Rate Advances for any Borrowing if the aggregate amount of such Borrowing is less than the Borrowing Minimum or if the obligation of the Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.07 or 2.11 and (ii) the Eurodollar Rate Advances may not be outstanding as part of more than fifteen separate Borrowings. (c) Each Notice of Borrowing shall be irrevocable and binding on the Borrower giving such Notice. In the case of any Borrowing that the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower giving such Notice shall indemnify each 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 Section 3.03, including, without limitation, any loss, 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. (d) Unless the Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender, contrary to its Commitment, 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) of this Section 2.02 and the Agent may, in reliance upon such assumption, make available to the applicable 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 such Borrower severally agree to repay without duplication 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 to the Agent, at (i) in the case of such Borrower, the interest rate applicable at the time to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender's Advance as part of such Borrowing for purposes of this Agreement. (e) 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. Nothing herein shall be deemed to prejudice any rights which any Borrower may have against a Lender as a result of any default by a Lender hereunder. SECTION 2.03. Fees. (a) Facility Fee. The Borrowers agree to pay to the Agent for the account of each Lender a facility fee on the aggregate amount of such Lender's Commitment from the Effective Date 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 at a rate per annum equal to 12 the Applicable Percentage in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December, commencing June 30, 2004, and on the Termination Date. (b) Participation Fees. The Borrowers agree to pay to the Agent for the account of each Lender a participation fee (i) on the date that is 180 days after the Closing Date, equal to 0.15% of each Lender's Commitment on such date and (ii) on the date that is 270 days after the Closing Date, equal to 0.15% of each Lender's Commitment on such date. (c) Agent's Fees. The Company shall pay to the Agent for its own account the fees set forth in the fee letter between the Company and the Agent or as may from time to time be otherwise agreed in writing between the Company and the Agent. SECTION 2.04. Termination or Reduction of the Commitments. (a) Optional. The Company shall have the right, upon at least three Business Days' notice to the Agent, to terminate in whole or permanently reduce ratably in part the unused portions of the respective Commitments of the Lenders, provided that each partial reduction shall be in the aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof. (b) Mandatory. The Commitments shall be automatically and permanently reduced, on a pro rata basis, on each date on which prepayment of Advances is required to be made pursuant to Section 2.09(b) in an amount equal to the applicable Reduction Amount, provided that notwithstanding the foregoing and Section 2.09(b), in no event shall the Commitments be reduced, pursuant to this Section 2.04(b), to less than $350,000,000. SECTION 2.05. Repayment of Advances. The Borrowers shall repay to the Agent for the ratable account of the Lenders on the Termination Date the aggregate principal amount of the Advances then outstanding. SECTION 2.06. Interest on Advances. (a) Scheduled Interest. The Borrowers shall pay interest on the unpaid principal amount of each Advance 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 (x) the Base Rate in effect from time to time plus (y) the Applicable Margin in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Base Rate Advance shall be Converted or paid in full. (ii) Eurodollar Rate Advances. During such periods as such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of (x) the Eurodollar Rate for such Interest Period for such Advance plus (y) the Applicable Margin in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full. (b) Default Interest. Upon the occurrence and during the continuance of an Event of Default that has not been waived, the Agent may, and upon the request of the Required Lenders shall, require the Borrowers to pay interest ("Default Interest") on (i) the unpaid principal amount of each Advance owing to each Lender, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by law, the amount of any interest, fee or other amount payable hereunder that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on Base Rate Advances pursuant to clause (a)(i) above; provided, however, that following acceleration of the Advances pursuant to Section 6.01, Default Interest shall accrue and be payable hereunder whether or not previously required by the Agent. 13 SECTION 2.07. Interest Rate Determination. (a) Each Reference Bank agrees to furnish to the Agent timely information for the purpose of determining each Eurodollar Rate. If any one or more of the Reference Banks 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 Reference Banks. The Agent shall give prompt notice to the Borrowers and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.06(a)(i) or (ii), and the rate, if any, furnished by each Reference Bank for the purpose of determining the interest rate under Section 2.06(a)(ii). (b) If, with respect to any Eurodollar Rate Advances, the Required Lenders notify the Agent that the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Required Lenders, as determined in the exercise of each such Lender's commercially reasonable discretion, of making, funding or maintaining their respective Eurodollar Rate Advances for such Interest Period, the Agent shall forthwith so notify the Borrowers and the Lenders, whereupon (A) the Borrowers will, on the last day of the then existing Interest Period therefor, either (x) prepay such Advances or (y) Convert such Advances into Base Rate Advances and (B) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrowers and the Lenders that the circumstances causing such suspension no longer exist. (c) If any Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances 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 Lenders and such Advances will automatically, on the last day of the then existing Interest Period therefor, Convert into Base Rate Advances. (d) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than the Borrowing Minimum, such Advances shall automatically Convert into Base Rate Advances. (e) Upon the occurrence and during the continuance of any Event of Default that has not been waived, (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, be Converted into Base Rate Advances and (ii) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended. (f) If Telerate Markets Page 3750 is unavailable and fewer than two Reference Banks furnish timely information to the Agent for determining the Eurodollar Rate for any Eurodollar Rate Advances, (i) the Agent shall forthwith notify the Borrowers and the Lenders that the interest rate cannot be determined for such Eurodollar Rate Advances, (ii) with respect to Eurodollar Rate Advances, each such Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance (or if such Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and (iii) the obligation of the Lenders to make Eurodollar Rate Advances or to Convert Advances into Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrowers and the Lenders that the circumstances causing such suspension no longer exist. SECTION 2.08. Optional Conversion of Advances. Any Borrower may on any Business Day, upon notice given to the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.07 and 2.11, Convert any or all Advances of one Type comprising the same Borrowing made to it into Advances of the other Type; provided, however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for such Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(b) and no Conversion of any Advances shall result in more separate Borrowings than permitted under Section 2.02(b). Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such 14 Conversion, (ii) the Advances to be Converted, and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for each such Advance. Each notice of Conversion shall be irrevocable and binding on the Borrower giving such notice. SECTION 2.09. Prepayments of Advances. (a) Optional. Any Borrower may, upon notice at least two Business Days prior to the date of such prepayment, in the case of Eurodollar Rate Advances, and not later than 11:00 A.M. (New York City time) on the date of such prepayment, in the case of Base Rate Advances, 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 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 principal amount prepaid; provided, however, that (x) each partial prepayment shall be in an aggregate principal amount not less than the Borrowing Minimum or a Borrowing Multiple in excess thereof and (y) in the event of any such prepayment of a Eurodollar Rate Advance, the applicable Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 9.04(c). (b) Mandatory. (i) The Borrowers shall, on the first Business Day after the date of receipt of the Net Cash Proceeds in excess of $10,000,000 in the aggregate by the Company or any of its Subsidiaries from (A) the sale, lease, transfer or other disposition of any assets of the Company or any of its Subsidiaries (other than any sale, lease, transfer or other disposition of assets pursuant to clause (i), (ii), (iii) or (iv) of Section 5.02(d)), (B) the incurrence or issuance by the Company or any of its Subsidiaries of any Debt (other than Debt incurred or issued pursuant to clause (i), (ii), (iii), (iv) or (vii) of Section 5.02(c)) and (C) the sale or issuance by the Company or any of its Subsidiaries of any equity interests (including, without limitation, receipt of any capital contribution), prepay an aggregate principal amount of the Advances comprising part of the same Borrowings in an amount equal to the amount of such Net Cash Proceeds. Each such prepayment shall be applied ratably to the Advances comprising a Borrowing. The amount remaining (if any) after the prepayment in full of the Advances then outstanding (the sum of such prepayment amounts and remaining amount being referred to herein as the "Reduction Amount") may be retained by the Borrowers and the Commitments shall be permanently reduced as set forth in Section 2.04(b). (ii) Each prepayment made pursuant to this Section 2.09(b) shall be made together with any interest accrued to the date of such prepayment on the principal amounts prepaid and, in the case of any prepayment of a Eurodollar Rate Advance on a date other than the last day of an Interest Period or at its maturity, any additional amounts which the Borrowers shall be obligated to reimburse to the Lenders in respect thereof pursuant to Section 9.04(c). The Agent shall give prompt notice of any prepayment required under this Section 2.09(b) to the Borrowers and the Lenders. SECTION 2.10. Increased Costs. (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 including, without limitation, any agency of the European Union or similar monetary or multinational authority (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Advances (excluding for purposes of this Section 2.10 any such increased costs resulting from (i) Taxes or Other Taxes (as to which Section 2.13 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 is organized or has its Applicable Lending Office or any political subdivision thereof), then the Borrowers shall from time to time, without premium or penalty, upon written demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost; provided however, that at such time such Lender shall be generally assessing such amounts on a non-discriminatory basis against borrowers under agreements having provisions similar to this Section. A certificate as to the amount of such increased cost, submitted to the Borrowers and the Agent by such Lender, shall be conclusive and binding for all purposes, absent error in the calculation of such amounts. (b) If any Lender determines that 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 or any corporation controlling such Lender (taking into consideration such Lender's (or such controlling corporation's) policies with 15 respect to capital adequacy) and that the amount of such capital is increased by or based upon the existence of such Lender's commitment to lend hereunder and other commitments of this type, then, upon written demand by such Lender (with a copy of such demand to the Agent), the Borrowers shall pay to the Agent for the account of such Lender, from time to time as specified by such Lender, without premium or penalty, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender's commitment to lend hereunder; provided, however, that at such time such Lender shall be generally assessing such amounts on a non-discriminatory basis against borrowers under agreements having provisions similar to this Section. A certificate as to such amounts submitted to the Borrowers and the Agent by such Lender shall be conclusive and binding for all purposes, absent error in the calculation of such amounts. (c) Each Lender will notify the Company of any change that will entitle such Lender to compensation under this Section 2.10 as promptly as practicable, but in any event within 90 days after such Lender obtains knowledge thereof; provided, however, that, if any Lender fails to give such notice within 90 days after it obtains knowledge of such change, such Lender shall, with respect to compensation payable in respect of any costs resulting from such change, only be entitled to payment for costs incurred from and after the date that such Lender does give such notice plus, if such change shall have retroactive effect, costs resulting from such change during the period of retroactive effect thereof. Any Lender claiming any additional amounts payable pursuant to this Section agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Eurodollar Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender. SECTION 2.11. Illegality. Notwithstanding any other provision of this Agreement, if any Lender shall notify the Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances hereunder, (a) be Converted into a Base Rate Advance and (b) the obligation of the Lenders to make Eurodollar Rate Advances or to Convert Advances into Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrowers and the Lenders that the circumstances causing such suspension no longer exist. SECTION 2.12. Payments and Computations. (a) The Borrowers shall make each payment hereunder, irrespective of any right of counterclaim or set-off, not later than 11:00 A.M. (New York City time) on the day when due in U.S. dollars to the Agent at the Agent's Account in same day funds. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or facility fees ratably (other than amounts payable pursuant to Section 2.10, 2.13 or 9.04(c)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender 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 9.07(c), from and after the effective date specified in such Assignment and Acceptance, the Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender 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) All computations of interest based on the Base Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, all computations of interest based on the Eurodollar Rate or the Federal Funds Rate and of facility fees shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or facility fees are payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (c) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the Business Day next succeeding, and such extension of time shall in such case be included in the computation of payment of interest or facility fee, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurodollar Rate 16 Advances to be made in the next following calendar month, such payment shall be made on the Business Day next preceding. (d) Unless the Agent shall have received notice from the applicable Borrower prior to the date on which any payment is due to the Lenders 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 Lender on such due date an amount equal to the amount then due such Lender. If and to the extent any Borrower shall not have so made such payment in full to the Agent, each Lender shall repay to the Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at the Federal Funds Rate. SECTION 2.13. Taxes. (a) Any and all payments by the Borrowers to or for the account of any Lender or the Agent hereunder or under the Notes shall be made, in accordance with Section 2.12 or the applicable provisions of such other documents, 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, in the case of each Lender and the Agent, (i) foreign, United States federal, state and local taxes imposed on its overall net income and franchise taxes imposed on it in lieu of net income taxes by the jurisdiction under the laws of which such Lender or the Agent (as the case may be) is organized or any political subdivision thereof, or by any jurisdiction where such Lender or the Agent (as the case may be) is doing business or any political subdivision thereof and, in the case of each Lender, taxes imposed on its overall net income, and franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction of such Lender's Applicable Lending Office or any political subdivision thereof, or by any jurisdiction where such Lender's Applicable Lending Office is doing business or any political subdivision thereof and (ii) United States state and local withholding taxes (in the appropriate amount) on the gross amount of interest paid by the Borrowers for which such Lender or the Agent (as the case may be) is entitled to a credit for such withholding taxes against a tax described in (i) (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as "Taxes"). If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note or any other documents to be delivered hereunder to any Lender or the Agent, (x) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.13) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (y) such Borrower shall make such deductions and (z) such Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. For the avoidance of doubt, if any Borrower shall be required by a court of competent jurisdiction to pay over an amount other than as Taxes, there shall be no adjustment as to such payment under this Section 2.13(a). (b) In addition, the Borrowers shall pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or under the Notes any other documents to be delivered hereunder or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or the Notes or any other documents to be delivered hereunder (hereinafter referred to as "Other Taxes"). (c) The Borrowers shall indemnify each Lender and the Agent for and hold it harmless against the full amount of Taxes or Other Taxes (including, without limitation, taxes of any kind imposed or asserted by any jurisdiction on amounts payable under this Section 2.13) imposed on or paid by such Lender 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 or the Agent (as the case may be) makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes, the Borrowers shall furnish to the Agent, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing such payment to the extent such a receipt is issued therefor, or other written proof of payment thereof that is reasonably satisfactory to the Agent. 17 (e) Each Lender organized under the laws of a jurisdiction outside the United States, 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 in the case of each other Lender, and from time to time thereafter as reasonably requested in writing by the Borrowers (but only so long as such Lender remains lawfully able to do so), shall provide each of the Agent and the Borrowers with two original Internal Revenue Service forms W-8BEN or W-8ECI, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, properly certifying that such Lender is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or the Notes. If the form provided by a Lender at the time such Lender first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes (and tax withheld in excess of such rate shall be included in Taxes) unless and until such Lender provides the appropriate forms 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 assignee becomes a party to this Agreement, the Lender assignor was entitled to payments under subsection (a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Lender assignee on such date. If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service form W-8BEN or W-8ECI, that the Lender reasonably considers to be confidential, the Lender shall give notice thereof to the Borrowers and shall not be obligated to include in such form or document such confidential information. For purposes of this subsection (e), the terms "United States" and "United States person" shall have the meanings specified in Section 7701 of the Internal Revenue Code (f) For any period with respect to which a Lender has failed to provide the Borrowers with the appropriate form, certificate or other document described in Section 2.13(e) (other than if such failure is due to a change in law, or in the interpretation or application thereof, occurring subsequent to the date on which a form, certificate or other document originally was required to be provided, or if such form otherwise is not required under subsection (e) above), such Lender shall not be entitled to indemnification under Section 2.13(a) or (c) with respect to Taxes imposed by the United States by reason of such failure and the Borrowers may withhold at the full United States statutory withholding tax rate on interest (currently, 30%); provided, however, that should a Lender become subject to Taxes because of its failure to deliver a form, certificate or other document required hereunder, the Borrowers shall take such steps as the Lender shall reasonably request to assist the Lender to recover such Taxes. SECTION 2.14. Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Advances owing to it (other than pursuant to Section 2.10, 2.13 or 9.04(c)) in excess of its ratable share of payments on account of the Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Advances owing to them as shall be necessary to cause such purchasing Lender 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, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. Each Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.14 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off as provided in Section 9.05) with respect to such participation as fully as if such Lender were the direct creditor of such Borrower in the amount of such participation. SECTION 2.15. 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 in respect of Advances. 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 18 owing to, or to be made by, such Lender, such Borrower shall promptly execute and deliver to such Lender a Note payable to such Lender in a principal amount up to the Commitment of such Lender. (b) The Register maintained by the Agent pursuant to Section 9.07(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 the Borrowers under this Agreement. SECTION 2.16. Use of Proceeds. The proceeds of the Advances shall be available (and each of the Borrowers agrees that it or its Subsidiaries, as applicable, shall use such proceeds) solely to pay cash consideration for the Acquisition and all fees and expenses incurred in connection with the Acquisition including the fees and expenses owing to the Agent and the Lenders hereunder, to repay Debt of the Company or to transfer to the Target sufficient amounts for the repayment of the Target's (or its Subsidiaries') Debt, and up to $350,000,000 for general corporate purposes of the Company and its Subsidiaries. ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING SECTION 3.01. Conditions Precedent to Effectiveness of Section 2.01. Section 2.01 of this Agreement shall become effective on and as of the first date on or prior to June 30, 2004 (the "Effective Date") on which the following conditions precedent have been satisfied: (a) There shall have occurred no Material Adverse Change since December 31, 2003. (b) There shall exist no action, suit, investigation, litigation or proceeding affecting the Company or any of its Subsidiaries pending or, to the knowledge of the Company, threatened before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect other than the matters described on Schedule 3.01(b) hereto (the "Disclosed Litigation") or (ii) purports to affect the legality, validity or enforceability of this Agreement or any Note or the consummation of the transactions contemplated hereby, and there shall have been no material adverse change in the status, or financial effect on the Company or any of its Subsidiaries, of the Disclosed Litigation from that described on Schedule 3.01(b) hereto. (c) Nothing shall have come to the attention of the Lenders during the course of their due diligence investigation to lead them to believe that the information presented at the Lenders' Meeting on April 29, 2004 was or has become misleading, incorrect or incomplete in any material respect; without limiting the generality of the foregoing, the Lenders shall have been given such access to the management, records, books of account, contracts and properties of the Company and its Subsidiaries as they shall have reasonably requested. (d) All governmental and third party consents and approvals necessary in connection with the transactions contemplated hereby shall have been obtained (without the imposition of any conditions that are not acceptable to the Lenders) and shall remain in effect, all applicable waiting periods in connection 19 with the Acquisition shall have expired without any action being taken by any competent authority, and no law or regulation shall be applicable in the reasonable judgment of the Lenders, in each case that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated hereby. (e) All conditions precedent to the consummation of the Acquisition (other than the payment of cash consideration from the proceeds of the initial Borrowing hereunder) shall have been satisfied substantially in accordance with the terms of the Merger Agreement, without any waiver or amendment not consented to by the Lenders of any material term, provision or condition set forth therein, and in compliance with all applicable laws. (f) The Company shall have notified each Lender and the Agent in writing as to the proposed Effective Date. (g) The Company shall have paid (i) on the Closing Date, all fees due to the Agent and the Lenders on the Closing Date and (ii) on or before the Effective Date, all other accrued fees and expenses of the Agent and the Lenders (including the accrued reasonable fees and expenses of counsel to the Agent). (h) On the Effective Date, the following statements shall be true and the Agent shall have received for the account of each Lender a certificate signed by a duly authorized officer of the Company, dated the Effective Date, stating that: (i) The representations and warranties contained in Section 4.01 are correct on and as of the Effective Date, and (ii) No event has occurred and is continuing that constitutes a Default. (i) The Agent shall have received on or before the Effective Date the following, each dated such day, in form and substance satisfactory to the Agent and (except for the Notes) in sufficient copies for each Lender: (i) The Notes to the Lenders to the extent requested by any Lender pursuant to Section 2.15. (ii) Certified copies of the resolutions of the Board of Directors of the Company approving this Agreement and the Notes, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement and the Notes. (iii) Copies of the unaudited pro forma Consolidated balance sheet of the Company and its Subsidiaries as at December 31, 2003, and the related pro forma Consolidated statements of income and cash flows of the Company and its Subsidiaries for the fiscal year then ended, giving effect to the Acquisition as of January 1, 2003. (iv) A certificate of the Secretary or an Assistant Secretary of the Company certifying the names and true signatures of the officers of the Company authorized to sign this Agreement and the Notes and the other documents to be delivered hereunder. (v) A favorable opinion of the Vice President and General Counsel of the Company, substantially in the form of Exhibit D hereto. (vi) A favorable opinion of Shearman & Sterling LLP, counsel for the Agent, in form and substance satisfactory to the Agent. 20 SECTION 3.02. Conditions Precedent to the Initial Borrowing of Each Designated Subsidiary. The obligation of each Lender to make an initial Advance to each Designated Subsidiary following its designation as a Borrower hereunder pursuant to Section 9.12 on the occasion of the initial Borrowing thereby is subject to the Agent's receipt on or before the date of such initial Borrowing of each of the following, in form and substance satisfactory to the Agent and dated such date: (a) The Designation Letter of such Designated Subsidiary, in substantially the form of Exhibit E hereto. (b) The Note of such Designated Subsidiary to the Lenders to the extent requested by any Lender pursuant to Section 2.15. (c) A certificate of the Secretary or an Assistant Secretary (or person performing similar functions) of such Designated Subsidiary certifying (i) appropriate resolutions of the board of directors (or persons performing similar functions) of such Designated Subsidiary approving this Agreement and its Notes, and all documents evidencing other necessary corporate (or equivalent) action and governmental approvals, if any, with respect to this Agreement and its Notes (copies of which shall be attached thereto) and (ii) the names and true signatures of the officers of such Designated Subsidiary authorized to sign the Designation Letter of such Designated Subsidiary and its Notes and the other documents to be delivered by such Designated Subsidiary hereunder. (d) A copy of a certificate of the Secretary of State (or other appropriate Governmental Authority) of the jurisdiction of organization of such Designated Subsidiary, dated reasonably near the date of such Borrowing, certifying that such Designated Subsidiary is duly organized and in good standing (or the equivalent thereof) under the laws of the jurisdiction of its organization. (e) A certificate signed by a duly authorized officer of such Designated Subsidiary, dated as of the date of such Borrowing, certifying that such Designated Subsidiary has obtained all authorizations, consents, approvals (including, without limitation, exchange control approvals) and licenses of any Governmental Authority or other third party necessary for such Designated Subsidiary to execute and deliver its Designation Letter and its Notes and to perform its obligations under this Agreement or any of its Notes. (f) Such other documents, opinions and other information as any Lender, through the Agent, may reasonably request. SECTION 3.03. Conditions Precedent to Each Borrowing. The obligation of each Lender to make an Advance on the occasion of each Borrowing shall be subject to the conditions precedent that the Effective Date shall have occurred and on the date of such Borrowing (a) the following statements shall be true (and each of the giving of the applicable Notice of Borrowing and the acceptance by any Borrower of the proceeds of such Borrowing shall constitute a representation and warranty by such Borrower that on the date of such Borrowing such statements are true): (i) the representations and warranties contained in Section 4.01 (except, in the case of Borrowings made after the initial Borrowing, the representations set forth in the last sentence of subsection (e) thereof) (and, if such Borrowing shall have been requested by a Designated Subsidiary, the representations and warranties of such Designated Subsidiary contained in its Designation Letter) are correct on and as of such date, before and after giving effect to such Borrowing and to the application of the proceeds therefrom, as though made on and as of such date except to the extent that such representations and warranties expressly relate to an earlier specified date, and (ii) no event has occurred and is continuing, or would result from such Borrowing or from the application of the proceeds therefrom, that constitutes a Default; 21 and (b) the Agent shall have received such other approvals, opinions or documents as any Lender through the Agent may reasonably request. SECTION 3.04. Determinations Under Section 3.01. For purposes of determining compliance with the conditions specified in Section 3.01, each Lender 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 Lenders unless an officer of the Agent responsible for the transactions contemplated by this Agreement shall have received notice from such Lender prior to the date that the Company, by notice to the Lenders, designates as the proposed Effective Date, specifying its objection thereto. The Agent shall promptly notify the Lenders of the occurrence of the Effective Date. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Company. The Company represents and warrants as follows: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio. (b) The execution, delivery and performance by the Company of this Agreement and the Notes to be delivered by it, and the consummation of the Acquisition and the other transactions contemplated hereby, are within the Company's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Company's charter or code of regulations or (ii) any applicable law or any contractual restriction in any material contract or, to the knowledge of the chief financial officer of the Company, any other contract the breach of which would limit the ability of any Borrower to perform its obligations under this Agreement or any Notes, binding on or affecting the Company. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery and performance by the Company of this Agreement or the Notes to be delivered by it or for the consummation of the Acquisition and the other transactions contemplated hereby, other than authorizations, approvals, actions, notices or filings (i) that have been duly obtained, taken, given or made and are in full force and effect or (ii) as to which the failure to obtain, take, give or make would not reasonably be likely to result in a Material Adverse Effect. All applicable waiting periods in connection with the Acquisition have expired without any action having been taken by any competent authority restraining, preventing or imposing materially adverse conditions upon the Acquisition. (d) This Agreement has been, and each of the Notes to be delivered by it when delivered hereunder will have been, duly executed and delivered by the Company. This Agreement is, and each of its Notes when delivered hereunder will be, the legal, valid and binding obligation of the Company enforceable against the Company in accordance with their respective terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or law). (e) The Consolidated balance sheet of the Company and its Subsidiaries as at December 31, 2003, and the related Consolidated statements of income and cash flows of the Company and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of Deloitte & Touche LLP, independent public accountants, and the Consolidated balance sheet of the Company and its Subsidiaries as at March 31, 2004, and the related Consolidated statements of income and cash flows of the Company and its Subsidiaries for the three months then ended, duly certified by the chief financial officer of the 22 Company, copies of which have been furnished to each Lender, fairly present, subject, in the case of said balance sheet as at March 31, 2004, and said statements of income and cash flows for the three months then ended, to year-end audit adjustments, the Consolidated financial condition of the Company and its Subsidiaries as at such dates and the Consolidated results of the operations of the Company and its Subsidiaries for the periods ended on such dates, all in accordance with GAAP consistently applied. Since December 31, 2003, there has been no Material Adverse Change. (f) The unaudited Consolidated and consolidating pro forma balance sheets of the Company and its Subsidiaries as at December 31, 2003, and the related unaudited Consolidated and consolidating pro forma statements of income and cash flows of the Company and its Subsidiaries for the year then ended, certified by the Chief Financial Officer of the Company, copies of which have been furnished to each Lender, fairly present, to the Chief Financial Officer's best knowledge, the Consolidated and consolidating pro forma financial condition of the Company and its Subsidiaries as at such date and the Consolidated and consolidating pro forma results of operations of the Company and its Subsidiaries for the period ended on such date, in each case giving effect to the Acquisition as of January 1, 2003, all in accordance with GAAP. (g) There is no pending or, to the Company's knowledge, threatened action, suit, investigation, litigation or proceeding, including, without limitation, any Environmental Action, affecting the Company or any of its Subsidiaries 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 or any Note or the consummation of the transactions contemplated hereby, and there has been no adverse change in the status, or financial effect on the Company or any of its Subsidiaries, of the Disclosed Litigation from that described on Schedule 3.01(b) hereto. (h) The Information Memorandum and any other information, exhibit or report that has been or will hereafter be furnished by or on behalf of the Company or any Borrower to the Agent or any Lender in connection with the negotiation and syndication of this Agreement or pursuant to the terms of this Agreement is and will be when furnished, taken as a whole, complete and correct in all material respects and does not and will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances under which such statements were or are made. (i) The Company is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance 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. (j) No Borrower is an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. (k) The Company is, individually and together with its Subsidiaries, Solvent. "Solvent" means, with respect to any Person on a particular date, that on such date (i) 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, (ii) 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, (iii) 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 (iv) 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 23 existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. ARTICLE V COVENANTS OF THE BORROWERS SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain unpaid or any Lender 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 Environmental Laws. (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 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 such Borrower nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings. (c) Maintenance of Insurance. Maintain, 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; provided, however, that such Borrower and its Subsidiaries may self-insure to the same extent as other companies engaged in similar businesses and owning similar properties and to the extent consistent with prudent business practice. (d) Preservation of Corporate Existence, Etc. Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its corporate existence, rights (charter and statutory) and franchises; provided, however, that such Borrower and its Subsidiaries may consummate any merger or consolidation permitted under Section 5.02(b) and provided further that neither such Borrower nor any of its Subsidiaries shall be required to preserve any right or franchise if the Board of Directors of 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 Lenders. (e) Visitation Rights. At any reasonable time and from time to time, upon reasonable notice and during normal business hours, permit the Agent or any of the Lenders or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, such Borrower and any of its Subsidiaries, and to discuss the affairs, finances and accounts of such Borrower and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants. (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 GAAP 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. 24 (h) Reporting Requirements. Furnish to the Lenders: (i) as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Company, the Consolidated balance sheet of the Company and its Subsidiaries as of the end of such quarter and Consolidated statements of income and cash flows of the Company and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by the chief financial officer of the Company as having been prepared in accordance with GAAP and certificates of the chief financial officer of the Company as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03; (ii) as soon as available and in any event within 120 days after the end of each fiscal year of the Company, a copy of the annual report for such year for the Company and its Subsidiaries, containing the Consolidated balance sheet of the Company and its Subsidiaries as of the end of such fiscal year and Consolidated statements of income and cash flows of the Company and its Subsidiaries for such fiscal year, in each case accompanied by an opinion acceptable to the Required Lenders by Deloitte & Touche LLP or other independent public accountants reasonably acceptable to the Required Lenders. There shall also be provided, in reasonable detail, the calculations necessary to demonstrate compliance with Section 5.03; (iii) as soon as possible and in any event within five days after a responsible officer of the Company knows or should have known of the occurrence of each Default continuing on the date of such statement, a statement of the chief financial officer of the Company setting forth details of such Default and the action that the Company has taken and/or proposes to take with respect thereto; (iv) promptly after the sending or filing thereof, copies of all reports that the Company sends to any of its security holders, and copies of all reports and registration statements that the Company or any Subsidiary files with the Securities and Exchange Commission or any national securities exchange; (v) promptly after the commencement thereof, notice of all actions and proceedings before any court, governmental agency or arbitrator affecting the Company or any of its Subsidiaries of the type described in Section 4.01(g); and (vi) such other information respecting the Company or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request. (i) Pari Passu Status. Ensure, and cause each of its Designated Subsidiaries to ensure, that the Debt outstanding under this Agreement and the Notes ranks at least pari passu with all other senior unsecured Debt of the Company or such Designated Subsidiary, as the case may be. (j) Transactions with Affiliates. Conduct, and cause each of its Subsidiaries to conduct, all transactions otherwise permitted under this Agreement with any of their Affiliates on terms that are fair and reasonable and no less favorable to the Company or such Subsidiary than it would obtain in a comparable arm's-length transaction with a Person not an Affiliate. SECTION 5.02. Negative Covenants. So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrowers will not: (a) Liens, Etc. Create or suffer to exist, or permit any of its Subsidiaries to create or suffer to exist, any Lien on or with respect to any of its properties, whether now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, other than: 25 (i) Liens existing on the Effective Date and described on Schedule 5.02(a) hereto, (ii) purchase money Liens upon or in any real property or equipment acquired or held by the Company or any Subsidiary in the ordinary course of business (including any Lien in respect of a capitalized lease of personal property) to secure the purchase price of such property or equipment or to secure Debt incurred solely for the purpose of financing the acquisition or lease of such property or equipment, or Liens existing on such property or equipment at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property) or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount, provided, however, that no such Lien shall extend to or cover any properties of any character other than the real property or equipment being acquired or leased, and no such extension, renewal or replacement shall extend to or cover any properties not theretofore subject to the Lien being extended, renewed or replaced, (iii) Liens asserted by warehousemen, mechanics or materialmen which Liens are being contested in good faith by appropriate proceedings diligently conducted and for which reserves in accordance with GAAP are being maintained on the books of the Company and any mechanic's, carrier's, landlord's or similar common law or statutory lien incurred in the normal course of business which has not been docketed as a judgment, (iv) Liens or levies for taxes, fees, assessments or governmental charges not yet due and payable or being contested in good faith by appropriate proceedings diligently conducted and Liens resulting from or incurred with respect to legal proceedings which are being contested in good faith by appropriate proceedings diligently conducted; provided that reserves in accordance with GAAP are being maintained on the books of the Company with respect to such taxes, fees, assessments, governmental charges and legal proceedings, (v) Liens securing only workers' compensation, unemployment insurance or similar obligations and/or deposits or pledges made in connection with, or to secure payment of, utilities or similar services, leases, workers' compensation, unemployment insurance, old age pensions or other social security obligations, (vi) Encumbrances as set forth in all deeds, title insurance and mortgages existing as of the Effective Date in respect of all real property owned or leased by the Company or any of its Subsidiaries and any other zoning or deed restrictions, public utility easements, minor title irregularities and similar matters having no material adverse effect as a practical matter on the ownership or use of any of the real property in question, (vii) Liens securing or given in lieu of surety, stay, appeal or performance bonds (other than contracts for the payment of indebtedness for borrowed money), or deposits required by law or governmental regulations or by any court order, decree, judgment or rule or as a condition to the transaction of business or the exercise of any right, privilege or license, or Liens arising from a judgment not constituting an Event of Default, (viii) Interest or title of a lessor under a lease, (ix) Liens in favor of the Agent or a Lender, if any, to secure the obligations of the Borrowers under this Agreement, (x) Liens created or assumed in purchasing, constructing or improving any real property or to which any real property is subject when purchased; provided, however, that: (x) the mortgage, security interest or other lien is confined to the property in question, and (y) the indebtedness secured thereby is non-recourse as to the Company and does not exceed the total cost of the purchase, construction or improvement, 26 (xi) Any transfer of a check or other medium of payment for deposit or collection, or any similar transaction in the normal course of business, (xii) Any financing statement perfecting a security interest that would be permissible under this Section 5.02(a), (xiii) Liens on property of a Person existing at the time such Person is merged into or consolidated with the Company or any Subsidiary of the Company or becomes a Subsidiary of the Company; provided that such Liens were not created in contemplation of such merger, consolidation or acquisition and do not extend to any assets other than those of the Person so merged into or consolidated with the Company or such Subsidiary or acquired by the Company or such Subsidiary, (xiv) other Liens securing Debt in an aggregate principal amount not to exceed $5,000,000 at any time outstanding, and (xv) the replacement, extension or renewal of any Lien permitted by clause (i), (ii), (viii), (ix) or (xii) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Debt secured thereby. (b) Mergers, Acquisitions, Etc. Merge with or into or consolidate with any other Person; liquidate, wind up, dissolve or divide; acquire all or substantial all of the properties or assets of any ongoing concern or going line of business; acquire all or substantially all of the capital stock or other equity interests in or of any other Person other than in the ordinary course of business; or agree, become or remain liable (contingently or otherwise) to do any of the foregoing, or permit any of its Subsidiaries to do any of the foregoing, except: (i) the Company may consummate the Acquisition, (ii) the Company or any Subsidiary may acquire all or substantially all of the properties or assets of any other Person, acquire all or substantially all of the capital stock or other equity interests in or of any other Person, or become or remain liable (contingently or otherwise) to do any of the foregoing, provided that the total value of the consideration for all transactions permitted under this clause (ii) shall not exceed $25,000,000 in the aggregate, (iii) a directly or indirectly wholly-owned Subsidiary of the Company (or any Subsidiary of such Subsidiary) may merge with or into or consolidate with or into any other wholly-owned Subsidiary of the Company (or any Subsidiary of such Subsidiary), (iv) the Company may acquire all or substantially all of the properties or assets of any Subsidiary, and (v) a directly or indirectly wholly-owned Subsidiary of the Company (or any Subsidiary of such Subsidiary) may merge with the Company, provided that the Company shall be the surviving corporation, and provided further, in the case of each transaction permitted in clauses (i), (ii) and (iii), that no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom. (c) Debt. Create or suffer to exist, or permit any of its Subsidiaries to create or suffer to exist, any Debt other than: (i) Debt outstanding under this Agreement and the Notes, 27 (ii) Debt owed to the Company or to a direct or indirect wholly-owned Subsidiary of the Company, (iii) Debt existing as of March 31, 2004 and described on Schedule 5.02(c) hereto (the "Existing Debt"), and any Debt extending the maturity of, or refunding or refinancing, in whole or in part, the Existing Debt, provided that the principal amount of such Existing 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, (iv) Debt secured by Liens permitted by Section 5.02(a)(ii) or (xi) aggregating for all of the Company's Subsidiaries not more than $5,000,000 at any one time outstanding, (v) unsecured Debt incurred in the ordinary course of business aggregating for the Company and its Subsidiaries, of which not more than $10,000,000 at any one time outstanding shall be incurred by Subsidiaries of the Company, (vi) secured Debt incurred in the ordinary course of business aggregating for the Company and its Subsidiaries not more than $5,000,000 at any time outstanding, and (vii) endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business. (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, except (i) sales of inventory in the ordinary course of its business, (ii) sales, transfers or other dispositions of obsolete or worn-out tools, equipment or other property (including leasehold interests) no longer used or useful in business and sales of intellectual property determined to be uneconomical, negligible or obsolete, (iii) in a transaction authorized by subsection (b) of this Section, (iv) sales, leases, transfers and other dispositions of assets by (x) the Company to any Subsidiary or (y) by any Subsidiary to the Company or any other Subsidiary and (v) sales of assets for fair value in an aggregate amount not to exceed $50,000,000 in any year, provided that in the case of the sale of any asset in a single transaction or a series of related transactions in an aggregate amount exceeding $20,000,000, the fair value of such asset shall have been determined in good faith by the Board of Directors of the Company, provided that in the case of sales of assets pursuant to this clause (v), the Borrowers shall, on the date of receipt by any Borrower or any of its Subsidiaries of the Net Cash Proceeds from such sale, prepay the Advances pursuant to, and in the amount and order of priority set forth in, Section 2.09(b), as specified therein. (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) Investments by the Company and its Subsidiaries in their Subsidiaries outstanding on the date hereof, Investments in Subsidiaries of the Company as required or is reasonably desirable to comply with thin capitalization rules in jurisdictions outside the United States and additional investments in wholly owned Subsidiaries in an aggregate amount invested from the date hereof not to exceed $10,000,000; (ii) Investments by the Company made as capital contributions to any of its direct or indirect Subsidiaries for the purpose of repaying, prepaying or otherwise retiring Debt of the Target or its direct or indirect Subsidiaries existing at the date of the Acquisition or restructuring Subsidiaries of the Borrower in connection with the Acquisition; 28 (iii) loans and advances to employees in the ordinary course of the business of the Company and its Subsidiaries as presently conducted in an aggregate principal amount not to exceed $2,000,000 at any time outstanding; (iv) Investments in Marketable Securities; (v) Investments made by the Company or its Subsidiaries in joint ventures as required by the applicable joint venture agreement in effect as of the date hereof; (vi) Investments consisting of intercompany Debt permitted under Section 5.02(c)(ii); (vii) any endorsement of a check or other medium of payment for deposit or collection, or any similar transaction in the ordinary course of business; (viii) the Company and its Subsidiaries may acquire and hold receivables and similar items owing to them in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; (ix) the Guaranteed Obligations; (x) intercompany loans and advances permitted by Section 5.02(c)(ii); (xi) the Company and its Subsidiaries may acquire and own Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers and suppliers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business; (xii) Investments by Subsidiaries of the Company organized outside of the United States in the following (or the equivalent thereof in the applicable foreign jurisdiction): (A) time deposits maturing within one year from the date of purchase thereof, including certificates of deposit issued by any bank or trust company organized outside of the United States that has total assets aggregating at least $200,000,000 or the equivalent in a foreign currency, (B) fully collateralized repurchase agreements having a term of not more than 30 days and covering securities described in subsection (A) above entered into with any bank or trust company described in subsection (A) above, or (C) investments in money market funds substantially all of the assets of which are comprised of securities described in (A) and (B) above; (xiii) loans and advances to customers and vendors in the ordinary course of business of the Company and its Subsidiaries as presently conducted in an aggregate principal amount not to exceed $10,000,000 at any time outstanding; and (xiv) other Investments in an aggregate amount invested not to exceed $10,000,000. (f) Payment Restrictions Affecting Subsidiaries. Directly or indirectly, enter into or suffer to exist, or permit any of its Subsidiaries to enter into or suffer to exist, any agreement or arrangement limiting the ability of any of its Subsidiaries to declare or pay dividends or other distributions in respect of its equity interests or repay or prepay any Debt owed to, make loans or advances to, or otherwise transfer assets to or invest in, the Company or any Subsidiary of the Company (whether through a covenant restricting dividends, loans, asset transfers or investments, a financial covenant or otherwise), except (i) any agreement or instrument evidencing Debt existing on the date hereof and (ii) any agreement in effect at the time such Subsidiary becomes a Subsidiary of the Company, so long as such agreement was not entered into solely in contemplation of such Person becoming a Subsidiary of the Company. 29 (g) Accounting Changes. Make or permit, or permit any of its Subsidiaries to make or permit, any change in accounting policies or reporting practices, except as required or permitted by GAAP. (h) Change in Nature of Business. Make, or permit any of its Subsidiaries to make, any material change in the nature of the business of the Company and its Subsidiaries considered as a whole as carried on at the date hereof. SECTION 5.03. Financial Covenants. So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Company will: (a) Debt/EBITDA Ratio. Maintain a ratio of Consolidated Debt to Consolidated EBITDA for the period of twelve months most recently ended of not greater than 5.75 : 1.00. (b) Interest Coverage Ratio. Maintain a ratio of Consolidated EBITDA for the period of four quarters most recently ended to cash interest payable on, and amortization of debt discount in respect of, all Debt (other than Debt of the Target outstanding at the date of the Acquisition) during such period, by the Company and its Subsidiaries of not less than 3.50 : 1.00. 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) Any Borrower shall fail to pay any principal of any Advance when the same becomes due and payable; or any Borrower shall fail to pay any interest on any Advance or make any other payment of fees or other amounts payable under this Agreement or any Note within four Business Days after the same becomes due and payable; or (b) Any representation or warranty made by any Borrower herein or by any Borrower (or any of its corporate officers) in connection with this Agreement shall prove to have been incorrect in any material respect when made; or (c) (i) The Borrowers shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(d), (e) or (h), 5.02 or 5.03, or (ii) the Borrowers shall fail to perform or observe any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if such failure shall remain unremedied for 15 days after written notice thereof shall have been given to the Company by the Agent or any Lender; or (d) The Company or any of its Subsidiaries shall fail to pay any principal of or premium or interest on any Debt that is outstanding in a principal amount of at least $25,000,000 in the aggregate at any one time (but excluding Debt outstanding hereunder) of the Company 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 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 30 (e) The Company or any of its 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 the Company or any of its 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, custodian 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), 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 for any substantial part of its property) shall occur; or the Company or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or (f) Judgments or orders for the payment of money in excess of $25,000,000 in the aggregate shall be rendered against the Company or any of its 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(f) if and for so long as (i) 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 and (ii) 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 (g) (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 the Company (or other securities convertible into such Voting Stock) representing 20% or more of the combined voting power of all Voting Stock of the Company; 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 the Company shall cease for any reason to constitute a majority of the board of directors of the Company; or (h) The Company or any of its ERISA Affiliates shall incur, or, in the reasonable opinion of the Required Lenders, shall be reasonably likely to incur liability in excess of $25,000,000 in the aggregate as a result of one or more of the following: (i) the occurrence of any ERISA Event; (ii) the partial or complete withdrawal of the Company or any of its ERISA Affiliates from a Multiemployer Plan; or (iii) the reorganization or termination of a Multiemployer Plan; 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 obligation of each Lender to make Advances 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 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 Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances shall automatically be terminated and (B) 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. ARTICLE VII 31 GUARANTY SECTION 7.01. Guaranty. The Company hereby absolutely, unconditionally and irrevocably guarantees the punctual payment when due, whether at scheduled maturity or on any date of a required prepayment or by acceleration, demand or otherwise, of all obligations of each other Borrower now or hereafter existing under or in respect of this Agreement and the Notes of such Borrower (including, without limitation, any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing obligations), whether direct or indirect, absolute or contingent, and whether for principal, interest, premiums, fees, indemnities, contract causes of action, costs, expenses or otherwise (such obligations being the "Guaranteed Obligations"), and agrees to pay any and all expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by the Agent or any Lender in enforcing any rights under this Guaranty. Without limiting the generality of the foregoing, the Company's liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by any other Borrower to the Agent or any Lender under or in respect of this Agreement and its Notes but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such other Borrower. Notwithstanding any other provisions of this Agreement, stock of a foreign entity directly held by the Company shall not serve as security for the Guaranteed Obligations, other than stock of any such foreign entity representing no more than 65% of the total combined voting power of all classes of stock of such entity entitled to vote. SECTION 7.02. Guaranty Absolute. The Company guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of this Agreement and the applicable Notes, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent or any Lender with respect thereto. The obligations of the Company under or in respect of this Guaranty are independent of the Guaranteed Obligations or any other obligations of any other Borrower under or in respect of this Agreement and the Notes, and a separate action or actions may be brought and prosecuted against the Company to enforce this Guaranty, irrespective of whether any action is brought against any other Borrower or whether any other Borrower is joined in any such action or actions. The liability of the Company under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and to the extent not prohibited by applicable law, the Company hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following: (a) any lack of validity or enforceability of this Agreement, any Note or any agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other obligations of any other Borrower under or in respect of this Agreement, and Notes, or any other amendment or waiver of or any consent to departure from this Agreement or any Note, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Borrower or any of its Subsidiaries or otherwise; (c) any taking, exchange, release or amendment or waiver of, or consent to departure from, any other guaranty, for all or any of the Guaranteed Obligations; (d) any manner of application of collateral, if any, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any collateral for all or any of the Guaranteed Obligations or any other obligations of any Borrower under this Agreement or the Notes or any other assets of any Borrower or any of its Subsidiaries; (e) any change, restructuring or termination of the corporate structure or existence of any Borrower or any of its Subsidiaries; (f) any failure of the Agent or any Lender to disclose to any Borrower any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Borrower now or hereafter known to the Agent or such Lender (the Company waiving any duty on the part of the Agent and the Lenders to disclose such information); 32 (g) the release or reduction of liability of any other guarantor or surety with respect to the Guaranteed Obligations; or (h) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Agent or any Lender that might otherwise constitute a defense available to, or a discharge of, any Borrower or any other guarantor or surety. This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Agent or any Lender or any other Person upon the insolvency, bankruptcy or reorganization of any other Borrower or otherwise, all as though such payment had not been made. SECTION 7.03. Waivers and Acknowledgments. (a) The Company hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that the Agent or any Lender protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against any Borrower or any other Person or any collateral. (b) The Company hereby unconditionally and irrevocably waives any right to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future. (c) The Company hereby unconditionally and irrevocably waives (i) any defense arising by reason of any claim or defense based upon an election of remedies by the Agent or any Lender that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of the Company or other rights of the Company to proceed against any of the other Borrowers, any other guarantor or any other Person or any collateral and (ii) any defense based on any right of set-off or counterclaim against or in respect of the obligations of the Company hereunder. (d) The Company hereby unconditionally and irrevocably waives any duty on the part of the Agent or any Lender to disclose to the Company any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Borrower or any of its Subsidiaries now or hereafter known by the Agent or such Lender. (e) The Company acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by this Agreement and that the waivers set forth in Section 7.02 and this Section 7.03 are knowingly made in contemplation of such benefits. SECTION 7.04. Subrogation. The Company hereby unconditionally and irrevocably agrees, so long as any Event of Default has occurred and is continuing, not to exercise any rights that it may now have or hereafter acquire against any other Borrower or any other insider guarantor that arise from the existence, payment, performance or enforcement of the Company's obligations under or in respect of this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Agent or any Lender against any Borrower or any other insider guarantor or any collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Borrower or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash and the Commitments shall have expired or been terminated. If any amount shall be paid to the Company in violation of the immediately preceding sentence at any time prior to the later of (a) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty and (b) the Termination Date, such amount shall be received and held in trust for the benefit of the Agent and the Lenders, shall be segregated from other property and funds of the Company and shall forthwith be paid or delivered to the Agent in the same form as so received (with any necessary endorsement or assignment) to be 33 credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of this Agreement, or to be held as collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (i) the Company shall make payment to the Agent or any Lender of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash and (iii) the Termination Date shall have occurred, the Agent and the Lenders will, at the Company's request and expense, execute and deliver to the Company appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to the Company of an interest in the Guaranteed Obligations resulting from such payment made by the Company pursuant to this Guaranty. SECTION 7.05. Subordination. The Company hereby subordinates any and all debts, liabilities and other obligations ------------- owed to the Company by each other Borrower (the "Subordinated Obligations") to the Guaranteed Obligations to the extent and in the manner hereinafter set forth in this Section 7.05: (a) Prohibited Payments, Etc. Except during the continuance of an Event of Default (including the commencement and continuation of any proceeding under any bankruptcy law relating to any other Borrower), the Company may receive regularly scheduled payments from any other Borrower on account of the Subordinated Obligations. After the occurrence and during the continuance of any Event of Default (including the commencement and continuation of any proceeding under any bankruptcy law relating to any other Borrower), however, unless the Required Lenders otherwise agree, the Company shall not demand, accept or take any action to collect any payment on account of the Subordinated Obligations. (b) Prior Payment of Guaranteed Obligations. In any proceeding under any bankruptcy law relating to any other Borrower, the Company agrees that the Agent and the Lenders shall be entitled to receive payment in full in cash of all Guaranteed Obligations (including all interest and expenses accruing after the commencement of a proceeding under any bankruptcy law, whether or not constituting an allowed claim in such proceeding ("Post Petition Interest")) before the Company receives payment of any Subordinated Obligations. (c) Turn-Over. After the occurrence and during the continuance of any Event of Default (including the commencement and continuation of any proceeding under any bankruptcy law relating to any other Borrower), the Company shall, if the Agent so requests, collect, enforce and receive payments on account of the Subordinated Obligations as trustee for the Agent and the Lenders and deliver such payments to the Agent on account of the Guaranteed Obligations (including all Post Petition Interest), together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of the Company under the other provisions of this Guaranty. (d) Agent Authorization. After the occurrence and during the continuance of any Event of Default (including the commencement and continuation of any proceeding under any bankruptcy law relating to any other Borrower), the Agent is authorized and empowered (but without any obligation to so do), in its discretion, (i) in the name of the Company, to collect and enforce, and to submit claims in respect of, Subordinated Obligations and to apply any amounts received thereon to the Guaranteed Obligations (including any and all Post Petition Interest), and (ii) to require the Company (A) to collect and enforce, and to submit claims in respect of, Subordinated Obligations and (B) to pay any amounts received on such obligations to the Agent for application to the Guaranteed Obligations (including any and all Post Petition Interest). SECTION 7.06. Continuing Guaranty; Assignments. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the later of (i) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty and (ii) the Termination Date, (b) be binding upon the Company, its successors and assigns and (c) inure to the benefit of and be enforceable by the Agent and the Lenders and their successors, transferees and assigns. Without limiting the generality of clause (c) of the immediately preceding sentence, the Agent or any Lender may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Commitments, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Agent or such Lender herein or otherwise, in each case as and to the 34 extent provided in Section 9.07. The Company shall not have the right to assign its rights under this Article VII or any interest in this Article VII without the prior written consent of the Agent and the Lenders. ARTICLE VIII THE AGENT SECTION 8.01. Authorization and Action. Each Lender 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 as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Notes), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lenders 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 prompt notice of each notice given to it by any Borrower pursuant to the terms of this Agreement. SECTION 8.02. 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 this Agreement, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (i) 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 9.07; (ii) may consult with legal counsel (including counsel for the Borrowers), 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; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance, observance or satisfaction of any of the terms, covenants or conditions of this Agreement on the part of any Borrower or the existence at any time of any Default or to inspect the property (including the books and records) of any Borrower; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 8.03. Citicorp and Affiliates. With respect to its Commitment, the Advances made by it and the Note issued to it, Citicorp shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent; and the term "Lender" or "Lenders" 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, the Company, any of its Subsidiaries and any Person who may do business with or own securities of the Company or any such Subsidiary, all as if Citicorp were not the Agent and without any duty to account therefor to the Lenders. The Agent shall have no duty to disclose information obtained or received by it or any of its affiliates relating to the Company or its Subsidiaries to the extent such information was obtained or received in any capacity other than as Agent. SECTION 8.04. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender 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 also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. 35 SECTION 8.05. Indemnification. The Lenders agree to indemnify the Agent (to the extent not reimbursed by the Borrowers), ratably according to the respective principal amounts of the Advances then owed to each of them (or if no Advances are at the time outstanding, ratably according to the respective amounts of their Commitments), from and against 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 this Agreement or any action taken or omitted by the Agent under this Agreement (collectively, the "Indemnified Costs"), provided that no Lender shall be liable for any portion of the Indemnified Costs resulting from the Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursed for such expenses by the Borrowers. In the case of any investigation, litigation or proceeding giving rise to any Indemnified Costs, this Section 8.05 applies whether any such investigation, litigation or proceeding is brought by the Agent, any Lender or a third party. SECTION 8.06. Successor Agent. The Agent may resign at any time by giving written notice thereof to the Lenders and the Company and may be removed 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 with the consent of the Company, which consent shall not be unreasonably withheld and shall not be required if any Event of Default has occurred and is continuing. 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 Lenders, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon 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 this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article VIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. SECTION 8.07. Sub-Agent. The Sub-Agent has been designated under this Agreement to carry out duties of the Agent. The Sub-Agent shall be subject to each of the obligations in this Agreement to be performed by the Sub-Agent, and each of the Borrowers and the Lenders agrees that the Sub-Agent shall be entitled to exercise each of the rights and shall be entitled to each of the benefits of the Agent under this Agreement as relate to the performance of its obligations hereunder. SECTION 8.08. Other Agents. Each Lender hereby acknowledges that neither the documentation agent nor any other Lender designated as any "Agent" on the signature pages hereof (other than the Agent) has any liability hereunder other than in its capacity as a Lender. ARTICLE IX MISCELLANEOUS SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the Notes, 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 no amendment, waiver or consent shall, unless in writing and signed by all the Lenders, do any of the following: (a) waive any of the conditions specified in Section 3.01, (b) increase the Commitments of the Lenders, (c) reduce the principal of, or interest on, the Advances or any fees or other amounts payable hereunder, (d) postpone any date fixed for any payment of principal of, or interest on, the Advances or any fees or other amounts payable hereunder, (e) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Advances, or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder, (f) reduce, subordinate or limit the obligations of the Company under Section 7.01 or (g) amend this Section 9.01; and provided further that 36 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 or any Note. SECTION 9.02. Notices, Etc. (a) All notices and other communications provided for hereunder shall be either (a) in writing (including telecopier, telegraphic or telex communication) and mailed, telecopied, telegraphed, telexed or delivered or (y) as and to the extent set forth in Section 9.02(c) and in the proviso to this Section 9.02(a), if to any Borrower, at the address of the Company at 29400 Lakeland Blvd., Wickliffe, Ohio 44092-2298, Attention: Treasurer (with a copy to the Company's legal division at the same address); if to any Initial Lender, at its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender, at its Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender; and if to the Agent, at its address at Two Penns Way, New Castle, Delaware 19720, Attention: Bank Loan Syndications Department; or, as to any Borrower 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, provided that materials required to be delivered pursuant to Section 5.01(h)(i), (ii) or (iv) shall be delivered to the Agent as specified in Section 9.02(c). All such notices and communications shall, when mailed, telecopied, telegraphed or e-mailed, be effective when deposited in the mails, telecopied, delivered to the telegraph company or confirmed by e-mail, respectively, except that notices and communications to the Agent pursuant to Article II, III or VIII 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. (b) Notwithstanding anything to the contrary contained in this Agreement or any Note, (i) any notice to the Borrowers or to any one of them required under this Agreement or any such Note that is delivered to the Company shall constitute effective notice to the Borrowers or to any such Borrower, including the Company and (ii) any Notice of Borrowing or any notice of Conversion delivered pursuant to Section 2.07 may be delivered by any Borrower or by the Company, on behalf of any other Borrower. Each Designated Subsidiary hereby irrevocably appoints the Company as its authorized agent to receive and deliver notices in accordance with this Section 9.02, and hereby irrevocably agrees that (A) in the case of clause (i) of the immediately preceding sentence, the failure of the Company to give any notice referred to therein to any such Designated Subsidiary to which such notice applies shall not impair or affect the validity of such notice with respect thereto and (B) in the case of clause (ii) of the immediately preceding sentence, the delivery of any such notice by the Company, on behalf of any other Borrower, shall be binding on such other Borrower to the same extent as if such notice had been executed and delivered directly by such Borrower. (c) So long as Citibank or any of its Affiliates is the Agent, materials required to be delivered pursuant to Section 5.01(h)(i), (ii) and (iv) shall be delivered to the Agent in an electronic medium in a format reasonably acceptable to the Agent and the Lenders by e-mail at oploanswebadmin@citigroup.com. The Company agrees that the Agent may make such materials, as well as any other written information, documents, instruments and other material relating to the Company, any of its Subsidiaries or any other materials or matters relating to this Agreement, the Notes or any of the transactions contemplated hereby (collectively, the "Communications") available to the Lenders by posting such notices on Intralinks or a substantially similar electronic system (the "Platform"). The Company acknowledges that (i) the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution, (ii) the Platform is provided "as is" and "as available" and (iii) neither the Agent nor any of its Affiliates warrants the accuracy, adequacy or completeness of the Communications or the Platform and each expressly disclaims liability for errors or omissions in the Communications or the Platform. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by the Agent or any of its Affiliates in connection with the Platform. (d) Each Lender agrees that notice to it (as provided in the next sentence) (a "Notice") specifying that any Communications have been posted to the Platform shall constitute effective delivery of such information, documents or other materials to such Lender for purposes of this Agreement; provided that if requested by any Lender the Agent shall deliver a copy of the Communications to such Lender by email or telecopier. Each Lender agrees (i) to notify the Agent in writing of such Lender's e-mail address to which a Notice may be sent by 37 electronic transmission (including by electronic communication) on or before the date such Lender becomes a party to this Agreement (and from time to time thereafter to ensure that the Agent has on record an effective e-mail address for such Lender) and (ii) that any Notice may be sent to such e-mail address. SECTION 9.03. No Waiver; Remedies. No failure on the part of any Lender 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 9.04. Costs and Expenses. (a) The Borrowers agree to pay on demand all reasonable, out-of-pocket costs and expenses of only the Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement, the Notes and the other documents to be delivered hereunder, including, without limitation, (A) all due diligence, syndication (including printing, distribution and bank meetings), transportation, computer, duplication, appraisal, consultant, and audit expenses and (B) the reasonable fees and expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities under this Agreement. The Borrowers further agree to pay on demand all costs and expenses of the Agent and the Lenders, if any (including, without limitation, reasonable counsel fees and expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, the Notes and the other documents to be delivered hereunder, including, without limitation, reasonable fees and expenses of counsel for the Agent and each Lender in connection with the enforcement of rights under this Section 9.04(a). (b) The Borrowers agree to indemnify and hold harmless the Agent and each Lender 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) incurred by or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) the Notes, this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances or (ii) the actual or alleged presence of Hazardous Materials on any property of the Company or any of its Subsidiaries or any Environmental Action relating in any way to the Company or any of its Subsidiaries, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by any Borrower, its directors, equityholders or creditors or an Indemnified Party or any other Person, whether or not any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrowers also agree not to assert any claim for special, indirect, consequential or punitive damages against the Agent, any Lender, any of their Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, arising out of or otherwise relating to the Notes, this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances. (c) If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made by any Borrower to or for the account of a Lender (i) other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.07, 2.09 or 2.11, acceleration of the maturity of the Notes pursuant to Section 6.01 or for any other reason, or by an Eligible Assignee to a Lender 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 9.07 as a result of a demand by the Company pursuant to Section 9.07(a) or (ii) as a result of a payment or Conversion pursuant to Section 2.07, 2.09 or 2.11, the applicable Borrower shall, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. 38 (d) Without prejudice to the survival of any other agreement of any Borrower hereunder, the agreements and obligations of the Borrowers contained in Sections 2.10, 2.13 and 9.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Notes. SECTION 9.05. Right of Set-off. Upon (i) the occurrence and during the continuance of any Event of Default and (ii) 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 and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or such Affiliate to or for the credit or the account of any Borrower against any and all of the obligations of the Borrowers now or hereafter existing under this Agreement and the Note held by such Lender, whether or not such Lender shall have made any demand under this Agreement or such Note and although such obligations may be unmatured. Each Lender agrees promptly to notify the applicable Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender and its Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender and its Affiliates may have. SECTION 9.06. Binding Effect. This Agreement shall become effective (other than Section 2.01, which shall only become effective upon satisfaction of the conditions precedent set forth in Section 3.01) when it shall have been executed by the Company and the Agent and when the Agent shall have been notified by each Initial Lender that such Initial Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Company, the Agent and each Lender 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 Lenders. SECTION 9.07. Assignments and Participations. (a) Each Lender may and, if demanded by the Company (following a demand by such Lender pursuant to Section 2.10 or 2.13) upon at least five Business Days' notice to such Lender and the Agent, will assign to one or more Persons all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Advances owing to it and the Note or Notes held by it); provided, however, that (i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement, (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 $5,000,000 or an integral multiple of $1,000,000 in excess thereof, (iii) each such assignment shall be to an Eligible Assignee, (iv) each such assignment made as a result of a demand by the Company pursuant to this Section 9.07(a) shall be arranged by the Company 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 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, (v) no Lender shall be obligated to make any such assignment as a result of a demand by the Company pursuant to this Section 9.07(a) unless and until such Lender shall have received one or more payments from either the 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, and (vi) 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 subject to such assignment and a processing and recordation fee of $3,500 payable by the parties to each such assignment, provided, however, that in the case of each assignment made as a result of a demand by the Company, such recordation fee shall be payable by the Company except that no such recordation fee shall be payable in the case of an assignment made at the request of the Company to an Eligible Assignee that is an existing Lender, and (vii) any Lender may, without the approval of the Company and the Agent, assign all or a portion of its rights to any of its Affiliates. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned 39 by it pursuant to such Assignment and Acceptance, relinquish its rights (other than its rights under Section 2.10, 2.13 and 9.04 to the extent any claim thereunder relates to an event arising prior such assignment) 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 rights and obligations under this Agreement, such Lender shall cease to be a party hereto). (b) By executing and delivering an Assignment and Acceptance, the Lender 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 makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower or the performance or observance by any Borrower of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (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 or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (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 this Agreement as are delegated to the Agent by the terms hereof, 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 that by the terms of this Agreement are required to be performed by it as a Lender. (c) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with any Note or Notes subject to such assignment, the Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Company. (d) The Agent shall maintain at its address referred to in Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Advances owing to, each Lender 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 Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Company or any Lender at any reasonable time and from time to time upon reasonable prior notice. (e) Each Lender may sell participations to one or more banks or other entities (other than the Company 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 Commitment, the Advances owing to it and any Note or Notes held by it); provided, however, that (i) such Lender's obligations under this Agreement (including, without limitation, its Commitment to the Borrowers hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Note for all purposes of this Agreement, (iv) the Borrowers, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of this Agreement or any Note, or any consent to any departure by any Borrower therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation. 40 (f) Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.07, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Company furnished to such Lender by or on behalf of the Company; provided 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 relating to the Company received by it from such Lender. (g) Notwithstanding any other provision set forth in this Agreement, any Lender 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. (h) Designation. (i) Notwithstanding anything to the contrary contained herein, any Lender (a "Designating Lender") may grant to one or more special purpose funding vehicles (each, an "SPV"), identified as such in writing from time to time by the Designating Lender to the Agent and the Company, the option to provide to the Borrowers all or any part of any Advance that such Designating Lender would otherwise be obligated to make to the Borrowers pursuant to this Agreement; provided that (A) nothing herein shall constitute a commitment by any SPV to make any Advance, (B) if an SPV fails to provide all or any part of such Advance, the Designating Lender shall be obligated to make such Advance pursuant to the terms hereof and (C) the Designating Lender shall, at all times, remain liable for any indemnity or other payment obligation with respect to its Commitment hereunder. The making of a Advance by an SPV hereunder shall utilize the Commitment of the Designating Lender to the same extent, and as if such Advance were made by such Designating Lender. (ii) As to any Advances or portion thereof made by it, each SPV shall have all the rights that the Designating Lender making such Advances or portion thereof would have had under this Agreement; provided, however, that each SPV shall have granted to its Designating Lender an irrevocable power of attorney, to deliver and receive all communications and notices under this Agreement and to exercise on such SPV's behalf, all of such SPV's voting rights under this Agreement. No additional Notes shall be required to evidence the Advances or portion thereof made by an SPV; and the related Designating Lender shall be deemed to hold its Note, if any, as agent for such SPV to the extent of the Advances or portion thereof funded by such SPV. In addition, any payments for the account of any SPV shall be paid to its Designating Lender as agent for such SPV. (iii) Each party hereto hereby agrees that no SPV shall be liable for any indemnity or payment under this Agreement for which a Lender would otherwise be liable. In furtherance of the foregoing, each party hereto hereby agrees (which agreements shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPV, it will not institute against, or join any other person in instituting against, such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. (iv) In addition, notwithstanding anything to the contrary contained in this Section 9.07(h) or otherwise in this Agreement, any SPV may (A) at any time and without paying any processing fee therefor, assign or sell a participation in all or a portion of its interest in any Advances to the Designating Lender or to any financial institutions providing liquidity and/or credit support to or for the account of such SPV to support the funding or maintenance of Advances and (B) disclose on a confidential basis any non-public information relating to its Advances to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancements to such SPV. This Section 9.07(h) may not be amended without the written consent of any Designating Lender affected thereby. SECTION 9.08. Confidentiality. Neither the Agent nor any Lender shall disclose any Confidential Information to any other Person without the written consent of the Company, other than (a) to the Agent's or such Lender's Affiliates and their officers, directors, employees, agents and advisors and, as contemplated by Section 9.07(f), 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 and (c) as requested or required by any state, federal or foreign authority or examiner regulating banks or banking. 41 SECTION 9.09. Governing Law. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York. SECTION 9.10. 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 9.11. 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 the Notes, 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 Designated Subsidiary hereby agrees that service of process in any such action or proceeding brought in the any such New York State court or in such federal court may be made upon the Company at its address set forth in Section 9.02 and each such Borrower hereby irrevocably appoints the Company its authorized agent to accept such service of process, and agrees that the failure of the Company 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. The Company 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 the Company at its address specified pursuant to Section 9.02. 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 the Notes 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 the Notes 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 9.12. Designated Subsidiaries. (a) Designation. The Company may at any time and from time to time by delivery to the Agent of a Designation Letter, duly executed by the Company and a wholly owned Subsidiary organized within the United States and in substantially the form of Exhibit E hereto, designate such Subsidiary as a "Designated Subsidiary" for all purposes of this Agreement, and, upon fulfillment of the applicable conditions set forth in Section 3.02 and after such Designation Letter is accepted by the Agent, such Subsidiary shall thereupon become a Designated Subsidiary for all purposes of this Agreement and, as such, shall have all of the rights and obligations of a Borrower hereunder. The Agent shall promptly notify each Lender of each such designation by the Company and the identity of each such Designated Subsidiary. (b) Termination. Upon the payment and performance in full of all of the indebtedness, liabilities and obligations of any Designated Subsidiary under this Agreement and the Notes issued by it, then, so long as at such time such Designated Subsidiary has not submitted a Notice of Borrowing, such Designated Subsidiary's status as a Borrower and as a Designated Subsidiary shall terminate upon notice to such effect from the Agent to the Lenders (which notice the Agent shall promptly deliver to the Lenders following its receipt of such a request from the Company). Thereafter, the Lenders shall be under no further obligation to make any Advances to such Designated Subsidiary. [The remainder of this page is intentionally left blank.] 42 SECTION 9.13. Waiver of Jury Trial. Each of the Borrowers, the Agent and the Lenders hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the Notes or the actions of the Agent or any Lender 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. THE LUBRIZOL CORPORATION By_____________________________ Title: By_____________________________ Title: CITICORP NORTH AMERICA, INC., as Agent By_____________________________ Title: Initial Lenders Commitment $1,100,000,000 CITICORP NORTH AMERICA, INC. By_____________________________ Title: $435,000,000 KeyBank National Association By_______________________ Title: $435,000,000 ABN AMRO BANK N.V. By_______________________ Title: $250,000,000 WACHOVIA CAPITAL INVESTMENTS, INC. By_______________________ Title: $115,000,000 THE BANK OF TOKYO-MITSUBISHI, LTD., CHICAGO BRANCH By_______________________ Title: $115,000,000 PNC BANK, NATIONAL ASSOCIATION By_______________________ Title: $2,450,000,000 Total of the Commitments EX-99.1 6 l08074aexv99w1.txt EX-99.1 PRESS RELEASE Exhibit 99.1 THE LUBRIZOL CORPORATION 29400 Lakeland Boulevard, Wickliffe, Ohio 44092-2298 News Release FOR RELEASE: Immediately FROM: FINANCIAL/INVESTOR CONTACT MEDIA CONTACT Joanne Wanstreet James S. Baldwin 440/347-1252 440/347-1838 WEB SITE: HTTP://WWW.LUBRIZOL.COM LUBRIZOL TO COMPLETE ACQUISITION OF NOVEON TODAY; CEO JAMES HAMBRICK ANNOUNCES ORGANIZATIONAL CHANGES o $1.84 billion acquisition to close as planned o New Lubrizol organizational structure and management team announced o Sales momentum continuing in second quarter o Price increases address rising raw material costs CLEVELAND, Ohio, June 3, 2004 - The Lubrizol Corporation (NYSE: LZ) announced that it will complete its acquisition of Noveon International, Inc. today in a transaction valued at $1.84 billion. The company expects to file a certificate of merger in Delaware by the close of business today. Both Lubrizol and Noveon are global producers and marketers of high-performance specialty chemicals, and both are headquartered near Cleveland, Ohio. Their combined pro forma revenues were $3.2 billion in 2003 and $900 million in the first quarter, 2004. With the addition of Noveon, Lubrizol's product lines include additives for transportation and industrial lubricants; additives and specialty resins for coatings; ingredients for personal care products, food and beverages and compounds used in the manufacture of specialty plastics. Noveon significantly expands Lubrizol's products and technologies for the global coatings and personal care markets. In addition to completing syndication of bridge financing for the transaction, the company filed a shelf registration on May 20 with the U.S. Securities and Exchange Commission to sell debt securities and common equity to replace the bridge facility. The refinancing is anticipated to occur by the end of the third quarter. James L. Hambrick, President and Chief Executive Officer, also announced a redesigned organizational structure consisting of two operating segments: Lubrizol Additives and Noveon. Mr. Hambrick said, "The new structure has been designed to promote accountability, encourage innovation and focus on commercial results. The management team is in position and we are planning to move quickly to begin to capture synergies for the combined organization." - more - Stephen F. Kirk, 54, has been named president of Lubrizol Additives. As vice president for Lubrizol's Fluid Technologies for Transportation division, Mr. Kirk led the company's commercial activities for lubricant and fuel additives. In the new Lubrizol Additives organization, Kirk's additional responsibilities include all technical, manufacturing and other supply chain activities for his business portfolio. His business unit now includes additives for engine oils, driveline fluids, industrial fluids, fuels, emulsified products and advanced fluid systems. Commenting on the new organization, Steve Kirk said, "The new business unit structure will allow tighter integration of our global additives business and will further enhance our responsiveness to our customers. Our new management team is excited about our ability to focus and dedicate our realigned capabilities more fully to the lubricants and fuels business." Noveon will become a wholly-owned subsidiary of Lubrizol. Donald W. Bogus, who led Lubrizol's Fluid Technologies for Industry (FTI) division, was named president of the Noveon segment on April 26. Along with the acquisition, Mr. Bogus has responsibility for the complementary FTI businesses that are being assimilated into Noveon. These include additives and specialty resins for coatings and inks, ingredients for personal care products, additives for foam control and other process chemicals. All the Noveon general managers are continuing to lead their respective business units: William B. Sedlacek - Personal Care and Pharmaceuticals; Cornelis Kees Verhaar - Performance Coatings; Andrew L. Auvil - TempRite Products; Julian M. Steinberg - Estane TPU; Thomas M. Holleran - Food, Beverage and Polymer Additives and Jimmy J. M. Chen - Asia Pacific and Static Control. Don Bogus commented, "The continuity of the Noveon management team is enabling a seamless integration for our customers and employees. We are looking forward to contributing to the future of the new Lubrizol." The new organization includes an Information Systems and Business Processes function that was created to manage key processes extending across the business units. At its upcoming meeting, the board of directors is expected to elect Patrick H. Saunier, 48, as vice president to lead this function. Mr. Saunier joined Lubrizol's manufacturing facility in Rouen, France in 1981. He has held a variety of positions in operations, marketing and information technology based in France, the U.K. and the U.S. In the late 1990's he led the implementation of Lubrizol's enterprise resource planning system for the U.S. and Europe. Since 1999, he has led the European Shared Services organization. Mr. Saunier received his university education in Toulouse, France. His chemical engineering degree is from Institut National des Sciences Appliquees and his business management degree is from Institut d'Administration des Entreprises. Other Noveon corporate functions are being integrated into Lubrizol's Finance and Planning, Legal, Human Resources and Communications staffs. Commenting on business conditions in the quarter, James Hambrick said, "The organizational redesign and the acquisition integration are occurring at a time of continuing momentum in our industrial and consumer businesses. In our transportation business, shipments of lubricant additives are meeting expectations. On the other hand, the high cost of petrochemical raw materials is a serious concern. In response, the additives business recently announced a new price increase, effective June 14 for shipments from North and South America and for European shipments billed in U.S. dollar currency. Noveon is also in the process of implementing price increases to address rising raw material costs." - more - Mr. Hambrick concluded, "With the Noveon acquisition, Lubrizol is taking a critical strategic step forward, and we are committed to running the new enterprise and supporting our expanding customer base with a motivated, globally leveraged organization." ABOUT LUBRIZOL The Lubrizol Corporation (NYSE: LZ) is a global provider of specialty chemicals and materials for a wide variety of markets and end-use applications, such as lubricant additives for engine oils, other transportation-related fluids and industrial lubricants, as well as fuel additives for gasoline and diesel fuel. In addition, Lubrizol makes ingredients and additives for personal care products and pharmaceuticals; specialty materials, including polymer additives and plastics technology; performance coatings in the form of specialty resins and additives; and additives for the food & beverage industry. Lubrizol's industry-leading positions in additives, ingredients and compounds enhance the quality, performance and value of customers' products, while reducing their environmental impact. Headquartered in Wickliffe, OH, The Lubrizol Corporation owns and operates manufacturing facilities in 22 countries, as well as sales and technical offices around the world. Founded in 1928, Lubrizol has more than 7,800 employees worldwide. In June 2004 Lubrizol acquired Noveon International, Inc. With Noveon, Lubrizol generated pro forma revenues of $3.2 billion in 2003. For more information, visit www.lubrizol.com or www.noveoninc.com. # # # This press release contains forward-looking statements within the meaning of the federal securities laws. As a general matter, forward-looking statements relate to anticipated trends and expectations rather than historical matters. Forward-looking statements are subject to uncertainties and factors relating to the company's operations and business environment that are difficult to predict and may be beyond the control of the company. Such uncertainties and factors may cause actual results to differ materially from those expressed or implied by forward-looking statements. Uncertainties and factors that could affect the future performance of the company and cause results to differ from the forward-looking statements in this press release are contained in the company's Registration Statement on Form S-3, filed on May 20, 2004, which is available on the company's website at www.lubrizol.com and upon request. -----END PRIVACY-ENHANCED MESSAGE-----