-----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, KKr8GxR6YdXY/GozrLvAGYYhsLYjSPf+1Ls2KdsetmA8bOUL3506QajzvmfZLCby 2/WE0bON1ndEqj1gt//CFQ== /in/edgar/work/0000945436-00-000012/0000945436-00-000012.txt : 20001109 0000945436-00-000012.hdr.sgml : 20001109 ACCESSION NUMBER: 0000945436-00-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEMC ELECTRONIC MATERIALS INC CENTRAL INDEX KEY: 0000945436 STANDARD INDUSTRIAL CLASSIFICATION: [3674 ] IRS NUMBER: 561505767 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13828 FILM NUMBER: 755594 BUSINESS ADDRESS: STREET 1: 501 PEARL DR CITY: ST PETERS STATE: MO ZIP: 63376 BUSINESS PHONE: 636/474-5500 MAIL ADDRESS: STREET 1: 501 PEARL DRIVE STREET 2: P. O. BOX 8 CITY: ST. PETERS STATE: M0 ZIP: 63376 10-Q 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 __________________________ or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------------------ ------------------------ Commission File Number: 1-13828 -------------------------------------------------- MEMC ELECTRONIC MATERIALS, INC. ------------------------------- (Exact name of registrant as specified in its charter) Delaware 56-1505767 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I. R. S. Employer Identification No.) incorporation or organization) 501 Pearl Drive (City of O'Fallon) St. Peters, Missouri 63376 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (636) 474-5000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. |X| Yes |_| No The number of shares of the registrant's common stock outstanding at October 20, 2000 was 69,612,900. PART I -- FINANCIAL INFORMATION Item 1. Financial Statements. MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; Dollars in thousands, except share data) Three Months Ended Nine Months Ended September 30, September 30, 2000 1999 2000 1999 ---------- ---------- ---------- ---------- Net sales $222,800 $182,781 $616,405 $510,624 Cost of goods sold 185,611 177,859 539,324 521,484 ---------- ---------- ---------- ---------- Gross margin 37,189 4,922 77,081 (10,860) Operating expenses: Marketing and administration 17,421 15,962 50,106 50,134 Research and development 16,788 20,723 54,416 61,290 ---------- ---------- ---------- ---------- Operating income (loss) 2,980 (31,763) (27,441) (122,284) ---------- ---------- ---------- ---------- Nonoperating (income) expense: Interest expense 19,086 15,899 54,900 49,054 Interest income (420) (450) (2,112) (1,183) Royalty income (3,539) (1,500) (7,738) (4,183) Other, net 323 1,337 582 1,483 ---------- ---------- ---------- ---------- Total nonoperating expense 15,450 15,286 45,632 45,171 ---------- ---------- ---------- ---------- Loss before income taxes, equity in income (loss) of joint ventures and minority interests (12,470) (47,049) (73,073) (167,455) Income taxes (3,367) (14,585) (19,730) (51,911) ---------- ---------- ---------- ---------- Loss before equity in income (loss) of joint ventures and minority interests (9,103) (32,464) (53,343) (115,544) Equity in income (loss) of joint ventures 6,747 (2,642) 7,463 (11,122) Minority interests 75 1,389 750 3,383 ---------- ---------- ---------- ---------- Net loss $ (2,281) $ (33,717) $ (45,130) $(123,283) ========== ========== ========== ========== Basic loss per share $ (.03) $ (.48) $ (.65) $ (2.06) ========== ========== ========== ========== Diluted loss per share $ (.03) $ (.48) $ (.65) $ (2.06) ========== ========== ========== ========== Weighted average shares used in computing basic loss per share 69,611,552 69,521,389 69,591,476 59,761,618 ========== ========== ========== ========== Weighted average shares used in computing diluted loss per share 69,611,552 69,521,389 69,591,476 59,761,618 ========== ========== ========== ========== See accompanying notes to consolidated financial statements. MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data) September 30, December 31, 2000 1999 (Unaudited) ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 99,059 $ 28,571 Accounts receivable, less allowance for doubtful accounts $2,905 and $2,409 in 2000 and 1999, respectively 151,065 111,559 Income taxes receivable - 9,237 Inventories 124,829 98,419 Deferred tax assets, net 14,883 12,905 Prepaid and other current assets 26,804 15,229 ----------- ----------- Total current assets 416,640 275,920 Property, plant and equipment, net of accumulated depreciation of $1,043,475 and $703,252 in 2000 and 1999, respectively 1,133,324 1,090,358 Investments in joint ventures 44,393 97,254 Excess of cost over net assets acquired, net of accumulated amortization of $6,960 and $6,466 in 2000 and 1999, respectively 46,064 47,058 Deferred tax asset, net 213,814 183,902 Other assets 74,844 30,089 ----------- ----------- Total assets $ 1,929,079 $ 1,724,581 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings and current portion of long-term debt $ 414,574 $ 22,163 Accounts payable 72,402 85,704 Accrued liabilities 48,810 29,795 Customer deposits 21,302 16,556 Provision for restructuring costs 9,566 12,839 Income taxes payable 10,142 - Accrued wages and salaries 30,508 22,557 ----------- ----------- Total current liabilities 607,304 189,614 Long-term debt, less current portion 695,695 869,759 Pension and similar liabilities 102,943 95,731 Customer deposits 39,165 48,456 Other liabilities 42,758 44,893 ----------- ----------- Total liabilities 1,487,865 1,248,453 Minority interests 72,422 43,337 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value, 50,000,000 shares authorized, none issued or outstanding at 2000 or 1999 - - Common stock, $.01 par value, 200,000,000 shares authorized, 70,542,105 and 70,463,505 issued in 2000 and 1999, respectively 705 705 Additional paid-in capital 771,432 770,476 Accumulated deficit (344,447) (299,317) Accumulated other comprehensive loss (41,878) (22,053) Treasury stock, at cost: 929,205 in 2000 and 1999 (17,020) (17,020) ----------- ----------- Total stockholders' equity 368,792 432,791 ----------- ----------- Total liabilities and stockholders' equity $ 1,929,079 $ 1,724,581 =========== =========== See accompanying notes to consolidated financial statements. MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited; Dollars in thousands) Nine Months Ended September 30, 2000 1999 ----------- ----------- Cash flows from operating activities: Net loss $ (45,130) $ (123,283) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 121,754 117,705 Minority interests (750) (3,383) Equity in (income) loss of joint ventures (7,463) 11,122 (Gain) loss on sale of property, plant and equipment (1,288) 1,380 Working capital and other (71,474) (95,256) ----------- ----------- Net cash used in operating activities (4,351) (91,715) Cash flows from investing activities: Capital expenditures (32,589) (35,439) Proceeds from sale of property, plant and equipment 1,427 44 Equity infusions in joint ventures - (12,052) Purchase of business, net of cash acquired 10,660 - Notes receivable from affiliates - 9,664 ----------- ----------- Net cash used in investing activities (20,502) (37,783) Cash flows from financing activities: Net short-term borrowings 66,425 (6,708) Proceeds from issuance of long-term debt 38,096 216,642 Principal payments on long-term debt (8,515) (272,802) Proceeds from issuance of common stock 958 197,271 ----------- ----------- Net cash provided by financing activities 96,964 134,403 Effect of exchange rates on cash and cash equivalents (1,623) (417) ----------- ----------- Net increase in cash 70,488 4,488 Cash and cash equivalents at beginning of period 28,571 16,168 ----------- ----------- Cash and cash equivalents at end of period $ 99,059 $ 20,656 =========== =========== See accompanying notes to consolidated financial statements. MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except share data) (1) Basis of Presentation The accompanying unaudited consolidated financial statements of MEMC Electronic Materials, Inc. and Subsidiaries (the Company or MEMC), in the opinion of management, include all adjustments (consisting of normal, recurring items) necessary to present fairly the Company's financial position and results of operations and cash flows for the periods presented. The consolidated financial statements are presented in accordance with the requirements of Regulation S-X and consequently do not include all disclosures required by generally accepted accounting principles. This report on Form 10-Q, including unaudited consolidated financial statements, should be read in conjunction with the Company's annual report to shareholders for the fiscal year ended December 31, 1999, which contains the Company's audited financial statements for such year and the related management's discussion and analysis of financial condition and results of operations. Operating results for the nine-month period ended September 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. (2) Earnings (loss) per share The numerator for basic and diluted loss per share calculations is net loss for all periods presented. The denominator for the basic and diluted loss per share calculations for the three and nine-month periods ended September 30, 2000 and 1999 is the same within each period (the weighted average shares outstanding for each respective period). The Company had 2,689,784 options outstanding at September 30, 2000 which were not included in the computation of diluted loss per share due to the net loss incurred during the three and nine-month periods ended September 30, 2000. (3) Inventories Inventories consist of the following: September 30, December 31, 2000 1999 ---------- ---------- Raw materials and supplies $ 55,033 $ 49,537 Goods in process 31,596 23,493 Finished goods 38,200 25,389 ---------- ---------- $ 124,829 $ 98,419 ========== ========== (4) Restructuring Costs During 1998, the Company recorded a charge to operations of $121,670 related to the decisions to close its small diameter wafer facility in Spartanburg, South Carolina, to withdraw from its 60%-owned joint venture in a small diameter wafer operation in China and to forego construction of a new 200 millimeter wafer facility at its 75%-owned joint venture in Malaysia. Restructuring activity since the provision for restructuring costs was recorded is as follows: Amount Balance Balance Utilized/ Sept.30, Dec.31, Provision Reversed 2000 1999 Asset impairment/write-off: Spartanburg property, plant and equipment $ 36,300 $ 36,300 $ - $ - Malaysian joint venture assets 28,000 27,498 502 530 Chinese joint venture assets 13,800 13,615 185 360 Other infrastructure 3,225 3,225 - - -------- -------- ------- -------- Total 81,325 80,638 687 890 -------- -------- ------- -------- Dismantling and related costs: Dismantling costs 11,345 6,021 5,324 7,260 Costs incurred by equipment suppliers 5,000 5,000 - - Environmental costs 3,500 3,417 83 400 Operating leases 3,000 2,511 489 1,000 Other 3,000 342 2,658 2,864 -------- -------- ------- -------- Total 25,845 17,291 8,554 11,524 -------- -------- ------- -------- Personnel costs 14,500 14,175 325 425 -------- -------- ------- -------- Total restructuring costs $121,670 $112,104 $ 9,566 $ 12,839 ======== ======== ======= ======== Substantially all of the dismantling and related costs, and the personnel costs included in the $9,566 restructuring reserve at September 30, 2000 are related to the Spartanburg facility. Approximately 10 percent of the reserve is expected to be utilized by December 31, 2000. Timing for utilization of the remainder of the reserve is primarily dependent on the timing of the sale of the Spartanburg facility. (5) Comprehensive Loss Comprehensive loss for the three months ended September 30, 2000 and 1999 was $14,773 and $25,936, respectively. Comprehensive loss for the nine months ended September 30, 2000 and 1999 was $64,955 and $133,022, respectively. The Company's only adjustment from net loss to comprehensive loss was foreign currency translation adjustments in all periods presented. (6) Acquisition On September 29, 2000 the Company acquired an additional 40% of Posco Huls Co., Ltd. (renamed MEMC Korea Company ("MKC") after the acquisition) bringing the Company's ownership percentage of MKC to 80%. The purchase price of approximately $68 million was funded by borrowings from an affiliate of E.ON AG. E.ON AG is the majority shareholder and principal lender of the Company. The balance sheet of MKC has been consolidated at September 30, 2000. Under Korean law, there are significant restrictions on MKC's ability to pay dividends and make loans, thereby limiting the Company's access to MKC's cash assets. Beginning in the fourth quarter of 2000 the operating results of MKC will be consolidated as part of MEMC. (7) Debt At September 30, 2000 the Company included $54 million in short-term debt and $80 million in long-term debt obligations with the consolidated reporting of MKC's balance sheet. The Company also incurred approximately $71 million in short-term debt from an affiliate of E.ON AG in connection with the purchase of the additional 40% of MKC. These events along with current portions due on long debt obligations brought current debt and long-term debt to $414 and $696 million, respectively, at September 30, 2000. Of this debt, $835 million was loans from E.ON AG and/or its affiliates at September 30, 2000. The Company's loans from E.ON AG and its affiliates begin to mature in 2001. The Company does not currently anticipate having sufficient funds from operations to repay these loans upon maturity commencing in 2001, and will need to seek and obtain replacement financing. There can be no assurance that such capital will be available on terms acceptable to the Company or that the Company will be able to refinance its loans with E.ON AG and its affiliates upon maturity. If the Company fails to repay the loans when due the Company will be in default under the loans and E.ON AG and its affiliates could accelerate all amounts outstanding under the loans. This would have a material adverse effect on the Company. The Company has been working closely with E.ON AG on the financial implications of these loans. The Company is also working with investment bankers and other advisors to determine the best solutions for MEMC. Under its credit facilities with E.ON AG and its affiliates, the Company cannot pledge any of its assets to secure additional financing without the consent of E.ON AG and its affiliates. In addition, under the Company's short-term loan with an affiliate of E.ON AG used to fund the acquisition of the additional 40% interest in MKC, the Company is required to pay 100% of any net proceeds received by the Company from the issuance of equity or debt securities, or from any additional incurrence of debt, to such affiliate of E.ON AG as a mandatory principal repayment. In addition this loan agreement requires the Company's to pay 75% of any cash received from MKC, through dividends, reductions or repurchases of equity, share redemptions or loans, to such affiliate of E.ON AG as a mandatory principal repayment. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Net Sales. Net sales increased 22% to $223 million for the third quarter of 2000 from $183 million for the third quarter of 1999. The increase was primarily attributable to a 12% increase in product volume and significant price increases in the third quarter of 2000 compared to the third quarter of 1999. Net sales increased 21% to $616 million for the nine months ended September 30, 2000 from $511 million for the nine months ended September 30, 1999. The increase was primarily attributable to a 15% increase in product volume and moderate price increases. On a geographic basis, the increase in product volumes for the three-month period ended September 30, 2000 as compared to the year-earlier period was led by sales in the U.S, Europe, and Japan. For the nine-month period ended September 30, 2000 as compared to the year-earlier period volumes were significantly higher in all world areas. The Company expects product volumes to remain relatively level in the fourth quarter as a result of the normal seasonality in the industry, as well as anticipated plant shut-downs for the holidays and for routine maintenance. The Company is optimistic that the firming of wafer pricing will continue, and anticipates a slight increase in overall average selling prices in the coming quarter. For the third quarter 2000, MKC recorded total revenues from third parties of $42 million and total net income of $7.5 million. The purchase price of approximately $68 million for the additional 40% interest in MKC, bringing the Company's ownership percentage to 80%, was funded by borrowings from an affiliate of E.ON AG, the majority shareholder and principal lender of the Company. As a result of the anticipated volumes and future consolidated reporting of MKC, the Company anticipates that fourth quarter revenues will be comparable to the combined MEMC and MKC customer sales recorded in the third quarter of 2000. With the consolidated reporting of MKC and continued focus on cost structure improvements, the Company anticipates approaching breakeven net income in the fourth quarter. Gross Margin. Gross margin improved to 17% in the third quarter of 2000 from 3% for the third quarter of 1999. Gross margin improved to 13% in the nine months ended September 30, 2000 from negative 2% in the nine months ended September 30, 1999. The increase in gross margin in both the three and nine-month periods ended September 30, 2000 compared to the corresponding September 30, 1999 periods was primarily attributable to significantly higher volumes coupled with higher pricing, an improved product mix and significant cost reductions. Advanced large diameter and epitaxial products represented 56% and 53% of product volume for the third quarters of 2000 and 1999, respectively. The Company expects continued, but gradual, improvements in its cost structure over the next few quarters from the consolidated reporting of MKC and continued cost reductions. MKC enjoys a lower cost structure than most of the Company's other facilities, due to its focused operations on relatively fewer products and customers. Research and Development. Research and development expenses in the 2000 third quarter totaled $17 million, compared to $21 million in the year-ago period. The decrease in reported expense is attributable to continued focus and spending control, coupled with increasing revenue from 300 millimeter wafers, which offset technology expenses. Interest Expense. Interest expense increased to $19 million for the quarter ended September 30, 2000 from $16 million for the quarter ended September 30, 1999. The increase in interest expense was attributable to increased borrowings and increased weighted average cost of borrowing in the three months ended September 30, 2000 as compared to the three months ended September 30, 1999. Income Taxes. The Company realized an income tax benefit at the rate of 27% for both the three and nine-month periods ended September 30, 2000 and an income tax benefit at the rate of 31% for both the three and nine-month periods ended September 30, 1999. The reduced rate of income tax benefit is primarily a result of changes in the composition of the Company's worldwide taxable income. The Company expects an effective tax rate for the year 2000 consistent with the first nine months. Equity in Income (Loss) of Joint Ventures. Equity in income (loss) of joint ventures was $7 million income in the third quarter of 2000, as compared to a loss of $3 million in the third quarter of 1999. The Company's share of the income of MKC, accounted for through September 30, 2000 as an unconsolidated joint venture, was $3 million in the third quarter of 2000 compared to a loss of $1 million in the third quarter of 1999. MKC's increased profitability was primarily due to a significant increase in product volume. The Company's share of the income of Taisil Electronic Materials Corporation (Taisil), the Company's 45%-owned, unconsolidated joint venture in Taiwan, was $4 million in the third quarter 2000 compared to a loss of $2 million in the third quarter of 1999. Taisil's improved income was primarily due to a 19% increase in product volume and a significant increase in average selling price in the third quarter of 2000 compared to third quarter of 1999. Equity in income (loss) of joint ventures was $7 million income in the nine months ended September 30, 2000, as compared to loss of $11 million in the nine months ended September 30, 1999. The Company's share of the income of MKC was $3 million in the nine months ended September 30, 2000 compared to a loss of $5 million in the nine months ended September 30, 1999. MKC's improved net income was primarily due to a significant increase in product volume in the nine months ended September 30, 2000 compared to the nine months ended September 30, 1999. The Company's share of the income of Taisil was $4 million in the nine months ended September 30, 2000 compared to a loss of $6 million in the nine months ended September 30, 1999. Taisil's improved net income was primarily due to a 20% increase in product volume and a significant increase in average selling price in the nine months ended September 30, 2000 compared to the nine months ended September 30, 1999. Net Loss. Net loss for the three-month periods ended September 30, 2000 and 1999 was approximately $2 million and $34 million, respectively. The reduction in net loss for the three months ended September 30, 2000 was primarily a result of increased gross margin of $32 million and a $9 million increase in joint venture income partially offset by a reduced income tax benefit. The Company had a net loss of $0.03 per share for the quarter ended September 30, 2000 on approximately 69.6 million shares outstanding compared to a net loss of $0.48 per share for the quarter ended September 30, 1999 on 69.5 million weighted average shares outstanding. Net loss for the nine-month periods ended September 30, 2000 and 1999 was approximately $45 million and $123 million, respectively. The reduction in net loss for the nine months ended September 30, 2000 was primarily a result of increased gross margin of $88 million and joint venture income increasing $19 million partially offset by a reduced income tax benefit. The Company had a net loss of $0.65 per share for the nine-month period ended September 30, 2000 on approximately 69.6 million shares outstanding compared to a net loss of $2.06 per share for the nine-month period ended September 30, 1999 on 59.8 million weighted average shares outstanding. The weighted average shares outstanding reflect the issuance of 15.4 million shares of common stock in a private placement to an affiliate of E.ON AG in March 1999 and 13.6 million shares of common stock in connection with the Company's rights offering in April 1999. Liquidity and Capital Resources. At September 30, 2000, the Company had $99 million of cash and cash equivalents compared to $29 million at December 31, 1999. The increase is primarily attributable to the consolidated reporting of MKC which had cash and cash equivalents at September 30, 2000 of approximately $79 million. Under Korean law, however, there are significant restrictions on MKC's ability to pay dividends and make loans, thereby limiting the Company's access to MKC's cash assets. Cash flows used in operating activities improved to $4 million for the nine months ended September 30, 2000 from $92 million for nine months ended September 30, 1999. This $88 million improvement was due primarily to the reduction in operating losses. Accounts receivable of $151 million at September 30, 2000 increased $39 million, or 35%, from $112 million at December 31, 1999. This increase was primarily attributable to the 22% increase in net sales during the third quarter 2000 over fourth quarter 1999 and to the consolidated reporting of MKC's balance sheet as of September 30, 2000. Days sales outstanding were 60 days at September 30, 2000 compared to 56 days at December 31, 1999 based upon annualized sales for the respective immediately preceding quarters. MKC's receivables have been excluded from this calculation as its sales were not consolidated for the periods ended September 30, 2000 and December 31, 1999. Inventories increased $26 million, or 27%, from December 31, 1999 to $125 million at September 30, 2000. This increase was primarily due to the consolidated reporting of MKC's balance sheet as of September 30, 2000. Total related inventory reserves for obsolescence, lower of cost or market issues, or other impairments were $15 million at September 30, 2000, compared to $17 million at December 31, 1999. Quarter-end inventories, excluding MKC's inventory, as a percentage of annualized quarterly net sales declined 2% to 11% for the period ended September 30, 2000 compared to the period ended December 31, 1999. The Company's net deferred tax assets increased $32 million in the first nine months of 2000 to $229 million at September 30, 2000. The Company provides for income taxes on a quarterly basis based on an estimated annual effective tax rate. The Company estimates that net operating loss carryforwards increased $58 million in the nine months ended September 30, 2000. Management believes it is more likely than not that, with its projections of future taxable income and after consideration of the valuation allowance, the Company will generate sufficient taxable income to realize the benefits of the net deferred tax assets existing at September 30, 2000. In order to realize the net deferred tax assets existing at September 30, 2000, the Company will need to generate future taxable income of approximately $625 million over the next 20 years. There can be no assurance, however, that the Company will generate sufficient taxable income to realize the full benefit of the existing net deferred tax assets. At December 31, 1999, the Company's net operating loss carryforwards totaled $647 million, of which $7 million will expire in 2001; $13 million will expire in 2002; $29 million will expire in 2003; $9 million will expire in 2004; $14 million will expire in 2012; $322 million will expire in 2018; and $253 million will expire in 2019. On June 16, 2000, VEBA AG, which through its affiliates is the majority shareholder and principal lender of the Company, merged with VIAG AG. The VEBA/VIAG group, now known as E.ON AG, has stated that its core businesses will be energy and specialty chemicals. E.ON AG's stated intent is to systematically and optimally divest certain non-core businesses, including the Company. The Company intends to work closely with E.ON AG to effectuate an orderly divestiture process that preserves and optimizes the value of the Company. A decrease of ownership interest of E.ON AG and its affiliates may result in annual limitations for federal income tax purposes of the Company's ability to use its tax loss carryforwards under Internal Revenue Code Section 382. Net cash used in investing activities improved $17 million to $21 million in the nine months ended September 30, 2000 compared to the nine months ended September 30, 1999. For the nine months ended September 30, 2000, cash used by investing activities reflected slightly decreased spending on capital projects, a reduction in equity infusions in joint ventures, a reduction in notes receivable from affiliates, and cash from MKC in excess of the purchase price by $11 million. The capital expenditures in the first nine months of 2000 primarily related to the implementation of SAP worldwide and to maintenance capital. The Company expects that capital expenditures will not exceed $65 million in 2000. At September 30, 2000, the Company had $21 million of committed capital expenditures related to various manufacturing and technology projects. The Company made no equity infusions into joint ventures in the nine months ended September 30, 2000, compared to an equity infusion of $12 million into Taisil in the nine months ended September 30, 1999. Although to date Taisil has an accumulated deficit, the Company does not consider its investment in Taisil to be impaired as of September 30, 2000 based on Taisil's increasing product volumes and capacity utilization, improving operating results, positive operating cash flow generated in 1999 and positive net income and cash flow in the nine months ended September 30, 2000. Cash flows provided by financing activities decreased to $97 million in the nine months ended September 30, 2000 from $134 million in the nine months ended September 30, 1999. The 2000 financing activities consisted primarily of issuance of debt by the Company. In the nine months ended September 30, 1999, the financing activities consisted primarily of stock offerings, partially offset by repayment of short-term and long-term debt. The primary use of financing in the nine months ended September 30, 2000 was a $68 million short-term loan from an affiliate of E.ON AG to purchase the additional 40% interest in MKC. At September 30, 2000, the Company maintained $1,032 million of committed long-term loan agreements, of which $999 million was outstanding. The Company also maintained $178 million of short-term lines of credit, of which less than $111 million was outstanding at September 30, 2000. The Company's weighted average cost of borrowing was 8.4% at September 30, 2000 and 7.8% at December 31, 1999. Total debt outstanding increased to $1,100 million at September 30, 2000 from $892 million at December 31, 1999. Of the $218 million increase in debt, $134 million relates to liabilities acquired in connection with the purchase of MKC, and approximately $71 million was incurred in connction with the purchase of the additional 40% interest in MKC. The total debt to total capital ratio at September 30, 2000 was 72% as compared to 65% at December 31, 1999. The silicon wafer industry is highly capital intensive. The Company's capital needs depend on numerous factors, including its profitability and investment in capital expenditures and research and development. Management believes that the liquidity provided by existing cash balances and credit facilities, together with cash generated from operations, will be sufficient to satisfy commitments for capital expenditures and operating cash requirements through 2000. If, however, the Company's future financial performance fails to meet management's current expectations, then the Company may require additional financing in order to satisfy planned capital expenditures and operating cash requirements for 2000. There can be no assurance that such financing will be available on terms acceptable to the Company. Historically, the Company has funded its operations primarily through loans from E.ON AG and its affiliates, internally generated funds, and issuances of common stock. To a lesser extent, the Company has raised funds by borrowing money from commercial banks. Under its credit facilities with E.ON AG and its affiliates, the Company cannot pledge any of its assets to secure additional financing without the consent of E.ON AG and its affiliates. In addition, under the Company's short-term loan with an affiliate of E.ON AG used to fund the acquisition of the additional 40% interest in MKC, the Company is required to pay 100% of any net proceeds received by the Company from the issuance of equity or debt securities, or from any additional incurrence of debt, to such affiliate of E.ON AG as a mandatory principal repayment. This loan agreement also requires the Company's to pay 75% of any cash received from MKC, through dividends, reductions or repurchases of equity, share redemptions or loans, to such affiliate of E.ON AG as a mandatory principal repayment. The Company's loans from E.ON AG and its affiliates begin to mature in 2001. The Company does not currently anticipate having sufficient funds from operations to repay these loans upon maturity commencing in 2001, and will need to seek and obtain replacement financing. There can be no assurance that such capital will be available on terms acceptable to the Company or that the Company will be able to refinance its loans with E.ON AG and its affiliates upon maturity. If the Company fails to repay the loans when due the Company will be in default under the loans and E.ON AG and its affiliates could accelerate all amounts outstanding under the loans. This would have a material adverse effect on the Company. The Company has been working closely with E.ON AG on the financial implications of these loans and the divestiture. The Company is also working with investment bankers and other advisors to determine the best solutions for MEMC. Recently Issued Accounting Pronouncements. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 requires the recognition of all derivatives as assets or liabilities within the balance sheet, and requires both the derivatives and the underlying exposure to be recorded at fair value. Any gain or loss resulting from changes in fair value will be recorded as part of the results of operations, or as a component of comprehensive income or loss, depending upon the intended use of the derivative. In July 1999, the Financial Accountings Standards Board changed the effective date of SFAS No. 133 to all fiscal quarters of fiscal years beginning after June 15, 2000. The Company does not believe that the implementation of this Statement will have a material effect on its financial condition or results of operations. Cautionary Statement Regarding Forward-Looking Statements. This Form 10-Q contains "forward-looking" statements within the meaning of the Securities Litigation Reform Act of 1995, including those concerning: the timing and utilization of the restructuring reserve; future pricing; future product volumes; effects of consolidated reporting of MKC; continued cost improvements; fourth quarter 2000 revenues; expectation of approaching breakeven net income in the fourth quarter 2000; expected effective income tax rate; liquidity through 2000; expectation that 2000 capital expenditures will not exceed $65 million; the Company's ability to generate future taxable income as it relates to the realization of the net deferred tax asset; the Company's intention to work closely with E.ON AG to effect an orderly divestiture process that preserves and optimizes the value of the Company; expectation that the Company will not have sufficient funds from operations to repay loans from E.ON AG and its affiliates upon maturity; and the impact of the implementation of SFAS No. 133. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include such factors as: market demand for silicon wafers; utilization of manufacturing capacity; ability of the Company to reduce manufacturing costs; demand for semiconductors generally; changes in the pricing environment; general economic conditions; competitors' actions; changes in currency exchange rates; changes in the components of worldwide taxable income; technological changes; changes in product specifications and manufacturing processes; accuracy of management's assumptions regarding the dismantling and sale of the Spartanburg facility; changes in the plans and intentions of third parties, including E.ON AG; changes in financial market conditions; changes in interest rates; and other risks described in the Company's filing with the Securities and Exchange Commission, including the Company's annual report on Form 10-K for the year ended December 31, 1999. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Market risks relating to the Company's operations result primarily from changes in interest rates and changes in foreign exchange rates. The Company enters into currency forward contracts to minimize its transactional currency risks. The Company does not use derivative financial instruments for speculative or trading purposes. There have been no significant changes in the Company's holdings of interest rate sensitive or foreign currency exchange rate sensitive instruments since December 31, 1999. PART II -- OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Number Description 3(i) Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3-a of the Company's Form 10-Q for the Quarter ended June 30, 1995) 3(i)(a) Certificate of Amendment of Restated Certificate of Incorporation of the Company as filed with the Secretary of State of the State of Delaware on June 2, 2000 (incorporated by reference to Exhibit 3(i) (a) of the Company's Form 10-Q for the Quarter ended June 30, 2000) 3(ii) Restated By-laws of the Company (incorporated by reference to Exhibit 3(ii) of the Company's Form 10-Q for the Quarter ended June 30, 1999) 10-s Share Sale and Purchase Agreement dated as of September 7, 2000 by and between Pohang Iron & Steel Co., Ltd. and the Company 10-yyy Euro 80,000,000 Credit Agreement dated as of September 22, 2000 between MEMC Electronic Materials, S.p.A. and VEBA International Finance B.V. 10-zzz Guaranty Agreement dated as of September 22, 2000 between the Company and VEBA International Finance B.V. 27 Financial Data Schedule (filed electronically with the SEC only) - ------------------------------- (b) Reports on Form 8-K During the third quarter of 2000, the Company filed no current reports on Form 8-K. 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. MEMC Electronic Materials, Inc. November 8, 2000 /s/ JAMES M. STOLZE -------------------------------- James M. Stolze Executive Vice President and Chief Financial Officer (on behalf of the registrant and as principal financial and accounting officer) EXHIBIT INDEX The exhibits below are numbered in accordance with the Exhibit Table of Item 601of Regulation S-K. Exhibit Number Exhibit 10-s Share Sale and Purchase Agreement dated as of September 7, 2000 by and between Pohang Iron & Steel Co., Ltd. and the Company 10-yyy Euro 80,000,000 Credit Agreement dated as of September 22, 2000 between MEMC Electronic Materials, S.p.A. and VEBA International Finance B.V. 10-zzz Guaranty Agreement dated as of September 22, 2000 between the Company and VEBA International Finance B.V. 27 Financial Data Schedule (filed electronically with SEC only) EX-10.S 2 0002.txt SHARE SALE AND PURCHASE AGREEMENT SHARE SALE AND PURCHASE AGREEMENT This SHARE SALE AND PURCHASE AGREEMENT (the "Agreement") is entered into this 7th day of September, 2000, by and between: MEMC ELECTRONIC MATERIALS, INC., a corporation organized and existing under the laws of the State of Delaware, U. S. A. and having its principle office at 501 Pearl Drive, St. Peters, Missouri 63376, U. S. A. ("MEMC"); and POHANG IRON & STEEL CO., LTD., a corporation organized and existing under the laws of the Republic of Korea and having its principle office at 1, Koedong, Pohang, Kyungsangbuk-do, Korea ("POSCO"). RECITALS WHEREAS, POSCO owns 6,880,000 shares of common stock of POSCO HULS CO., LTD., a corporation organized and existing under the laws of the Republic of Korea (the "Company"), having a par value of five thousand (5,000) Korean Won per share (the "Shares"), which comprises forty percent (40%) of all issued and outstanding shares of stock of the Company; WHEREAS, pursuant to Article 7.3 of the Joint Venture Agreement dated August 28, 1990 entered into by and among POSCO, MEMC and Samsung Electronics Co., Ltd. ("Samsung"), as amended by the First Amendment to Joint Venture Agreement dated as of December 9, 1993 and the Second Amendment to Joint Venture Agreement dated as of December 30, 1994 (as amended, the "Joint Venture Agreement"), POSCO had offered to MEMC and Samsung to sell and transfer all of the Shares; WHEREAS, Samsung notified POSCO of its intention to waive its right to purchase the Shares in proportion to its shareholding ratio in the Company; WHEREAS, MEMC wishes to purchase from POSCO all of the Shares subject to the terms and based on the conditions set forth herein. NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, POSCO and MEMC agree as follows: Article 1 Definitions As used in this Agreement, the following terms shall have the following meanings: "Business Day" means a day other than (i) a Saturday or Sunday or (ii) a day on which banking institutions are authorized or required by law or executive order to remain closed in the domicile of MEMC or POSCO. "Closing" means the consummation of the transactions contemplated by this Agreement in accordance with the provisions of Article 3. "Consents" means all of the consents, permits or approvals of Governmental Authorities and other persons or entities necessary or required to consummate the transactions contemplated hereby. "Governmental Authority" means (i) the Republic of Korea, any state, territory, or possession thereof and any political subdivision, including but not limited to courts, tribunals, departments, commissions, boards, bureaus, agencies, municipalities, provinces, and other instrumentalities, and (ii) any foreign (as to the Republic of Korea) sovereign entity, including but not limited to nations, states, republics, kingdoms and principalities, any province, commonwealth, territory or possession thereof, and any political subdivision, or instrumentality of any of the same. "Legal Requirements" means applicable common law and any applicable statute, ordinance, code or other law, rule, regulation, order, technical or other standard, requirement or procedure enacted, adopted, promulgated or applied by any Governmental Authority, including any judgment. "Lien" means any security agreement, financing statement filed with any Governmental Authority, conditional sale or other title retention agreement, any lease, consignment or bailment given for the purpose of security, any lien, mortgage, indenture, pledge, option, encumbrance, restriction on transfer, adverse interest, constructive trust or other trust, claim, attachment, exception to or defect in title or other ownership interest (including but not limited to reservations, rights of entry, possibilities of reverter, encroachments, easements, rights-of-way, restrictive covenants, leases and licenses) of any kind, which otherwise constitutes an interest in or claim against property, whether arising pursuant to any Legal Requirement, contract or otherwise. "Losses" means any litigation, losses, liabilities, damages, Liens, penalties, costs, fines and expenses, including but not limited to interest which may be imposed in connection therewith, expenses of investigation, reasonable fees and disbursements of counsel and other experts, and the cost to any person or entity making a claim or seeking indemnification under this Agreement with respect to funds expended by such person or entity by reason of the occurrence of any event with respect to which indemnification is sought. Article 2 Terms of Purchase and Sale 2.1 Subject to the terms and conditions hereof, POSCO shall sell, transfer and deliver to MEMC, free and clear of all Liens, all of the Shares on the Closing Date, and MEMC shall purchase the Shares from POSCO at the Purchase Price. 2.2 The aggregate purchase price for the Shares is Seventy Six Billion Korean Won (KRW76,000,000,000) (the "Purchase Price"). Article 3 Closing 3.1 The Closing shall take place at the offices of POSCO in Seoul, Korea, or any other mutually agreed upon location, at 2:00 p.m. Korean time on September 29, 2000 (the "Closing Date"), or any other mutually agreed upon time; provided, however that the Closing Date shall not be later than the 15th day of October, 2000. 3.2 Subject to Article 3.6, on the Closing Date, MEMC shall pay Fifty Billion (50,000,000,000) Korean Won of the Purchase Price to POSCO by wire transfer of immediately available funds to an account designated by POSCO. The remaining balance of the Purchase Price shall be paid to POSCO by MEMC in accordance with the payment schedule as specified in Article 3.6 hereof. 3.3 On the Closing Date, MEMC shall deliver to POSCO the following, in form and substance reasonably satisfactory to POSCO and its counsel: (a) A certificate, dated as of the Closing Date, executed by a duly authorized officer of MEMC, certifying that (i) the resolutions, as attached to such certificate, were duly adopted by MEMC's Board of Directors, authorizing and approving the execution of this Agreement and the consummation of the transactions contemplated hereby and that such resolutions remain in full force and effect and have not been modified or amended, (ii) the representations and warranties of MEMC contained in Article 5.1 hereof are true in all respects as of the Closing Date as if made at and as of such date, and (iii) all other obligations of MEMC hereunder which should be performed on or prior to the Closing Date have been performed or complied with; and (b) Such other documents and instruments as shall be reasonably necessary to effect the intent of this Agreement and consummate the transactions contemplated by this Agreement. 3.4 On the Closing Date, POSCO shall deliver to MEMC the following, in form and substance reasonably satisfactory to MEMC and its counsel: (a) A certificate or certificates for all of the Shares, duly endorsed or accompanied by an appropriate duly executed stock power in form sufficient to permit transfer of the Shares to MEMC; (b) A certificate, dated as of the Closing Date, executed by a duly authorized representative of POSCO, certifying that (i) the resolutions, as attached to such certificate, were duly adopted by POSCO's Board of Directors, authorizing and approving the execution of this Agreement and the consummation of the transactions contemplated hereby and that such resolution remain in full force and effect and have not been modified or amended, (ii) the representations and warranties of POSCO contained in Article 5.2 hereof are true in all respects as of the Closing Date as if made at and as of such date, and (iii) all other obligations of POSCO hereunder which should be performed on or prior to the Closing Date have been performed or complied with; and (c) Such other documents and instruments as shall be reasonably necessary to effect the intent of this Agreement and consummate the transactions contemplated by this Agreement. 3.5 On or immediately after the Closing Date, MEMC shall apply for a change in the shareholders' registry to reflect the share transfer transaction contemplated hereunder and provide to POSCO certified evidence of such change in registration. 3.6 The remaining balance of the Purchase Price shall be paid as follows: (a) On September 29, 2001, Thirteen Billion (13,000,000,000) Korean Won and interests on the total amount of the remaining balance of the Purchase Price (Twenty Six Billion Korean Won) from the date following the Closing Date up to September 29, 2001 shall be paid to POSCO by wire transfer of immediately available funds to an account designated by POSCO. The interest rate shall be seven and one half percent (7.5%) per annum; and (b) On September 29, 2002, Thirteen Billion (13,000,000,000) Korean Won and interests on the total amount of the remaining balance of the Purchase Price (Thirteen Billion Korean Won) from Septmeber 30, 2001 up to September 29, 2002 shall be paid to POSCO by wire transfer of immediately available funds to an account designated by POSCO. The interest rate shall be seven and one half percent (7.5%) per annum. (c) In the event any of the dates specified above is not a Business Day, each payment shall be made on the first Business Day immediately preceding such date. 3.7 To guarantee punctual payment of the remaining balance of the Purchase Price in accordance with Article 3.6 hereabove, MEMC shall provide, on the Closing Date, guarantee issued by an internationally recognized financial institution for the amount of such remaining balance. Notwithstanding the foregoing in Articles 3.2, 3.6 and 3.7, MEMC shall have the option of paying the total amount of the Purchase Price on the Closing Date by wire transfer of immediately available funds to an account designated by POSCO. Article 4 Conditions to Completion The obligations of POSCO to sell the Shares and the obligations of MEMC to purchase the Shares and effect the Closing shall be subject to the obtaining of, or the satisfaction or waiver by MEMC or POSCO, as the case may be, on or prior to the Closing Date of all of the following conditions: (a) The issuance of an acceptance by a foreign exchange bank designated by the Ministry of Commerce, Industry and Energy of the Republic of Korea ("MOCIE") of the share transfer report to be filed by MEMC in connection with the purchase of the Shares; (b) All representations and warranties of the parties contained in this Agreement having been true when made and being true in all respects at and as of the Closing Date as if such representations and warranties were made at and as of such date; (c) All other obligations of MEMC and POSCO under this Agreement which should be performed on or prior to the Closing Date having been performed or complied with or otherwise waived, including the tender of all of the closing deliveries required by Articles 3.3 and 3.4; (d) All Government Consents necessary for the consummation of the transactions contemplated by this Agreement and the performance of the parties' obligations contained herein shall have been obtained and be in full force and effect; and (e) No action or proceeding shall have been instituted or threatened before any court or other governmental body or by any public authority seeking to restrain or prohibit the sale and purchase of the Shares hereunder. Article 5 Representations and Warranties 5.1 MEMC hereby makes the following representations and warranties to POSCO, each of which is true and correct on the date hereof and shall be true and correct on the Closing Date, and each of which shall survive the Closing Date and the sale contemplated herein: (a) It is a corporation duly organized, existing and in good standing under the laws of the State of Delaware, USA, and has all requisite corporate power and authority to execute and deliver this Agreement and any other documents required to be executed and delivered hereunder and to perform its obligations hereunder. In the event MEMC assigns its rights and obligations hereunder to a subsidiary, as provided in Article 10.2, such subsidiary will be an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and such subsidiary will have all requisite entity power and authority to execute and deliver the assignment and any documents required to be executed and delivered hereunder and to perform its obligations hereunder. (b) This Agreement has been duly and validly authorized, executed and delivered by MEMC and constitutes the legal, valid and binding obligation of MEMC, enforceable against MEMC in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally or (ii) general principles of equity. In the event that MEMC assigns its rights and obligations hereunder to a subsidiary, as provided in Article 10.2, such assignment will have been duly and validly authorized, executed and delivered by such subsidiary and this Agreement will constitute the legal, valid and binding obligation of such subsidiary, enforceable against such subsidiary in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally or (ii) general principles of equity. (c) The execution, delivery and performance by MEMC of this Agreement will not (i) violate or conflict with its certificate of incorporation and by-laws or other organizational documents, (ii) violate or conflict with any law, or (iii) result in any material breach of, or constitute a material default under any contract to which it is a party which breach or default would have a material adverse effect on MEMC and its subsidiaries, taken as a whole. In the event that MEMC assigns its rights and obligations to a subsidiary as provided in Article 10.2, the execution and delivery by such subsidiary of such assignment and the performance by such subsidiary of this Agreement will not (i) violate or conflict with its articles of organization and by-laws or other organizational documents, (ii) violate or conflict with any law, or (iii) result in any material breach of, or constitute a material default under any contract to which it is a party which breach or default would have a material adverse effect on MEMC and its subsidiaries, taken as a whole. (d) To the best of its knowledge, the execution, delivery and performance by MEMC (or by any subsidiary to which MEMC assigns its rights and obligations under this Agreement as provided in Article 10.2) of this Agreement do not and will not require any Consent other than described in Article 4(a); 5.2 POSCO hereby makes the following representations and warranties to MEMC, each of which is true and correct on the date hereof and shall be true and correct on the Closing Date, and each of which shall survive the Closing Date and the sale contemplated herein: (a) It is a corporation duly organized, existing and in good standing under the laws of the Republic of Korea, and has all requisite corporate power and authority to execute and deliver this Agreement and any other documents required to be executed and delivered hereunder and to perform its obligations hereunder. (b) This Agreement has been duly and validly authorized, executed and delivered by POSCO and constitutes the legal, valid and binding obligation of POSCO, enforceable against POSCO in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally or (ii) general principles of equity. (c) The execution, delivery and performance by POSCO of this Agreement will not (i) violate or conflict with its articles of incorporation or other organizational documents, (ii) violate or conflict with any law, or (iii) result in any material breach of, or constitute a material default under any contract to which it is a party which breach or default would have a material adverse effect on POSCO and its subsidiaries, taken as a whole. (d) To the best of its knowledge, the execution, delivery and performance by POSCO of this Agreement do not and will not require any Consent other than described in Article 4(a). (e) It is the legal owner of the Shares and has full authority to sell and transfer the Shares as provided herein. (f) The Shares represent the entire interest of POSCO in the issued share capital of the Company and MEMC will acquire at the Closing good and marketable title to the Shares, free and clear of all Liens. (g) No outstanding claim of POSCO exists or to the best of its knowledge, is likely to exist, against the Company arising out of or in relation to the Joint Venture Agreement, its past ownership of the shares of the Company or conduct of its past business transactions with the Company in connection therewith. Article 6 Additional Obligations 6.1 Each of MEMC and POSCO shall use its commercially reasonable efforts to obtain all Government Consents otherwise to effect or obtain any notice to or consents from third parties, required for the transactions contemplated hereunder. 6.2 Each of MEMC and POSCO shall use its commercially reasonable efforts to take, or cause to be taken, all such action, and execute and deliver all such documents, as may be necessary to consummate the transactions contemplated hereunder. 6.3 On and after the Closing Date, POSCO shall not seek to exercise its remaining rights, if any, under the Joint Venture Agreement without the prior written consent of MEMC. If requested by MEMC, POSCO (a) will exercise any remaining rights under the Joint Venture Agreement in accordance with MEMC's instructions and (b) will take all such action, and execute and deliver such documents, as may be necessary (i) to terminate the Joint Venture Agreement or (ii) to convey POSCO's remaining rights, if any, under the Joint Venture Agreement to MEMC. 6.4 POSCO covenants and agrees that between the date of this Agreement and the Closing Date, it will not cause the Company to conduct its business otherwise than in the ordinary course and consistent with the Company's past practices. 6.5 POSCO hereby waives, and releases the Company from, any and all future demands and claims against the Company, contingent or otherwise, which may be made by POSCO in connection with the Joint Venture Agreement, its ownership of the shares of the Company or conduct of its past business transactions with the Company. 6.6 As of the Closing Date, MEMC confirms that POSCO will cease to be a shareholder of the Company and MEMC will not, on and after the Closing Date, make any demands or claims against POSCO as a shareholder of the Company. 6.7 In the event this Agreement is terminated or the Closing fails to occur by the Closing Date due to reasons attributable to MEMC other than those beyond reasonable control of MEMC (i.e, force majeure), then MEMC shall waive any claims it may have against POSCO under the Joint Venture Agreement in connection with POSCO's subsequent sale of the Shares to any third party. Article 7 Indemnification 7.1 MEMC hereby agrees to indemnify and hold POSCO harmless from and against any Loss suffered or incurred by POSCO for or on account of or arising from or in connection with any breach of any of the representations, warranties or covenants contained in this Agreement, provided, however, that MEMC shall not have any liability under this Article 7.1 unless the aggregate of all Losses relating thereto exceed on a cumulative basis Two Hundred Million (200,000,000) Korean Won, and then only to the extent of such excess and MEMC's maximum liability hereunder is expressly limited to the Purchase Price. POSCO acknowledges and agrees that its sole and exclusive remedy with respect to any and all claims for monetary damages relating to the subject matter of this Agreement shall be pursuant to the indemnification provisions set forth in this Article 7.1. 7.2 POSCO hereby agrees to indemnify and hold MEMC harmless from and against any Loss suffered or incurred by MEMC for or on account of or arising from or in connection with any breach of any of the representations, warranties or covenants contained in this Agreement, provided, however, that POSCO shall not have any liability under this Article 7.2 unless the aggregate of all Losses relating thereto exceed on a cumulative basis Two Hundred Million (200,000,000) Korean Won, and then only to the extent of such excess and POSCO's maximum liability hereunder is expressly limited to the Purchase Price. MEMC acknowledges and agrees that its sole and exclusive remedy with respect to any and all claims for monetary damages relating to the subject matter of this Agreement shall be pursuant to the indemnification provisions set forth in this Article 7.2. 7.3 The representations and warranties made by each party contained in Article 5 hereof, and indemnification pursuant to Article 7 hereof, shall survive the Closing indefinitely. Article 8 Dispute Resolution and Arbitration 8.1 The parties shall attempt in good faith to resolve any controversy, dispute or claim arising out of or relating to this Agreement or the breach, termination, enforceability or validity thereof (collectively, a "Dispute") promptly by negotiation between officers or employees who have authority to settle the Dispute. Either party may give the other a written notice (a "Dispute Notice") setting forth with reasonable specificity the nature of the Dispute and the identity of such party's representatives who will attend and participate in the meeting at which the parties will attempt to settle the Dispute. Following the receipt of a Dispute Notice, the representatives of both parties shall meet as soon as is practicable at a mutually acceptable time and place to negotiate in good faith a settlement of the Dispute, and shall meet thereafter as they reasonably deem necessary. All negotiations pursuant to this Article 8.1 shall be confidential and shall be treated as compromise and settlement negotiations. Nothing said or disclosed, nor any document produced, in the course of such negotiations which is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose in any current or future arbitration or litigation. 8.2 If the Dispute has not been resolved within 30 days after the receipt of a Dispute Notice through negotiation as provided in Article 8.1, then the Dispute shall be finally settled by arbitration pursuant to the U.S.-Korean Commercial Arbitration Agreement, dated December 1, 1974, by which each party is bound. The arbitration shall be held in Seoul, Korea, if the case is brought against POSCO and in St. Louis, Missouri, U. S. A. if the case is brought against MEMC, unless the parties mutually agree to have the arbitration held elsewhere, and judgment upon the award made therein may be entered by any court having jurisdiction over any of the parties to this Agreement; provided, however, that nothing contained in the Article 8 shall be construed to limit or preclude a party from bringing any action in any court of competent jurisdiction for injunctive or other provisional relief to compel another party to comply with its obligations under this Agreement during the pendency of the arbitration proceedings. The arbitrator shall have the authority to grant any equitable and legal remedies that would be available in any judicial proceeding instituted to resolve any claim hereunder. Article 9 Termination This Agreement may be terminated at any time prior to the Closing: (a) By mutual written agreement of all the Parties; (b) By MEMC, by ten (10) Business Days prior written notice to POSCO (if MEMC is not then materially in default or breach of this Agreement) if POSCO shall default or be in material breach in the performance of any of its obligations under this Agreement, and such default or breach has not been cured by POSCO within seven (7) Business Days following the receipt of written notice from MEMC of MEMC's intention to terminate this Agreement; (c) By POSCO, by ten (10) Business Days prior written notice to MEMC (if POSCO is not then materially in default or breach of this Agreement) if MEMC shall default or be in material breach in the performance of any of its obligations under this Agreement, and such default or breach has not been cured by MEMC within seven (7) Business Days following the receipt of written notice from POSCO of POSCO's intention to terminate this Agreement; (d) By MEMC in the event of a material adverse change in the financial condition or prospects of the Company or a material adverse loss or damage to or condemnation of the property or assets of the Company; and (e) By either MEMC or POSCO if the Closing shall not have occurred by October 15, 2000 (or such other date mutually agreed upon by the parties in writing); provided, however, that this Agreement may not be terminated under this paragraph (d) by a party if the failure of the Closing to occur by such date shall have resulted from the such party's failure to fulfill any obligation under this Agreement. Article 10. Miscellaneous 10.1 Confidentiality. Prior to the Closing Date, neither party (a) will disclose to any other person or entity the existence of this Agreement, or any of the terms, conditions or other facts of this Agreement or the transaction contemplated hereby, including the status thereof, or (b) make any public disclosure or publicity release pertaining to the transaction contemplated hereby or the existence of this Agreement, without the prior written consent of the other party. However, each party is permitted to make such disclosures to the public or to governmental agencies as are deemed necessary to maintain compliance with and to prevent violations of applicable laws and regulations or the rules of any stock exchange on which the securities of a party (or a majority stockholder of a party) may be listed, so long as the party notifies the other party in writing and furnishes the other party with a copy of any such proposed disclosure. In addition, the parties understand that certain disclosures regarding this Agreement and the transaction contemplated hereby must be made to parties whose consent or approval may be required in connection with such transaction. The parties agree that such disclosures may be made without any prior consent or notification. In addition, each party may disclose this Agreement and the transaction contemplated hereby to its accountants, attorneys, lenders and majority stockholders provided such parties agree to keep the information confidential as provided in this Article 10.1. 10.2 Assignment; Binding Agreement. (a) This Agreement and all or any part of MEMC's rights and obligations hereunder may be assigned by MEMC at any time to any one or more direct or indirect subsidiary(ies) of MEMC provided that MEMC shall remain liable to POSCO for the performance of such subsidiary(ies) of the obligations set forth in this Agreement. MEMC shall cause such subsidiary(ies) to perform any of MEMC's obligations hereunder which are assigned to such subsidiary(ies). (b) Except as provided in paragraph (a) above, neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the prior written consent of the other party. (c) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and to their respective heirs, successors and permitted assignees. 10.3 Amendments. This Agreement may be amended only in writing signed by duly authorized representatives of all the parties. 10.4 Waiver. No waiver of this Agreement by a party may be claimed against such party unless in writing signed by such party. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege preclude any further exercise thereof or the exercise of any other such right, power or privilege. 10.5 Entire Agreement. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof, merge all prior negotiations and drafts of the parties with regard to the transactions contemplated herein, and supersede any and all other written or oral understandings or agreements between the parties regarding such transactions. 10.6 Severability. If any provision of this Agreement shall be determined to be unenforceable by any court or other governmental entity, the remaining provisions shall be severable and enforceable in accordance with their terms. 10.7 Counterparts. This Agreement may be executed in one or more identical counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. 10.8 Headings; Interpretation. The Article headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of the Agreement. 10.9 Specific Performance. The parties agree that irreparable damage would occur in the event any provisions of this Agreement is not performed in accordance with the terms or is otherwise breached, and that the parties shall be entitled to specific performance of the terms hereof in any court of competent jurisdiction, in addition to any other remedy at law or equity. 10.10No Third Party Beneficiaries. No provision of this Agreement, express or implied, is intended or shall be construed to confer upon or give to any person other than the parties any rights, remedies or other benefits under or by reason of this Agreement, unless specifically provided otherwise herein. 10.11Notices. All written notices, requests, demands and other communications under this Agreement shall be given by letter (delivered by hand, air courier or registered air mail) or by cable, telex, or facsimile transmission confirmed by such a letter, which shall be addressed to the respective party as follows, or to such other coordinates as such party shall have designated by written notice to the other party: To: MEMC MEMC Electronic Materials, Inc. 501 Pearl Drive (City of O'Fallon) P.O. Box 8 St. Peters, MO 63376-0008 Attention: Chief Executive Officer Fax: 1-636-474-5158 Telephone: 1-636-474-5000 To: POSCO Pohang Iron & Steel Co., Ltd. POSCO Center, 892, Daechi-4dong, Kangnam-gu Seoul, 135-777, Korea Attention: Executive Vice President Fax: 82-2-3457-1914 Telephone: 82-2-3457-0058 10.12Governing Law. This Agreement shall be governed, and construed and interpreted in accordance with, the laws of the Republic of Korea, without giving effect to its conflict of laws principles. IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Agreement on the date first written above. MEMC Electronic Materials, Inc. Pohang Iron & Steel Co., Ltd. /s/ Klaus R. von Horde /s/ Ku-Taek Lee - -------------------------- ----------------------------- Name: Klaus R. von Horde Name: Ku-Taek Lee Title: President & CEO Title: President & CEO EX-10.YYY 3 0003.txt EURO 80,000,000 CREDIT AGREEMENT Euro 80,000,000 CREDIT AGREEMENT Dated as of September 22, 2000 Between MEMC ELECTRONIC MATERIALS, S.P.A. as Borrower and VEBA INTERNATIONAL FINANCE B.V. as Initial Lender and as Agent CREDIT AGREEMENT Dated as of September 22, 2000 MEMC ELECTRONIC MATERIALS, S.P.A., a company formed under the laws of Italy, as the borrower (the "Borrower"), and VEBA INTERNATIONAL FINANCE B.V., a company formed under the laws of the Netherlands ("VEBA"), as the initial lender (the "Initial Lender") and as agent (together with any successor appointed pursuant to Article VII, the "Agent") for the Lenders (as hereinafter defined), hereby agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Advance" has the meaning specified in Section 2.01. "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 50% or more of the voting stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting stock, by contract or otherwise. "Agent" has the meaning specified in the recital of parties to this Agreement. "Agent's Account" means the account of the Agent maintained with such bank as the Agent shall specify in writing to the Borrower and the Lenders from time to time. "Applicable Spread" means 5.1325%, which is the percentage per annum equal to the excess of (a) the Bloomberg fair market sector curves (adjusted for the chosen interest rate method) applicable two business days prior to September 22, 2000, to a B3 rated industrial borrower for the period from September 22, 2000, through the Termination Date over (b) the corresponding Swap Rate for such period. "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. "Bank" means any Lender other than the Initial Lender or any Affiliate of the Initial Lender. "Borrower" has the meaning specified in the recital of parties to this Agreement. "Borrowing" means the borrowing consisting of the Advances made by the Lenders. "Borrowing Notice" has the meaning specified in Section 2.02(a). "Business Day" means a day of the year on which banks are not required or authorized by law to close in Amsterdam, The Netherlands. "Change of Control" means the Initial Lender or any Affiliate of the Initial Lender, through any transaction or series of transactions or otherwise, no longer has beneficial ownership, directly or indirectly, of more than 50% of the shares of common stock of the Borrower. "Change of Control Date" means the date of occurrence of a Change of Control; provided, that if such occurrence is on or prior to January 1, 2001, the occurrence shall be deemed to have occurred on January 1, 2001. "Commitment" has the meaning specified in Section 2.01. "Confidential Information" means information that the Borrower furnishes to the Agent or any Lender in a writing designated as confidential, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Agent or such Lender from a source other than the Borrower, an Affiliate of the Borrower or an Affiliate of the Initial Lender. "Consolidated" refers to the consolidation of accounts in accordance with GAAP. "Debt" means (a) indebtedness for borrowed money, (b) obligations evidenced by bonds, debentures, notes or other similar instruments, (c) obligations to pay the deferred purchase price of property or services, (d) obligations as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases, and (e) obligations under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clause (a) through (d) of this definition. "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. "Dollars" and the sign "$" each means lawful money of the United States of America. "Domestic Lending Office" means, with respect to any Bank, the office of such Bank specified as its "Domestic Lending Office" in the Assignment and Acceptance pursuant to which it became a Lender, or such other office of such Bank as such Bank may from time to time specify to the Borrower and the Agent. "Effective Date" has the meaning specified in Section 3.01. "Eligible Assignee" means any Person approved by all of the Lenders; provided, however, that neither the Borrower, MEMC nor any Subsidiary of MEMC shall qualify as an Eligible Assignee. "Euros" and the sign "Euro" means the money of the participating member states of the European Union as defined in Article 2 of Regulation 947/98/CE of May 3, 1998 of the Council of the European Union, as amended. "EURIBOR" means, at a time selected by the Agent on the Quotation Day for the offering of deposits in Euro for a period comparable to the Interest Period, (a) the applicable Screen Rate, or (b) if no Screen Rate is available for the period of that loan, the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its requested quoted by the reference banks (chosen by the Agent) to lending banks in the European interbank market. "Events of Default" has the meaning specified in Section 6.01. "GAAP" has the meaning specified in Section 1.03. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, and any federal, state, local or foreign court or governmental, executive, legislative, judicial, administrative or regulatory agency, department, authority, instrumentality, commission, board or similar body. "Guaranty" means the Guaranty Agreement of MEMC in the form attached hereto as Exhibit D. "Guarantor" means MEMC. "Indemnified Party" has the meaning specified in Section 8.04(b). "Initial Lender" has the meaning specified in the recital of parties to this Agreement. "Interest Period" means for each Advance comprising part of the same Borrowing, the period commencing on the date of such Advance and ending three months thereafter, and thereafter the period commencing on the last day of the prior Interest Period and ending three months thereafter. "Interest Rate" for any Interest Period means a three months rate at all times equal to (a) the EURIBOR rate for such Interest Period for such Advance, plus (b) the Applicable Spread. "Lender" means the Initial Lender and each Person that shall become a party hereto pursuant to Section 8.07. "Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower and its Subsidiaries taken as a whole. "MEMC" means MEMC Electronic Materials, Inc., a Delaware corporation. "Note" means a promissory note of the Borrower payable to the order of any Lender, substantially in the form of Exhibit A hereto, evidencing the Debt of the Borrower to such Lender resulting from the Advance made by such Lender. "Other Taxes" has the meaning specified in Section 2.12(b). "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. "PHC" means Posco Huls Co., Ltd., a corporation organized and existing under the laws of the Republic of Korea. "Posco" means Pohang Iron & Steel Co., Ltd., corporation organized and existing under the laws of the Republic of Korea. "Purchase Agreement" means the Share Sale and Purchase Agreement dated September 7, 2000 by and between Posco and MEMC, a true and correct copy of which has been delivered to VEBA. "Quotation Day" means, in relation to the Interest Period, two TARGET Days before the first day of such Interest Period. "Register" has the meaning specified in Section 8.07(c). "Repayment Date" means, with respect to the Advances comprising a Borrowing, the date specified by the Borrower in the Borrowing Notice for such Borrowing on which the Borrower agrees to repay the aggregate principal amount of the Advances comprising such Borrowing; provided that such date shall not be later than the Termination Date. "Screen Rate" means the percentage rate per annum determined by the Banking Federation of the European Union for the relevant period displayed on the appropriate page(s) of the Reuters screen, as determined by the Agent. If the agreed page is replaced or service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the Borrower and the Lenders. "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; provided, however, that the term "Subsidiary" shall not include any joint venture of the Borrower with respect to any action or decision of the board of directors of such joint venture if, by written agreement, such action or decision requires a vote in excess of the number of members of such board of directors elected or controlled by the Borrower. "Swap Rate" means the US-Dollar denominated interbank interest rate swap offered rates as shown on the appropriate Reuters page, as determined by the Agent, and other comparable brokerage pages, adjusted for a three month period. "TARGET" means Trans-European Automated Real-time Gross Settlement Express Transfer payment system. "TARGET Day" means any day on which TARGET is open for the settlement of payments in Euro. "Taxes" has the meaning specified in Section 2.12(a). "Termination Date" means the earlier of (a) September 22, 2001, (b) the termination in whole of the Commitments pursuant to Section 2.04 or Section 6.01, or (c) October 16, 2001 if the acquisition contemplated by the Purchase Agreement has not been consummated. "United States" and "U.S." each means the United States of America. The words "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation." 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 means "to but excluding." SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles ("GAAP"). 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 (each, an "Advance") to the Borrower from time to time on any Business Day during the period from the Effective Date until the Termination Date in an amount not to exceed the amount set forth opposite such Lender's name on the signature pages hereof or, if such Lender has entered into any Assignment and Acceptance, set forth for such Lender in the Register maintained by the Agent pursuant to Section 8.07(c), as such amount may be reduced pursuant to Section 2.04 (such Lender's "Commitment"). Each Borrowing shall be in an aggregate amount of Euro 10,000,000 or an integral multiple of Euro 100,000 in excess thereof and shall be made simultaneously by the Lenders ratably according to their respective Commitments. The Borrower is not entitled to reborrow any repaid or prepaid portion of any Advance. SECTION 2.02. Making the Advances. (a) Each Borrowing shall be made on notice, given not later than 11:00 A.M. (Amsterdam, The Netherlands time) on the third Business Day prior to the date of the proposed Borrowing by the Borrower to the Agent, which shall give to each Lender prompt notice thereof by telecopier or telex. Each notice of a Borrowing (a "Borrowing Notice") shall be by telephone, confirmed immediately in writing, or telecopier or telex, in substantially the form of Exhibit B hereto, specifying therein, among other things, the requested date of such Borrowing, the amount of such Borrowing and the Repayment Date of the Advances comprising such Borrowing. Each Lender shall, before 11:00 A.M. (Amsterdam, The Netherlands time) on the date of such Borrowing, make available for the account of its Domestic 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 Article III, the Agent will make such funds available to the Borrower by depositing the proceeds of the Advances in such Euro account of the Borrower (or of such Person as the Borrower shall specify to the Lender in the Borrowing Notice or by other written notice to the Lender given simultaneously with or prior to such Borrowing Notice) maintained with such bank as the Borrower shall specify to the Agent in such Borrowing Notice. The parties hereto understand and agree that the Initial Lender may, in its sole discretion (but shall have no obligation to), designate a financial institution or another Person to perform the Initial Lender's obligations hereunder in accordance with the terms hereof. The Borrower agrees that performance of any such obligation by any such designee of the Initial Lender shall be deemed to constitute performance by the Initial Lender for all purposes of this Agreement and the Note and shall discharge the Initial Lender from such obligation to the extent of such performance. (b) Any Borrowing Notice delivered by the Borrower to the Agent shall be irrevocable and binding on the Borrower. The Borrower 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 Borrowing Notice for such Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not made on such date. (c) The Agent shall only make available to the Borrower on the date of any Borrowing the ratable portion of such Borrowing of each Lender that such Lender has made available to the Agent on or prior to the date of such Borrowing. (d) 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. (e) Notwithstanding the foregoing, the Borrower agrees that there shall be only one Advance hereunder. SECTION 2.03. Commitment Fee. The Borrower agrees to pay to the Agent for the account of each Lender a commitment fee on the unused portion of such Lender's Commitment from the Effective Date in the case of the 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 1/4 of 1%, payable in arrears quarterly on the last day of each March, June, September and December, commencing September 30, 2000, and on the Termination Date. SECTION 2.04. Optional Termination or Reduction of the Commitments. The Borrower shall have the right, upon at least three Business Days' notice to the Agent, to terminate in whole or reduce in part the unused Commitments of the Lenders, provided that each partial reduction shall be in the amount of Euro 100,000 or an integral multiple of Euro 100,000 in excess thereof. SECTION 2.05. Repayment. The Borrower shall repay to the Agent for the ratable account of the Lenders the aggregate principal amount of the Advances then outstanding comprising each Borrowing on the Repayment Date for such Borrowing. SECTION 2.06. Interest. (a) Interest on the Advances. The Borrower 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 have been paid in full at an interest rate per annum equal to the Interest Rate, payable in arrears on the last day of such Interest Period and on the date such Advance shall be paid in full. (b) Interest on Overdue Amounts. In the event that any principal amount of any Advance or any interest, fees, costs, expenses or other amounts payable hereunder are not paid when due, the Borrower shall pay interest on such unpaid amount from the date such amount is due until the date such amount is paid in full, payable on demand, at an interest rate per annum equal to the interest rate referred to in subsection (a) of this Section 2.06 then in effect plus 2%. SECTION 2.07. Reserved. SECTION 2.08. Optional Prepayments and Reductions of Commitment. (a) The Borrower may, upon at least three Business Days' notice to the Agent stating the proposed date and the aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding principal amount of the Advances in whole or ratably in part, together with (i) accrued interest to the date of such prepayment on the principal amount prepaid and (ii) any amount payable pursuant to Section 8.04(c); provided, however, that each such partial prepayment shall be in an aggregate principal amount of not less than Euro 5,000,000 or an integral multiple of Euro 100,000 in excess thereof. (b) Upon the prepayment in whole or in part of the Advances in accordance with subsection (a) of this Section 2.08 or under Section 5.02, the Commitments of the Lenders shall be automatically reduced ratably by the amount of such prepayment. SECTION 2.09. Increased Costs, Etc. If due to either (a) the introduction of or any change (including, without limitation, any change by way of imposition or increase of reserve requirements) in or in the interpretation of any law or regulation or (b) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining an Advance, then the Borrower shall from time to time, upon 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 (as applicable) to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to the Borrower by such Lender, shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.10. Illegality. Notwithstanding any other provision of this Agreement, if any Bank shall notify the Borrower that any law or regulation, or 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 such Lender to perform its obligations hereunder to make an Advance or to fund or maintain an Advance hereunder, (a) the obligation of such Lender to make, fund and maintain any Advance shall be suspended until such Lender shall notify the Borrower that the circumstances causing such suspension no longer exist, (b) such Lender shall promptly notify the Borrower of such circumstances and such suspension, and (c) unless the Borrower and such Lender shall have otherwise agreed within ten Business Days of such notice, the Borrower shall forthwith on such tenth Business Day prepay in full the Advances then outstanding together with interest accrued thereon. SECTION 2.11. Payments and Computations. (a) The Borrower shall make each payment hereunder and under the Notes not later than 1:00 P.M. (Amsterdam, The Netherlands time) on the day when due in Euro to the Agent at the Agent's Account, in each case in immediately available funds. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or fees ratably (other than amounts payable pursuant to Section 2.09, 2.12 or 8.04(c)) to the Lenders for the account of their respective Domestic 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 Domestic Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 8.07(d), from and after the effective date 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 and of fees shall be made in good faith by the Agent on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable. (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 next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fee, as the case may be. (d) Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Agent may assume that the 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 the 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 overnight EURIBOR rate as selected and calculated by the Agent. SECTION 2.12. Taxes. (a) Any and all payments by the Borrower hereunder or under the Notes shall be made in accordance with Section 2.11, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and the Agent, net income taxes (or franchise taxes imposed in lieu thereof) that are imposed on such Lender or the Agent by the state or foreign jurisdiction under the laws of which such Lender or the Agent (as the case may be) is organized or any political subdivision thereof and, in the case of each Lender, net income taxes (or franchise taxes imposed in lieu thereof) that are imposed on such Lender by the state or foreign jurisdiction of such Lender's Domestic Lending Office or any political subdivision thereof (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note, (i) the sum payable shall be increased as may be necessary so that, after making all required deductions (including deductions applicable to additional sums payable under this Section 2.12), such Lender or the Agent receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, the Borrower shall pay any present or future stamp, documentary, excise, property or other taxes, charges or levies that arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as "Other Taxes"). (c) The Borrower shall indemnify each Lender and the Agent for the full amount of Taxes or Other Taxes and for the full amount of Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.12 imposed on or paid by such Lender or the Agent (as the case may be) or any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date such Lender or the Agent makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes, the Borrower shall furnish to the Agent, at its address referred to in Section 8.02, the original receipt of payment or a certified copy of such receipt. If no Taxes are payable in respect of any payment hereunder or under the Notes, the Borrower shall furnish to the Agent, at such address, a certificate from each appropriate taxing authority, or an opinion of counsel acceptable to the Lenders, in either case stating that such payment is exempt from or not subject to Taxes. (e) Each Lender organized under the laws of a jurisdiction outside Italy shall, on or after the Effective Date in the case of the Initial Lender and on the date of the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender, and from time to time thereafter if requested in writing by the Borrower or the Agent (but only so long as such Lender remains lawfully able to do so), provide each of the Borrower and the Agent with tax forms or documentation, as appropriate, prescribed by Italian taxing authorities, certifying that such Lender is exempt from or entitled to a reduced rate of Italian withholding tax on payments of interest pursuant to this Agreement or the Notes. The Lender shall not be required to provide the Borrower or Agent with any tax form or documentation referred to in this subsection (e) if such tax form or documentation (i) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by the Italian taxing authorities that the Lender reasonably considers to be confidential, or (ii) is more onerous (in form, in procedure or in substance of the information disclosed) than comparable information or other reporting requirements imposed under U.S. tax law, regulation or administrative practice (such as Forms W-8, W-BEN or W-8ECI or any comparable successor form). (f) For any period with respect to which a Lender has failed to provide the Borrower or Agent with the appropriate form described in Section 2.12(e) (other than if such failure is due to a change in law occurring subsequent to the date on which a form originally was required to be provided or if such form is otherwise not required), such Lender shall not be entitled to indemnification under Section 2.12(a) with respect to Taxes imposed by Italy until such form is provided; provided, however, that should such Lender become subject to Taxes because of its failure to deliver a form required hereunder, the Borrower and Agent shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Taxes. (g) If following any amount paid under this Section 2.12, the Lender receives or is granted a credit against or remission for any Taxes or Other Taxes payable by such Lender which the Lender determines, in its sole and absolute discretion, is attributable to any Taxes or Other Taxes paid hereunder, such Lender shall, subject to the Borrower having made any increased payment hereunder and to the extent such Lender can do so in its sole opinion without prejudicing the retention of the amount of such credit or remission and without prejudice to its rights to obtain any other relief or allowance which may be available to such Lender and to conduct its own tax affairs as it sees fit, reimburse such amount to the Borrower as the Lender shall in its sole and absolute discretion certify to be the proportion of such credit or remission as will leave the Lender (after such reimbursement) in no worse position than it would have been in had no payment been required under this Section 2.12. Such reimbursement shall be made promptly upon the Lender certifying that the amount of such credit or remission has been received by it; provided, however, that no such payment shall be made so long as an Event of Default shall have occurred and be continuing. The disallowance or reduction of any credit or remission of Taxes or Other Taxes with respect to which a Lender has made a payment to Borrower under this Section 2.12 shall be treated as Taxes for which Borrower is obligated to indemnify such Lender hereunder. Notwithstanding the above, no Lender shall (i) be under any obligation to claim a tax credit in priority to any other claim, relief, credit or deduction available to such Lender or (ii) be obligated to disclose any information regarding its tax affairs or computations to the Borrower. SECTION 2.13. Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of the Advance owing to it (other than pursuant to Section 2.09, 2.12 or 8.04(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 (a) the amount of such Lender's required repayment to (b) 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. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.13 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. SECTION 2.14. Use of Proceeds. The proceeds of the Advances shall be available (and the Borrower agrees that it shall use such proceeds) to capitalize one or more direct or indirect wholly owned subsidiaries of the Borrower and for one of such subsidiaries to purchase 40% of the issued and outstanding share capital of PHC from Posco under the terms of the Purchase Agreement by paying the full purchase price therefor, and the balance, if any, shall be used for general corporate purposes. 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 (the "Effective Date") on which the following conditions precedent have been satisfied: (a) There shall have occurred no Material Adverse Change since June 30, 2000. (b) There shall exist no action, suit, investigation, litigation or proceeding affecting the Borrower or any of its Subsidiaries pending or threatened in writing before any court, governmental agency or arbitrator that (i) may materially adversely affect the financial condition or operations of the Borrower or any of its Subsidiaries or (ii) purports to affect the legality, validity or enforceability of this Agreement or any Note or the consummation of the transactions contemplated hereby. (c) On the Effective Date, the following statements shall be true and the Agent shall have received a certificate signed by a duly authorized officer of the Borrower, 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. (d) The Agent shall have received on or before the Effective Date the following, each dated such date, in form and substance satisfactory to the Lenders (except for the Notes): (i) executed counterparts of this Agreement duly executed and delivered by the Borrower; (ii) the Notes to the order of the Lenders; (iii) certified copies of the resolutions of the board of directors of the Borrower 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; (iv) a certificate of the Secretary or an Assistant Secretary of the Borrower certifying the names and true signatures of the officers of the Borrower authorized to sign this Agreement and the Notes and the other documents to be delivered hereunder; (v) the Guaranty duly executed and delivered by the Guarantor; (vi) certified copies of the resolutions of the board of directors of the Guarantor, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to the Guaranty; and (iv) a certificate of the Secretary or an Assistant Secretary of the Guarantor certifying the names and true signatures of the officers of the Guarantor authorized to sign the Guaranty. SECTION 3.02. 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 the following statements shall be true (and each of the giving of the applicable Borrowing Notice and the acceptance by the Borrower of the proceeds of such Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Borrowing such statements are true): (a) the representations and warranties contained in Section 4.01 are correct on and as of the date of such Borrowing, 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, and (b) 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. SECTION 3.03. 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 Borrower, 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 Borrower. The Borrower represents and warrants as follows: (a) The Borrower is a company duly organized, validly existing and in good standing under the laws of the Italy. (b) The execution, delivery and performance by the Borrower of this Agreement and the Notes are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Borrower's charter or by-laws or (ii) any law or any contractual restriction binding on or affecting the Borrower. (c) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required for the due execution, delivery and performance by the Borrower of this Agreement and the Notes. (d) This Agreement has been, and the Notes when delivered hereunder will have been, duly executed and delivered by the Borrower. This Agreement is, and each of the Notes when delivered hereunder will be, legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms. (e) There is no pending or threatened action or proceeding affecting the Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator, that (i) may materially adversely affect the financial condition or operations of the Borrower or any of its Subsidiaries or (ii) purports to affect the legality, validity or enforceability of this Agreement or the Notes or the consummation of the transactions contemplated hereby. (f) The Advances and all related obligations of the Borrower under this Agreement and the Notes rank pari passu with all other unsecured obligations of the Borrower that are not, by their terms, expressly subordinate to such other obligations of the Borrower. (g) The Purchase Agreement has not been terminated, and either the purchase contemplated by the Purchase Agreement has been consummated or the Borrower believes in good faith that such purchase will be consummated in accordance with the terms of the Purchase Agreement. (h) The Borrower is not insolvent and has a net worth equal to at least US$80,000,000. ARTICLE V COVENANTS OF THE BORROWER SECTION 5.01. Affirmative Covenants. On and after the Change of Control Date and so long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will, unless the Lenders shall otherwise consent in writing: (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 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 the 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 and as to which appropriate reserves are being maintained, unless and until any lien resulting therefrom attaches to its property and becomes enforceable against its other creditors. (c) 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 neither the Borrower nor any of its Subsidiaries shall be required to preserve any right or franchise if the board of directors of the Borrower or such Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Borrower or such Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any material respect to the Borrower, such Subsidiary or the Lenders. (d) 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 the Borrower and each such Subsidiary in accordance with the equivalent of GAAP applicable in the jurisdiction in which the Borrower or any such Subsidiary is organized. (e) 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. (f) Reporting Requirements. Furnish to the Lenders: (i) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Borrower, Consolidated balance sheets of the Borrower and its Subsidiaries as of the end of such quarter and Consolidated statements of income and cash flows of the Borrower 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 Borrower as having been prepared in accordance with GAAP; (ii) as soon as available and in any event within 90 days after the end of each fiscal year of the Borrower, a copy of the annual report for such year for the Borrower and its Subsidiaries, containing Consolidated balance sheets of the Borrower and its Subsidiaries as of the end of such fiscal year and Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for such fiscal year; (iii) as soon as possible and in any event within ten days after the occurrence of each Default continuing on the date of such statement, a statement of the chief financial officer of the Borrower setting forth details of such Default and the action that the Borrower has taken and proposes to take with respect thereto; (iv) promptly after the commencement thereof, notice of all actions and proceedings before any court, governmental agency or arbitrator affecting the Borrower or any of its Subsidiaries of the type described in Section 4.01(e); and (v) such other information respecting the Borrower or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request. SECTION 5.02. Mandatory Repayment and Other Covenants. (a) In addition to any other mandatory repayments or commitment reductions pursuant to this Agreement, within twenty (20) days after each date upon which any of Borrower or its Subsidiaries receives any cash from PHC from dividends, reductions or repurchases of equity, share redemptions or loans, Borrower shall pay the Lenders an amount equal to 75% of the cash received from PHC less any applicable taxes as a mandatory repayment of the outstanding principal amount of the Advances, together with accrued interest to the date of such repayment on the principal amount repaid. (b) In addition to any other mandatory repayments or commitment reductions pursuant to this Agreement, if within twenty-five (25) days from obtaining the Advance, a direct or indirect wholly owned Subsidiary of the Borrower does not consummate the purchase contemplated by the Purchase Agreement, the Borrower shall pay to the Lenders all amounts then outstanding hereunder. (c) The Borrower shall not be required to pay any amount under Section 8.04(c) in connection with any Advances repaid pursuant to Section 5.02. (d) The Borrower will, unless the Lenders shall otherwise consent in writing, use and cause each of its Subsidiaries to use, reasonable commercial efforts to obtain cash from PHC by way of dividends or loans (taking into account tax consequences and PHC's reasonable capital requirements), which amounts shall then be payable to the Lenders as a mandatory repayment pursuant to this Section 5.02. 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) the Borrower shall fail to pay (i) any principal of any Advance when the same becomes due and payable or (ii) any interest on any Advance or any other amount payable under this Agreement or any Note within ten days from the date the same becomes due and payable, or the Guarantor shall fail to pay any amounts under the Guaranty when the same become due and payable; or (b) any representation or warranty made by the Borrower herein or by the Guarantor in the Guaranty or by the Borrower (or any of its officers) in connection with this Agreement or by the Guarantor (or any of its officers) in connection with the Guaranty shall prove to have been incorrect in any material respect when made; or (c) (i) the Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 5.01 or in Section 5.02, (ii) the Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or any Note on its part to be performed or observed if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Agent or any Lender, (iii) the Guarantor shall fail to perform or observe any term, covenant or agreement contained in Section 10 of the Guaranty, or (iv) the Guarantor shall fail to perform or observe any other term, covenant or agreement contained in the Guaranty on its part to be performed or observed if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Guarantor by the Agent or any Lender; or (d) the Borrower or MEMC 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 $5,000,000 in the aggregate (but excluding Debt outstanding hereunder) of the Borrower or MEMC 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 (other than by a regularly scheduled required prepayment), redeemed, 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 (e) the Borrower or MEMC 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 Borrower or MEMC 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 Borrower or MEMC or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this Section 6.01(e); or (f) any judgment or order for the payment of money in excess of $5,000,000 shall be rendered against the Borrower or MEMC 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 30 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; then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the Lenders, by notice to the Borrower, 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 Lenders, by notice to the Borrower, declare the Notes, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under any applicable bankruptcy law, (A) the obligation of each Lender to make Advances shall automatically be terminated and (B) the Notes, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. ARTICLE VII THE AGENT SECTION 7.01. 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 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 the Borrower pursuant to the terms of this Agreement. SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (a) may treat the payee of any Note as the holder thereof until the Agent receives and accepts an Assignment and Acceptance entered into by the Lender that is the payee of such Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07; (b) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender 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; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the property (including the books and records) of the Borrower; (e) 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 (f) 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 7.03. VEBA. With respect to its Commitment, the Advance made by it and the Note issued to it, Veba 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 Veba in its individual capacity. SECTION 7.04. 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. SECTION 7.05. Indemnification. The Lenders agree to indemnify the Agent (to the extent not reimbursed by the Borrower), ratably according to the respective principal amounts of the Notes then held by each of them (or if no Notes are at the time outstanding or if any Notes are held by Persons that are not Lenders, 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 or the Guaranties, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including 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 or the Guarantees, to the extent that the Agent is not reimbursed for such expenses by the Borrower. SECTION 7.06. Successor Agent. The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and may be removed at any time with or without cause by the all of the Lenders. Upon any such resignation or removal, the Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the 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 or of any state thereof and having a long-term senior unsecured debt rating by S&P of "A" or better. 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 VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. ARTICLE VIII MISCELLANEOUS SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the Notes or any Guaranty, nor consent to any departure by the Borrower or the Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the 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 or subject the Lenders to any additional obligations, (c) reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, (d) postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, (e) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Notes, or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder or (f) amend this Section 8.01; and provided further that no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Agent under this Agreement or any Note. SECTION 8.02. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic or telex communication) and mailed, telecopied, telegraphed, telexed or delivered, if to the Borrower, at its address at Viale Gherzi, 31, 28100 Novara, Italy, Attention: Chief Financial Officer (telecopier number 390-473-333-270); if to the Initial Lender or the Agent, at Strawinskylaan 3111, 1070 ZX Amsterdam, The Netherlands, Attention: Peter Pels (telecopier number 3120-442-0319); if to any other Lender or any Bank, at its Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender; or, as to any party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications shall, when mailed, telecopied, telegraphed or telexed, be effective when received by the party to whom such notice is addressed, except that notices and communications pursuant to Section 2.06 shall not be effective until confirmed in writing by the party to whom such notice is addressed. 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. SECTION 8.03. 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 8.04. Costs and Expenses. (a) The Borrower agrees to pay on demand all reasonable costs and expenses of the Agent in connection with the preparation, execution, delivery, modification and amendment of this Agreement, the Notes, the Guaranty and the other documents to be delivered hereunder, including, without limitation, 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 Borrower further agrees 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 8.04(a). (b) The Borrower agrees 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) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of, or in connection with the preparation for a defense of, any investigation, litigation or proceeding arising out of, related to or in connection with the Notes, this Agreement, the Guaranty, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances, whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated, except to the extent such claim, damage, loss, liability or expense is found in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct. The Borrower also agrees not to assert any claim 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, for special, indirect, consequential or punitive damages 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 any Advance is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Advance, as a result of a payment pursuant to Section 2.08(b), acceleration of the maturity of the Notes pursuant to Section 6.01 or for any other reason, the 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 including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. (d) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in Sections 2.09, 2.12 and 8.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Notes. SECTION 8.05. Right of Setoff. Upon (a) the occurrence and during the continuance of any Event of Default and (b) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Agent to declare the Notes due and payable pursuant to the provisions of Section 6.01, each Lender 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 the Borrower against any and all of the obligations of the Borrower 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 Borrower after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Lender and its Affiliates under this Section 8.05 are in addition to other rights and remedies (including, without limitation, other rights of setoff) that such Lender and its Affiliates may have. SECTION 8.06. 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 Borrower, the Agent and the Initial Lender and thereafter shall be binding upon and inure to the benefit of the Borrower, the Agent and the Initial Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders. SECTION 8.07. Assignments and Participations. (a) Each Lender may 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 Advance 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 Euro 5,000,000 or an integral multiple of Euro 100,000 in excess thereof, (iii) each such assignment shall be to an Eligible Assignee, and (iv) 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. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (A) 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 (B) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's 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 Guaranty 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 the Borrower or the Guarantor or the performance or observance by the Borrower or the Guarantor of any of its obligations under this Agreement or the Guaranty 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) The Agent shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the 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 Borrower, 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 Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (d) 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 Borrower. Within five Business Days after its receipt of such notice, the Borrower, at its own expense, shall execute and deliver to the Agent in exchange for the surrendered Note a new Note to the order of such Eligible Assignee in an amount equal to the Commitment assumed by it pursuant to such Assignment and Acceptance and, if the assigning Lender has retained a Commitment hereunder, a new Note to the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit A hereto. (e) Each Lender may sell participations to one or more banks or other entities (other than the Borrower 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 the Note or Notes held by it); provided, however, that (i) such Lender's obligations under this Agreement (including, without limitation, its Commitment to the Borrower 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 Borrower, 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 the 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. (f) Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 8.07, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; 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 Borrower 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 the Note 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) In connection with the initial assignment or proposed initial assignment by the Initial Lender pursuant to this Section 8.07, the Borrower shall, upon the request of the Initial Lender, furnish to the Initial Lender a favorable opinion of counsel for the Borrower acceptable to the Initial Lender, in form and substance reasonably satisfactory to the Initial Lender. SECTION 8.08. Confidentiality. Neither the Agent nor any Lender shall disclose any Confidential Information to any Person without the consent of the Borrower, other than (a) to the Agent's or such Lender's Affiliates and their officers, directors, employees, agents and advisors and to actual or prospective assignees and participants, and then, in each case, only on a confidential and need-to-know 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. SECTION 8.09. 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 8.10. 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 8.11. 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 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. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. MEMC ELECTRONIC MATERIALS, S.P.A., as Borrower By /s/ Giovanni Chiroli ------------------------------------- Name: Giovanni Chiroli Title: Financial Manager VEBA INTERNATIONAL FINANCE B.V., as Agent and as Initial Lender By /s/ H. J. Wirix and S.A.L. Visser ------------------------------------- Name: H. J. Wirix S.A.L. Visser Title: Managing Director/Managing Director EXHIBIT A TO THE CREDIT AGREEMENT FORM OF PROMISSORY NOTE Euro ____________________ Dated: __________________, ______ FOR VALUE RECEIVED, the undersigned, MEMC ELECTRONIC MATERIALS, S.P.A., a company organized under the laws of Italy (the "Borrower"), HEREBY PROMISES TO PAY to the order of [NAME OF LENDER], a [JURISDICTION OF INCORPORATION ] corporation (the "Lender") for its account on the Termination Date (as defined in the Credit Agreement referred to below) the principal SUM of Euro [AMOUNT OF THE LENDER'S COMMITMENT IN FIGURES] or, if less, the principal amount of the Advances made by the Lender to the Borrower pursuant to the Credit Agreement dated as of September 22, 2000 between the Borrower and VEBA INTERNATIONAL FINANCE B.V., a company organized under the laws of the Netherlands ("VEBA"), as the Lender and as Agent (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; the terms defined therein being used herein as therein defined) outstanding on the Termination Date. The Borrower promises to pay interest on the unpaid principal amount of the Advances from the date of the Advances until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. Both principal and interest are payable in Euros, the lawful money of participating states to the European Union, to VEBA, as Agent, at the Agent's Account, in same day funds. The Advances owing to the Lender by the Borrower pursuant to the Credit Agreement, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Promissory Note. This Promissory Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit Agreement. The Credit Agreement, among other things, (i) provides for the making of Advances by the Lender to the Borrower 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 the Euro amount first above mentioned, the indebtedness of the Borrower resulting from the Advances being evidenced by this Promissory Note, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. MEMC ELECTRONIC MATERIALS, S.P.A. By: ------------------------------------ Title:
ADVANCES AND PAYMENTS OF PRINCIPAL ======================== ====================== ====================== ======================== ==================== Amount of Principal Unpaid Principal Date Amount of Advance Paid or Prepaid Balance Notation Made By - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- - ------------------------ ---------------------- ---------------------- ------------------------ -------------------- ======================== ====================== ====================== ======================== ====================
EXHIBIT B TO THE CREDIT AGREEMENT FORM OF NOTICE OF BORROWING VEBA INTERNATIONAL FINANCE B.V., as Agent for the Lenders parties to the Credit Agreement referred to below Strawinskylaan 3111 September , 2000 1070 ZX Amsterdam The Netherlands Attention: Peter Pels Ladies and Gentlemen: The undersigned, MEMC ELECTRONIC MATERIALS, S.P.A., refers to the Credit Agreement, dated as of September 22, 2000 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement", the terms defined therein being used herein as therein defined), between the undersigned and VEBA INTERNATIONAL FINANCE B.V., as Initial Lender and as Agent for the Lenders thereunder, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement, that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the "Proposed Borrowing") as required by Section 2.02(a) of the Credit Agreement: (a) The Business Day of the Proposed Borrowing is September ___, 2000. (b) The aggregate amount of the Proposed Borrowing is Euro _______________. (c) The Repayment Date of the Advances comprising such Proposed Borrowing is _____________, _________. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on and as of the date of the Proposed Borrowing: (i) the representations and warranties contained in Section 4.01 of the Credit Agreement are correct, before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; and (ii) no event has occurred and is continuing, or would result from such Proposed Borrowing or from the application of the proceeds therefrom, that constitutes a Default. Very truly yours, MEMC ELECTRONIC MATERIALS, S.P.A. By: ----------------------------------- Title: EXHIBIT C TO THE CREDIT AGREEMENT FORM OF ASSIGNMENT AND ACCEPTANCE Reference is made to the Credit Agreement dated as of September 22, 2000 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") between MEMC ELECTRONIC MATERIALS, S.P.A., a company organized under the laws of Italy (the "Borrower"), and VEBA INTERNATIONAL FINANCE B.V., a company organized under the laws of the Netherlands ("VEBA"), as Initial Lender and as Agent (the "Agent") for the Lenders thereunder (each as defined in the Credit Agreement). Terms defined in the Credit Agreement are used herein with the same meaning. The "Assignor" and the "Assignee" referred to on Schedule 1 hereto agree as follows: 1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement as of the date hereof equal to the percentage interest specified on Schedule 1 hereto of all outstanding rights and obligations under the Credit Agreement. After giving effect to such sale and assignment, the Assignee's Commitment and the amount of the Advances owing to the Assignee will be as set forth on Schedule 1 hereto. 2. The Assignor (a) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (b) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto; (c) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto; and (d) attaches the Note held by the Assignor and requests that the Agent exchange such Note for a new Note payable to the order of the Assignee in an amount equal to the Commitment assumed by the Assignee pursuant hereto or new Notes payable to the order of the Assignee in an amount equal to the Commitment assumed by the Assignee pursuant hereto and the Assignor in an amount equal to the Commitment retained by the Assignor under the Credit Agreement, respectively, as specified on Schedule 1 hereto. 3. The Assignee (a) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (b) agrees that it will, independently and without reliance upon the Agent, the Assignor 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 the Credit Agreement; (c) confirms that it is an Eligible Assignee; (d) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement as are delegated to the Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (e) agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender; and (f) attaches any U.S. Internal Revenue Service forms required under Section 2.12 of the Credit Agreement. 4. Following the execution of this Assignment and Acceptance, it will be delivered to the Agent for acceptance and recording by the Agent. The effective date for this Assignment and Acceptance (the "Effective Date") shall be the date of acceptance hereof by the Agent, unless otherwise specified on Schedule 1 hereto. 5. Upon such acceptance and recording by the Agent, as of the Effective Date, (a) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (b) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 6. Upon such acceptance and recording by the Agent, from and after the Effective Date, the Agent shall make all payments under the Credit Agreement and the Notes in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and facility fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the Notes for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York. 8. This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this Assignment and Acceptance to be executed by their officers thereunto duly authorized as of the date specified thereon. Schedule 1 to Assignment and Acceptance Percentage interest assigned: _______% Assignee's Commitment: Euro ____________ Aggregate outstanding principal amount of Advances assigned: Euro ____________ Principal amount of Note payable to Assignee: Euro ____________ Principal amount of Note payable to Assignor: Euro ____________ Effective Date* : ___________________, _____ [NAME OF ASSIGNOR], as Assignor By: --------------------------------- Title: Date: ___________________, _____ [NAME OF ASSIGNEE], as Assignee By: --------------------------------- Title: Domestic Lending office [ADDRESS] - --------------- [FN] *This date should be no earlier than five Business Days after the delivery of this Assignment and Acceptance to the Agent. Accepted this ______ day of _______________, ____ VEBA INTERNATIONAL FINANCE B.V., as Agent By: - -------------------------------- Title: EX-10.ZZZ 4 0004.txt GUARANTY AGREEMENT COMPANY GUARANTY AGREEMENT GUARANTY AGREEMENT dated as of September 22, 2000, between MEMC ELECTRONIC MATERIALS, INC., a Delaware corporation ("MEMC" or the "Guarantor"), and VEBA INTERNATIONAL FINANCE B.V., a company organized under the laws of the Netherlands ("VEBA"), as Agent and as Initial Lender (as defined in the Credit Agreement referred to below). Reference is made to the Credit Agreement dated as of September 22, 2000 (the "Credit Agreement"), between MEMC ELECTRONIC MATERIALS, S.P.A., as Borrower, and VEBA, as Initial Lender and as Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement. The Lenders have agreed to make Advances to the Borrower, pursuant to, and upon the terms and subject to the conditions specified in the Credit Agreement. The Borrower is a wholly owned Subsidiary of MEMC, and MEMC acknowledges that it will derive substantial benefit from the making of the Advances by the Lenders to the Borrower. The obligations of the Lenders to make Advances to the Borrower are conditioned on, among other things, the execution and delivery by MEMC of a Guaranty Agreement in the form hereof. As consideration therefor and in order to induce the Lenders to make Advances to the Borrower, MEMC is willing to execute this Agreement. Accordingly, the parties hereto agree as follows: SECTION 1. Definitions. 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): "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 50% 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. "Change of Control" means the Initial Lender or any Affiliate of the Initial Lender, through any transaction or series of transactions or otherwise, no longer has beneficial ownership, directly or indirectly, of more than 50% of the shares of common stock of the Borrower. "Change of Control Date" means the date of occurrence of a Change of Control; provided, that if such occurrence is on or prior to January 1, 2001, the occurrence shall be deemed to have occurred on January 1, 2001. "Commitment" has the meaning specified in Section 2.01 of the Credit Agreement. "Consolidated" refers to the consolidation of accounts in accordance with GAAP. "Debt" means (a) indebtedness for borrowed money, (b) obligations evidenced by bonds, debentures, notes or other similar instruments, (c) obligations to pay the deferred purchase price of property or services, (d) obligations as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases, and (e) obligations under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clause (a) through (d) of this definition; provided, however, that, solely for purposes of calculating the Leverage Ratio at any time, Debt shall not include obligations of MEMC under direct or indirect guaranties of indebtedness or obligations of any Subsidiary of MEMC, to the extent the inclusion of any such obligation results in double-counting thereof. "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. "EBIT" means, with respect to MEMC and its Subsidiaries for any period, the sum of (a) net income (or net loss), (b) interest expense and (c) income tax expense, in each case determined in accordance with GAAP for such period. "Effective Date" has the meaning specified in Section 3.01. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "Events of Default" has the meaning specified in Section 6.01 of the Credit Agreement. "GAAP" means generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 9(e) and Section 10(a)(iv). "Governmental Authority" means any nation or government, any state or other political subdivision thereof, and any federal, state, local or foreign court or governmental, executive, legislative, judicial, administrative or regulatory agency, department, authority, instrumentality, commission, board or similar body. "Interest Coverage Ratio" means, with respect to MEMC and its Subsidiaries on a Consolidated basis for any period, a ratio of (a) Consolidated EBIT of MEMC and its Subsidiaries for such period to (b) interest payable on all Debt during such period. "Lender" means the Initial Lender and each Person that shall become a party to the Credit Agreement pursuant to Section 8.07 of the Credit Agreement. "Leverage Ratio" means, with respect to MEMC and its Subsidiaries at any date of determination, the ratio of (a) Consolidated Debt of MEMC and its Subsidiaries at such date to (b) Consolidated net worth of MEMC and its Subsidiaries at such date. "Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of MEMC and its Subsidiaries taken as a whole. "Net Proceeds" means, with respect to any issuance of equity or debt securities (including debt securities convertible into equity) or any incurrence of Debt (other than non-interest bearing Debt not for borrowed money (i.e., customer deposits) and other than Debt from E.ON AG or its Affiliates), an amount equal to the cash proceeds received by MEMC or any of its Subsidiaries in respect thereof (including cash proceeds received as income or other proceeds of any noncash proceeds), less any direct expenses reasonably incurred by MEMC and its Subsidiaries in connection therewith and excluding any Restricted Proceeds. "Note" has the meaning specified in Section 2. "Obligations" has the meaning specified in Section 2. "Other Taxes" has the meaning specified in Section 7(c). "PHC" means Posco Huls Co., Ltd., a corporation organized and existing under the laws of the Republic of Korea. "Restricted Proceeds" means cash proceeds received by a Subsidiary of MEMC from any issuance of debt securities or any incurrence of Debt, to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of such proceeds is not at that 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. "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; provided, however, that the term "Subsidiary" shall not include any joint venture of MEMC with respect to any action or decision of the board of directors of such joint venture if, by written agreement, such action or decision requires a vote in excess of the number of members of such board of directors elected or controlled by MEMC. "Taxes" has the meaning specified in Section 7(b). SECTION 2. Guaranty. The Guarantor unconditionally guaranties, as a primary obligor and not merely as a surety, (a) the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Advances, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by any Borrower under the Credit Agreement or any note issued pursuant to the Credit Agreement (individually a "Note" and collectively the "Notes"), when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and (iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Borrower under the Credit Agreement or any Note, and (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Borrower under or pursuant to the Credit Agreement or any Note (all the monetary and other obligations referred to in the preceding clauses (a) through (b) being collectively called the "Obligations"). The Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guaranty notwithstanding any extension or renewal of any Obligation. SECTION 3. Obligations Not Waived. To the fullest extent permitted by applicable law, the Guarantor waives presentment to, demand of payment from and protest to the Borrower of any of the Obligations, and also waives notice of acceptance of its guaranty and notice of protest for nonpayment. To the fullest extent permitted by applicable law, the obligations of the Guarantor hereunder shall not be affected by (a) the failure of the Agent or any Lender to assert any claim or demand or to enforce or exercise any right or remedy against any Borrower or any guarantor under the provisions of the Credit Agreement, any Note, any guaranty agreement, or otherwise, or (b) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of this Guaranty Agreement, the Credit Agreement, any Note, any guaranty agreement, or any other agreement. SECTION 4. Guaranty of Payment. The Guarantor further agrees that its guaranty constitutes a guaranty of payment when due and not of collection, and waives any right to require that any resort be had by the Agent or any Lender to the Borrower or to any other guarantor or to any of the security held for payment of the Obligations or to any balance of any deposit account or credit on the books of the Agent or any other Lender in favor of any Borrower or any other person. SECTION 5. No Discharge or Diminishment of Guaranty. The obligations of the Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of the Obligations), including any claim of waiver, release, surrender, alteration or compromise of any of the Obligations, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of the Guarantor hereunder shall not be discharged or impaired or otherwise affected by the failure of the Agent or any Lender or any other party to assert any claim or demand or to enforce any remedy under the Credit Agreement or any other agreement, by any waiver or modification of any provision of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the Obligations, or by any other act or omission that may or might in any manner or to any extent vary the risk of the Guarantor or that would otherwise operate as a discharge of the Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations). SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted by applicable law, the Guarantor waives any defense based on or arising out of any defense of the Borrower or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower, other than the final payment in full in cash of the Obligations. The Agent may, at its election, foreclose on any security held by judicial or nonjudicial sale, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with the Borrower or any other guarantor or exercise any other right or remedy available to it against the Borrower, or any other guarantor, without affecting or impairing in any way the liability of the Guarantor hereunder except to the extent the Obligations have been fully and finally paid in cash or otherwise satisfied pursuant to the terms of the Credit Agreement. Pursuant to applicable law, the Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or other right or remedy of the Guarantor against the Borrower or any other guarantor, as the case may be, or any security. SECTION 7. Agreement to Pay; Subordination. (a) In furtherance of the foregoing and not in limitation of any other right that the Agent, any Lender or any other party has at law or in equity against the Guarantor by virtue hereof, upon the failure of the Borrower to pay any Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, the Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Agent as designated thereby in cash the amount of such unpaid Obligations. Upon payment by the Guarantor of any sums to the Agent as provided above, all rights of the Guarantor against the Borrower arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior payment in full in cash of all the Obligations. In addition, any indebtedness of the Borrower now or hereafter held by the Guarantor is hereby subordinated in right of payment to the prior payment in full of the Obligations. If any amount shall erroneously be paid to the Guarantor on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness of the Borrower, and if an Event of Default shall have occurred and be continuing, such amount shall be held in trust for the benefit of the Borrower and shall forthwith be paid to the Agent to be credited against the payment of the Obligations, whether matured or unmatured, in accordance with the terms of the Credit Agreement. (b) Any and all payments by the Guarantor hereunder shall be made 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, net income taxes (or franchise taxes imposed in lieu thereof) that are imposed on such Lender or the Agent by the state or foreign jurisdiction under the laws of which such Lender or the Agent (as the case may be) is organized or any political subdivision thereof and, in the case of each Lender, net income taxes (or franchise taxes imposed in lieu thereof) that are imposed on such Lender by the state or foreign jurisdiction of such Lender's Domestic Lending Office or any political subdivision thereof (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder being hereinafter referred to as "Taxes"). If the Guarantor shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note, (i) the sum payable shall be increased as may be necessary so that, after making all required deductions (including deductions applicable to additional sums payable under this Section 7), such Lender or the Agent receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Guarantor shall make such deductions and (iii) the Guarantor shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (c) In addition, the Guarantor shall pay any present or future stamp, documentary, excise, property or other taxes, charges or levies that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Guaranty (hereinafter referred to as "Other Taxes"). (d) The Guarantor shall indemnify each Lender and the Agent for the full amount of Taxes or Other Taxes and for the full amount of Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 7 imposed on or paid by such Lender or the Agent (as the case may be) or any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date such Lender or the Agent makes written demand therefor. (e) Within 30 days after the date of any payment of Taxes, the Guarantor shall furnish to the Agent, at its address referred to in Section 8.02 of the Credit Agreement, the original receipt of payment or a certified copy of such receipt. If no Taxes are payable in respect of any payment hereunder, the Guarantor shall furnish to the Agent, at such address, a certificate from each appropriate taxing authority, or an opinion of counsel acceptable to the Lenders, in either case stating that such payment is exempt from or not subject to Taxes. (f) Each Lender organized under the laws of a jurisdiction outside the United States shall, prior to payment of unpaid Obligations by the Guarantor pursuant to Section 7(a) and from time to time thereafter if requested in writing by the Guarantor or the Agent (but only so long as such Lender remains lawfully able to do so), provide each of the Guarantor and the Agent with Internal Revenue Service form W-8, W-BEN or W-8ECI, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender is exempt from or entitled to a reduced rate of United States withholding tax on payments of interest pursuant to this Guaranty. If any form or document referred to in this subsection (f) 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-8, W-BEN or W-8ECI, that the Lender reasonably considers to be confidential, the Lender shall give notice thereof to the Guarantor and shall not be obligated to include in such form or document such confidential information. (g) For any period with respect to which a Lender has failed to provide the Guarantor with the appropriate form described in Section 7(f) (other than if such failure is due to a change in law occurring subsequent to the date on which a form originally was required to be provided), such Lender shall not be entitled to indemnification under Section 7(b) with respect to Taxes imposed by the United States until such form is provided; provided, however, that should such Lender become subject to Taxes because of its failure to deliver a form required hereunder, the Guarantor shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Taxes. (h) If following any amount paid under this Section 7, the Lender receives or is granted a credit against or remission for any Taxes or Other Taxes payable by such Lender which the Lender determines, in its sole and absolute discretion, is attributable to any Taxes or Other Taxes paid hereunder, such Lender shall, subject to the Guarantor having made any increased payment hereunder and to the extent such Lender can do so in its sole opinion without prejudicing the retention of the amount of such credit or remission and without prejudice to its rights to obtain any other relief or allowance which may be available to such Lender and to conduct its own tax affairs as it sees fit, reimburse such amount to the Guarantor as the Lender shall in its sole and absolute discretion certify to be the proportion of such credit or remission as will leave the Lender (after such reimbursement) in no worse position than it would have been in had no payment been required under this Section 7. Such reimbursement shall be made promptly upon the Lender certifying that the amount of such credit or remission has been received by it; provided, however, that no such payment shall be made so long as an Event of Default shall have occurred and be continuing. The disallowance or reduction of any credit or remission of Taxes or Other Taxes with respect to which a Lender has made a payment to Guarantor under this Section 7 shall be treated as Taxes for which Guarantor is obligated to indemnify such Lender hereunder. Notwithstanding the above, no Lender shall (i) be under any obligation to claim a tax credit in priority to any other claim, relief, credit or deduction available to such Lender or (ii) be obligated to disclose any information regarding its tax affairs or computations to the Guarantor. SECTION 8. Information. The Guarantor assumes all responsibility for being and keeping itself informed of the Borrower's financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that the Guarantor assumes and incurs hereunder, and agrees that none of the Agent or any other Lender will have any duty to advise the Guarantor of information known to it or any of them regarding such circumstances or risks. SECTION 9. Representations and Warranties. MEMC represents and warrants as follows: (a) MEMC is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. (b) The execution, delivery and performance by MEMC of this Guaranty Agreement are within MEMC's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) MEMC's charter or by-laws or (ii) any law or any contractual restriction binding on or affecting MEMC. (c) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required for the due execution, delivery and performance by MEMC of this Guaranty Agreement. (d) This Guaranty Agreement has been duly executed and delivered by MEMC. This Guaranty Agreement is a legal, valid and binding obligation of MEMC enforceable against MEMC in accordance with its terms. (e) The Consolidated balance sheets of MEMC and its Subsidiaries as of December 31, 1999 and June 30, 2000, and the related Consolidated statements of income and cash flows of MEMC and its Subsidiaries for the fiscal year and the six months then ended, copies of which have been furnished to the Lenders, fairly present the financial condition of MEMC and its Subsidiaries as at such dates and the results of the operations of MEMC and its Subsidiaries for the periods ended on such dates, all in accordance with GAAP. Since June 30, 2000, there has been no Material Adverse Change. (f) There is no pending or threatened action or proceeding affecting MEMC or any of its Subsidiaries before any court, governmental agency or arbitrator, that (i) may materially adversely affect the financial condition or operations of MEMC or any of its Subsidiaries or (ii) purports to affect the legality, validity or enforceability of the Credit Agreement, this Guaranty Agreement or the consummation of the transactions contemplated hereby. (g) MEMC 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. (h) The Obligations of MEMC under this Guaranty Agreement rank pari passu with all other unsecured obligations of MEMC that are not, by their terms, expressly subordinate to such other obligations of MEMC. (i) The representations and warranties of the Borrower set forth in the Credit Agreement are true and accurate. (j) No event has occurred or is continuing that constitutes a Default. SECTION 10. Covenants. (a) Affirmative Covenants. On and after the Change of Control Date and so long as any Advance shall remain unpaid or any Lender shall have any Commitment under the Credit Agreement, MEMC will, unless the Lenders shall otherwise consent in writing: (i) 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. (ii) 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 MEMC 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 and as to which appropriate reserves are being maintained, unless and until any lien resulting therefrom attaches to its property and becomes enforceable against its other creditors. (iii) 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 neither MEMC nor any of its Subsidiaries shall be required to preserve any right or franchise if the board of directors of MEMC or a Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the business of MEMC or such Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any material respect to MEMC, the Subsidiary or the Lenders. (iv) 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 MEMC and each such Subsidiary in accordance with GAAP or, in the case of any Subsidiary organized under the laws of a jurisdiction other than the United States or any state thereof, the equivalent of GAAP applicable in such jurisdiction. (v) 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. (vi) Reporting Requirements. Furnish to the Lenders: (A) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of MEMC, Consolidated balance sheets of MEMC and its Subsidiaries as of the end of such quarter and Consolidated statements of income and cash flows of MEMC 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 Borrower as having been prepared in accordance with GAAP and setting forth in reasonable detail the calculations necessary to demonstrate compliance with subsections (vii), (viii) and (ix) of this Section 10; (B) as soon as available and in any event within 90 days after the end of each fiscal year of the Borrower, a copy of the annual report for such year for the Borrower and its Subsidiaries, containing Consolidated balance sheets of the Borrower and its Subsidiaries as of the end of such fiscal year and Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for such fiscal year, in each case accompanied by an opinion acceptable to the Lenders by KPMG Peat Marwick or other independent public accountants reasonably acceptable to the Lenders and setting forth in reasonable detail the calculations necessary to demonstrate compliance with subsections (vii), (viii) and (ix) of this Section 10; (C) as soon as possible and in any event within ten days after the occurrence of each Default continuing on the date of such statement, a statement of the chief financial officer of MEMC setting forth details of such Default and the action that MEMC has taken and proposes to take with respect thereto; (D) promptly after the sending or filing thereof, copies of all reports which MEMC sends to any of its securityholders, and copies of all reports and registration statements which MEMC or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange; (E) promptly after the filing or receiving thereof, copies of all reports and notices which MEMC or any Subsidiary files under ERISA with the Internal Revenue Service or the Pension Benefit Guaranty Corporation or the U.S. Department of Labor or which MEMC or any Subsidiary receives from the Pension Benefit Guaranty Corporation; (F) promptly after the commencement thereof, notice of all actions and proceedings before any court, governmental agency or arbitrator affecting MEMC or any of its Subsidiaries of the type described in Section 9(f); and (G) such other information respecting MEMC or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request. (vii) Working Capital. Maintain an excess of Consolidated current assets over Consolidated current liabilities of MEMC and its Subsidiaries of not less than $50,000,000 and a ratio of Consolidated current assets to Consolidated current liabilities of MEMC and its Subsidiaries of not less than 1.25 to 1. Consolidated current liabilities shall include the current portion of the Debt resulting from the Notes. (viii) Net Worth. Maintain an excess of Consolidated total assets over Consolidated total liabilities of MEMC and its Subsidiaries of not less than $400,000,000. (ix) Interest Coverage Ratio. Maintain an Interest Coverage Ratio of not less than 4.0 to 1. (b) Negative Covenants. On and after the date hereof, and so long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, MEMC will not, unless the Lenders shall otherwise consent in writing: (i) Liens, Etc. Create or suffer to exist, or permit any of its Subsidiaries to create or suffer to exist, any lien, security interest or other charge or encumbrance, or any other type of preferential arrangement, upon 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, in each case to secure any Debt of any Person, other than: (A) purchase money liens or purchase money security interests upon or in any property acquired or held by MEMC or any Subsidiary in the ordinary course of business to secure the purchase price of such property or to secure indebtedness incurred solely for the purpose of financing the acquisition of such property; (B) liens or security interests existing on such property at the time of its acquisition (other than any such lien or security interest created in contemplation of such acquisition); (C) liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 10(a)(ii) hereof; (D) liens imposed by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's liens and other similar liens arising in the ordinary course of business securing obligations that are not overdue for a period of more than 30 days; (E) pledges or deposits to secure obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations; (F) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use of such property for its present purposes; and (G) liens incurred or deposits made in the ordinary course of business to secure the performance of letters of credit, bids, tenders, sales contracts, leases, surety, appeal and performance bonds and other similar obligations not incurred in connection with the borrowing of money; provided that the aggregate principal amount of the Debt, other indebtedness, taxes, assessments, governmental charges or levies and other obligations secured by the liens or security interests referred to in clauses (A) through (G) of this Section 10(b)(i) shall not exceed $45,000,000 in the aggregate at any time outstanding. (ii) 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 allowed by generally accepted accounting principles. (c) Required Repayment under the Credit Agreement. On and after the Effective Date and so long as any Advance shall remain unpaid or any Lender shall have any Commitment under the Credit Agreement, MEMC will, unless the Lenders shall otherwise consent in writing: (i) Obtain Funds from PHC. Use reasonable commercial efforts, and cause the Borrower to use reasonable commercial efforts, to obtain cash from PHC by way of dividends or loans (taking into account tax consequences and PHC's reasonable capital requirements), which amounts shall then be payable to the Lenders as a mandatory repayment pursuant to Section 5.02 of the Credit Agreement. (ii) Mandatory Repayment of PHC Funds. Within ten (10) days after each date upon which MEMC or its Subsidiaries receives any cash from PHC from dividends, reductions or repurchases of equity, share redemptions or loans, cause the Borrower to pay the Lenders an amount equal to 75% of any such cash received from PHC less any applicable taxes as a mandatory repayment of the outstanding principal amount of the Advances, together with accrued interest to the date of such repayment on the principal amount repaid. (iii) Within ten (10) days after each date upon which MEMC or its Subsidiaries receives any Net Proceeds, cause the Borrower to pay to the Lenders an amount equal to 100% of the Net Proceeds as a mandatory repayment of the outstanding principal amount of the Advances, together with accrued interest to the date of such repayment on the principal amount repaid. (iv) Cause the Borrower to comply with its obligations under the Credit Agreement. SECTION 11. Termination. The Guaranty made hereunder (a) shall terminate when all the Obligations have been paid in full and the Lenders have no further commitment to lend to any Borrower under the Credit Agreement and (b) shall be reinstated if, at any time after the Guaranty has terminated, payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by the Guarantor or any other guarantor upon the bankruptcy or reorganization of any Borrower, MEMC, any other guarantor or otherwise. SECTION 12. Binding Effect; Several Agreement; Assignments. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of MEMC that are contained in this Agreement shall bind and inure to the benefit of each party hereto and their respective successors and assigns. This Agreement shall become effective as to MEMC when a counterpart hereof executed on behalf of MEMC shall have been delivered to the Agent, and a counterpart hereof shall have been executed on behalf of the Agent, and thereafter shall be binding upon MEMC and the Agent and their respective successors and assigns, and shall inure to the benefit of MEMC, the Agent and the Lenders, and their respective successors and assigns, except MEMC shall not have the right to assign its rights or obligations hereunder or any interest herein (and any such attempted assignment shall be void). SECTION 13. Waivers; Amendment. (a) No failure or delay of the Agent or any Lender in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Agent and of the Lenders hereunder and under the Credit Agreement are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by MEMC therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on MEMC in any case shall entitle MEMC to any other or further notice or demand in similar or other circumstances. (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to a written agreement entered into between MEMC and the Agent, with the prior written consent of the Lenders (except as otherwise provided in the Credit Agreement). SECTION 14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 15. Notices. All communications and notices hereunder shall be in writing and given as provided in Section 8.02 of the Credit Agreement, except the address for MEMC shall be 501 Pearl Drive, St. Peters, Missouri 63376, Attention: Treasurer (telecopier number (636) 474-5158). SECTION 16. Survival of Agreement; Severability. (a) All covenants, agreements, representations and warranties made by MEMC herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or the Credit Agreement shall be considered to have been relied upon by the Agent and the other Parties and shall survive the making by the Lenders of the Advances to the Borrower, and shall continue in full force and effect as long as the principal of or any accrued interest on any Advance to the Borrower or any other fee or amount payable under this Agreement or the Credit Agreement by the Borrower is outstanding and unpaid. (b) In the event any one or more of the provisions contained in this Agreement or the Credit Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 17. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 12. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually executed counterpart of this Agreement. SECTION 18. Rules of Interpretation. The rules of interpretation specified in Section 1.1 of the Credit Agreement shall be applicable to this Agreement. SECTION 19. Jurisdiction; Consent to Service of Process. (a) MEMC 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 Credit Agreement, 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 such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Agent, any Lender or any other party may otherwise have to bring any action or proceeding relating to this Agreement or the Credit Agreement against MEMC or its properties in the courts of any jurisdiction. (b) The Guarantor hereby 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 Credit Agreement 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. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 15. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 20. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE CREDIT AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE CREDIT AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 20. SECTION 21. Right of Setoff. If an Event of Default shall have occurred and be continuing, the Borrower 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 Borrower to or for the credit or the account of MEMC against any or all the obligations of MEMC now or hereafter existing under this Agreement and the Credit Agreement held by such Borrower, irrespective of whether or not such party shall have made any demand under this Agreement or the Credit Agreement and although such obligations may be unmatured. The rights of each party under this Section 21 are in addition to other rights and remedies (including other rights of setoff) which such party may have. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. MEMC ELECTRONIC MATERIALS, INC. By /s/ Kenneth L. Young ____________________________________ Name: Kenneth L. Young Title: Treasurer VEBA INTERNATIONAL FINANCE B.V., as Agent and as Initial Lender By /s/ H. J. Wirix and S.A.L. Visser ____________________________________ Name: H.J. Wirix S.A.L. Visser Title: Managing Director/Managing Director EX-27 5 0005.txt FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from SEC Form10-Q and is qualified in its entirety by reference to such financial statements. 1000 9-MOS DEC-31-2000 SEP-30-2000 99,059 0 153,970 2,905 124,829 416,640 2,176,799 1,043,475 1,929,079 607,304 695,695 0 0 705 368,087 1,929,079 616,405 616,405 539,324 539,324 0 0 54,900 (73,073) (19,730) (45,130) 0 0 0 (45,130) (.65) (.65)
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