UNITED STATES

-----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, N4ryoE3RjQgyHEVrnLinqQg0g7zgL/04PdoUL5+Q8r4W1Wif0qdhdA4GmscgxMfp BQN+Qyf0Z/j6d7RgeaEm6w== 0000945436-01-500020.txt : 20020410 0000945436-01-500020.hdr.sgml : 20020410 ACCESSION NUMBER: 0000945436-01-500020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEMC ELECTRONIC MATERIALS INC CENTRAL INDEX KEY: 0000945436 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 561505767 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13828 FILM NUMBER: 1791707 BUSINESS ADDRESS: STREET 1: 501 PEARL DR CITY: ST PETERS STATE: MO ZIP: 63376 BUSINESS PHONE: 6364745000 MAIL ADDRESS: STREET 1: 501 PEARL DRIVE STREET 2: P. O. BOX 8 CITY: ST. PETERS STATE: M0 ZIP: 63376 10-Q 1 memc10q3.htm UNITED STATES

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, 2001


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 incorporation or organization)	(I. R. S. Employer Identification No.)

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)


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 31, 2001 was 69,612,900.

TABLE OF CONTENTS

PART I--FINANCIAL INFORMATION

Item 1. Financial Statements

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures About Market Risk

PART II--OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

SIGNATURE

EXHIBIT INDEX

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,
			2001	2000	2001	2000

Net sales			$ 120,744	$ 222,800	$ 497,435	$ 616,405
Cost of goods sold			155,472	185,611	521,169	539,324
	Gross margin		(34,728)	37,189	(23,734)	77,081
Operating expenses:
	Marketing and administration		16,052	17,421	53,936	50,106
	Research and development		16,640	16,788	47,853	54,416
	Restructuring		130	-	22,422	-
		Operating income (loss)	(67,550)	2,980	(147,945)	(27,441)
Nonoperating (income) expense:
	Interest expense		22,902	19,086	67,919	54,900
	Interest income		(1,996)	(420)	(5,911)	(2,112)
	Royalty income		(769)	(3,539)	(2,600)	(7,738)
	Other, net		2,243	323	2,546	582
		Total nonoperating expense	22,380	15,450	61,954	45,632
		Loss before income taxes, equity in income (loss) of joint ventures and minority interests	(89,930)	(12,470)	(209,899)	(73,073)
Income taxes			(18,701)	(3,367)	239,381	(19,730)
		Loss before equity in income (loss) of joint ventures and minority interests	(71,229)	(9,103)	(449,280)	(53,343)
Equity in income (loss) of joint ventures			(9)	6,747	457	7,463
Minority interests			3,796	75	8,492	750
		Net loss	($ 67,442) =======	($ 2,281) ========	($ 440,331) =======	($ 45,130) ========

Basic and Diluted loss per share			($ 0.97) =====	($ 0.03) =====	($ 6.33) =====	($ 0.65) =====
Weighted average shares used in computing basic loss per share and diluted loss per share			69,612,900 ========	69,611,552 ========	69,612,900 ========	69,591,476 ========

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,
				2001	2000
				(Unaudited)
ASSETS
Current assets:
	Cash and cash equivalents			$ 125,767	$ 94,759
	Accounts receivable, less allowance for doubtful accounts of $4,023 and $3,089 in 2001 and 2000, respectively			81,919	145,970
	Inventories			116,999	131,859
	Deferred tax assets, net			1,056	13,450
	Prepaid and other current assets			23,795	24,369
			Total current assets	349,536	410,407
Property, plant and equipment, net of accumulated depreciation of $1,164,827 and
	$1,085,315 in 2001 and 2000, respectively			984,520	1,097,602
Investments in joint ventures				52,049	51,647
Excess of cost over net assets acquired, net of accumulated amortization of $6,628 and
	$7,291 in 2001 and 2000, respectively			35,791	45,733
Deferred tax assets, net				-	221,100
Other assets				55,382	64,077
		Total assets		$ 1,477,278 ========	$ 1,890,566 ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Short-term borrowings and current portion of long-term debt			$ 552,017	$ 127,782
	Accounts payable			73,875	88,552
	Accrued liabilities			29,499	44,372
	Customer deposits			18,977	14,307
	Provision for restructuring costs			9,879	9,007
	Income taxes			-	13,735
	Accrued wages and salaries			20,857	25,870
		Total current liabilities		705,104	323,625
Long-term debt, less current portion				595,478	942,972
Pension and similar liabilities				97,813	91,786
Customer deposits				32,014	42,456
Deferred tax liabilities, net				8,457	-
Other liabilities				50,388	48,895
		Total liabilities		1,489,254	1,449,734
Minority interests				63,162	74,413
Commitments and contingencies
Stockholders' equity:
	Preferred stock, $.01 par value, 50,000,000 shares authorized, none issued or outstanding at 2001 or 2000			- -	- -
	Common stock, $.01 par value, 200,000,000 shares authorized, 70,542,105 issued in 2001 and 2000			705	705
	Additional paid-in capital			771,675	771,675
	Accumulated deficit			(783,038)	(342,707)
	Accumulated other comprehensive loss			(47,460)	(46,234)
	Treasury stock, at cost: 929,205 in 2001 and 2000			(17,020)	(17,020)
		Total stockholders' equity (deficit)		(75,138)	366,419
		Total liabilities and stockholders' equity		$ 1,477,278 ========	$ 1,890,566 ========

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,
				2001	2000
Cash flows from operating activities:
	Net loss			$ (440,331)	$ (45,130)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation and amortization		147,065	121,754
		Minority interests		(8,492)	(750)
		Equity in income of joint ventures		(457)	(7,463)
		(Gain) loss on sale of property, plant and equipment		367	(1,288)
		Restructuring		16,795	-
		Working capital, deferred taxes and other		274,249	(71,474)
			Net cash used in operating activities	(10,804)	(4,351)
Cash flows from investing activities:
	Capital expenditures			(38,825)	(32,589)
	Purchase of business, net of cash acquired			-	10,660
	Proceeds from sale of property, plant and equipment			18	1,427
			Net cash used in investing activities	(38,807)	(20,502)
Cash flows from financing activities:
	Net short-term borrowings			38,646	66,425
	Proceeds from issuance of long-term debt			70,549	38,096
	Dividend to minority interest			(2,759)	-
	Principal payments on long-term debt			(21,976)	(8,515)
	Proceeds from issuance of common stock			-	958
			Net cash provided by financing activities	84,460	96,964
Effect of exchange rate changes on cash and cash equivalents				(3,841)	(1,623)
Net increase (decrease) in cash and cash equivalents				31,008	(70,488)
Cash and cash equivalents at beginning of period				94,759	28,571
Cash and cash equivalents at end of period				$ 125,767 =======	$ 99,059 ======

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 accounting principles generally accepted in the United States of America. 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, 2000, 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, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001.

(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, 2001 and 2000 are the same within each period (the weighted average shares outstanding for each respective period). The Company had 3,048,584 options outstanding at September 30, 2001 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, 2001.

(3) Inventories

Inventories consist of the following:

	September 30,	December 31,
	2001	2000
Raw materials and supplies	$ 55,173	$ 52,643
Goods in process	26,529	35,562
Finished goods	35,297	43,654
	$ 116,999 =======	$ 131,859 =======

(4) Restructuring Costs

During the second quarter of 2001, the Company decided to close its small diameter wafer line at MEMC Southwest Inc. in Sherman, Texas. MEMC Southwest Inc. is a joint venture 80% owned by MEMC and 20% owned by Texas Instruments. This action was taken as part of the Company's continuing efforts to focus its manufacturing facilities, to improve its cost structure, and to balance its production capabilities with the evolving market conditions.

The restructuring charges recorded in the second quarter for the above actions were as follows: $14,850 for asset impairment and write-off, $2,274 for dismantling and related costs and $5,352 for personnel costs. The Company recorded total charges to operations of $22,476 (of which $16,954 was non-cash) related to the above actions in the second quarter 2001. In conjunction with this action the Company also wrote off approximately $3,000 of inventory to cost of goods sold. In addition, the Company recorded an adjustment to reduce the previously existing restructuring reserve related to its former Chinese joint venture assets by $184.

At September 30, 2001, the Company had provisions for restructuring of $9,879 as compared to $9,007 as of December 31, 2000. The restructuring reserve related to the Sherman facility was $2,956 (dismantling $1,877, personnel costs $1,079). Substantially all of the reserve related to the Sherman facility is expected to be expended by 2001 year-end. The balance of the restructuring reserve of $6,923 relates primarily to the Spartanburg facility. Timing for utilization of this portion of the reserve is primarily dependent on the sale of the Spartanburg facility.

(5) Comprehensive Loss

Comprehensive loss for the three months ended September 30, 2001 and 2000 was $66,428 and $14,773, respectively. Comprehensive loss for the nine months ended September 30, 2001 and 2000 was $441,557 and $64,955, respectively. The Company's only adjustment from net loss to comprehensive loss was foreign currency translation adjustments in all periods presented.

6) Derivative Financial Instruments

MEMC adopted Statement of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS 137 and SFAS 138, in the first fiscal quarter of 2001. SFAS 133 establishes new standards of accounting and reporting for derivative instruments and hedging activities, and requires that all derivatives, including foreign currency exchange contracts, be recognized on the balance sheet at fair value. Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, must be recognized currently in earnings.

MEMC conducts business in a number of foreign countries, with certain transactions denominated in local currencies, primarily Japanese yen, Italian lira and the Korean won. The purpose of MEMC's foreign currency management is to manage the effect of exchange rate fluctuations on certain foreign denominated revenues, costs and eventual cash flows. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. MEMC does not use derivative financial instruments for trading or speculative purposes.

MEMC uses derivative financial instruments such as forward exchange contracts to hedge certain exposure to changes in the fair value of a recognized asset or liability. MEMC recognizes the gain or loss in earnings in the period of change together with the offsetting loss or gain on the hedged item attributable to the risk being hedged. The effect of that accounting is to reflect in earnings the extent to which the hedge is not effective in achieving offsetting changes in fair value. Changes in the market value of forward exchange contracts of an existing asset or liability are recognized as an adjustment of the carrying amount of the hedged item. For derivatives that MEMC does not designate as a hedging instrument, the gain or loss is recognized in earnings in the period of change.

At September 30, 2001, MEMC had currency forward contracts in the notional amount of $49,000 with an estimated fair value premium of $6,000. MEMC recognizes the gain or loss on the associated financial instruments in Nonoperating (income) expense within Other, net. Amounts recognized in the period ended September 30, 2001 were immaterial.

(7) Debt

The Company had long-term committed loan agreements of approximately $1,105,000 at September 30, 2001, of which approximately $1,097,000 was outstanding. The $8,000 of available long-term loan agreements at September 30, 2001 was with E.ON AG and its affiliates. The Company had short-term loan agreements of approximately $93,000 at September 30, 2001, of which approximately $50,000 was then outstanding. Of the $43,000 available under short-term credit agreements, $29,000 was credit facilities available only within Korea.

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.

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. The Company is not required to make principal payments on its existing credit facilities with E.ON AG and its affiliates until 2002. Under these credit facilities, the Company cannot pledge any of its assets to secure additional financing without the consent of E.ON AG and certain of its affiliates. In addition, under the Company's 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 from the issuance of debt to the affiliate of E.ON AG as a mandatory principal repayment of this loan. The Company is also required to pay 75% of any cash received from MKC, through dividends, reductions or repurchases of equity, share red emptions or loans, to the affiliate of E.ON AG as a mandatory principal repayment of this loan. Finally, under the Company's remaining loan agreements with E.ON AG and its affiliates, the Company is obligated to use 75% of any proceeds from the issuance of debt and 50% of the Company's annual free cash flow, which is net of capital expenditures, to pay down the principal of these loans.

In March 2001, E.ON AG and certain of its affiliates agreed to waive some of these covenants, including certain restrictions on the Company's ability to pledge assets, to allow the Company to seek additional financing from third parties and to retain a dividend from MKC. In May 2001, E.ON AG and certain of its affiliates agreed to further waive some of these covenants. In return, to the extent not needed for working capital purposes, the Company agreed to use the proceeds of any additional third-party financing and any dividend received in 2001 from MKC to pay down, with an ability to re-borrow, outstanding amounts owing on the Company's revolving credit agreements with E.ON AG.

On September 30, 2001, E.ON AG and its affiliates entered into an agreement with Texas Pacific Group and certain of its affiliates (Texas Pacific ) relating to the sale to Texas Pacific of all of the MEMC equity and debt held by E.ON and its affiliates. In October, E.ON AG amended its July $50,000 credit facility with MEMC, as called for in the Texas Pacific purchase agreement, to increase it to $87,000. This increased collateralized credit facility matures on April 1, 2002 and bears interest at LIBOR plus 8%. However, the Company may only borrow under this credit facility for funding needs during the period on or prior to December 31, 2001. As of October 31, 2001 the Company had $23,000 available in credit facilities from E.ON AG. E.ON AG is committed, upon closing of the purchase with Texas Pacific, to provide an additional $13,000 in liquidity to the Company along with any undrawn amounts under the $87,000 collateralized credit facility. Also upon closing, Texas Pacific will provide th e Company with a collateralized interest bearing line of credit for up to $150,000. This credit facility matures after five years, will bear interest at the prevailing market rate, and will contain covenants governing borrowings under the agreement. This new Texas Pacific credit facility and the additional liquidity to be provided by E.ON AG are contingent upon closing of the agreements between E.ON AG and Texas Pacific.

(8)Income Taxes

The Company increased its valuation allowance in the 2001 third quarter related to deferred tax assets in the amount of $41,000. In making this determination, the Company considered the terms and structure of both the pending divestiture by E.ON AG of its interest in the Company and the planned debt and equity restructuring contemplated by the Texas Pacific purchase agreement.

(9)New Accounting Standards

In June 2001, the Financial Accounting Standards Board simultaneously approved Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations, SFAS No. 142, Goodwill and Other Intangible Assets, and SFAS No. 143, Accounting for Asset Retirement Obligations. In August 2001, the Financial Accounting Standards Board approved Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The Company has not yet determined the effect that the adoption of these standards will have on its consolidated financial position or results of operations.

(10) Subsequent Events

On November 13, 2001, E.ON and its affiliates and an investor group led by Texas Pacific Group ("TPG") closed the transactions contemplated by their Purchase Agreement of September 30, 2001, under which TPG purchased all of E.ON's debt and equity holdings in the Company.

In addition, on that date the Company and TPG announced that they had reached agreement with respect to the restructuring of the Company's debt acquired by TPG from E.ON.

As a result of these transactions, TPG now beneficially owns approximately 72% of the Company's outstanding Common Stock and has exchanged all of the previously outstanding debt of approximately $860,000 acquired from E.ON for shares of the Company's newly issued Series A Cumulative Convertible Preferred Stock with a stated value of $260,000, $50,000 in principal amount of the Company's newly issued senior subordinated secured notesand warrants to purchase 16,666,667 shares of the Company's Common Stock. TPG will also retain 55 million Euro in principal amount of a note currently outstanding issued by the Company's Italian subsidiary. Assuming shareholder approval is obtained as described below, TPG will own or have the right to acquire, through conversion of the preferred stock and exercise of the warrants, approximately 182 million shares of Common Stock, representing approximately 90% of the Company's outstanding Common Stock.

As a result of the purchase of E.on's equity interest by TPG, the Company will revalue historical costs in its balance sheet to reflect the costs basis of TPG in the Company. The Company expects this to result in a significant write-down of fixed assets, which would in turn significantly reduce depreciation expense going forward.

The restructuring was approved by a Special Committee of the Board of Directors of the Company, comprised of the independent members of the Board of Directors, after review and consideration of the restructuring, the restructuring agreements and related documents, alternatives available to the Company and receipt by the Special Committee of an opinion from the financial advisors retained by the Special Committee that the transactions were fair from a financial point of view to the public stockholders of the Company.

The transactions contemplated by the restructuring documents were completed November 13, 2001, except for the restructuring of the debt of the Company's Italian subsidiary, which is expected to be completed no later than November 29, 2001.

Preferred Stock

The Company has issued and delivered to TPG 260,000 shares of Preferred Stock (stated value $1,000 per share), which bear dividends at a rate of 10% per annum, if paid in cash, or 12% per annum if paid in kind, and are convertible into shares of Common Stock at a conversion price of $2.25 per share. Until the Company obtains shareholder approval relating to the Preferred Stock and the Common Stock issuable upon conversion of the Preferred Stock pursuant to its terms, the Preferred Stock may not be converted into more than 19.9% of the outstanding shares of the Company's Common Stock. After shareholder approval, holders of the Preferred Stock will be entitled to vote with the Common Stockholders (with each share of Preferred Stock having the voting rights of that number of shares of Common Stock into which the Preferred Stock may then be converted). Holders of the preferred stock have the right to appoint and have appointed four directors to the Company's Board of Directors. At the date of closing all of the five E.ON AG affiliated members of the Company's Board of Directors resigned from the Board.

On or after the eighth anniversary of the date of issuance, the holders of the preferred stock may require the Company to redeem shares of the Preferred Stock in cash at a redemption price equal to the stated value plus accrued and unpaid dividends.

Notes and Warrants

The Company has issued and delivered to TPG $50 million of Senior Subordinated Secured Notes due 2007. The Notes bear interest at a rate of 8% (payment in kind) in years one and two, 14% (payment in kind) in years three and four and 14% (payment in kind with optional pyment in cash at the request of the noteholders)) in years five and six. As collateral under the Notes, the Company has pledged substantially all of its domestic assets, including all of the capital stock of most of its domestic subsidiaries and 65% of the capital stock certain of of its foreign subsidiaries, but excluding any assets currently pledged to support third party debt. The Company has also issued and delivered to TPG Warrants to purchase 16,666,667 shares of Common Stock at an exercise price of $3.00 per share. The Warrants may be exercised, in whole or in part, at any time and from time to time, after the Company's stockholders approve the issuance of the Common Stock underlying the Warrants until the tenth anniversary of th e date of issuance. The notes and the security interest related thereto, are subordinated in priority and in right of payment to the five year revolving credit facility described below.

Pursuant to the restructuring of the debt issued by the Company's Italian subsidiary, MEMC's Italian subsidiary will issue and deliver to TPG 55 million Euro principal amount of senior secured notes due 2031. These notes will bear interest at a rate of 6% per annum and be secured by all the assets of the Italian subsidiary.

Registration Rights Agreement

The Company and TPG have entered into a registration rights agreement providing for registration rights with respect to the Preferred Stock, the shares of Common Stock issuable upon conversion of the Preferred Stock, the Warrants, the Notes, the shares of Common Stock issuable upon exercise of the Warrants, and any shares of Common Stock owned or acquired by TPG (including the shares acquired by TPG from E.ON pursuant to the Purchase Agreement) (collectively, the "Registrable Securities"). The Company has agreed that, on or before August 10, 2002, the Company will file with the SEC a shelf registration statement on Form S-3 covering resales of the Registrable Securities by the holders of those Registrable Securities.

Credit Agreement

TPG has established a five-year revolving credit facility pursuant to the Credit Agreement among the Company, the lender parties thereto and the administrative agent, pursuant to which the lenders have committed to make available to the Company a $150,000 line of credit. Loans may be drawn down as follows: (i) $50,000 at any time prior to January 1, 2002, (ii) $75,000 at any time prior to April 1, 2002, (iii) $100,000 at any time prior to July 1, 2002 and (iv) $125,000 at any time prior to October 1, 2002. Loans will bear interest at a rate of LIBOR plus 3.5% or alternate base rate plus 2.5%. As collateral under the Credit Agreement, the Company has pledged substantially all of its domestic assets, including all of the capital stock of most of its domestic subsidiaries and 65% of the capital stock of certain of its foreign subsidiaries, but excluding any assets currently pledged to support third party debt.

Merger Agreement

Pursuant to an Agreement and Plan of Merger, the Company has agreed, subject to shareholder approval, to permit the merger of TPG Wafer Holdings LLC, an affiliate of TPG ("Holdings"), with and into the Company at such time as the members of Holdings shall determine. The Company will continue in existence as the surviving corporation. As a result of the merger, the members of Holdings generally will convert their interests in Holdings into the equity securities of the Company held by Holdings, plus Common Stock of the Company having a market value equal to the principal amount of any debt securities of the Company held by Holdings.

Management Advisory Agreement

In connection with the Restructuring, the Company has entered into a management advisory agreement with TPG GenPar III, L.P. ("TPG GenPar"), pursuant to which TPG GenPar will provide certain management and financial advisory services to the Company in exchange for a management advisory fee.

Shareholder Approval

Pursuant to the Restructuring Agreement, the Company has agreed to use its best efforts to obtain, as promptly as possible, (i) any necessary approval by the stockholders of the Company relating to the Series A Preferred Stock, the shares issuable upon conversion of the Series A Preferred Stock, the Warrants and the shares issuable upon exercise of the warrants under the rules and regulations of the New York Stock Exchange, (ii) the approval by the stockholders of the Company of the plan of merger contained in the Merger Agreement in accordance with the Delaware General Corporation Law, and (iii) the approval by the stockholders of the Company of a one-for-two reverse split of the Common Stock. The Company has also agreed to use its best efforts to hold a special meeting of its stockholders for such purpose no later than February 28, 2002 and will file with the Securities and Exchange Commission a proxy statement with respect to such shareholder meeting no later than December 15, 2001.

Fees and Expenses

The Company is responsible for the payment of all its expenses incurred in connection with the Restructuring Agreement, including all fees and expenses of its legal counsel and all third-party consultants engaged by it to assist in such transactions. The Company will pay to TPG a $10,000 transaction fee and a $3,000 credit facility fee, and reimburse TPG for all its fees and disbursements of legal counsel, financial advisors and other third party consultants and other out-of-pocket expenses incurred by it in connection with the Restructuring.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Net Sales. Net sales decreased 46% to $121 million for the third quarter of 2001 from $223 million for the third quarter of 2000. MEMC Korea Company (MKC) has been consolidated since fourth quarter 2000. Had MKC been consolidated with the Company in the 2000 third quarter, the Company's net sales would have been approximately $260 million, resulting in a 53% year-over-year decline in net sales. This decline was primarily a result of a 51% product volume decrease and modest price declines. Net sales decreased 19% to $497 million for the nine months ended September 30, 2001 from $616 million for the nine months ended September 30, 2000. Had MKC been consolidated with the Company in the nine months ended September 30, 2000, the Company's net sales would have been approximately $725 million, resulting in an approximately 31% year-over-year decline in net sales, primarily a result of what would have amounted to a 31% product volume decrease.

Gross Margin. Gross margin declined to negative 29% in the third quarter of 2001 from positive 17% for the third quarter of 2000. Gross margin declined to negative 5% in the nine months ended September 30, 2001 from positive 13% in the nine months ended September 30, 2000. The decrease in gross margin in the three and nine-month periods ended September 30, 2001 compared to the corresponding year ago periods was primarily the result of under absorption of manufacturing fixed costs reflecting significantly lower product volumes.

Research and Development. Research and development expenses in the 2001 third quarter totaled $17 million, compared to $17 million in the year-ago period. Research and development expense for the nine-month periods ended September 30, 2001 and 2000, totaled $48 and $54 million, respectively. The decrease in reported expense was attributable to increased revenue from 300 millimeter wafers, which offsets the research and development expenses.

Restructuring. During the second quarter of 2001, the Company decided to close its small diameter wafer line at MEMC Southwest Inc., in Sherman, Texas. MEMC Southwest Inc. is a joint venture 80% owned by MEMC and 20% owned by Texas Instruments. This action was taken as part of the Company's continuing efforts to focus its manufacturing facilities, to improve its cost structure, and to balance its production capabilities with the evolving market conditions.

The restructuring charges recorded in the second quarter for the above actions were as follows: $15 million for asset impairment and write-off, $2 million for dismantling and related costs and $5 million for personnel costs. The Company recorded total charges to operations of $22 million (of which $17 million was non-cash) related to the above actions in the second quarter 2001. In conjunction with this action the Company also wrote off $3.0 million million of inventory to cost of goods sold.

Interest Expense. Interest expense increased to $23 million for the quarter ended September 30, 2001 from $19 million for the quarter ended September 30, 2000. Interest expense increased to $68 million for the nine months ended September 30, 2001 from $55 million for the nine months ended September 30, 2000. The increases in interest expense were primarily attributable to increased borrowings related to the acquisition and consolidation of MKC and additional debt for operating needs.

Income Taxes. The Company increased its valuation allowance in the 2001 third quarter related to deferred tax assets in the amount $41 million. In making this determination, the Company considered the terms and structure of both the pending divestiture by E.ON AG of its interest in the Company and the planned debt and equity restructuring contemplated by the Texas Pacific purchase agreement .

Equity in Income (Loss) of Joint Ventures. Equity in income (loss) of joint ventures for the three and nine-month periods ended September 30, 2001 relate solely to Taisil Electronic Materials Corporation (Taisil), the Company's 45%-owned, unconsolidated joint venture in Taiwan. Equity in income (loss) of joint ventures was break-even in the third quarter of 2001, as compared to income of $6.7 million in the third quarter of 2000. Of the $6.7 million equity in income of joint ventures in the third quarter of 2000, $3.7 million was attributable to Taisil and $3.0 was attributable to MKC. Equity in income of joint ventures was $0.5 million in the nine months ended September 30, 2001, as compared to income of $7.5 million in the nine months ended September 30, 2000. Of the $7.5 million equity in income of joint ventures in the nine months ended September 30, 2000, $4.0 million was attributable to Taisil and $3.5 million was attributable to MKC. The decreases attributable to Taisil for the thre e and nine-month periods ended September 30, 2001 as compared to 2000 were primarily due to significantly lower volumes and price declines in 2001.

Net Loss. Net loss for the nine-month periods ended September 30, 2001 and 2000 was approximately $440 million and $45 million, respectively. The increase in net loss for the nine months ended September 30, 2001 was primarily a result of the increased valuation allowance for deferred tax assets of $267 million, discontinuation of the recognition of additional deferred tax benefit of net operating loss carryforwards of $41 million, decreased gross margin of $101 million, restructuring charges of $22 million and increased net interest expense of $9 million. The Company had a net loss of $6.33 per share for the nine months ended September 30, 2001 compared to a net loss of $0.65 per share for the nine months ended September 30, 2000 on approximately 69.6 million weighted average shares outstanding for each period.

Outlook. The current market remains challenging, and visibility remains limited. The Company will continue to review its cost structure and evaluate actions to balance operating costs with the evolving market conditions.

Liquidity and Capital Resources.

At September 30, 2001, the Company had $126 million of cash and cash equivalents, including MKC cash and cash equivalents of approximately $110 million. 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 by operating activities increased to $11 million for the nine months ended September 30, 2001 from $4 million for the nine months ended September 30, 2000. This $7 million increase was due primarily to increased net losses of the Company only partially offset by changes in working capital, increased depreciation as a result of the financial consolidation of MKC and the add-back of certain non-cash deferred tax asset valuation allowances and restructuring charges.

Accounts receivable of $82 million at September 30, 2001 decreased $64 million, or 44%, from $146 million at December 31, 2000. This decrease was primarily attributable to the 53% decrease in net sales during the third quarter 2001 compared to the fourth quarter of 2000. Days' sales outstanding were 62 days at September 30, 2001 compared to 52 days at December 31, 2000 based upon annualized sales for the respective immediately preceding quarters. The increase in days' sales outstanding is primarily related to the effect of lengthier collection periods in the Asian region and a slight slowdown in customer payment patterns. Management believes the Company's provision for doubtful accounts of $4 million to be sufficient at September 30, 2001.

Inventories decreased $15 million, or 11%, from December 31, 2000 to $117 million at September 30, 2001. Total related inventory reserves for obsolescence, lower of cost or market issues, or other impairments were $29 million at September 30, 2001 and $17 million at December 31, 2000. Quarter-end inventories as a percentage of annualized quarterly net sales increased 11% to 24% for the period ended September 30, 2001 compared to the period ended December 31, 2000, as a result of the significant sales decline in the third quarter 2001 as compared to the fourth quarter 2000 and the character of certain inventory items which do not fluctuate with sales levels. Management believes the Company's inventory reserves of $29 million to be sufficient at September 30, 2001.

The Company increased its valuation allowance in the 2001 third quarter related to deferred tax assets in the amount of $41 million. In making this determination, the Company considered the terms and structure of both the pending divestiture by E.ON AG of its interest in the Company and the planned debt and equity restructuring contemplated by Texas Pacific purchase agreement.

Net cash used in investing activities increased $18 million to $39 million in the nine months ended September 30, 2001 compared to $21 million in the nine months ended September 30, 2000. For the nine months ended September 30, 2001, cash used by investing activities reflected slightly increased spending on capital projects compared to 2000 primarily due to the consolidation of MKC in 2001. The nine months ended September 30, 2000 reflected cash from the consolidation of MKC in excess of the purchase price by $11 million. The capital expenditures in the first nine months of 2001 primarily related to maintenance, capabilities and 300mm. The Company expects to tightly control capital expenditures in the remainder of 2001. At September 30, 2001, the Company had $21 million of committed capital expenditures related to various manufacturing and technology projects.

The Company had long-term committed loan agreements of approximately $1,105 million at September 30, 2001, of which approximately $1,097 million was outstanding. The $8 million of available long-term loan agreements at September 30, 2001 was with E.ON AG and its affiliates. The Company had short-term loan agreements of approximately $93 million at September 30, 2001, of which approximately $50 million was outstanding. Of the $43 million available under short-term credit agreements, $29 million was credit facilities available only within Korea.

On September 30, 2001, E.ON AG and its affiliates entered into an agreement with Texas Pacific Group and certain of its affiliates (Texas Pacific ) relating to the sale to Texas Pacific of all of the MEMC equity and debt held by E.ON and its affiliates. In October, E.ON AG amended its July $50 million credit facility with MEMC, as called for in the Texas Pacific purchase agreement, to increase it to $87 million. This increased collateralized credit facility matures on April 1, 2002 and bears interest at LIBOR plus 8%. However, the Company may only borrow under this credit facility for funding needs during the period on or prior to December 31, 2001. As of October 31, 2001 the Company had $23 million available in credit facilities from E.ON AG. E.ON AG is committed, upon closing of the purchase with Texas Pacific, to provide an additional $13 million in liquidity to the Company along with any undrawn amounts under the $87 million collateralized credit facility. Also upon closing, Texas P acific will provide the Company with a collateralized interest bearing line of credit for up to $150 million. This credit facility matures after five years, will bear interest at the prevailing market rate, and will contain covenants governing borrowings under the agreement. This new Texas Pacific credit facility and the additional liquidity to be provided by E.ON AG are contingent upon closing of the agreements between E.ON AG and Texas Pacific.

Recent Developments

In addition, on that date the Company and TPG announced that they had reached agreement with respect to the restructuring of the Company's debt acquired by TPG from E.ON.

As a result of these transactions, TPG now beneficially owns approximately 72% of the Company's outstanding Common Stock and has exchanged all of the previously outstanding debt of approximately $860 million acquired from E.ON for shares of the Company's newly issued Series A Cumulative Convertible Preferred Stock with a stated value of $260 million, $50 million in principal amount of the Company's newly issued senior subordinated secured notes and warrants to purchase 16,666,667 shares of the Company's Common Stock. TPG will also retain 55 million Euro in principal amount of a note currently outstanding issued by the Company's Italian subsidiary. Assuming shareholder approval is obtained as described below, TPG will own or have the right to acquire, through conversion of the preferred stock and exercise of the warrants, approximately 182 million shares of Common Stock, representing approximately 90% of the Company's outstanding Common Stock.

The transactions contemplated by the restructuring documents were completed on November 13, 2001, except for the restructuring of the debt of the Company's Italian subsidiary, which is expected to be completed no later than November 29, 2001.

Preferred Stock

On or after the eighth anniversary of the date of issuance, the holders of the Preferred Stock may require the Company to redeem shares of the Preferred Stock in cash at a redemption price equal to the stated value plus accrued and unpaid dividends.

Notes and Warrants

The Company has issued and delivered to TPG $50 million of Senior Subordinated Secured Notes due 2007. The Notes bear interest at a rate of 8% (payment in kind,) in years one and two, 14% (payment in kind) in years three and four and 14% (payment in kind, with optional payment in cash at the request of the note holders) in years five and six. As collateral under the Notes, the Company has pledged substantially all of its domestic assets, including all of the capital stock of most of its domestic subsidiaries and 65% of the capital stock certain of its foreign subsidiaries, but excluding any assets currently pledged to support third party debt. The Company has also issued and delivered to TPG Warrants to purchase 16,666,667 shares of Common Stock at an exercise price of $3.00 per share. The Warrants may be exercised, in whole or in part, at any time and from time to time, after the Company's stockholders approve the issuance of the Common Stock underlying the Warrants until the tenth anniversary of th e date of issuance. The notes and the security interest related thereto, are subordinated in priority and in right of payment to the five year revolving credit facility described below.

Registration Rights Agreement

Credit Agreement

TPG has established a five-year revolving credit facility pursuant to the Credit Agreement among the Company, the lender parties thereto and the administrative agent, pursuant to which the lenders have committed to make available to the Company a $150 million line of credit. Loans may be drawn down as follows: (i) $50 million at any time prior to January 1, 2002, (ii) $75 million at any time prior to April 1, 2002, (iii) $100 million at any time prior to July 1, 2002 and (iv) $125 million at any time prior to October 1, 2002. Loans will bear interest at a rate of LIBOR plus 3.5% or alternate base rate plus 2.5%. As collateral under the Credit Agreement, the Company has pledged substantially all of its domestic assets, including all of the capital stock of most of its domestic subsidiaries and 65% of the capital stock of certain of its foreign subsidiaries, but excluding any assets currently pledged to support third party debt.

Merger Agreement

Management Advisory Agreement

Shareholder Approval

Fees and Expenses

The Company is responsible for the payment of all its expenses incurred in connection with the Restructuring Agreement, including all fees and expenses of its legal counsel and all third-party consultants engaged by it to assist in such transactions. The Company will pay to TPG a $10 million transaction fee and a $3 million credit facility fee, and reimburse TPG for all its fees and disbursements of legal counsel, financial advisors and other third party consultants and other out-of-pocket expenses incurred by it in connection with the Restructuring.

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; and the significant write-down of the book value of the Company's fixed assets, timing and restructuing of the debt issued by the Company's Italian subsidiary; and effect of new accounting standards;;. 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; inventory levels at customers; demand for semiconductors generally; changes in the pricing environment; general economic conditions; competitors' actions; changes in currency exchange rates; technological changes; changes in product specifications and manufacturing processes; accuracy of management's assumpt ions regarding the dismantling and sale of the Spartanburg facility and the dismantling and sale of the equipment at the Sherman small diameter line; stockholder approval of certain matters relating to the Series A Cumulative Convertible Preferred Stock and the warrants; changes in the plans and intentions of third parties, 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, 2000.

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, 2000.

PART II -- OTHER INFORMATION


Item 6. Exhibits and Reports on Form 8- K.
(a) Exhibits
	Exhibit Number	Description
	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
	10-vvv	Euro 55,000,000 Amended and Restated Credit Agreement dated as of September 22, 2001 between MEMC Electronic Materials, S.p.A. and E.ON International Finance B.V.
	10-vvv(1)	Amended and Restated Guaranty Agreement dated as of September 22, 2001 between the Company and E.ON International B.V.
	10-yyy	U.S. $50,000,000 Second Amended and Restated Revolving Credit Agreement dated as of September 4, 2001 among the Company, MEMC Pasadena, Inc. and E.ON AG
	10-yyy(1)	Amendment No. 1 to the Second and Restated Revolving Credit Agreement dated as of September 28, 2001 among the Company, MEMC Pasadena, Inc. and E.ON AG
	10-yyy(2)	Amended and Restated Security Agreement dated as of July 26, 2001 among the Company, MEMC Pasadena, Inc. and E.ON AG
	10-yyy(3)	Amendment No 1. to the Security Agreement dated September 4, 2001 among the Company, MEMC Pasadena, Inc. and E.ON AG
	10-yyy(4)	Amended and Restated Pledge Agreement dated as of September 28, 2001 between the Company and E.ON AG
	10-yyy(5)	Pledge Agreement dated as of September 28, 2001 between the Company and E.ON AG


-------------------------------

(b) Reports on Form 8-K
During the third quarter of 2001, 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 14, 2001	/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.

	Number Exhibit	Description
	3(ii)	Restated By-laws of the Company
	10-vvv	Euro 55,000,000 Amended and Restated Credit Agreement dated as of September 22, 2001 between MEMC Electronic Materials, S.p.A. and E.ON International Finance B.V.
	10-vvv(1)	Amended and Restated Guaranty Agreement dated as of September 22, 2001 between the Company and E.ON International B.V.
	10-yyy	U.S. $50,000,000 Second Amended and Restated Revolving Credit Agreement dated as of September 4, 2001 among the Company, MEMC Pasadena, Inc. and E.ON AG
	10-yyy(1)	Amendment No. 1 to the Second and Restated Revolving Credit Agreement dated as of September 28, 2001 among the Company, MEMC Pasadena, Inc. and E.ON AG
	10-yyy(2)	Amended and Restated Security Agreement dated as of July 26, 2001 among the Company, MEMC Pasadena, Inc. and E.ON AG
	10-yyy(3)	Amendment No 1. to the Security Agreement dated September 4, 2001 among the Company, MEMC Pasadena, Inc. and E.ON AG
	10-yyy(4)	Amended and Restated Pledge Agreement dated as of September 28, 2001 between the Company and E.ON AG
	10-yyy(5)	Pledge Agreement dated as of September 28, 2001 between the Company and E.ON AG

EX-10 3 m3ii.htm BY-LAWS BY-LAWS

OF

MEMC ELECTRONIC MATERIALS, INC.

ARTICLE I

Offices

Section 1. Offices. The registered office of MEMC Electronic Materials, Inc. (hereinafter called the Corporation) shall be in the State of Delaware. The Corporation may have offices and places of business at such places within and without the State of Delaware as shall be determined by the Board of Directors. The books of the Corporation may be kept outside of the State of Delaware at such place or places as the Board of Directors may from time to time determine.

ARTICLE II

Stockholders

Section 1. Place of Meetings. All meetings of the stockholders shall be held at such place within or without the State of Delaware as is designated by the Board of Directors.

Section 2. Annual Meeting. The Board of Directors shall fix the time and place of the annual meeting of the stockholders for the purpose of electing the directors and for the transaction of such other business as may properly be brought before the meeting.

Section 3. Special Meeting. Special meetings of the stockholders may be called by a majority of the holders of the common stock of the Corporation or by a majority of the Board of Directors or by the Chairman of the Board.

Section 4. Notice of Meetings. Except as is otherwise provided by law, notice of each meeting of stockholders, whether annual or special, shall be given to each stockholder not less than 10 nor more than 60 days prior to the meeting. The notice shall state the date, time and place and, in the case of special meetings, the purpose or purposes of such meeting, and at whose direction the notice is given.

Section 5. Quorum. At all meetings of stockholders, except as otherwise required by statute, the holders of a majority of the shares entitled to vote thereat, present in person or by proxy, shall constitute a quorum for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat may adjourn such meeting from time to time in accordance with Section 7 of this Article II of these By-Laws until the number of votes requisite to constitute a quorum shall be present.

Section 6. Voting. When a quorum is present or represented by proxy at any meeting of stockholders, the vote of the holders of a majority of the outstanding shares of stock entitled to vote thereat present in person or by proxy shall decide any question brought before such meeting, unless the question is one upon which an express provision of the General Corporation Law of the State of Delaware or of the Restated Certificate of Incorporation requires a greater vote, in which case such provision shall control.

Each stockholder entitled to vote at any meeting may vote in person or by proxy and shall, unless the Restated Certificate of Incorporation provides otherwise, have one vote for each share of stock registered in his name, but no proxy shall be valid after three years from its date, unless the proxy provides for a longer period.

Section 7. Adjourned Meetings. Any meeting of stockholders may be adjourned to a designated time and place by a vote of a majority in interest of the stockholders present in person or by proxy, even though less than a quorum is so present. No notice of such an adjourned meeting needs to be given, other than by announcement at the meeting, and any business may be transacted which might have been transacted at the meeting as originally called; provided, however, that if the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting.

Section 8. Action Without Meeting. Any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of all the outstanding stock entitled to vote thereon. The effective date of the authorization of such action shall be deemed to be the date of the filing of the last such written consent in the minute books of the Corporation, which date shall be noted therein by the Secretary.

Section 9. Advance Notice of Business to Be Transacted at Annual Meetings. To be properly brought before the annual meeting of stockholders, business must be either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 9 and on the record date for the determination of stockholders entitled to vote at such meeting and (ii) who complies with the notice procedures set forth in this Section 9. In addition to any other applicable requirements, including but not limited to the requirements of Rule 14a-8 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation, not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, in order to be timely, notice by the stockholder must be so received not later than the close of business on the tenth day following the day on which notice of the date of the annual meeting is mailed to stockholders or public disclosure of the date of the annual meeting is made, whichever first occurs. The provisions of this Section 9 shall also govern what constitutes timely notice for purposes of Rule 14a-4(c) under the Exchange Act.

To be in proper written form, a stockholder's notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (b) the name and record address of such stockholder, (c) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, together with evidence reasonably satisfactory to the Secretary of such beneficial ownership, (d) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (e) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

Notwithstanding anything in these By-Laws to the contrary, no business shall be conducted at the annual meeting of stockholders except business brought before such meeting in accordance with the procedures set forth in this Section 9; provided, however, that, once business has been properly brought before such meeting in accordance with such procedures, nothing in this Section 9 shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of such meeting determines that business was not properly brought before the meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

ARTICLE III

Directors

Section 1. Management of the Corporation. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The officers of the Corporation shall keep the Board of Directors fully informed about the affairs of the Corporation, and the officers and employees of the Corporation shall provide the Board of Directors with such written or oral reports and information as the Board of Directors may deem advisable.

Section 2. Number and Term of Office. Subject to the rights, if any, of holders of preferred stock of the Corporation, the number of directors shall be determined from time to time by resolution passed by a majority of the Board of Directors of the Corporation, but in no event shall the Board of Directors consist of less than five or more than 15 directors. The number of directors so determined is referred to in these By-Laws as the "total number of directors". The Board of Directors shall, by resolution passed by a majority of the Board of Directors, designate the directors to serve as initial Class I, Class II and Class III directors upon filing of the Restated Certificate of Incorporation of the Corporation with the Secretary of State of the State of Delaware. Except as provided in Section 5 of this Article III, directors shall be elected by a plurality of the votes cast at annual meetings of stockholders, and each director so elected shall hold office as provided by Article Fifth of the Restated Certificate of Incorporation of the Corporation. Directors need not be stockholders of the Corporation.

Section 3. Nomination of Directors and Advance Notice Thereof. Only persons who are nominated in accordance with the Restated Certificate of Incorporation of the Corporation shall be eligible for election as directors of the Corporation.

Section 4. Resignation. Any director may resign at any time. Such resignation shall be made in writing and shall take effect at the time specified therein or, if no time be specified, at the time of its receipt by the Chief Executive Officer (the "CEO"), the President or the Secretary of the Corporation. The acceptance of a resignation shall not be necessary to make it effective.

Section 5. Vacancies. Subject to the rights, if any, of the holders of any series of preferred stock then outstanding, any vacancy on the Board of Directors arising from death, resignation, removal, an increase in the number of directors or any other cause, may be filled either by a majority vote of the remaining directors, although less than a quorum, or by the sole remaining director; provided, however, that if any director then in office determines that any such vacancy on the Board of Directors shall be filled by the stockholders, such vacancy shall be filled by the stockholders in accordance with the Restated Certificate of Incorporation. Any director elected to fill a vacancy shall hold office for a term that shall coincide with the term of the class to which such director shall have been elected.

Section 6. Regular Meetings. The Board of Directors shall hold at least two regular meetings during each calendar year on such dates as may be determined by the Board of Directors. Such regular meetings may be held at such places, either within or without the State of Delaware, as shall from time to time be determined by the Board of Directors.

Section 7. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the CEO or the President, and shall be called by the CEO, the President or the Secretary, upon the written request of at least two members of the Board of Directors. Each director shall be given 10 days' notice of each such meeting.

Section 8. Fees. Each member of the Board of Directors who is not an officer of the Corporation shall receive from the Corporation an annual fee for serving on the Board of Directors and an annual fee for serving on each committee of the Board of Directors on which such director serves, plus a fee for each meeting of the Board of Directors he attends, plus a fee for each meeting of a committee of the Board of Directors he attends. The amount of such fees shall be determined from time to time by a majority of the total number of directors. Each director, including those who are also officers, shall receive from the Corporation reimbursement of travel expenses for each meeting of the Board of Directors or any committee thereof he attends.

Section 9. Quorum. A quorum of directors for the transaction of business shall consist of at least a majority of the total number of directors.

Section 10. Waiver of Notice. Notice of a meeting need not be given to any director who submits a written waiver of such notice, signed by him, whether before or after such meeting. Neither the business to be transacted at, nor the purpose of, any meeting of the directors need be specified in any written waiver of notice with respect to such meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except when the director attends such meeting for the express purpose of objecting, at the beginning of such meeting, to the transaction of any business because the meeting is not lawfully called or convened.

Section 11. Voting. The act of a majority of the total number of directors shall be the act of the Board of Directors.

Section 12. Meetings via Conference Call. Any one or more members of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or such committee by means of a conference telephone call or similar communications equipment hook-up allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting.

Section 13. Action Without Meeting. Notwithstanding any other provisions of these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting, if a written consent or consents to the adoption of a resolution authorizing the action is signed by the whole Board of the Corporation or all the members of such committee, as the case may be. The resolution and the written consents thereto shall be filed with the minutes of the proceedings of the Board of Directors.

Section 14. Committees. (a) Audit Committee; Compensation Committee; Other Committees. The Board of Directors shall designate an Audit Committee and a Compensation Committee, each consisting of at least two directors and to have such duties and functions as shall be specified in the resolution or resolutions appointing such committees. The Board of Directors, by resolution passed by a majority of the total number of directors, may designate other committees of the Board of Directors, each such committee to consist of two or more directors and to have such duties and functions as shall be provided in such resolution.

(b) Rules of Committees. A majority of all of the members of any committee of the Board of Directors may determine its rules of procedure, determine its action and fix the time and place, whether within or without the State of Delaware, of its meetings and specify what notice thereof, if any, shall be given, unless the Board of Directors shall otherwise by resolution provide. Each committee shall record minutes of its proceedings and shall submit the same to the Board of Directors. The Board of Directors shall have power to change the members of any such committee and fill vacancies therein and to discharge any such committee, either with or without cause, at any time.

(c) Powers of Committees. The Board of Directors, by resolution passed by a majority of a duly constituted quorum of the Board of Directors, may designate committees of the Board of Directors pursuant to, and which will have the powers as are consistent with, the provisions of Section 141(c)(2) of the Delaware General Corporation Law.

Section 15. The Chairman of the Board and Vice Chairman of the Board. The Chairman of the Board and, if the Board of Directors determines that the Board should have a Vice Chairman, the Vice Chairman of the Board shall be elected annually by the Board of Directors. The Chairman of the Board shall preside at all meetings of the Board of Directors, act as chairman at all meetings of stockholders and shall sign the minutes of the proceedings recorded at such meetings by the Secretary. He shall make reports to the Board of Directors as well as to the stockholders and shall perform all duties incident to his office or properly required of him by the Board of Directors. The Chairman of the Board and the Vice Chairman of the Board shall each perform such further duties and exercise such further powers as may be assigned to him from time to time by the Board of Directors. In the absence of the Chairman of the Board, the Vice Chairman of the Board shall carry out his duties and authorities.

ARTICLE IV

Officers

Section 1. Officers. The officers of the Corporation shall include the Chief Executive Officer, the President, a Treasurer and a Secretary. Each officer of the Corporation shall hold office until his successor shall have been duly chosen and qualified, or until his death, disqualification, resignation or removal. Except for the offices of President and Secretary, any two or more offices may be held by one person. Any vacancy occurring in any office shall be filled by the Board of Directors.

Section 2. Other Officers. The Board of Directors may appoint one or more Vice Presidents, Assistant Treasurers, Assistant Secretaries and such other officers and agents with such powers and duties as it shall deem necessary.

Section 3. The Chief Executive Officer (the "CEO"). The Chief Executive Officer, subject to the direction of the Board of Directors, shall have general management and control of the business and affairs of the Corporation.

Section 4. The President. The President shall be the Chief Operating Officer of the Corporation and, subject to the direction of the CEO and the Board of Directors, shall be responsible for the day-to-day management of the Corporation.

Section 5. The Treasurer. The Treasurer shall have custody of all funds, securities and evidences of indebtedness of the Corporation, shall receive and give receipts and acquittances for monies paid in on account of the Corporation, shall pay out of the funds on hand all bills, payrolls, and other just debts of the Corporation, of whatever nature upon maturity, shall enter regularly in books to be kept by him for that purpose, full and accurate accounts of all monies received and paid out by him on account of the Corporation, and shall perform all other duties incident to the Office of Treasurer and as may be prescribed by the Board of Directors.

Section 6. The Secretary. The Secretary, if he shall be present, shall keep the minutes of all proceedings of directors and stockholders, and shall attend to the giving and serving of all notices to stockholders and directors or other notices required by law or by these By-Laws, shall affix the seal of the Corporation to deeds, contracts and other instruments in writing requiring a seal when duly signed or when so ordered by the Board of Directors, shall have charge of the minute books, certificate books and stock books and such other books and papers as the Board of Directors may direct, and shall perform all other duties incident to the office of Secretary.

Section 7. Removal of Officers. Any officer of the Corporation may be removed from office at any time, with or without cause, by a vote of the majority of the total number of directors.

ARTICLE V

Capital Stock

Section 1. Form and Execution of Certificates. The shares of the Corporation shall be represented by certificates in such form as is required by the General Corporation Law of the State of Delaware and as shall be adopted by the Board of Directors. Certificates shall be numbered and registered in the order issued, shall be signed by the President or a Vice President and by the Secretary or the Treasurer and sealed with the corporate seal or a facsimile thereof.

Section 2. Transfer. Transfer of shares shall be made only upon the books of the Corporation by the registered holder thereof or by attorney, duly authorized, and upon

surrender of the certificate or certificates for such shares properly assigned for transfer.

Section 3. Lost or Destroyed Certificates. The holder of any certificate representing shares of stock of the Corporation may notify the Corporation of any loss, theft, or destruction thereof, and the Board of Directors may thereupon, in its discretion (subject to applicable law), cause a new certificate for the same number of shares to be issued to such holder upon satisfactory proof of such loss, theft or destruction, and, if required by the Board of Directors, the deposit of indemnity by way of bond or otherwise, in such form and amount and with such surety or sureties as the Board of Directors may require, to indemnify the Corporation against loss or liability by reason of the issuance of such new certificates.

Section 4. Record Date. The Board of Directors may fix, in advance, a date, not exceeding 60 days nor less than 10 days, as the record date for the determination of stockholders entitled to receive notice of, or to vote at, any meeting of stockholders, or to consent to any proposal without a meeting, or for the purpose of determining stockholders entitled to receive payment of any dividends, or allotment of any rights, or for the purpose of any other action.

ARTICLE VI

Miscellaneous

Section 1. Dividends and Reserves. The Board of Directors may declare dividends and may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may reduce or eliminate any such reserve. Dividends may be paid in cash, in property, or in shares of stock.

Section 2. Regulations. The Board of Directors may make such rules and regulations as it may deem expedient concerning the transfer and registration of certificates for shares of the Corporation.

Section 3. Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation and the words "CORPORATE SEAL", and the state of its incorporation.

Section 4. Notice and Waiver of Notice. Whenever under the provisions of these By-Laws any notice is required to be given, such notice, unless otherwise required by law or by these By-Laws, shall be communicated to the person entitled thereto be courier mail or first-class mail, postage prepaid, or by telegraph, telex, cable, facsimile or other recorded form of transmission, and such notice shall be deemed to have been given on the third day after the time of dispatch by courier mail or mailing thereof or at the time of dispatch in the case of notice by any other form of transmission. Any notice required to be given under these By-Laws may be waived in writing by the person entitled thereto, whether before or after the time stated therein.

Section 5. Fiscal Year. The fiscal year of the Corporation shall be determined by resolution of the Board of Directors.

Section 6. No petition under title 11 of the United States Code may be filed by the Corporation without a resolution of the Board of Directors authorizing such a filing which has been approved by at least all but one of the directors then in office, including the affirmative vote of at least two directors that are not affiliated or associated with E.ON AG or its affiliates (other than the Corporation and its subsidiaries).

Section 7. No petition under title 11 of the United States Code may be filed by the Corporation during the period commencing on the Closing Date (as such term is defined in the Purchase Agreement dated as of September 30, 2001, by and among TPG Partners III, L.P., T(3) Partners, L.P., T(3) Partners II, L.P., and TPG Wafer Holdings LLC, on the one hand, and E.ON AG, E.ON International Finance B.V., FIDELIA Corporation, VEBA Zweite Verwaltungsgesellschaft mbH, and E.ON North America, Inc., on the other hand (the "Purchase Agreement")) through and including the date on which at least thirty million dollars has been loaned to the Corporation pursuant to the terms of the Revolving Credit Facility (as such term is defined in the Purchase Agreement) without a resolution of the Board of Directors authorizing such a filing which has been approved by at least all but one of the directors then in office, including a majority of such directors not affiliated or associated with TPG Wafer Holdings LLC, T(3)Partners, L.P., T(3) Partners II, L.P. or any of their respective affiliates.

ARTICLE VII

Amendments

Section 1. Amendments. The Board of Directors shall have the power, without assent or vote of the stockholders, to make, alter, amend, change, add to or repeal these By-Laws, or any of them, upon a vote of a majority of the total number of directors.

EX-10 4 m10vvv.htm NY2 - 276236.12 EURO 55,000,000
AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of September 22, 2001

MEMC ELECTRONIC MATERIALS, S.P.A., a company formed under the laws of Italy, as the borrower (the "Borrower"), and E.ON INTERNATIONAL FINANCE B.V., a company formed under the laws of the Netherlands ("Finance"), 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:

Preliminary Statement

WHEREAS, Borrower and Finance are parties to a Credit Agreement dated as of September 22, 2000 (the "Credit Agreement") pursuant to which Finance agreed to extend up to Euro 80,000,000 of credit to Borrower on a term basis;

WHEREAS, by letter agreement dated January 17, 2001 (the "January 17, 2001 Letter Agreement") among MEMC (as hereunder defined), Finance and E.ON AG, the parties agreed that if on or prior to September 1, 2001, the entire principal amount of Euro 80 million, plus all accrued interest and any other outstanding amounts owing under the Credit Agreement had not been paid in full to Finance, then MEMC shall cause Borrower to execute and deliver to Finance, and Finance shall execute and deliver to Borrower, an amended and restated Credit Agreement, which among other things extends the maturity date of the Credit Agreement for an additional twelve months until September 22, 2002;

WHEREAS, the Borrower has borrowed Euro 80 million under the Credit Agreement and has made principal payments of Euro 25 million, leaving an outstanding principal balance of Euro 55 million;

WHEREAS, as of September 1, 2001, the entire principal amount owing under the Credit Agreement, had not been paid in full to Finance;

WHEREAS, pursuant to the January 17, 2001 Letter Agreement, Borrower and Finance desire to amend the Credit Agreement as herein set forth (this "Agreement").

NOW THEREFORE, in consideration of the foregoing premises and the mutual covenants and conditions hereinafter set forth, the parties agree as follows:

ARTICLE I.
AMENDMENT; DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Amendment. Subject to Section 8.06, the Credit Agreement (including all Exhibits thereto) is amended and restated in its entirety as set forth in this Agreement.

SECTION 1.02. 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.

"Amendment Effective Date" means September 22, 2001.

"Applicable Spread" means 6.81875%, 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, 2001, to a B3 rated industrial borrower for the period from September 22, 2001, 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.

"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 1.04.

"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.

"MKC" means MEMC Korea Company, a corporation organized and existing under the laws of the Republic of Korea formerly known as Posco Hüls Co., Ltd.

"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.

"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 Finance.

"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.

"Required Lenders" means, at any time, Lenders owed at least 51% of the then aggregate unpaid principal amount of Advances owing to Lenders or, if no such principal amount is then outstanding, Lenders having at least 51% of the Commitments.

"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 o f 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, 2002 and (b) the termination in whole of the Commitments pursuant to Section 2.04 or Section 6.01.

"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 1.03. 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 1.04. 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 entitle d to reborrow any repaid or prepaid portion of any Advance. As of the Amendment Effective Date, the Lender's Commitments have been fully drawn by the Borrower and no further Advances shall hereafter be made.

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 fu nds, 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 203. 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, 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 forth with 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.

(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 informa tion 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 re imbursement 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 MKC 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 of the Borrower and its Subsidiaries.

ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING

SECTION 3.01. Conditions Precedent to Effectiveness of Section 2.01. Section 2.01 of this Agreement became effective on and as of the first date (the "Effective Date") on which the following conditions precedent were 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. Effective as of the Effective Date and as of the date of each Borrowing, 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 MKC 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 MKC 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) The Borrower shall not be required to pay any amounts under Section 8.04(c) in connection with any Advances repaid pursuant to Section 5.02.

(c) 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 MKC by way of dividends or loans (taking into account tax consequences and MKC'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 Subsection (c) of 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 prepai d (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 an d 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 s uch 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 p arties.

SECTION 7.03. Finance. With respect to its Commitment, the Advance made by it and the Note issued to it, Finance 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 Finance 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, ju dgments, 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 Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all the Lenders, do any of the following: (a) waive any of the conditions specified in Section 3.01, (b) increase the Commitments of the Lenders 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 o f 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 effec tive 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 limitati on, 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 upon the Amendment Effective Date. Prior to the Amendment Effective Date, the Credit Agreement shall remain in full force and effect.

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 5,00 0,000 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 Accepta nce 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 t hat 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 ha ve 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.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

MEMC ELECTRONIC MATERIALS, S.P.A., as Borrower

By /s/ Giovanni Chiroli
______________________________
Name: Giovanni Chiroli
Title: Financial Manager

E.ON INTERNATIONAL FINANCE B.V., as
Agent and as Initial Lender

By /s/ H. J. Wirix and S.A.L. Visser
______________________________
Name: H. J. Wirix and S.A.L. Visser
Title: Managing Director Managing Director

By ______________________________
Name:
Title:

EXHIBIT A TO THE
CREDIT AGREEMENT

FORM OF PROMISSORY NOTE

Euro 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 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 E.ON INTERNATIONAL FINANCE B.V., a company organized under the laws of the Netherlands ("Finance"), 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 Finance, 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

Date	Amount of Advance	Amount of Principal Paid or Prepaid	Unpaid Principal Balance	Notation Made By

EXHIBIT B TO THE
CREDIT AGREEMENT

FORM OF NOTICE OF BORROWING

E.ON INTERNATIONAL FINANCE B.V., as Agent for the Lenders parties to the Credit Agreement referred to below Strawinskylaan 3111 1070 ZX Amsterdam The Netherlands	September , 2000
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 E.ON 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 ________________.

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 E.ON INTERNATIONAL FINANCE B.V., a company organized under the laws of the Netherlands ("Finance"), 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 t he 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]

Accepted this ______ day
of _______________, ____

E.ON INTERNATIONAL FINANCE B.V.,
as Agent

By:

Title:

__________
*This date should be no earlier than five Business Days after the delivery of this Assignment and Acceptance to the Agent.

EX-10 5 m10vvv1.htm NY2 - 276694.12 AMENDED AND RESTATED COMPANY GUARANTY AGREEMENT

AMENDED AND RESTATED COMPANY GUARANTY AGREEMENT dated as of September 22, 2001, between MEMC ELECTRONIC MATERIALS, INC., a Delaware corporation ("MEMC" or the "Guarantor"), and E.ON INTERNATIONAL FINANCE B.V., a company organized under the laws of the Netherlands ("Finance"), as Agent and as Initial Lender (as defined in the Credit Agreement referred to below).

Reference is made to the Amended and Restated Credit Agreement dated as of September 22, 2001 (the "Credit Agreement"), between MEMC ELECTRONIC MATERIALS, S.P.A., as Borrower, and Finance, 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:

Amendment. The Company Guaranty Agreement dated as of September 22, 2000 between MEMC and Finance is amended and restated in its entirety as set forth in this Agreement.

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):

"Approved Capital Expenditures" means the aggregate amount for Guarantor and its Subsidiaries of (a) all purchases or acquisitions by Guarantor and its Subsidiaries of items considered to be capital items under GAAP, which in any event shall include all expenditures capitalized in accordance with GAAP relating to property, plant, equipment or software on the consolidated balance sheet of Guarantor and its Subsidiaries, and which shall exclude any such purchases or acquisitions by a Subsidiary that were purchased or acquired with Restricted Proceeds and/or with Restricted Net Free Cash Flow, plus (b) any capital contributions or equity investments by Guarantor or its Subsidiaries in Guarantor's unconsolidated joint ventures; provided, that such expenditures, acquisitions, contributions or investments were contained in the annual budget approved of in advance by the board of directors of Guarantor or were subsequently approved by the board of directors of Guarantor. For purposes of determining Approved Capital Expenditures for a Subsidiary in a particular year, all Approved Capital Expenditures in such year shall only be considered to have been purchased or acquired by such Subsidiary with Restricted Proceeds and/or with Restricted Net Free Cash Flow to the extent that the Consolidated Net Free Cash Flow as determined for such Subsidiary on a stand-alone basis (i.e., for that Subsidiary and its consolidated Subsidiaries only) for that particular year is equal to or less than the amount of the Approved Capital Expenditures by such Subsidiary during such year.

"Change of Control Date" means the date of occurrence of a Change of Control.

"Commitment" has the meaning specified in Section 2.01 of the Credit Agreement.

"Consolidated" refers to the consolidation of accounts in accordance with GAAP.

"Consolidated Net Free Cash Flow" shall mean, for any fiscal year, the following amount:

(a)

the sum of:

(i)

Consolidated Net Income for such period, plus

(ii)

Consolidated Working Capital Adjustment, plus

(iii)

Consolidated depreciation and amortization expense during such period, plus

(iv)

the amount of cash dividends and distributions paid to Guarantor by Guarantor's unconsolidated joint ventures during such period, plus

(v)

the excess, if any, of (i) the amount of expense for contributions to be made to the MEMC Pension Plan and Guarantor's other retirement plans included in Consolidated Net Income, over (ii) the amount of cash contributions made to the MEMC Pension Plan and Guarantor's other retirement plans, plus

(vi)

any non-cash losses during such period not included in the foregoing items (ii) through (v),

minus

(b)

the sum of:

(i)

the amount of Approved Capital Expenditures during such period, plus

(ii)

the aggregate amount of scheduled or required permanent principal payments of Debt for borrowed money of Guarantor and its Subsidiaries during such period, plus

(iii)

the aggregate amount of any voluntary permanent repayments of principal by Guarantor on E.ON Loans (which repayments, in the case of any E.ON Loan that is a revolving loan, are accompanied by a concurrent permanent reduction of the revolving loan commitment) during such period, plus

(iv)

the excess, if any, of (i) the amount of cash contributions made to the MEMC Pension Plan and Guarantor's other retirement plans, but only to the extent such contributions are required pursuant to such plans or to meet minimum funding standards or to avoid participant notice requirements of ERISA, over (ii) the amount of expense for contributions to be made to the MEMC Pension Plan and Guarantor's other retirement plans included in Consolidated Net Income, plus

(v)

any non-cash income during such period not included in items (i) through (iv).

Notwithstanding the foregoing, Consolidated Net Free Cash Flow shall exclude any Restricted Net Free Cash Flow.

"Consolidated Net Income" means, for any period, the Consolidated net income (or loss) of Guarantor and its Subsidiaries for such period (on a Consolidated basis in conformity with GAAP).

"Consolidated Working Capital" means, as at any date of determination, the excess (or deficit) of (a) the total assets of Guarantor and its Subsidiaries on a Consolidated basis which may properly be classified as current assets in conformity with GAAP, excluding the current portion of deferred tax assets and cash and cash equivalents over (b) the total liabilities of Guarantor and its Subsidiaries on a Consolidated basis which may properly be classified as current liabilities in conformity with GAAP, excluding the current portions of Debt.

"Consolidated Working Capital Adjustment" means, for any period on a Consolidated basis, the amount (which may be a negative number) by which Consolidated Working Capital as of the beginning of such period exceeds (or is less than) Consolidated Working Capital as of the end of such period.

"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 (other than guaranties of Debt of MEMC's Affiliates which Debt is otherwise included in Debt) 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.

"Effective Date" has the meaning specified in Section 3.01 of the Credit Agreement.

"E.ON Loans" mean any and all existing and future Debt of Guarantor to E.ON AG and its Affiliates, including without limitation the term loans and revolving loans outstanding between Guarantor and E.ON AG and its Affiliates on the date hereof.

"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 10(e) and Section 11(a)(iv).

"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.

"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.

"MKC" means MEMC Korea Company, a corporation organized and existing under the laws of the Republic of Korea formerly known as Posco Hüls Co., Ltd.

"Net Proceeds" means, with respect to any issuance of 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), other than Debt from E.ON AG or its Affiliates and other than Debt to the extent incurred to refinance, in whole or in part, Debt for borrowed money outstanding as of December 31, 2000), an amount equal to the cash proceeds received 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 3.

"Obligations" has the meaning specified in Section 3.

"Other Taxes" has the meaning specified in Section 8(c).

"Restricted Net Free Cash Flow" means Consolidated Net Free Cash Flow as determined for a Subsidiary on a stand-alone basis (i.e., for that Subsidiary and its consolidated Subsidiaries only), to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of such net free cash flow 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.

"Restricted Proceeds" means cash proceeds received by a Subsidiary 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.

"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill, Inc.

"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 join t 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 8(b).

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 (inclu ding 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.

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.

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.

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).
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 Cred it 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.
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 h ereby 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 8), 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 8 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 8(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 8(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 8(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 8, 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 8. 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 8 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.

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.
Representations and Warranties. Effective as of the Effective Date, 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.

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;

(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;

(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 10(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.

(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 11(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 11(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 MKC. Use reasonable commercial efforts, and cause the Borrower to use reasonable commercial efforts, to obtain cash from MKC by way of dividends or loans (taking into account tax consequences and MKC'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 MKC Funds. Within ten (10) days after each date upon which MEMC or its Subsidiaries receives any cash from MKC 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 MKC 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.

(d) Mandatory Repayment and Other Covenants.

(i) In addition to any other mandatory repayments or commitment reductions pursuant to this Agreement, within 90 days after the end of each fiscal year commencing with the fiscal year ending December 31, 2001, Guarantor shall pay E.ON AG an amount equal to 50% of the Consolidated Net Free Cash Flow for such year as a mandatory repayment of principal of outstanding E.ON Loans in accordance with the requirements of Section 11(d)(iii). Within 80 days after the end of each fiscal year, Guarantor shall deliver to E.ON AG a certificate setting forth its calculation of the Consolidated Net Free Cash Flow for the prior year and the components thereof, together with documents supporting such calculation.

(ii) To the extent that any Subsidiary has Restricted Proceeds and/or Restricted Net Free Cash Flow in a fiscal year, Guarantor shall use reasonable commercial efforts to obtain as soon as practicable such Restricted Proceeds and/or Restricted Net Free Cash Flow from such Subsidiary by way of loans, dividends or similar distributions (taking into account tax consequences and such Subsidiary's reasonable capital requirements) in subsequent fiscal years and, in the case of Restricted Proceeds, in the same fiscal year. Any such Restricted Proceeds and/or Restricted Net Free Cash Flow received by Guarantor in subsequent fiscal years by way of loans, dividends, reductions or repurchases of equity, share redemptions or similar distributions shall be considered Net Proceeds or Consolidated Net Free Cash Flow, as the case may be, in such subsequent fiscal years, and within forty-five (45) days following the end of the calendar quarter in which suc h funds have been received by Guarantor, Guarantor shall pay to E.ON AG as a mandatory repayment of principal of outstanding E.ON Loans an amount equal to 50% of the Restricted Net Free Cash Flow so received by Guarantor and 75% of the Restricted Proceeds so received by Guarantor. For purposes of this Section 11(d)(ii), the amount of Restricted Net Free Cash Flow generated in a particular fiscal year shall be limited to the lesser of (i) the Restricted Net Free Cash Flow for such fiscal year and (ii) the sum of the Consolidated Net Free Cash Flow and the Restricted Net Free Cash Flow for such fiscal year. By way of illustration, if the Consolidated Net Free Cash Flow for a particular fiscal year is negative $10 million and the Restricted Net Free Cash Flow for such fiscal year is positive $30 million, then for purposes of this Section 11(d)(ii) the Restricted Net Free Cash Flow considered to be generated in such fiscal year shall be $20 million.

(iii) Each amount required to be applied to repay E.ON Loans pursuant to Section 11(d)(i) or (ii) shall be applied (i) first, to repay the remaining scheduled principal payments of the then outstanding E.ON Loans that are term loans, and (ii) second, if all outstanding E.ON Loans that are term loans have been fully repaid, to repay the principal amount of any then outstanding E.ON Loans that are revolving loans (and permanently reduce the revolving loan commitment under such loan); provided, that in each case, Guarantor shall propose to E.ON AG, and Guarantor and E.ON AG shall seek to agree on, which term loan or revolving loan shall be repaid and which advance or advances thereunder; provided, further, that if Guarantor and E.ON AG cannot agree on which term loan or revolving loan and which advances shall be repaid, E.ON AG may make such determination in its sole discretion. In addition to each amount required to be applied to repay E.ON Loans pursuant to Section 11(d)(i) or (ii) Guarantor shall pay accrued interest to the date of such repayment on the principal amount repaid.

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.
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).
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).

Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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).
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.

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.
Rules of Interpretation. The rules of interpretation specified in Section 1.1 of the Credit Agreement shall be applicable to this Agreement.
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 proc eeding 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 16. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

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 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 22 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

E.ON INTERNATIONAL FINANCE B.V., as Agent and as Initial Lender

By /s/ H. J. Wirix S.A.L. Visser
_____________________________________
Name: H. J. Wirix and S.A.L. Visser
Title: Managing Director Managing Director

By _________________________________
Name:
Title:

EX-10 6 m10yyy.htm NY2 - 307552.04

SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

Dated as of September 4, 2001

MEMC ELECTRONIC MATERIALS, INC., a Delaware corporation ("MEMC"), and MEMC PASADENA, INC., a Delaware corporation ("MEMC Pasadena"), as borrowers (each, a "Borrower" and collectively, the "Borrowers"), and E.ON AG, a company formed under the laws of the Federal Republic of Germany ("E.ON"), as the initial lender (the "Initial Lender") and as agent (together with any successor appointed pursuant to Article VIII, the "Agent") for the Lenders (as hereinafter defined), hereby agree as follows:

Preliminary Statement

WHEREAS, MEMC and E.ON AG are parties to an Amended and Restated Revolving Credit Agreement dated as of July 26, 2001 (the "Existing Amended and Restated Credit Agreement") pursuant to which E.ON AG agreed to extend up to US$50,000,000 of credit to MEMC in the form of revolving loans;

WHEREAS, MEMC and E.ON AG wish to amend and restate the Existing Amended and Restated Credit Agreement to, among other things, provide for additional collateral to secure the Borrowers' obligations, as set forth herein; and

NOW THEREFORE, in consideration of the foregoing premises and the mutual covenants and conditions hereinafter set forth, the parties agree as follows:

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Amendment. Subject to Section 9.06, the Existing Amended and Restated Credit Agreement (including all Schedules and Exhibits thereto) is amended and restated in its entirety as set forth in this Agreement.

"Advance" has the meaning specified in Section 2.01.

"Agent" has the meaning specified in the recitals to this Agreement.

"Agent's Account" means the Dollar account of the Agent maintained with such bank as the Agent shall specify in writing to the Borrowers and the Lenders from time to time.

"Agreement" means this Second Amended and Restated Revolving Credit Agreement, as amended, modified or supplemented from time to time.

"Approved Capital Expenditures" means the aggregate amount for MEMC and its Subsidiaries of (a) all purchases or acquisitions by the MEMC and its Subsidiaries of items considered to be capital items under GAAP, which in any event shall include all expenditures capitalized in accordance with GAAP relating to property, plant, equipment or software on the consolidated balance sheet of MEMC and its Subsidiaries, and which shall exclude any such purchases or acquisitions by a Subsidiary that were purchased or acquired with Restricted Proceeds and/or with Restricted Net Free Cash Flow, plus (b) any capital contributions or equity investments by MEMC or its Subsidiaries in MEMC's unconsolidated joint ventures; provided, that such expenditures, acquisitions, contributions or investments were contained in the annual budget approved of in advance by the board of directors of MEMC or were subsequently approved by the board of directors of MEMC. For purposes of determining Approve d Capital Expenditures for a Subsidiary in a particular year, all Approved Capital Expenditures in such year shall be considered to have been purchased or acquired by such Subsidiary with Restricted Proceeds and/or with Restricted Net Free Cash Flow to the extent that the Consolidated Net Free Cash Flow as determined for such Subsidiary on a stand-alone basis (i.e., for that Subsidiary and its consolidated Subsidiaries only) for that particular year is equal to or less than the amount of the Approved Capital Expenditures by such Subsidiary during such year.

"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.

"Availability Reserves" means, as of any date of determination, such amounts as the Lenders may from time to time establish and revise in good faith reducing the amount of Advances that would otherwise be available to the Borrower under the lending formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks that, as determined by Lender in good faith, do or have a reasonable likelihood of adversely affecting either (i) the Collateral or its value, (ii) the assets or financial condition of the Borrower, or (iii) the security interests and other rights of the Lenders in the Collateral (including the enforceability, perfection and priority thereof) or (b) to reflect the Lenders' good faith belief that any collateral report or financial information furnished by or on behalf of the Borrower to the Lenders is or may have been incomplete, inaccurate or misleading in any material respect, or (c) in respect of any state of facts which the Lenders determine in go od faith constitutes an Event of Default or may, with notice or passage of time or both, constitute an Event of Default. The amount of any Availability Reserves established by Lender shall have a reasonable relationship to the matter, event or transaction which is the basis for such reserve, as determined by the Lenders in good faith. Availability Reserves shall not be effective until communicated to the Borrower.

"Bank" means any Lender other than the Initial Lender or any Affiliate of the Initial Lender.

"Borrower" and "Borrowers" has the meaning specified in the recitals 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).

"Borrowing Projected Cash Flow Statement" has the meaning specified in Section 5.01(g)(ix).

"Business Day" means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable business day relates to any Advances, on which dealings are carried on in the London interbank market.

"Collateral" means, collectively (i) the Pledge Agreement Collateral and (ii) the Security Agreement Collateral.

"Commitment" has the meaning specified in Section 2.01.

"Confidential Information" means information that any 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 such Borrower, an Affiliate of such Borrower or an Affiliate of the Initial Lender.

"Consolidated" refers to the consolidation of accounts in accordance with GAAP.

"Consolidated Net Free Cash Flow" means, for any fiscal year, the following amount:

(a) the sum of:

(i) Consolidated Net Income for such period, plus

(ii) Consolidated Working Capital Adjustment, plus

(iii) Consolidated depreciation and amortization expense during such period,

plus

(iv) the amount of cash dividends and distributions paid to MEMC by MEMC's unconsolidated joint ventures during such period, plus

(v) the excess, if any, of (i) the amount of expense for contributions to be made to the MEMC Pension Plan and MEMC's other retirement plans included in Consolidated Net Income, over (ii) the amount of cash contributions made to the MEMC Pension Plan and MEMC's other retirement plans, plus

(vi) any non-cash losses during such period not included in the foregoing items (ii) through (v),

minus

(b) the sum of:

(i) the amount of Approved Capital Expenditures during such period, plus

(ii) the aggregate amount of scheduled or required permanent principal payments of Debt for borrowed money of MEMC and its Subsidiaries during such period, plus

(iii) the aggregate amount of any voluntary permanent repayments of principal by MEMC on E.ON Loans (which repayments, in the case of any E.ON Loan that is a revolving loan, are accompanied by a concurrent permanent reduction of the revolving loan commitment) during such period, plus

(iv) the excess, if any, of (i) the amount of cash contributions made to the MEMC Pension Plan and MEMC's other retirement plans, but only to the extent such contributions are required pursuant to such plans or to meet minimum funding standards or to avoid participant notice requirements of ERISA, over (ii) the amount of expense for contributions to be made to the MEMC Pension Plan and MEMC's other retirement plans included in Consolidated Net Income, plus

(v) any non-cash income during such period not included in items (i) through (iv).

Notwithstanding the foregoing, Consolidated Net Free Cash Flow shall exclude any Restricted Net Free Cash Flow.

"Consolidated Net Income" means, for any period, the Consolidated net income (or loss) of MEMC and its Subsidiaries for such period (on a Consolidated basis in conformity with GAAP).

"Consolidated Working Capital" means, as at any date of determination, the excess (or deficit) of (a) the total assets of MEMC and its Subsidiaries on a Consolidated basis which may properly be classified as current assets in conformity with GAAP, excluding the current portion of deferred tax assets and cash and cash equivalents over (b) the total liabilities of MEMC and its Subsidiaries on a Consolidated basis which may properly be classified as current liabilities in conformity with GAAP, excluding the current portions of Debt.

"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 (other than guaranties of Debt of the Borrowers' Affiliates which Debt is otherwise included in Debt) 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.

"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 Borrowers nor any Subsidiary of any Borrower shall qualify as an Eligible Assignee.

"Eligible Inventory" means all Inventory, except that Eligible Inventory shall not include (a) packaging and shipping materials; (b) supplies used or consumed in the Borrowers' business; (c) Inventory subject to a security interest or Lien in favor of any person other than the Agent except those permitted in this Agreement; (d) bill and hold goods; (e) unserviceable, obsolete or slow moving Inventory; (f) Inventory which is not subject to the first priority, valid and perfected security interest of Agent; (g) damaged and/or defective Inventory; (h) returned Inventory that is not held for resale; (i) Inventory to be returned to vendors; (j) Inventory held after the applicable expiration date thereof; (k) samples; (l) Inventory purchased on consignment title to which has not passed to the Borrower; and (m) Inventory sold on consignment title to which has passed to the customer. General criteria for Eligible Inventory may be established and revised from time to time by the Agent in goo d faith. Any Inventory which is not Eligible Inventory shall nevertheless be part of the Collateral.

"Eligible Receivables" means all Receivables of either of the Borrowers which are and continue to be reasonably acceptable to the Agent based on the criteria set forth below. In general, such Receivables shall be Eligible Receivables if:

such Receivables arise from the actual and bona fide sale and delivery of goods or rendition of services by any Borrower to any person (other than an Affiliate of the Borrower) in the ordinary course of the business of such Borrower which transactions are completed in accordance with the terms and provisions contained in any documents related thereto;

such Receivables are not unpaid more than ninety (90) days after the date of the original invoice for them;

such Receivables comply with the applicable terms and conditions contained in Section 6.02 of this Agreement and Article III of the Security Agreement;

such Receivables do not arise from sales on consignment, guaranteed sale, sale and return, sale on approval, or other terms under which payment by the account debtor may be conditional or contingent;

such Receivables do not consist of progress billings, bill and hold invoices or retainage invoices, except as to bill and hold invoices, if the Agent shall have received, on behalf of the Lenders, an agreement in writing from the account debtor, in form and substance satisfactory to the Agent, confirming the unconditional obligation of the account debtor to take the goods related thereto and pay such invoice;

the account debtor with respect to such Receivables has not asserted a counterclaim, defense or dispute and does not have, and does not engage in transactions which may give rise to, any right of setoff against such Receivables other than sales by either of the Borrowers to such account debtor giving rise to Receivables (but the portion of the Receivables of such account debtors in excess of the amount at any time and from time to time owed by any Borrower or its Affiliates to such account debtor or claimed owed by such account debtor may be deemed Eligible Receivables);

there are no facts, events or occurrences which would impair the validity, enforceability or collectability of such Receivables or reduce the amount payable or delay payment thereunder;

such Receivables are subject to the first priority, valid and perfected security interest of the Agent, for the benefit of the Secured Creditors, and any goods giving rise thereto are not, and were not at the time of the sale thereof, subject to any Liens except those permitted in this Agreement and the Security Agreement;

the account debtors with respect to such Receivables are not any foreign government, the United States of America, any State, political subdivision, department, agency or instrumentality thereof;

there are no proceedings or actions which are threatened or pending against the account debtors with respect to such Receivables which might result in any material adverse change in any such account debtor's financial condition;

such Receivables are not owed by an account debtor who has Receivables unpaid more than sixty (60) days after the due date of the original invoice for them which constitute more than fifty (50%) percent of the total Receivables of such account debtor;

such Receivables are owed by account debtors deemed creditworthy at all times by the Agent, as determined by the Agent.

General criteria for Eligible Receivables may be established and revised from time to time by the Agent and the Lenders in good faith. Any Receivables which are not Eligible Receivables shall nevertheless be part of the Collateral.

"E.ON Loans" means any and all existing and future Debt of any Borrower to E.ON and its Affiliates, including without limitation the term loans and revolving loans outstanding between either of the Borrowers and E.ON and its Affiliates on the date hereof.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

"Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

"Eurodollar Lending Office" means, with respect to any Bank, the office of such Bank specified as its "Eurodollar 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 Borrowers and the Agent.

"Eurodollar Rate Reserve Percentage" for any Interest Period for all Advances comprising part of the same Borrowing means the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Advances is determined) having a term equal to such Interest Period.

"Events of Default" has the meaning specified in Section 7.01.

"Existing Amended and Restated Credit Agreement" has the meaning specified in the recitals to this Agreement.

"Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three federal funds brokers of recognized standing selected by it.

"GAAP" has the meaning specified in Section 1.03.

"Indemnified Party" has the meaning specified in Section 9.04(b).

"Initial Lender" has the meaning specified in the recitals 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 on the last day of the period selected by a Borrower pursuant to the provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by such Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one week or one, two or three months, as the Borrower may, upon notice received by the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that:

(i) the Borrower may not select any Interest Period that ends after the Termination Date;

(ii) Interest Periods commencing on the same date for Advances comprising part of the same Borrowing shall be of the same duration;

(iii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and

(iv) whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

"Interest Rate" for any Interest Period means a rate per annum at all times equal to the sum of (i) the British Bankers' Association (BBA) LIBOR rate (as shown on the Reuters page FRBD or comparable pages) for such Interest Period for such Advance, divided by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period, plus (ii) eight (8%) percent.

"Inventory" means all merchandise, inventory, goods and goods on consignment and all additions, substitutions and replacements thereof, wherever located, together with all goods, supplies, incidentals, packaging materials, labels, materials and any other items used or usable in manufacturing, processing, packaging or shipping same, in all stages of production -- from raw materials through work-in-process to finished goods -- and all products and proceeds of whatever sort and wherever located and any portion thereof which may be returned, rejected, reclaimed or repossessed by the Agent from any Borrower's customers, and shall specifically include all "inventory" as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, now or hereafter owned by any Borrower.

"Lender" means the Initial Lender and each Person that shall become a party hereto pursuant to Section 9.07.

"Lien" means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effects as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Code or comparable law of any jurisdiction).

"Loan Documents" means this Agreement, the Note, the Security Agreement and the Pledge Agreement.

"Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of either of MEMC or MEMC and its Subsidiaries taken as a whole.

"Monthly Projected Cash Flow Statement" has the meaning specified in Section 5.01(g)(vii).

"Net Proceeds" means, with respect to any issuance of debt securities (including debt securities convertible into equity) or any incurrence of Debt (other than non-interest bearing Debt not for borrowed money e.g., customer deposits), other than Debt from E.ON or its Affiliates and other than Debt to the extent incurred to refinance, in whole or in part, Debt for borrowed money outstanding as of December 31, 2000), an amount equal to the cash proceeds received 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" means a promissory note of the Borrowers payable to the order of any Lender, substantially in the form of Exhibit A hereto, evidencing the Debt of the Borrowers to such Lender resulting from the Advance made by such Lender.

"Obligations" means all unpaid principal of and accrued and unpaid interest on the Notes and all liabilities and obligations of the Borrowers now or hereafter arising under this Agreement and all of the other Loan Documents, whether for principal, interest, fees, expenses, indemnities or otherwise, and whether primary, secondary, direct, indirect, contingent, fixed or otherwise (including obligations of performance).

"Other Taxes" has the meaning specified in Section 2.12(b).

"Permitted Liens" means the Liens described in clauses (iii), (iv), (v) and (viii) of Section 5.02(a).

"Pledge Agreement" means the Pledge Agreement of even date between MEMC, as pledgor and E.ON AG, as pledgee, as amended, modified or supplemented from time to time.

"Pledge Agreement Collateral" means the "Collateral" as defined in Section 2 of the Pledge Agreement.

"Receivables" has the meaning specified in the Security Agreement.

"Register" has the meaning specified in Section 9.07(c).

"Restricted Net Free Cash Flow" means Consolidated Net Free Cash Flow as determined for a Subsidiary of MEMC on a stand-alone basis (i.e., for that Subsidiary and its consolidated Subsidiaries only), to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of such net free cash flow 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.

"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.

"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill, Inc.

"Secured Creditors" has the meaning specified in the recitals of the Security Agreement and the Pledge Agreement.

"Security Agreement" means the Security Agreement, dated as of July 26, 2001, among the Borrowers and the Agent, as amended, modified or supplemented from time to time.

"Security Agreement Collateral" means the "Collateral" as defined in Section 1.1(a) of the Security Agreement.

"Stock" has the meaning specified in Section 2 of the Pledge Agreement.

"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 either of the Borrowers 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 either of the Borrowers.

"Taxes" has the meaning specified in Section 2.12(a).

"Termination Date" means the earlier of (a) April 1, 2002 and (b) the termination in whole of the Commitments pursuant to Section 2.04 or Section 7.01.

"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 1.04. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(e) ("GAAP").

ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01. The Advances. (a) On the date hereof each "Advance" made under the Existing Amended and Restated Credit Agreement shall constitute an Advance hereunder and each Lender severally agrees, on the terms and conditions hereinafter set forth, to make advances (each, an "Advance") to the Borrowers 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 Acce ptance, set forth for such Lender in the Register maintained by the Agent pursuant to Section 9.07(c), as such amount may be reduced pursuant to Section 2.04 (such Lender's "Commitment"); provided that the aggregate amount of each Advance shall not exceed an amount equal to the lesser of (i) when added to all outstanding Advances, the sum of (A) $30,000,000, (B) eighty-five (85%) percent of the net amount of Eligible Receivables and (C) forty (40%) percent of Eligible Inventory, less, in each case, any Availability Reserves (each of which is measured as of the end of the fourth Business Day immediately preceeding such Advance), and (ii) when added to the outstanding Advances made during the calendar month during which such Advance is made, will not exceed 110% of the aggregate projected cash requirements of MEMC for such month as set forth on the applicable Monthly Projected Cash Flow Statement. Each Borrowing shall be in an aggregate amount of $2,000,000 or an integral multiple of $5 00,000 in excess thereof and shall be made simultaneously by the Lenders ratably according to their respective Commitments. Within the limits of each Lender's Commitment, the Borrowers may borrow or reborrow under this Section 2.01.

(b) The Agent may, in its discretion, from time to time, upon not less than five (5) days prior notice to the Borrowers, reduce the lending formula with respect to Eligible Receivables to the extent that the Agent determines in good faith that: (i) the dilution with respect to the Receivables for any period (based on the ratio of (A) the aggregate amount of reductions in Receivables (other than as a result of payments in cash) to (B) the aggregate amount of total sales) has increased in any respect or may be anticipated to increase in any respect above historical levels, or (ii) the general creditworthiness of account debtors has declined. In determining whether to reduce the lending formula(s), the Agent may consider events and conditions which are also considered in determining Eligible Receivables. Any reduction in any of the lending formulas pursuant to this Section 2.01(b) shall have a reasonable relationship to the event or circumstance which is the basis for such reduction as determined by the Agent in good faith.

(c) All Advances otherwise available to the Borrower shall be subject to the Lender's continuing right to establish and revise Availability Reserves.

(d) The aggregate amount of the Advances outstanding at any time shall not exceed $50,000,000.

SECTION 2.02. Making the Advances. Each Borrowing shall be made on notice, given not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Borrowing by one of the Borrowers 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, setting forth therein, the following: (i) the date of such Borrowing, (ii) the amount of such Borrowing, and (iii) the initial Interest Period for such Advances, provided that, notwithstanding the foregoing, the first Advance may be made on one Business Day's notice.

(b) Each Lender shall, before 11:00 A.M. (New York City time) on the date of such Borrowing, make available for the account of its Eurodollar 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 Borrowers by depositing the proceeds of the Advances in such Dollar account of the Borrowers (or of such Person as the Borrowers 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 Borrowers 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 Borrowers agree 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.

(c) Anything in Section 2.02 to the contrary notwithstanding, neither of the Borrowers may request a Borrowing if the obligation of the Lenders to make Advances shall be suspended pursuant to Section 2.10.

(d) Any Borrowing Notice delivered by either of the Borrowers to the Agent shall be irrevocable and binding on both Borrowers. Each 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.

(e) The Agent shall only make available to the Borrowers 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.

(f) The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing.

SECTION 2.03. Commitment Fee. The Borrowers agree, jointly and severally, 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 28, 2001, and on the Termination Date.

SECTION 2.04. Optional Termination or Reduction of the Commitments. The Borrowers shall have the right, upon at least three Business Days' notice to the Agent, to terminate in whole or reduce ratably in part the unused portions of the respective Commitments of the Lenders, provided that each partial reduction shall be in the aggregate amount of $2,000,000 or an integral multiple of $500,000 in excess thereof.

SECTION 2.05. Repayment. The Borrowers shall repay to the Agent for the ratable account of the Lenders on the Termination Date the aggregate principal amount of the Advances then outstanding.

SECTION 2.06. Interest. (a) Interest on the Advances. The Borrowers shall pay interest on the unpaid principal amount of each Advance owing to each Lender from the date of such Advance until such principal amount shall 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 Borrowers 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. Interest Rate Determination. (a) The Agent shall give prompt notice to the Borrowers and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.06(a).

(b) If any Borrower shall fail to select the duration of any Interest Period for any Advances in accordance with the provisions contained in the definition of "Interest Period" in Section 1.01, the Agent will forthwith so notify the Borrower and the Lenders and such Advances will automatically, on the last day of the then existing Interest Period therefor, convert into an Advance bearing interest at the Interest Rate applicable to Advances of the same aggregate amount having an Interest Period of three months.

(c) On the date on which the aggregate unpaid principal amount of Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $5,000,000, such Advances shall automatically convert into an Advance bearing interest at the Interest Rate applicable to Advances of the same aggregate amount having an Interest Period of three months.

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 Bank of agreeing to make or making, funding or maintaining an Advance, then the Borrowers shall from time to time, upon demand by such Bank (with a copy of such demand to the Agent), pay to the Agent for the account of such Bank additional amounts sufficient (as applicable) to compensate such Bank for such increased cost. A certificate as to the amount of such increased cost, submitted to the Borrowers by such Bank, 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 Borrowers 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 Bank to perform its obligations hereunder to make an Advance or to fund or maintain an Advance hereunder, (a) the obligation of such Bank to make, fund and maintain any Advance shall be suspended until such Bank shall notify the Borrowe rs that the circumstances causing such suspension no longer exist, (b) such Bank shall promptly notify the Borrowers of such circumstances and such suspension, and (c) unless the Borrowers and such Bank shall have otherwise agreed within ten Business Days of such notice, the Borrowers 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. The Borrowers shall make each payment hereunder and under the Notes not later than 1:00 P.M. (New York City time) on the day when due in Dollars 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 9.04(c)) to the Lenders for the account of their respective Eurodollar 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 Eurodollar Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 9.07(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.

(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; provided, however, that if such extension would cause payment of interest on or principal of any Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

(d) Unless the Agent shall have received notice from the Borrowers prior to the date on which any payment is due to the Lenders hereunder that the Borrowers 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 Federal Funds Rate.

SECTION 2.12. Taxes. Any and all payments by the Borrowers 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 that are imposed by the United States and 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 Eurodollar 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 either 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 Borrow er 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 Borrowers 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 Borrowers 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 Borrowers shall furnish to the Agent, at its address referred to in Section 9.02, 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 Borrowers 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 the United States shall, on 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 Borrowers or the Agent (but only so long as such Lender remains lawfully able to do so), provide each of the Borrowers and the Agent with Internal Revenue Service form W-8BEN 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 Agreement or the Notes. If the form provided by such Lender at the time such Lender becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and un til such Lender provides the appropriate form certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such form; provided, however, that, if at the date of the Assignment and Acceptance pursuant to which a Lender becomes a party to this Agreement, the Lender assignor was entitled to payments under Section 2.12(a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Lender assignee on such date. If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service form W- 8BEN, that the Lender reasonably considers to be confidential, the Lender shall give notice thereof to the Borrowers and shall not be obligated to include in such form or document such confidential information.

(f) For any period with respect to which a Lender has failed to provide the Borrowers 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 otherwise is not required under the first sentence of Section 2.12(e) above), such Lender shall not be entitled to indemnification under Section 2.12(a) with respect to Taxes imposed by the United States; provided, however, that should such Lender become subject to Taxes because of its failure to deliver a form required hereunder, the Borrowers shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Taxes.

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 9.04(c)) in excess of its ratable share of payments on account of the Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Advances owing to them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (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. Each 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 such Borrower in the amount of such participation.

SECTION 2.14. Use of Proceeds. The proceeds of the Advances shall be used for general corporate purposes of the Borrowers and their Subsidiaries.

ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING

SECTION 3.01. Conditions Precedent to Effectiveness of Section 2.01. Section 2.01 of this Agreement will become effective on and as of the first date (the "Effective Date") on which the following conditions precedent are satisfied:

(a) There shall have occurred no Material Adverse Change since June 30, 2001, except as otherwise reflected in any written materials provided to the Agent.

(b) There shall exist no action, suit, investigation, litigation or proceeding affecting any 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 such Borrower or any of its Subsidiaries or (ii) purports to affect the legality, validity or enforceability of any of the Loan Documents 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 each of the Borrowers, 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,

(ii) no event has occurred and is continuing that constitutes a Default; and

(iii) the pledge has been registered in the Shareholders' Book of MEMC Electronic Materials, S.p.A. and attached is a true and correct copy of the registration of the pledge.

(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, the Security Agreement and the Pledge Agreement duly executed and delivered by each of the Borrowers;

(ii) the Notes to the order of the Lenders;

(iii) certified copies of the resolutions of the board of directors of each of the Borrowers approving the Loan Documents, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to the Loan Documents;

(iv) a certificate of the Secretary or an Assistant Secretary of each of the Borrowers certifying the names and true signatures of the officers of each Borrower authorized to sign the Loan Documents and the other documents to be delivered hereunder;

(v) proper financing statements (Form UCC-1 or the equivalent) fully executed for filing under the UCC or other appropriate filing offices of each jurisdiction as may be necessary, or in the reasonable opinion of the Agent, desirable to perfect the security interests purported to be created by the Security Agreement;

(vi) share certificates of the Stock, endorsed by MEMC and a copy of the registration of such pledge in the Shareholders' Book of MEMC Electronic Materials, S.p.A. of the Stock;

(vii) an opinion of (A) U.S. counsel to the Borrowers and (B) Italian counsel to MEMC, each in form and substance satisfactory to the Agent.

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 Borrowers of the proceeds of such Borrowing shall constitute a representation and warranty by the Borrowers that on the date of such Borrowing such statements are true):< /A>

(a) the representations and warranties contained in Section 4.01, the Security Agreement and the Pledge Agreement 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;

(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;

(c) after giving effect to such Borrowing, the aggregate amount of the requested Borrowing will not exceed an amount equal to the lesser of (i) when added to all outstanding Advances, the sum of (A) $30,000,000, (B) eighty-five (85%) percent of the net amount of Eligible Receivables and (C) forty (40%) percent of Eligible Inventory, less, in each case, any Availability Reserves (each of which is measured as of the end of the fourth Business Day immediately preceeding such Borrowing), and (ii) when added to the outstanding Advances made during the calendar month during which such Borrowing is made, will not exceed 110% of the aggregate projected cash requirements of MEMC for such month as set forth on the applicable Monthly Projected Cash Flow Statement;

(d) all expenditures to be paid from proceeds of the applicable Borrowing are reasonable and necessary for the conduct of the business of the Borrower; and

(e) in the reasonable judgment of the Borrower, the amount of such Borrowing is reasonably necessary for the Borrower to meet its liquidity requirements for the next ten (10) Business Days immediately following the date of such Borrowing (taking into account the liquidity needs of its Subsidiaries).

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 a s 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 Borrowers. Effective as of the Effective Date and, other than the last sentence of Section 4.01(e), as of the date of each Borrowing, the Borrowers represent and warrant as follows:

(a) MEMC is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and MEMC Pasadena, Inc. is corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

(b) The execution, delivery and performance by each Borrower of the Loan Documents are within each Borrowers' corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) such Borrower's charters or by-laws or (ii) any law or any contractual restriction binding on or affecting such Borrower.

(d) This Agreement and the Security Agreement have been, and the Notes when delivered hereunder will have been, duly executed and delivered by the Borrowers. This Agreement and the Security Agreement are, and each of the Notes when delivered hereunder will be, legal, valid and binding obligations of the Borrowers enforceable against each of the Borrowers in accordance with their respective terms.

(e) The Pledge Agreement has been duly executed and delivered by MEMC. The Pledge Agreement is a legal, valid and binding obligation of MEMC, enforceable against MEMC in accordance with its terms.

(f) The Consolidated balance sheets of MEMC and its Subsidiaries as of December 31, 2000 and June 30, 2001 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 date and the results of the operations of MEMC and its Subsidiaries for the period ended on such date, all in accordance with GAAP. Since June 30, 2001, there has been no Material Adverse Change, except as otherwise reflected in any written materials provided to the Agent.

(g) There is no pending or threatened action or proceeding affecting any 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 such Borrower or any of its Subsidiaries or (ii) purports to affect the legality, validity or enforceability of the Loan Documents or the consummation of the transactions contemplated hereby.

(h) Neither of the Borrowers is 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.

(i) The provisions of the Security Agreement are effective to create in favor of the Agent for the benefit of the Secured Creditors a legal, valid and enforceable security interest in all right, title and interest of the Borrowers in the Security Agreement Collateral described therein, and the Agent, for the benefit of the Secured Creditors, has a first lien on, and security interest in, all right, title and interest of the Borrowers in all of the Security Agreement Collateral described therein, subject to no other Liens other than Permitted Liens. The filings on Form UCC-1 made pursuant to the Security Agreement, will create, as may be perfected by such filing and recordation, a perfected security interest in the Security Agreement Collateral.

(j) The provisions of the Pledge Agreement are effective to create in favor of the Agent for the benefit of the Secured Creditors a legal, valid and enforceable security interest in all right, title and interest of MEMC in the Pledge Agreement Collateral described therein, and the Agent, for the benefit of the Secured Creditors, has a first lien on, and security interest in, all right, title and interest of the Borrowers in all of the Pledge Agreement Collateral, subject to no other Liens other than Permitted Liens.

(k) Neither of the Borrowers is an "investment company" within the meaning of the Investment Company Act of 1940, as amended.

(l) All information provided by either of the Borrowers, on behalf of such Borrower or the other Borrower, to the Agent or any Lender in connection with the transactions contemplated hereby is true and correct in all material respects.

ARTICLE V
COVENANTS OF THE BORROWERS

SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrowers will, unless the Lenders shall otherwise consent in writing:

(a) Compliance with Laws, Etc. Comply, and cause each of their Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA and environmental laws.

(b) Payment of Taxes, Etc. Pay and discharge, and cause each of their 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 Borrowers nor any of their 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 their Subsidiaries to preserve and maintain, their corporate existence, rights (charter and statutory) and franchises; provided, however, that neither the Borrowers nor any of their Subsidiaries shall be required to preserve any right or franchise if the board of directors of the applicable Borrower or such Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Borrower or such Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any material respect to the Borrower, such Subsidiary or the Lenders.

(d) Replacement Lender. Use its best efforts to enter into a financing arrangement with a third party lender to provide financing to the Borrowers to refinance the Advances.

(e) Keeping of Books. Keep, and cause each of their 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 Borrowers 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.

(f) Maintenance of Properties, Etc. Maintain and preserve, and cause each of their 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.

(g) 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 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 MEMC 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 MEMC, a copy of the annual report for such year for MEMC and its Subsidiaries, containing Consolidated balance sheets of MEMC and its Subsidiaries as of the end of such fiscal year and Consolidated statements of income and cash flows MEMC and its Subsidiaries for such fiscal year, in each case accompanied by an opinion acceptable to the Lenders by KPMG LLP or other independent public accountants reasonably acceptable to the Lenders;

(iii) as soon as possible and in any event within ten (10) 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 the Borrowers have taken and proposes to take with respect thereto;

(iv) promptly after the sending or filing thereof, copies of all reports which any Borrower sends to any of its securityholders, and copies of all reports and registration statements which any Borrower or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange;

(v) promptly after the filing or receiving thereof, copies of all reports and notices which any Borrower or any of its Subsidiaries files under ERISA with the Internal Revenue Service or the Pension Benefit Guaranty Corporation or the U.S. Department of Labor or which any Borrower or any Subsidiary receives from the Pension Benefit Guaranty Corporation;

(vi) promptly after the commencement thereof, notice of all actions and proceedings before any court, governmental agency or arbitrator affecting any Borrower or any of its Subsidiaries of the type described in Section 4.01(g);

(vii) within ten (10) days prior to the beginning of each month, a statement of projected cash flow (a "Monthly Projected Cash Flow Statement") setting forth in reasonable detail and on a line-item basis, separated by category, MEMC's and its U.S. Subsidiaries' projected cash flow for the immediately succeeding month; each Monthly Projected Cash Flow Statement shall be prepared by MEMC based on its good faith estimate of the amount of such projected cash flow;

(viii) on a weekly basis, a weekly report of available cash of MEMC and its U.S. Subsidiaries, including (i) the balance of all bank accounts of MEMC and its U.S. Subsidiaries and (ii) the amount available to be drawn by MEMC under the Amended and Restated Overnight Loan Agreement, dated as of December 31, 2000, between MEMC and E.ON North America, Inc.;

(ix) simultaneously with the delivery of each Borrowing Notice, a statement of projected cash flow of MEMC and its U.S. Subsidiaries (a "Borrowing Projected Cash Flow Statement") for the immediately succeeding ten (10) Business Days following the date of the proposed Borrowing relating to such Borrowing Notice; each Borrowing Projected Cash Flow Statement shall be prepared by MEMC based on its good faith estimate of the amount of such projected cash flow; and

(x) such other information respecting any Borrower or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request.

(h) Ownership of MEMC Pasadena, Inc. Ensure that at all times MEMC Pasadena will be a wholly-owned subsidiary of MEMC.

(i) Ownership of MEMC Electronic Materials, S.p.A. Ensure that at all times MEMC Electronic Materials, S.p.A. will be a wholly-owned subsidiary of MEMC.

SECTION 5.02. Negative Covenants. So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, neither Borrower will, unless the Lenders shall otherwise consent in writing:

(a) 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:

(i) purchase money Liens or purchase money security interests upon or in any property acquired or held by the Borrower 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;

(ii) 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);

(iii) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(b) hereof;

(iv) 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;

(v) pledges or deposits to secure obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations;

(vi) 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;

(vii) 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; and

(viii) Liens permitted by the Security Agreement and the Pledge Agreement;

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 (i) through (vii) of this Section 5.02(a) shall not exceed $45,000,000 in the aggregate at any time outstanding.

(b) 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.

(i) Merge or consolidate with any other Person unless (and so long as no Event of Default shall have occurred and be continuing) either (i) such Borrower is the surviving company, or (ii) the Person with whom such Borrower is merged or consolidated is a Person formed under the laws of the United States or any state or subdivision thereof, if such surviving Person assumes obligations of the Borrower under the Loan Documents as evidenced by a written instrument in form and substance satisfactory to the Agent; provided that in the case of MEMC Pasadena, the surviving company shall be a wholly-owned subsidiary of MEMC.

(ii) Sell, lease, transfer or otherwise dispose of any of its assets, except (A) sales and dispositions in the ordinary course of its business (including the disposition or repossessed assets), (B) dispositions of obsolete, worn out or surplus property disposed of in the ordinary course of business, including sales of assets of closed production facilities, (C) sales, leases, transfers or other dispositions of assets by a wholly-owned Subsidiary of any Borrower to any other wholly-owned Subsidiary of any Borrower; provided, that this clause (C) shall not permit a sale, lease, transfer or disposition of assets by MEMC Pasadena to any of its Subsidiaries or to any Subsidiary of MEMC (other than the sales or dispositions in the ordinary course of business); (D) sales, leases, transfers or other dispositions of assets by any wholly-owned Subsidiary of a Borrower to a Borrower, and (E) sales, transfers or disposition of assets by Borrowers or any Subsidiary of any Borrower, provided, that any such sales, transfers or dispositions covered under this clause (E) shall, for the term of this Agreement, include assets with an aggregate fair market value of not more than $10,000,000.

(d) Prepayment of Indebtedness. Make any prepayment (whether voluntary or involuntarily) or repurchase of any indebtedness for borrowed money (other than the Advances or any other loan by E.ON or its Subsidiaries to any Borrower or any of its Subsidiaries), or make any repayment of any such indebtedness, in each case prior to the scheduled payment date therefor.

(e) Capital Expenditures. Incur, nor permit its Subsidiaries to incur, on a quarterly basis, commitments for expenditures for fixed and other non-current assets, or for replacements, substitutions or additions thereto (other than repairs thereto) in excess of an aggregate amount equivalent to $15,000,000.

SECTION 5.03. Mandatory Repayment of E.ON Loans. In addition to any other mandatory repayments or commitment reductions pursuant to this Agreement, within 90 days after the end of each fiscal year commencing with the fiscal year ending December 31, 2001, MEMC shall pay E.ON an amount equal to 50% of the Consolidated Net Free Cash Flow for such year as a mandatory repayment of principal of outstanding E.ON Loans in acc ordance with the requirements of Section 5.03 (d). Within 80 days after the end of each fiscal year, MEMC shall deliver to E.ON a certificate setting forth its calculation of the Consolidated Net Free Cash Flow for the prior year and the components thereof, together with documents supporting such calculation.

(b) In addition to any other mandatory repayments or commitment reductions pursuant to this Agreement, on each date on or after the Effective Date upon which MEMC or its Subsidiaries receives any Net Proceeds, MEMC shall pay to E.ON an amount equal to 75% of the Net Proceeds as a mandatory repayment of principal of outstanding E.ON Loans in accordance with the requirements of Section 5.03(d). At the time of each payment under the preceding sentence, MEMC shall deliver to E.ON a certificate setting forth a calculation of the Net Proceeds received by MEMC and its Subsidiaries in such financing, together with documents supporting such calculation. Within 30 days after the end of each fiscal year, MEMC shall deliver to E.ON a certificate certifying that MEMC and its Subsidiaries have not received any Net Proceeds during the prior fiscal year that would have been subject to this Section 5.03(b) other than those for which MEMC made all payments requi red by this Section 5.03(b).

(c) To the extent that any Subsidiary has Restricted Proceeds and/or Restricted Net Free Cash Flow in a fiscal year, MEMC shall use reasonable commercial efforts to obtain as soon as practicable such Restricted Proceeds and/or Restricted Net Free Cash Flow from such Subsidiary by way of loans, dividends or similar distributions (taking into account tax consequences and such Subsidiary's reasonable capital requirements) in subsequent fiscal years and, in the case of Restricted Proceeds, in the same fiscal year. Any such Restricted Proceeds and/or Restricted Net Free Cash Flow received by MEMC in subsequent fiscal years by way of loans, dividends, reductions or repurchases of equity, share redemptions or similar distributions shall be considered Net Proceeds or Consolidated Net Free Cash Flow, as the case may be, in such subsequent fiscal years, and within forty-five (45) days following the end of the calendar quarter in which su ch funds have been received by MEMC, MEMC shall pay to E.ON as a mandatory repayment of principal of outstanding E.ON Loans an amount equal to 50% of the Restricted Net Free Cash Flow so received by MEMC and 75% of the Restricted Proceeds so received by MEMC. For purposes of this Section 5.03(c), the amount of Restricted Net Free Cash Flow generated in a particular fiscal year shall be limited to the lesser of (i) the Restricted Net Free Cash Flow for such fiscal year and (ii) the sum of the Consolidated Net Free Cash Flow and the Restricted Net Free Cash Flow for such fiscal year. By way of illustration, if the Consolidated Net Free Cash Flow for a particular fiscal year is negative $10 million and the Restricted Net Free Cash Flow for such fiscal year is positive $30 million, then for purposes of this Section 5.03(c) the Restricted Net Free Cash Flow considered to be generated in such fiscal year shall be $20 million.

(d) Each amount required to be applied to repay E.ON Loans pursuant to Sections 5.03(a), (b) or (c ) shall be applied (i) first, to repay the remaining scheduled principal payments of the then outstanding E.ON Loans that are term loans, and (ii) second, if all outstanding E.ON Loans that are term loans have been fully repaid, to repay the principal amount of any then outstanding E.ON Loans that are revolving loans (and permanently reduce the revolving loan commitment under such loan); provided, that in each case, MEMC shall propose to E.ON, and MEMC and E.ON shall seek to agree on, which term loan or revolving loan shall be repaid and which advance or advances thereunder; provided, further, that if MEMC and E.ON cannot agree on which term loan or revolving loan and which advances shall be repaid, E.ON may make such determination in its sole discretion; pro vided, further, that MEMC shall not be required to repay any loan prior to its Initial Termination Date (as defined in the credit agreement of such loan) unless all other E.ON Loans with earlier Initial Termination Dates have previously been repaid. In addition to each amount required to be applied to repay E.ON Loans pursuant to Sections 5.03(a), (b) or (c ) MEMC shall pay accrued interest to the date of such repayment on the principal amount repaid. MEMC shall not be required to pay any amounts under Section 9.04(c) in connection with any loans repaid pursuant to Sections 5.03(a), (b) or (c).
ARTICLE VI
COLLATERAL REPORTING AND COVENANTS

SECTION 6.01. Collateral Reporting. The Borrowers shall provide the Agent with the following documents in form satisfactory to the Agent: (a) on a regular basis as required by the Agent, a schedule of Receivables; (b) on a monthly basis or more frequently as the Agent may reasonably request (i) aging of accounts receivable and (ii) reports for each classification of Eligible Inventory showing outstanding balances and changes from prior months.

SECTION 6.02. Receivables Covenants. (a) Each Borrower shall notify the Agent promptly of (i) the assertion of any material claims, offsets, defenses or counterclaims by any account debtor of an Eligible Receivable (other than chargebacks and setoffs in the ordinary course of business consistent with past practices and policies) or any material disputes with any of such persons or any settlement, adjustment or compromise thereof and (ii) all material adverse information relating to the financial condition of any account debtor of an Eligible Receivable. No credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any account debtor except in the ordinary course of such Borr owers' business in accordance with its most recent past practices and policies. So long as no Event of Default exists or has occurred and is continuing, the applicable Borrower shall settle, adjust or compromise any claim, offset, counterclaim or dispute with any account debtor, in accordance with past practices. At any time that an Event of Default exists or has occurred and is continuing, the Agent on behalf of the Lenders shall, at its option, have the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with account debtors or grant any credits, discounts or allowances.

(b) With respect to each Eligible Receivable: (i) the amounts shown on any invoice delivered to the Agent or schedule thereof delivered to the Agent shall be true and complete, (ii) no credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any account debtor, except as reported to the Agent in accordance with this Agreement and except for credits, discounts, allowances or extensions made or given in the ordinary course of the Borrower's business in accordance with the Borrower's past practices and policies, (iii) there shall be no material setoffs, deductions, contras, defenses, counterclaims or disputes existing or asserted with respect thereto except as reported to the Agent in accordance with the terms of this Agreement, (iv) none of the transactions giving rise thereto will violate any applicable State or Federal Laws or regulations, all documentation relating thereto will be legally sufficient under such laws and regulati ons and all such documentation will be legally enforceable in all material respects in accordance with its terms

(c) The Agent shall have the right at any time or times after prior notice to the Borrowers that the Agent will be contacting account debtors (but without having to specify any particular account debtor that may be contacted), in the Agent's or Lenders' name, to verify the validity, amount or any other matter relating to any Receivables or by mail, telephone, facsimile transmission or otherwise.

SECTION 6.03. Inventory Covenants. With respect to the Eligible Inventory: (a) the Borrowers shall at all times maintain inventory records reasonably satisfactory to the Agent, keeping correct and accurate records itemizing and describing the kind, type, quality and quantity of Eligible Inventory, the Borrowers' costs therefor and monthly withdrawals therefrom and additions thereto; (b) the Borrowers shall conduct a physical count of the Eligible Inventory once every fiscal year, but at any time or times as the Lenders may requests on or after an Event of Default occurs and is continuing, and promptly following such physical inventory shall supply the Agent with a report in the form and with such specificity as may be reasonably satisfactory to the Agent concerning such physical count; (c) the Borrowers shall not remove any Eligible Inventory from the locations set forth or permitted herein, without the prior written consent of the Lenders, except for sales of Eligible Inventory in the ordinary course of the Borrowers' business and except to move Eligible Inventory directly from one location set forth or permitted herein to another such location; (d) the Borrowers shall produce, use, store and maintain the monthly Eligible Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws; (e) the Borrowers assume all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Eligible Inventory; (f) the Borrowers shall not sell Eligible Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate the Borrowers to repurchase such Eligible Inventory; and (g) the Borrowers shall keep the Eligible Inventory in good and marketable condition. The Borrowers agree that, at the Borrow ers' expense and upon request of the Lenders, a third party appraisal firm may be engaged to conduct an appraisal of the Borrower's Inventory. The Borrowers agree to cooperate with any such appraisal firm in connection therewith; provided, that such third party appraisal firm shall sign a confidentiality agreement reasonably acceptable to the Borrowers.
ARTICLE VII
EVENTS OF DEFAULT

SECTION 7.01. Events of Default. If any of the following events ("Events of Default") shall occur and be continuing:

(a) the Borrowers 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

(b) any representation or warranty made by either Borrower herein or by the Borrower (or any of its officers) in connection with this Agreement shall prove to have been incorrect in any material respect when made; or

(c) (i) either Borrower shall fail to perform or observe any term, covenant or agreement contained in subsection (c) of Section 5.01 or in Section 5.02, or (ii) either Borrower shall fail to perform or observe any other term, covenant or agreement contained in any of the Loan Documents 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 such Borrower by the Agent or any Lender; or

(d) either Borrower 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 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) either Borrower 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 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 (incl uding, 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 either Borrower or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this Section 7.01(e);

(f) any judgment or order for the payment of money in excess of $5,000,000 shall be rendered against either Borrower 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; or

(g) any Loan Document shall cease to be in full force and effect, or the Security Agreement or Pledge Agreement shall cease to give the Agent for the benefit of the Lenders, the Liens, rights, powers and privileges purported to be created thereby (including, without limitation, a perfected security interest in, and Lien on, all of the Security Agreement Collateral or Pledge Agreement Collateral, as applicable, in favor of the Agent for the benefit of the Lenders, superior to and prior to the rights of all third Persons, and subject to no other Liens (except Permitted Liens));

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 Borrowers, declare the obligation of each Lender to make Advances to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the 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 the Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances shall automatically be terminated and (B) the Notes, all such interest and all suc h 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 VIII
THE AGENT

SECTION 8.01. Authorization and Action. Each Lender hereby appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement, the Security Agreement and the Pledge 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, the Security Agreement or the Pledge 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 any Borrower pursuant to the terms of this Agreement.

SECTION 8.02. Agent's Reliance, Etc. Neither the Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, the Security Agreement or the Pledge 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 s uch Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section 9.07; (b) may consult with legal counsel (including counsel for the Borrowers), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (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 Borrowers or to inspect the property (including the books and records) of either 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 8.03. E.ON. With respect to its Commitment, the Advance made by it and the Note issued to it, E.ON shall have the same rights and powers under this Agreement, the Security Agreement and the Pledge 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 E.ON in its individual capacity.

SECTION 8.04. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own cred it decisions in taking or not taking action under this Agreement.

SECTION 8.05. Indemnification. The Lenders agree to indemnify the Agent (to the extent not reimbursed by the Borrowers), ratably according to the respective principal amounts of the 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, incurr ed 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, 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, to the extent that the Agent is not reimbursed for such expenses by the Borrowers.

SECTION 8.06. Successor Agent. The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrowers 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 Le nders, 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 VIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.
ARTICLE IX
MISCELLANEOUS

SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the any other Loan Documents, nor consent to any departure by the Borrowers therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all the Lenders, do any of the following: (a) waive any of the condi tions 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 9.01; 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 any of the Loan Documents.

SECTION 9.02. 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 MEMC, at its address at 501 Pearl Drive, St. Peters, Missouri 63376, Attention: Treasurer (telecopier number (636) 474-5158); if to MEMC Pasadena, at its address at 3000 N. South Street, Pasadena, Texas 77503, Attention: President (telecopier number (713) 740-1410); if to the Initial Lender or the Agent, at E.ON-Platz 1, D-40479 Düsseldorf, Germany, Attention: Corporate Finance (telecopier number 49 211 4579 354), with a copy to E.ON North America, Inc., 405 Lexington Avenue, New York, NY 10174, Attention: President (telecopier number (212) 557-5189); if to any other Lender or any Bank, at its Eurodollar 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 any of the Loan Documents or of any Schedule or Exhibit hereto to be executed and delivered hereunder shall be effec tive as delivery of a manually executed counterpart thereof.

SECTION 9.03. No Waiver; Remedies. No failure on the part of any Lender or the Agent to exercise, and no delay in exercising, any right under any Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 9.04. Costs and Expenses. (a) Each 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 the Loan Documents 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. Each Borrower further agrees to pay on demand all costs and expenses of the Agent and the Lenders, i f any (including, without limitation, reasonable counsel fees and expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of any of the Loan Documents and the other documents to be delivered hereunder, including, without limitation, reasonable fees and expenses of counsel for the Agent and each Lender in connection with the enforcement of rights under this Section 9.04(a).

(b) Each 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 Loan Documents, 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 either Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a part y 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. Each 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 Loan Documents, 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 Borrowers 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(a), acceleration of the maturity of the Notes pursuant to Section 7.01 or for any other reason, the Borrowers 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 Borrowers hereunder, the agreements and obligations of the Borrowers contained in Sections 2.09, 2.12 and 9.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Notes.

SECTION 9.05. Right of 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 7.01 to authorize the Agent to declare the Notes due and payable pursuant to the provisions of Section 7.01, 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 indeb tedness at any time owing by such Lender or such Affiliate to or for the credit or the account of the Borrowers against any and all of the obligations of the Borrowers now or hereafter existing under this Agreement and the Note held by such Lender, whether or not such Lender shall have made any demand under this Agreement or such Note and although such obligations may be unmatured. Each Lender agrees promptly to notify the Borrowers 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 9.05 are in addition to other rights and remedies (including, without limitation, other rights of setoff) that such Lender and its Affiliates may have.

SECTION 9.06. Binding Effect. This Agreement shall become effective (other than Section 2.01, which shall only become effective upon satisfaction of the conditions precedent set forth in Section 3.01) when it shall have been executed by the Borrowers, the Agent and the Initial Lender and thereafter shall be binding upon and inure to the benefit of the Borrowers, the Agent and the Initial Lender and their respective successors and assigns, except that the Borrowers shall not have the right to assign its rights hereunder or any interest herein without the prior written conse nt of the Lenders.

SECTION 9.07. Assignments and Participations. (a) Each Lender may assign to one or more Persons all or a portion of its rights and obligations under Loan Documents (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 $5,000,000 or an integral multiple of $500,000 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 execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Loan Document 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 Borrowers or the performance or observance by the Borrowers of any of their obligations under this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto; (iii)&n bsp;such assignee confirms that it has received a copy of this Agreement, the Security Agreement and the Pledge 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, the Security Agreement and the Pledge Agreement as are delegated to the Agent by the terms hereof and thereof, together with such po wers 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 9.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Advances owing to, each Lender from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrowers, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers 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 Borrowers. Within five Business Days after its receipt of such notice, the Borrowers, at their 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 Borrowers or any of their Affiliates) in or to all or a portion of its rights and obligations under the Loan Documents (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 Borrowers hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Note for all purposes of this Agreement, (iv) the Borrowers, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and (v) no participant under any such participation sh all have any right to approve any amendment or waiver of any provision of the Loan Documents, or any consent to any departure by the Borrowers 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 9.07, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrowers furnished to such Lender by or on behalf of the Borrowers; 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 Borrowers 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 9.07, the Borrowers shall, upon the request of the Initial Lender, furnish to the Initial Lender a favorable opinion of counsel for the Borrowers acceptable to the Initial Lender, in form and substance reasonably satisfactory to the Initial Lender.

SECTION 9.08. Confidentiality. Neither the Agent nor any Lender shall disclose any Confidential Information to any Person without the consent of each 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 9.09. Governing Law. The Loan Documents shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 9.10. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 9.11. Jurisdiction, Etc. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to the Loan Documents, 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 the Loan Documents in the courts of any jurisdiction.

(b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or 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.
ARTICLE X
JOINT AND SEVERAL OBLIGATIONS.

SECTION 10.01. Joint and Several Obligations. Each Borrower hereby agrees that such Borrower is jointly and severally liable for the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations owed or hereafter owing to the Agent and the Lenders by each other Borrower.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

MEMC ELECTRONIC MATERIALS, INC.,
as Borrower

By /s/ James M. Stolze
______________________________________
Name:James M. Stolze
Title: Executive Vice President and
Chief Financial Officer

By /s/ Helene F. Hennelly
______________________________________
Name: Helene F. Hennelly
Title: Corporate Vice President, General Counsel & Secretary

MEMC PASADENA, INC., as Borrower

By /s/ Jonathon P. Jansky
_____________________________________
Name: Jonathon P. Jansky
Title: Chairman of the Board

E.ON AG, as Agent

By /s/ Hans Gisbert Ulmke
________________________________________
Name: Hans Gisbert Ulmke
Title: Executive Vice President

By /s/ Dr. Michael Bangert
_________________________________________
Name: Dr. Michael Bangert
Title: Vice President

Commitment Amount: $50,000,000

E.ON AG, as Initial Lender

By /s/ Hans Gisbert Ulmke
___________________________________
Name: Hans Gisbert Ulmke
Title: Executive Vice President

By /s/ Dr. Michael Bangert
___________________________________
Name: Dr. Michael Bangert
Title: Vice President

EXHIBIT A TO THE
REVOLVING CREDIT AGREEMENT

FORM OF PROMISSORY NOTE

U. S. $____________________

Dated: __________________, ______

FOR VALUE RECEIVED, the undersigned, MEMC ELECTRONIC MATERIALS, INC. ("MEMC"), a Delaware corporation, and MEMC PASADENA, INC., a Delaware corporation (individually, a "Borrower", and together with MEMC, the "Borrowers") HEREBY JOINTLY AND SEVERALLY PROMISE TO PAY to the order of [NAME OF LENDER], a [JURISDICTION] corporation (the "Lender"), for its account on the Termination Date (as defined in the Credit Agreement referred to below) the principal SUM OF U.S.$[AMOUNT OF THE LENDER'S COMMITMENT IN FIGURES] or, if less, the principal amount of the Advances made by the Lender to the Borrowers pursuant to the Amended and Restated Revolving Credit Agreement, dated as of [DATE OF AGREEMENT], among the Borrowers and E.ON AG, 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 Borrowers jointly and severally promise 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 lawful money of the United States of America to E.ON AG, as Agent, at the Agent's Account, in same day funds. The Advances owing to the Lender by the Borrowers 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 Borrowers from time to time in an aggregate amount not to exceed at any time outstanding the Dollar amount first above mentioned, the indebtedness of the Borrowers 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.

IN WITNESS WHEREOF, the Borrowers have caused this Note to be duly executed by manual signature.

MEMC ELECTRONIC MATERIALS, INC.

By________________________________
Title:

By________________________________
Title:

MEMC PASADENA, INC.

By________________________________
Title:

ADVANCES AND PAYMENTS OF PRINCIPAL

Date

Amount of Advance

Amount of Principal Paid or Prepaid

Unpaid Principal Balance

Notation Made By

EXHIBIT B TO THE
REVOLVING CREDIT AGREEMENT

FORM OF NOTICE OF BORROWING

E.ON AG, as Agent
for the Lenders parties
to the Credit Agreement
referred to below
E.ON-Platz 1,
D-40479 Düsseldorf
Germany

[Date]

Attention:_______________________

Ladies and Gentlemen:

The undersigned, [MEMC ELECTRONIC MATERIALS, INC.] [MEMC PASADENA, INC.], refers to the Second Amended and Restated Revolving Credit Agreement, dated as of [DATE OF AGREEMENT] (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement", the terms defined therein being used herein as therein defined), among MEMC ELECTRONIC MATERIALS, INC. ("MEMC"), a Delaware corporation, MEMC PASADENA, INC., a Delaware corporation, as borrowers (each, a "Borrower" and collectively, the "Borrowers"), and E.ON AG, a company formed under the laws of the Federal Republic of Germany, 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 _______________, ________.

(b) The initial Interest Period for each Advance made as part of the Proposed Borrowing is [one week] [one month] [two months] [three months].

(c) The aggregate amount of the 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 of the Borrower contained in the Credit Agreement, in the Security Agreement and in the Pledge 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;

(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;

(iii) after giving effect to such Proposed Borrowing, the aggregate amount of the requested Borrowing will not exceed an amount equal to the lesser of (i) when added to all outstanding Advances, the sum of (A) $30,000,000, (B) eighty-five (85%) percent of the net amount of Eligible Receivables and (C) forty (40%) percent of Eligible Inventory, less, in each case, any Availability Reserves (each of which is measured as of the end of the fourth Business Day immediately preceeding such Proposed Borrowing), and (ii) when added to the outstanding Advances made during the calendar month during which such Proposed Borrowing is made, will not exceed 110% of the aggregate projected cash requirements of MEMC for such month as set forth on the applicable Monthly Projected Cash Flow Statement;

(iv) all expenditures to be paid from proceeds of the Proposed Borrowing are reasonable and necessary for the conduct of the business of the Borrower; and

(v) in the reasonable judgment of the Borrower, the amount of such Proposed Borrowing is reasonably necessary for the Borrower to meet its liquidity requirements for the next ten (10) Business Days immediately following the date of the Proposed Borrowing (taking into account the liquidity needs of its Subsidiaries).

Very truly yours,

MEMC ELECTRONIC MATERIALS, INC.

By________________________________
Title:

MEMC PASADENA, INC.

By________________________________
Title:

EXHIBIT C TO THE
REVOLVING CREDIT AGREEMENT

FORM OF ASSIGNMENT AND ACCEPTANCE

Reference is made to the Second Amended and Restated Revolving Credit Agreement dated as of [DATE OF AGREEMENT] (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") among MEMC ELECTRONIC MATERIALS, INC. ("MEMC"), a Delaware corporation, MEMC PASADENA, INC., a Delaware corporation, as borrowers (each, a "Borrower" and collectively, the "Borrowers"), and E.ON AG, a company formed under the laws of the Federal Republic of Germany, 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, any other Loan Document 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 Borrowers or the performance or observance by the Borrowers of any of its obligations under the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto; and (d) attaches the Note held by the Assignor and requests that the Agent exchange s uch 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 and the Security 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:

$_______________

Aggregate outstanding principal amount of Advances assigned:

$_______________

Principal amount of Note payable to Assignee:

$_______________

Principal amount of Note payable to Assignor:

$_______________

Effective Date^* : ___________________, _____

[NAME OF ASSIGNOR], as Assignor

By_______________________________
Title:

Date: ___________________, _____

[NAME OF ASSIGNEE], as Assignee

By_______________________________
Title:

Eurodollar Lending Office

[ADDRESS]

Accepted this ______ day

of _______________, ____

E.ON AG, as Agent

By_______________________________
Title:

By_______________________________
Title:

__________
*This date should be no earlier than five Business Days after the delivery of this Assignment and Acceptance to the Agent.
EX-10 7 m10yyy1.htm NY3 - 266178.03 AMENDMENT NO. 1 TO THE SECOND AMENDED
AND RESTATED REVOLVING CREDIT AGREEMENT

AMENDMENT NO. 1 TO THE SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of September 28, 2001 (this "Amendment"), to the Second Amended and Restated Revolving Credit Agreement, dated as of September 4, 2001, among MEMC ELECTRONIC MATERIALS, INC. ("MEMC") and MEMC PASADENA, INC., as Borrowers, and E.ON AG, as Initial Lender and as Agent (as amended, modified or supplemented from time to time, the "Second Amended Credit Agreement").
W I T N E S S E T H :

WHEREAS, E.ON has released 35% of the issued and outstanding shares of capital stock of MEMC Electronic Materials, S.p.A., a company organized and existing under the laws of Italy, with a registered office at Viale Gherzi, 31, 28100 Novara, Italy ("MEMC S.p.A."), originally pledged by MEMC to E.ON pursuant to the Pledge Agreement dated as of September 4, 2001 by and between MEMC and E.ON;

WHEREAS, E.ON now holds 65% of the issued and outstanding shares of MEMC S.p.A. as collateral to secure the Borrowers' obligations under the Second Amended Credit Agreement;

WHEREAS, MEMC and E.ON have entered into a Pledge Agreement dated as of September 28, 2001 pursuant to which MEMC will pledge 65% of the issued and outstanding shares of capital stock of MEMC Japan Ltd., a company organized and existing under the laws of Japan ("MEMC Japan"), to E.ON as collateral to secure the Borrower's obligations under the Second Amended Credit Agreement;

WHEREAS, the Borrowers and E.ON wish to amend the Second Amended Credit Agreement as set forth herein;

NOW, THEREFORE, the parties hereto agree as follows:

SECTION 1. Definitions. Capitalized terms used herein and not defined herein have the meanings assigned to them in the Second Amended Credit Agreement.

SECTION 2. Amendment to the Second Amended Credit Agreement.

(a) Section 1.02 is hereby amended as follows:

(1) by deleting the definition of "Collateral" in its entirety and inserting in lieu thereof the following:

"Collateral" means, collectively, (i) the MEMC S.p.A. Pledge Agreement Collateral; (ii) the MEMC Japan Pledge Agreement Collateral; and (iii) the Security Agreement Collateral.

(2) by deleting the definition of "Loan Documents" and inserting in lieu thereof the following:

"Loan Documents" means this Agreement, the Note, the Security Agreement, the MEMC Japan Pledge Agreement and the MEMC S.p.A. Pledge Agreement.

(3) by inserting, before the definition of "Monthly Projected Cash Flow Statement," the following:

"MEMC Japan Pledge Agreement" means the Pledge Agreement dated September 28, 2001 between MEMC, as pledgor, and E.ON, as pledgee, as amended, modified or supplemented from time to time.

"MEMC Japan Pledge Agreement Collateral" means the "Collateral" as defined in Section 2 of the MEMC Japan Pledge Agreement.

"MEMC Japan Pledged Stock" means the issued and outstanding shares of capital stock of MEMC Japan at any time pledged under the MEMC Japan Pledge Agreement.

"MEMC S.p.A. Pledge Agreement" means the Amended and Restated Pledge Agreement dated September 28, 2001 between MEMC, as pledgor, and E.ON, as pledgee, as amended, modified or supplemented from time to time.

"MEMC S.p.A. Pledge Agreement Collateral" means the "Collateral" as defined in Section 2 of the MEMC S.p.A. Pledge Agreement."

"MEMC S.p.A. Pledged Stock" means the issued and outstanding shares of capital stock of MEMC S.p.A. at any time pledged under the MEMC S.p.A. Pledge Agreement.

(4) by deleting the definitions of "Pledge Agreement" and "Pledge Agreement Collateral" in their entirety.

(5) by inserting, before the definition of "Receivables," the following:

"Pledged Stock" means the MEMC Japan Pledged Stock and the MEMC S.p.A. Pledged Stock.

(6) by deleting the definition of "Secured Creditors" and inserting in lieu thereof the following:

"Secured Creditors" has the meaning specified in the recitals of the Security Agreement, the MEMC Japan Pledge Agreement and the MEMC S.p.A. Pledge Agreement.

(7) by deleting the definition of "Stock" in its entirety.

(b) Sections 2.01 and 3.02(c) are hereby amended by deleting "$30,000,000" and inserting in lieu thereof "$35,000,000."

(c) Section 3.01(c) is hereby amended by deleting subsection (iii) in its entirety and inserting in lieu thereof the following:

(iii) the pledge of the MEMC S.p.A. Pledged Stock has been registered in the Shareholders' Book of MEMC S.p.A. and attached is a true and correct copy of the registration of such pledge.

(d) Section 3.01(d) is hereby amended by deleting subsections (i), (vi) and (vii) in their entirety and inserting in lieu thereof the following:

(i) executed counterparts of this Agreement, the Security Agreement, the MEMC Japan Pledge Agreement and the MEMC S.p.A. Pledge Agreement duly executed and delivered by each of the Borrowers;

(vi) share certificates of the MEMC S.p.A. Pledged Stock, endorsed by MEMC and a copy of the registration of such pledge in the Shareholders' Book of MEMC S.p.A. of the MEMC S.p.A. Pledged Stock;

(vii) share certificates of the MEMC Japan Pledged Stock, accompanied by undated stock powers duly executed in blank by MEMC; and

(viii) an opinion of (A) U.S. counsel to the Borrowers, (B) Italian counsel to MEMC, and (C) Japanese counsel to MEMC, each in form and substance satisfactory to the Agent.

(e) Section 3.02 is hereby amended by deleting subsection (a) and inserting in lieu thereof the following:

(a) the representations and warranties contained in Section 4.01, the Security Agreement, the MEMC Japan Pledge Agreement, and the MEMC S.p.A. Pledge Agreement 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;

(f) Section 4.01 is hereby amended by deleting subsections (e) and (j) and inserting in lieu thereof the following:

(e) The MEMC Japan Pledge Agreement and the MEMC S.p.A. Pledge Agreement have been duly executed and delivered by MEMC. The MEMC Japan Pledge Agreement and the MEMC S.p.A. Pledge Agreement are legal, valid and binding obligations of MEMC, enforceable against MEMC in accordance with their terms.

(j) The provisions of the MEMC Japan Pledge Agreement are effective to create in favor of the Agent for the benefit of the Secured Creditors a legal, valid and enforceable security interest in all right, title and interest of MEMC in the MEMC Japan Pledge Agreement Collateral described therein, and the Agent, for the benefit of the Secured Creditors, has a first lien on, and security interest in, all right, title and interest of the Borrowers in all of the MEMC Japan Pledge Agreement Collateral, subject to no other Liens other than Permitted Liens. The provisions of the MEMC S.p.A. Pledge Agreement are effective to create in favor of the Agent for the benefit of the Secured Creditors a legal, valid and enforceable security interest in all right, title and interest of MEMC in the MEMC S.p.A. Pledge Agreement Collateral described therein, and the Agent, for the benefit of the Secured Creditors, has a first lien on, and security interest in, all right, title and interest of the Borrowers in all of the MEM C S.p.A. Pledge Agreement Collateral, subject to no other Liens other than Permitted Liens.

(g) Section 5.01 is hereby amended by inserting at the end thereof the following:

(j) Ownership of MEMC Japan Ltd. Ensure that at all times MEMC Japan Ltd. will be a wholly-owned subsidiary of MEMC.

(h) Section 5.02(a) is hereby amended by deleting subsection (viii) and inserting in lieu thereof the following:

(viii) Liens permitted by the Security Agreement, the MEMC Japan Pledge Agreement and the MEMC S.p.A. Pledge Agreement;

(i) Section 7.01 is hereby amended by deleting subsection (g) in its entirety and inserting in lieu thereof the following:

(g) any Loan Document shall cease to be in full force and effect, or the Security Agreement, the MEMC Japan Pledge Agreement or the MEMC S.p.A. Pledge Agreement shall cease to give the Agent for the benefit of the Lenders, the Liens, rights, powers and privileges purported to be created thereby (including, without limitation, a perfected security interest in, and Lien on, all of the Security Agreement Collateral, the MEMC Japan Pledge Agreement Collateral or the MEMC S.p.A. Pledge Agreement Collateral, as applicable, in favor of the Agent for the benefit of the Lenders, superior to and prior to the rights of all third Persons, and subject to no other Liens (except Permitted Liens));

(j) Section 8.01 is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

SECTION 8.01. Authorization and Action. Each Lender hereby appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement, the Security Agreement, the MEMC Japan Pledge Agreement and the MEMC S.p.A. Pledge 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, the Security Agreement, the MEMC Japan Pledge Agreement or the MEMC S.p.A. Pledge Agreement (including, without li mitation, 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 any Borrower pursuant to the terms of this Agreement.

(k) The first sentence of Section 8.02 is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

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, the Security Agreement, the MEMC Japan Pledge Agreement or the MEMC S.p.A. Pledge Agreement, except for its or their own gross negligence or willful misconduct.

(l) Section 8.03 is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

SECTION 8.03. E.ON. With respect to its Commitment, the Advance made by it and the Note issued to it, E.ON shall have the same rights and powers under this Agreement, the Security Agreement, the MEMC Japan Pledge Agreement and the MEMC S.p.A. Pledge 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 E.ON in its individual capacity.

(m) Section 9.07 is hereby amended by deleting subsection (b) in its entirety and inserting in lieu thereof the following:

(b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Loan Document 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 Borrowers or the performance or observance by the Borrowers of any of their obligations under this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto; (iii) such assi gnee confirms that it has received a copy of this Agreement, the Security Agreement, the MEMC Japan Pledge Agreement and the MEMC S.p.A. Pledge 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, the Security Agreement, the MEMC Japan Pledge Agreement and the MEMC S.p.A. Pledge Agreement as are delegated to the Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender.

(n) Exhibit B to the Second Amended Credit Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof Annex A hereto.

SECTION 3. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

SECTION 4. Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

MEMC ELECTRONIC MATERIALS, INC.,
as Borrower

By /s/ James M. Stolze
- -----------------------------------------------
Name: James M. Stolze
Title: Executive Vice President and Chief
Financial Officer

By /s/ Kenneth L. Young
- -----------------------------------------------
Name: Kenneth L. Young
Title: Treasurer

MEMC PASADENA, INC., as Borrower

By /s/ Kenneth L. Young
- ----------------------------------------------
Name: Kenneth L. Young
Title: Treasurer

E.ON AG, as Agent

By /s/ Dr. Erhard Schipporeit
- ----------------------------------------------
Name: Dr. Erhard Schipporeit
Title: Chief Financial Officer

By /s/ Dr. Michael Bangert
- ----------------------------------------------
Name: Dr. Michael Bangert
Title: Vice President

E.ON AG, as Initial Lender

By /s/ Dr. Erhard Schipporeit
- ----------------------------------------------
Name: Dr. Erhard Schipporeit
Title: Chief Financial Officer

By /s/ Dr. Michael Bangert

---------------------------------------------
Name: Dr. Michael Bangert
Title: Vice President

Annex A

EXHIBIT B TO THE
REVOLVING CREDIT AGREEMENT

FORM OF NOTICE OF BORROWING

E.ON AG, as Agent

for the Lenders parties

to the Credit Agreement

referred to below

E.ON-Platz 1,

D-40479 Düsseldorf

Germany

[Date]

Attention:_______________________

Ladies and Gentlemen:

The undersigned, [MEMC ELECTRONIC MATERIALS, INC.] [MEMC PASADENA, INC.], refers to the Second Amended and Restated Revolving Credit Agreement, dated as of [DATE OF AGREEMENT] (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement", the terms defined therein being used herein as therein defined), among MEMC ELECTRONIC MATERIALS, INC. ("MEMC"), a Delaware corporation, MEMC PASADENA, INC., a Delaware corporation, as borrowers (each, a "Borrower" and collectively, the "Borrowers"), and E.ON AG, a company formed under the laws of the Federal Republic of Germany, 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:

The Business Day of the Proposed Borrowing is _______________, ________.

The initial Interest Period for each Advance made as part of the Proposed Borrowing is [one week] [one month] [two months] [three months].

(c) The aggregate amount of the 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 of the Borrower contained in the Credit Agreement, in the Security Agreement, in the MEMC Japan Pledge Agreement and in the MEMC S.p.A. Pledge 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;

(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;

(iii) after giving effect to such Proposed Borrowing, the aggregate amount of the requested Borrowing will not exceed an amount equal to the lesser of (i) when added to all outstanding Advances, the sum of (A) $35,000,000, (B) eighty-five (85%) percent of the net amount of Eligible Receivables and (C) forty (40%) percent of Eligible Inventory, less, in each case, any Availability Reserves (each of which is measured as of the end of the fourth Business Day immediately preceeding such Proposed Borrowing), and (ii) when added to the outstanding Advances made during the calendar month during which such Proposed Borrowing is made, will not exceed 110% of the aggregate projected cash requirements of MEMC for such month as set forth on the applicable Monthly Projected Cash Flow Statement;

(iv) all expenditures to be paid from proceeds of the Proposed Borrowing are reasonable and necessary for the conduct of the business of the Borrower; and

(v) in the reasonable judgment of the Borrower, the amount of such Proposed Borrowing is reasonably necessary for the Borrower to meet its liquidity requirements for the next ten (10) Business Days immediately following the date of the Proposed Borrowing (taking into account the liquidity needs of its Subsidiaries).

Very truly yours,

MEMC ELECTRONIC MATERIALS, INC.

By
Title:

MEMC PASADENA, INC.

By
Title:

EX-10 8 m10yyy2.htm NY3 - 260667.05 AMENDED AND RESTATED
SECURITY AGREEMENT

THIS AMENDED AND RESTATED SECURITY AGREEMENT, dated as of July 26, 2001, is made by MEMC Electronic Materials, Inc. ("MEMC"), a Delaware corporation, and MEMC Pasadena, Inc. ("MEMC Pasadena"), a Delaware corporation, (each, an "Assignor" and collectively, the "Assignors") in favor of E.ON AG, as Agent (the "Agent"), for the benefit of the Secured Creditors (as defined below). Except as otherwise defined herein, capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as so defined.

W I T N E S S E T H :

WHEREAS, MEMC, the lenders from time to time party thereto and E.ON AG, as agent, have entered into a Revolving Credit Agreement, dated as of July 13, 2001, providing for the making of Advances to MEMC, as contemplated therein (the "Existing Credit Agreement");

WHEREAS, in connection with the Existing Credit Agreement, MEMC and E.ON AG, as agent, under the Existing Credit Agreement entered into a Security Agreement, dated as of July 13, 2001, by and between MEMC and the Agent (the "Existing Security Agreement");

WHEREAS, the Existing Credit Agreement has been amended and restated pursuant to the Amended and Restated Revolving Credit Agreement (the "Credit Agreement"), dated as of July 26, 2001, among the Assignors, the lenders party thereto (the "Lenders") and the Agent, pursuant to which, among other things, MEMC Pasadena, has been added as a borrower thereunder; and

WHEREAS, MEMC and the Agent desire to amend and restate the Existing Security Agreement as set forth herein to, among other things, add MEMC Pasadena as a party.

NOW, THEREFORE, in consideration of the benefits accruing to the Assignor, the receipt and sufficiency of which are hereby acknowledged, the Assignor hereby makes the following representations and warranties to the Agent for the benefit of the Secured Creditors and hereby covenants and agrees with the Agent for the benefit of the Secured Creditors as follows:
ARTICLE I

SECURITY INTERESTS

1.1. Grant of Security Interests. As security for the prompt and complete payment and performance when due of all of the Obligations, each Assignor does hereby assign and transfer unto the Agent, and does hereby pledge and grant to the Agent for the benefit of the Secured Creditors, a continuing security interest in, all of the right, title and interest of such Assignor in, to and under all of the following, whether now existing or hereafter from time to time acquired (i) each and every Receivable, (ii) all Inventory and (iii) all Proceeds and products of the Receivables (collectively, the "Collateral").

(b) The security interest of the Agent under this Agreement extends to all Collateral of the kind which is the subject of this Agreement which any Assignor may acquire at any time during the term of this Agreement.

1.2. Power of Attorney. Each Assignor hereby constitutes and appoints the Agent its true and lawful attorney, irrevocably, with full power after the occurrence of and during the continuance of an Event of Default (in the name of such Assignor or otherwise) to act, require, demand, receive, compound and give acquittance for any and all moneys and claims for moneys due or to become due to such Assignor under or arising out of the Collateral, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings which the Agent may deem to be necessary or advisable to protect the interests of the Secured Creditors, which appointment as attorney is coupled with an interest.

ARTICLE II

GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

Each Assignor, jointly and severally, represents, warrants and covenants, which representations, warranties and covenants shall survive execution and delivery of this Agreement, as follows:

2.1. Necessary Filings. All filings, registrations and recordings necessary or appropriate to create, preserve and perfect the security interest granted by such Assignor to the Agent hereby in respect of the Collateral have been accomplished and the security interest granted to the Agent pursuant to this Agreement in and to the Collateral creates a perfected security interest therein prior to the rights of all other Persons therein and subject to no other Liens (other than Permitted Liens) and is entitled to all the rights, priorities and benefits afforded by the Uniform Commercial Code or other relevant law as enacted in any relevant jurisdiction to perfected security interests, in each case to the extent that the Collateral consists of the type of property in which a security interest may be perfected by filing a financing statemen t under the Uniform Commercial Code as enacted in any relevant jurisdiction.

2.2. No Liens. Such Assignor is, and as to Collateral acquired by it from time to time after the date hereof such Assignor will be, the owner of all Collateral free from any Lien, security interest, encumbrance or other right, title or interest of any Person (other than Permitted Liens), and such Assignor shall defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein adverse to the Agent.

2.3. Other Financing Statements. As of the date hereof, there is no financing statement (or similar statement or instrument of registration under the law of any jurisdiction) covering or purporting to cover any interest of any kind in the Collateral (other than financing statements filed in respect of Permitted Liens), and so long as any of the Obligations remain outstanding and unpaid, such Assignor will not execute or authorize to be filed in any public office any financing statement (or similar statement or instrument of registration under the law of any jurisdiction) or statements relating to the Collateral, except financing statements filed or to be filed in respect of and covering the security interests granted hereby by the Assignor or in connection with Permitted Liens.

2.4. Chief Executive Office; Records; Jurisdiction of Reincorporation. The chief executive office of each Assignor is located at the address indicated on Annex A hereto for such Assignor. Such Assignor will not move its chief executive office except to such new location as such Assignor may establish in accordance with this Section 2.4. The originals of all documents evidencing all Receivables of such Assignor and the only original books of account and records of such Assignor relating thereto are, and will continue to be, kept at such chief executive office, at one or more of the other locations set forth on Annex A hereto or at such new locations as the Assignor may establish in accordance with this Section 2.4. All Receivables of such Assignor are, and will continue to be, maintained at, and controlled and directed (including, wit hout limitation, for general accounting purposes) from, the office locations described above or such new location established in accordance with this Section 2.4. No Assignor shall establish new locations for such offices until (i) it shall have given to the Agent not less than 15 days' prior written notice of its intention to do so, clearly describing such new location and providing such other information in connection therewith as the Agent may reasonably request, (ii) with respect to such new location, it shall have taken all action reasonably satisfactory to the Agent to maintain the security interest of the Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect and (iii) at the request of the Agent, it shall have furnished an opinion of counsel reasonably acceptable to the Agent to the effect that all financing or continuation statements and amendments or supplements thereto have been filed in the appropriate filing office or offices, an d all other actions have been taken, in order to perfect (and maintain the perfection of) the security interest granted hereby in respect of the types of Collateral referred to in Section 1.1 hereof. In addition, each Assignor agrees not to reincorporate in any jurisdiction other than its current jurisdiction of incorporation.

2.5. Location of Eligible Inventory. All Eligible Inventory held on the date hereof by each Assignor is located at one of the locations shown on Annex B hereto for such Assignor. Each Assignor agrees that all Eligible Inventory now held or subsequently acquired by it shall be kept at (or shall be in transport to) any one of the locations shown on Annex B hereto, or such new location as such Assignor may establish in accordance with the last sentence of this Section 2.5. Any Assignor may establish a new location for Eligible Inventory only if (i) it shall have given to the Agent not less than 15 days' prior written notice of its intention so to do, clearly describing such new location and providing such other information in connection therewith as the Agent may request, (ii) with respect to such new location, it shall have taken all action reasonably satisfactory to the A gent to maintain the security interest of the Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect and (iii) at the request of the Agent, it shall have furnished an opinion of counsel reasonably acceptable to the Agent to the effect that all financing or continuation statements and amendments or supplements thereto have been filed in the appropriate filing office or offices, and all other actions have been taken, in order to perfect (and maintain the perfection of) the security interest granted hereby in respect of the types of Collateral referred to in Section 1.1 hereof.

2.6. Recourse. This Agreement is made with full recourse to each Assignor (including, without limitation, with full recourse to all assets of such Assignor) and pursuant to and upon all the warranties, representations, covenants and agreements on the part of such Assignor contained herein, in the other Loan Documents and otherwise in writing in connection herewith or therewith.

2.7. Trade Names; Change of Name. No Assignor has or operates in any jurisdiction under, or in the preceding five years has had or has operated in any jurisdiction under, any trade names, fictitious names or other names except its legal name and such other trade or fictitious names as are listed on Annex C hereto for such Assignor. No Assignor shall change its legal name or assume or operate in any jurisdiction under any trade, fictitious or other name except those names listed on Annex C hereto for such Assignor and new names established in accordance with the last sentence of this Section 2.7. No Assignor shall assume or operate in any jurisdiction under any new trade, fictitious or other name until (i) it shall have given to the Agent not less than 15 days' prior written notice of its intention to do so, clearly describi ng such new name and the jurisdictions in which such new name shall be used and providing such other information in connection therewith as the Agent may reasonably request, (ii) with respect to such new name, it shall have taken all action reasonably requested by the Agent to maintain the security interest of the Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect and (iii) at the request of the Agent, it shall have furnished an opinion of counsel reasonably acceptable to the Agent to the effect that all financing or continuation statements and amendments or supplements thereto have been filed in the appropriate filing office or offices, and all other actions have been taken, in order to perfect (and maintain the perfection of) the security interest granted hereby in respect of the types of Collateral referred to in Section 1.1 hereof.

ARTICLE III

SPECIAL PROVISIONS CONCERNING THE COLLATERAL

3.1. Additional Representations and Warranties. As of the time when its Receivables arises, the Assignor shall be deemed to have represented and warranted that such Receivable, and all records, papers and documents relating thereto (if any) are what they purport to be, and such Receivable will evidence true and valid obligations of the account debtor named therein.

3.2. Maintenance of Records. Each Assignor will keep and maintain at its own cost and expense accurate records of its Receivables, including, but not limited to, originals of all documentation with respect thereto, records of all payments received, all credits granted thereon, all merchandise returned and all other dealings therewith, and such Assignor will make the same available on such Assignor's premises to the Agent for inspection, at such Assignor's own cost and expense, at any and all reasonable times upon prior notice to such Assignor. Upon the occurrence and during the continuance of an Event of Default and at the request of such Agent, such Assignor shall, at its own cost and expense, deliver all tangible evidence of its Receivables (including, without limitation, all documents evidencing the Receivables and such books and records to the Agent or to its representatives (copies of which evidence and books and records may be retained by such Assignor). Upon the occurrence and during the continuance of an Event of Default and if the Agent so directs, such Assignor shall legend, in form and manner reasonably satisfactory to the Agent, the Receivables, as well as books, records and documents (if any) of such Assignor evidencing or pertaining to such Receivables with an appropriate reference to the fact that such Receivables have been assigned to the Agent and that the Agent has a security interest therein.

3.3. Protection of Agent's Security. Each Assignor will do nothing to impair the rights of the Agent in the Collateral. Each Assignor assumes all liability and responsibility in connection with the Collateral acquired by it and the liability of such Assignor to pay the Obligations shall in no way be affected or diminished by reason of the fact that such Collateral may be lost, stolen, or for any reason whatsoever unavailable to such Assignor.

3.4. Direction to Account Debtors; Contracting Parties; etc. Upon the occurrence and during the continuance of an Event of Default, and if the Agent so directs, the each Assignor agrees (x) that the Agent may, at its option, directly notify the obligors with respect to any Receivables to make payments with respect thereto as directed by the Agent, (y) that the Agent may enforce collection of any such Receivables and may adjust, settle or compromise the amount of payment thereof, in the same manner and to the same extent as such Assignor, and (z) take whatever other action the Agent may deem necessary or desirable for the protection of the Lenders' interests. At any time that an Event of Default exists or has occurred and is continuing, at the Agent's request, all invoices and statements sent to any account debtor shall state tha t the Receivables due from such account debtor and such other obligations have been assigned to the Agent on behalf of the Lenders and are payable directly and only to the Agent and the Assignors shall deliver to the Agent such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any Receivables as the Agent may require. The costs and expenses (including reasonable attorneys' fees) of collection, whether incurred by an Assignor or the Agent, shall be borne by the relevant Assignor. The Agent shall deliver a copy of each notice referred to in the preceding clause (x) to the relevant Assignor, provided, that the failure by the Agent to so notify such Assignor shall not affect the effectiveness of such notice or the other rights of the Agent created by this Section 3.4.

3.5. Modification of Terms; etc. Except in accordance with such Assignor's ordinary course of business and consistent with reasonable business judgment, such Assignor shall not rescind or cancel any indebtedness evidenced by any Receivable, or modify any term thereof or make any adjustment with respect thereto, or extend or renew the same, or compromise or settle any material dispute, claim, suit or legal proceeding relating thereto, or sell any Receivable, or interest therein, without the prior written consent of the Agent. Each Assignor will duly fulfill all obligations on its part to be fulfilled under or in connection with the Receivables and will do nothing to impair the rights of the Agent in the Receivables.

3.6. Collection. Each Assignor shall endeavor in accordance with reasonable business practices to cause to be collected from the account debtor named in its Receivables, as and when due (including, without limitation, amounts which are delinquent, such amounts to be collected in accordance with generally accepted lawful collection procedures) any and all amounts owing under or on account of such Receivable, and apply forthwith upon receipt thereof all such amounts as are so collected to the outstanding balance of such Receivable, except that, prior to the occurrence of an Event of Default, any Assignor may allow in the ordinary course of business as adjustments to amounts owing under its Receivables (i) an extension or renewal of the time or times of payment, or settlement for less than the total unpaid balance, which the A ssignor finds appropriate in accordance with reasonable business judgment and (ii) such refund or credit due as a result of returned or damaged merchandise or improperly performed services or for other reasons which such Assignor finds appropriate in accordance with reasonable business judgment. The reasonable costs and expenses (including, without limitation, reasonable attorneys' fees) of collection, whether incurred by an Assignor or the Agent, shall be borne by the relevant Assignor.

3.7. Assignors Remain Liable Under Receivables. Anything herein to the contrary notwithstanding, the Assignors shall remain liable under each of the Receivables to observe and perform all of the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to such Receivables. Neither the Agent nor any other Secured Creditor shall have any obligation or liability under any Receivable (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Agent or any other Secured Creditor of any payment relating to such Receivable pursuant hereto, nor shall the Agent or any other Secured Creditor be obligated in any manner to perform any of the obligations of any Assignor under or pursuant to any Receivable (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by them or as to the sufficiency of any performance by any party under any Receivable (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to them or to which they may be entitled at any time or times.

3.8. Financing Statements. Each Assignor agrees to execute and deliver to the Agent such financing statements, in form reasonably acceptable to the Agent, as the Agent may from time to time reasonably request or as are necessary or desirable in the opinion of the Agent to establish and maintain a valid, enforceable, first priority perfected security interest in the Collateral as provided herein and the other rights and security contemplated hereby all in accordance with the UCC as enacted in any and all relevant jurisdictions or any other relevant law. Each Assignor will pay any applicable filing fees, recordation taxes and related expenses relating to its Collateral. Each Assignor hereby authorizes the Agent to file any such financing statements without the signature of the Assignor where permitted by law.

3.9. Further Actions. Each Assignor will, at its own expense, make, execute, endorse, acknowledge, file and/or deliver to the Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, certificates, reports and other assurances or instruments and take such further steps relating to its Collateral, as the Agent may reasonably require.

ARTICLE IV

REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT

4.1. Remedies; Obtaining the Collateral Upon Default. Each Assignor agrees that, if any Event of Default shall have occurred and be continuing, then and in every such case, the Agent, in addition to any rights now or hereafter existing under applicable law, shall have all rights as a secured creditor under any UCC, and such additional rights and remedies to which a secured creditor is entitled under the laws in effect, in all relevant jurisdictions and may:

(i) personally, or by agents or attorneys, immediately take possession of the Collateral or any part thereof, from such Assignor or any other Person who then has possession of any part thereof with or without notice or process of law, and for that purpose may enter upon such Assignor's premises where any of the Collateral is located and remove the same and use in connection with such removal any and all services, supplies, aids and other facilities of such Assignor;

(ii) instruct the obligor or obligors on any Receivable to make any payment relating to such Receivable directly to the Agent and may exercise any and all remedies of such Assignor in respect of such Collateral;

(iii) sell, assign or otherwise liquidate any or all of the Collateral or any part thereof in accordance with Section 4.2 hereof, or direct the relevant Assignor to sell, assign or otherwise liquidate any or all of the Collateral or any part thereof, and, in each case, take possession of the proceeds of any such sale or liquidation;

(iv) take possession of the Collateral or any part thereof, by directing the relevant Assignor in writing to deliver the same, or all agreements, instruments and documents relating thereto, to the Agent at any place or places designated by the Agent, in which event such Assignor shall at its own expenses:

(x) forthwith cause the same to be moved to the place or places so designated by the Agent and there delivered to the Agent;

(y) store and keep any Collateral so delivered to the Agent at such place or places pending further action by the Agent as provided in Section 4.2 hereof; and

(z) while the Collateral shall be so stored and kept, provide such guards and maintenance services as shall be necessary to protect the same and to preserve and maintain them in good condition

it being understood that each Assignor's obligation so to deliver the Collateral is of the essence of this Agreement and that, accordingly, upon application to a court of equity having jurisdiction, the Agent shall be entitled to a decree requiring specific performance by such Assignor of said obligation. By accepting the benefits of this Agreement, the Secured Creditors agree that this Agreement may be enforced only by the action of the Agent acting upon the instructions of the Secured Creditors and that no other Secured Creditor shall have any right individually to seek to enforce this Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may be exercised by the Agent for the benefit of the Secured Creditors upon the terms of this Agreement and the Credit Agreement.

4.2. Remedies; Disposition of the Collateral. If any Event of Default shall have occurred and be continuing, then any Collateral repossessed by the Agent under or pursuant to Section 4.1 hereof and any other Collateral whether or not so repossessed by the Agent, may be sold, assigned, leased or otherwise disposed of under one or more contracts or as an entirety, and without the necessity of gathering at the place of sale the property to be sold, and in general in such manner, at such time or times, at such place or places and on such terms as the Agent may, in compliance with any mandatory requirements of applicable law, determine to be commercially reasonable. Any of the Collateral may be sold, leased or otherwise disposed of, in the condition in which the same existed when taken by the Agent or after any overhaul or repair at the e xpense of the relevant Assignor which the Agent shall determine to be commercially reasonable. Any such disposition which shall be a private sale or other private proceedings permitted by such requirements shall be made upon not less than 10 days' prior written notice to the relevant Assignor specifying the time at which such disposition is to be made and the intended sale price or other consideration therefor, and shall be subject, for the 10 days after the giving of such notice, to the right of the relevant Assignor or any nominee of such Assignor to acquire the Collateral involved at a price or for such other consideration at least equal to the intended sale price or other consideration so specified. Any such disposition which shall be a public sale permitted by such requirements shall be made upon not less than 10 days' prior written notice to the relevant Assignor specifying the time and place of such sale and, in the absence of applicable requirements of law, shall be by public auction (which may, at t he Agent's option, be subject to reserve), after publication of notice of such auction (where required by applicable law) not less than 10 days prior thereto. The Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the sale may be so adjourned. To the extent permitted by any such requirement of law, the Agent may bid for and become the purchaser of the Collateral or any item thereof, offered for sale in accordance with this Section without accountability to the relevant Assignor. If, under mandatory requirements of applicable law, the Agent shall be required to make disposition of the Collateral within a period of time which does not permit the giving of notice to the relevant Assignor as hereinabove specified, the Agent need give such Assignor only such notice of disposition as shall be reasonably practicable in view of such mandatory requirements of applicable law. Each Assignor agrees to do or cause to be done all such other acts and things as may be reasonably necessary to make such sale or sales of all or any portion of the Collateral valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales, all at such Assignor's expense.

4.3. Waiver of Claims. Except as otherwise provided in this Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE AGENT'S TAKING POSSESSION OR THE AGENT'S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and each Assignor hereby further waives, to the extent permitted by law:

(i) all damages occasioned by such taking of possession except any damages which are the direct result of the Agent's gross negligence or willful misconduct;

(ii) all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Agent's rights hereunder; and

(iii) all rights of redemption, appraisement, valuation, stay, extension or moratorium now or hereafter in force under any applicable law in order to prevent or delay the enforcement of this Agreement or the absolute sale of the Collateral or any portion thereof, and each Assignor, for itself and all who may claim under it, insofar as it or they now or hereafter lawfully may, hereby waives the benefit of all such laws.

Any sale of, or the grant of options to purchase, or any other realization upon, any Collateral shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the Assignor therein and thereto, and shall be a perpetual bar both at law and in equity against each Assignor and against any and all Persons claiming or attempting to claim the Collateral so sold, optioned or realized upon, or any part thereof, from, through and under such Assignor.

4.4. Application of Proceeds. (a) All moneys collected by the Agent upon any sale or other disposition of the Collateral, together with all other moneys received by the Agent hereunder, shall be applied as follows:

(i) first, to the payment of all amounts owing the Agent of the type described in clauses (ii) and (iii) of the definition of "Obligations";

(ii) second, to the extent proceeds remain after the application pursuant to the preceding clause (i), an amount equal to the outstanding Obligations shall be paid to the Secured Creditors as provided in Section 4.4(c) hereof, with each Secured Creditor receiving an amount equal to such outstanding Obligations or, if the proceeds are insufficient to pay in full all such Obligations, its pro rata share of the amount remaining to be distributed;

(iii) third, to the extent proceeds remain after the application pursuant to the preceding clauses (i) and (ii) and following the termination of this Agreement pursuant to Section 7.8(a) hereof, to the Assignor or to whomever may be lawfully entitled to receive such surplus.

(b) If any payment to any Secured Creditor of its pro rata share of any distribution would result in overpayment to such Secured Creditor, such excess amount shall instead be distributed in respect of the unpaid Obligations of the other Secured Creditors, with each Secured Creditor whose Obligations have not been paid in full to receive an amount equal to such excess amount multiplied by a fraction the numerator of which is the unpaid Obligations of such Secured Creditor and the denominator of which is the unpaid Obligations, of all Secured Creditors entitled to such distribution.

(c) All payments required to be made hereunder shall be made to the Agent under the Credit Agreement for the account of the Secured Creditors.

(d) For purposes of applying payments received in accordance with this Section 4.4, the Agent shall determine the outstanding Obligations owed to the Secured Creditors.

(e) It is understood that the Assignors shall remain jointly and severally liable to the extent of any deficiency between the amount of the proceeds of the Collateral and the aggregate amount of the Obligations.

4.5. Remedies Cumulative. Each and every right, power and remedy hereby specifically given to the Agent shall be in addition to every other right, power and remedy specifically given under this Agreement, the other Loan Documents or now or hereafter existing at law, in equity or by statute and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time or simultaneously and as often and in such order as may be deemed expedient by the Agent. All such rights, powers and remedies shall be cumulative and the exercise or the beginning of the exercise of one shall not be deemed a waiver of the right to exercise any other or others. No delay or omission of the Agent in the exercise of any such right, power or remedy and no renewal or extension of any of the Obligations sh all impair any such right, power or remedy or shall be construed to be a waiver of any Default or Event of Default or an acquiescence therein. No notice to or demand on any Assignor in any case shall entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Agent to any other or further action in any circumstances without notice or demand. In the event that the Agent shall bring any suit to enforce any of its rights hereunder and shall be entitled to judgment, then in such suit the Agent may recover reasonable expenses, including reasonable attorneys' fees, and the amounts thereof shall be included in such judgment.

4.6. Discontinuance of Proceedings. In case the Agent shall have instituted any proceeding to enforce any right, power or remedy under this Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Agent, then and in every such case the Assignor, the Agent and each holder of any of the Obligations shall be restored to their former positions and rights hereunder with respect to the Collateral subject to the security interest created under this Agreement, and all rights, remedies and powers of the Agent shall continue as if no such proceeding had been instituted.

ARTICLE V

INDEMNITY

5.1. Indemnity.  Each Assignor, jointly and severally, agrees to indemnify, reimburse and hold the Agent, each other Secured Creditor and their respective successors, permitted assigns, employees, agents and servants (hereinafter in this Section 5.1 referred to individually as "Indemnitee," and collectively as "Indemnitees") harmless from any and all liabilities, obligations, damages, injuries, penalties, claims, demands, actions, suits, judgments and any and all costs, expenses or disbursements (including reasonable attorneys' fees and expenses) (for the purposes of this Section 5.1 the foregoing are collectively called "expenses") of whatsoever kind and nature imposed on, asserted against or incurred by any of the Indemnitees in any way relating to or arising out of this Agreement, any other Loan Document or any other document executed in connection herewith or therewith or in any other way connected with the administration of the transactions contemplated hereby or thereby or the enforcement of any of the terms of, or the preservation of any rights under any thereof, or in any way relating to or arising out of the ownership, delivery, control, acceptance, lease, financing, possession, sale, or other disposition, or use of the Collateral, the violation of the laws of any country, state or other governmental body or unit, any tort, or contract claim; provided that no Indemnitee shall be indemnified pursuant to this Section 5.1(a) 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. Each Assignor agrees that upon written notice by any Indemnitee of the assertion of such a liability, obligation, damage, injury, penal ty, claim, demand, action, suit or judgment, the Assignor shall assume full responsibility for the defense thereof. Each Indemnitee agrees to use its best efforts to promptly notify the Assignor of any such assertion of which such Indemnitee has knowledge.

(b) Without limiting the application of Section 5.1(a) hereof, each Assignor agrees to pay, or reimburse the Agent for any and all reasonable fees, costs and expenses of whatever kind or nature incurred in connection with the creation, preservation or protection of the Agent's Liens on, and security interest in, the Collateral, including, without limitation, all fees and taxes in connection with the recording or filing of instruments and documents in public offices, payment or discharge of any taxes or Liens upon or in respect of the Collateral and all other fees, costs and expenses in connection with protecting, maintaining or preserving the Collateral and the Agent's interest therein, whether through judicial proceedings or otherwise, or in defending or prosecuting any actions, suits or proceedings arising out of or relating to the Collateral.

(c) Without limiting the application of Section 5.1(a) or (b) hereof, each Assignor agrees, jointly and severally, to pay, indemnify and hold each Indemnitee harmless from and against any loss, costs, damages and expenses which such Indemnitee may suffer, expend or incur in consequence of or growing out of any misrepresentation by any Assignor in this Agreement, any other Loan Document or in any writing contemplated by or made or delivered pursuant to or in connection with this Agreement or any other Loan Document.

(d) If and to the extent that the obligations of any Assignor under this Section 5.1 are unenforceable for any reason, such Assignor hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law.

5.2. Indemnity Obligations Secured by Collateral; Survival. Any amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement shall constitute Obligations secured by the Collateral. The indemnity obligations of the Assignor contained in this Article V shall continue in full force and effect notwithstanding the full payment of all of the other Obligations and notwithstanding the full payment of all the Notes issued under the Credit Agreement and the payment of all other Obligations and notwithstanding the discharge thereof.

ARTICLE VI

DEFINITIONS

The following terms shall have the meanings herein specified. All capitalized terms used but not defined herein, shall have the meaning ascribed to them in the Credit Agreement. Such definitions shall be equally applicable to the singular and plural forms of the terms defined.

"Agent" shall have the meaning provided in the recitals to this Agreement.

"Agreement" shall mean this Amended and Restated Security Agreement, as the same may be modified, supplemented or amended from time to time in accordance with its terms.

"Assignor" and "Assignors" shall have the meaning provided in the recitals to this Agreement.

"Collateral" shall have the meaning provided in Section 1.1(a) of this Agreement.

"Credit Agreement" shall have the meaning provided in the recitals to this Agreement.

"Default" shall mean any event which, with notice or lapse of time, or both, would constitute an Event of Default.

"Eligible Inventory" shall mean all Inventory, except that Eligible Inventory shall not include (a) packaging and shipping materials; (b) supplies used or consumed in the Assignors' business; (c) Inventory subject to a security interest or Lien in favor of any person other than the Agent except those permitted in this Agreement; (d) bill and hold goods; (e) unserviceable, obsolete or slow moving Inventory; (f) Inventory which is not subject to the first priority, valid and perfected security interest of Agent; (g) damaged and/or defective Inventory; (h) returned Inventory that is not held for resale; (i) Inventory to be returned to vendors; (j) Inventory held after the applicable expiration date thereof; (k) samples; (l) Inventory purchased on consignment title to which has not passed to the Assignor; and (m) Inventory sold on consignment title to which has passed to the customer. General criteria for Eligible Inventory may be established and revised from time to time by the Agent in good faith. Any Inven tory which is not Eligible Inventory shall nevertheless be part of the Collateral.

"Event of Default" shall mean any Event of Default under, and as defined in, the Credit Agreement.

"Existing Credit Agreement" shall have the meaning provided in the recitals to this Agreement.

"Existing Security Agreement" shall have the meaning provided in the recitals to this Agreement.

"Indemnitee" shall have the meaning provided in Section 5.1 of this Agreement.

"Inventory" shall mean all merchandise, inventory, goods, goods on consignment and all additions, substitutions and replacements thereof, wherever located, together with all goods, supplies, incidentals, packaging materials, labels, materials and any other items used or usable in manufacturing, processing, packaging or shipping same, in all stages of production -- from raw materials through work-in-process to finished goods -- and all products and proceeds of whatever sort and wherever located and any portion thereof which may be returned, rejected, reclaimed or repossessed by the Agent from any Assignors' customers, and shall specifically include all "inventory" as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, now or hereafter owned by any Assignor.

"Lenders" shall have the meaning provided in the recitals to this Agreement.

"Liens" shall mean any lien, security interest or other charge or encumbrance, or any other type of preferential arrangement, in, of, or on any Assignor's property.

"Loan Document" shall mean this Agreement, the Credit Agreement and the Notes.

"Obligations" shall mean (i) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations and indebtedness (including, without limitation, fees and interest thereon) of each Assignor to the Secured Creditors, whether now existing or hereafter incurred under, arising out of, or in connection with the Credit Agreement and the other Loan Documents to which such Assignor is a party and the due performance and compliance by such Assignor with all of the terms, conditions and agreements contained in the Credit Agreement and such other Loan Documents; (ii) any and all sums advanced by the Agent in order to preserve the Collateral or preserve its security interest in the Collateral; (iii) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations or liabilities of such Assignor referred to in clause (i) above, after an Event of Default shall have occurred and be continuing, the reasonable expenses of retaking, ho lding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Agent of its rights hereunder, together with reasonable attorneys' fees and court costs; and (iv) all amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement under Section 5.1 of this Agreement; all such obligations, liabilities, sums and expenses set forth in clauses (i) through (iv) of Article VI being herein collectively called the "Obligations," it being acknowledged and agreed that the "Obligations" shall include extensions of credit of the types described above, whether outstanding on the date of this Agreement or extended from time to time after the date of this Agreement.

"Proceeds" shall have the meaning provided in the Uniform Commercial Code as in effect in the State of New York on the date hereof or under other relevant law and, in any event, shall include, but not be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Agent or any Assignor from time to time with respect to any of the Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable to any Assignor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental authority (or any person acting under color of governmental authority) and (iii) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.

"Receivables" shall mean any "account" as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, now or hereafter owned by the Assignor.

"Security Agreement" shall have the meaning provided in the recitals to this Agreement.

"UCC" shall mean the Uniform Commercial Code as in effect from time to time in the State of New York.

ARTICLE VII

MISCELLANEOUS

7.1. Notices. Except as otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be made as provided in Section 9.02 of the Credit Agreement.

7.2. Waiver; Amendment. None of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by each Assignor directly effected thereby and the Agent (with the written consent of the Secured Creditors);

7.3. Obligations Absolute. The obligations of each Assignor hereunder shall remain in full force and effect without regard to, and shall not be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of such Assignor; (b) any exercise or non-exercise, or any waiver of, any right, remedy, power or privilege under or in respect of this Agreement or any other Loan Document; or (c) any amendment to or modification of any Loan Document for any of the Obligations; whether or not such Assignor shall have notice or knowledge of any of the foregoing.

7.4. Successors and Assigns. This Agreement shall be binding upon each Assignor and its successors and assigns (although no Assignor may assign its rights and obligations hereunder except in accordance with the provisions of the Loan Documents) and shall inure to the benefit of the Agent and the Secured Creditors and their respective successors and assigns. All agreements, statements, representations and warranties made by each Assignor herein or in any certificate or other instrument delivered by such Assignor or on its behalf under this Agreement shall be considered to have been relied upon by the Secured Creditors and shall survive the execution and delivery of this Agreement and the other Loan Documents regardless of any investigation made by the Secured Creditors or on their behalf.

7.5. Headings Descriptive. The headings of the several sections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

7.6. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

7.7. Assignor's Duties. It is expressly agreed, anything herein contained to the contrary notwithstanding, that each Assignor shall remain liable to perform all of the obligations, if any, assumed by it with respect to the Collateral and the Agent shall not have any obligations or liabilities with respect to any Collateral by reason of or arising out of this Agreement, nor shall the Agent be required or obligated in any manner to perform or fulfill any of the obligations of any Assignor under or with respect to any Collateral.

7.8. Termination; Release. After payment in full of the Obligations, this Agreement shall terminate (provided that all indemnities set forth herein including, without limitation, in Section 5.1 hereof shall survive such termination) and the Agent, at the request and expense of the respective Assignor, will promptly execute and deliver to such Assignor a proper instrument or instruments (including Uniform Commercial Code termination statements on form UCC-3) acknowledging the satisfaction and termination of this Agreement, and will duly assign, transfer and deliver to such Assignor (without recourse and without any representation or warranty) such of the Collateral as may be in the possession of the Agent and as has not theretofore been sold or otherwise applied or released pursuant to this Agreement.

(b) In the event that any part of the Collateral is released at the direction of the Secured Creditors and the proceeds from such release are applied in accordance with the provisions of the Credit Agreement, to the extent required to be so applied, such Collateral will be sold free and clear of the Liens created by this Agreement and the Agent, at the request and expense of the Assignor, will duly assign, transfer and deliver to such Assignor (without recourse and without any representation or warranty) such of the Collateral as is then being (or has been) so sold or released and as may be in the possession of the Agent and has not theretofore been released pursuant to this Agreement.

(c) At any time that an Assignor desires that the Agent take any action to acknowledge or give effect to any release of Collateral pursuant to the foregoing Section 7.8(a) or (b), such Assignor shall deliver to the Agent a certificate signed by a principal executive officer of such Assignor stating that the release of the respective Collateral is permitted pursuant to Section 7.8(a) or (b).

7.9. Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with each Assignor and the Agent.

7.10. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

7.11. The Agent. The Agent will hold in accordance with this Agreement all items of the Collateral at any time received under this Agreement. It is expressly understood and agreed that the obligations of the Agent as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this Agreement, are only those expressly set forth in this Agreement and in Article VII of the Credit Agreement.

7.12. Benefit of Agreement. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of and be enforceable by each of the parties hereto and its successors and assigns.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written.

MEMC ELECTRONIC MATERIALS, INC.,
as Assignor

By: /s/ James M. Stolze
________________________________
Name: James M. Stolze
Title: Executive Vice President and Chief Financial Officer

By: /s/ Kenneth L. Young
_________________________________
Name: Kenneth L. Young
Title: Treasurer

MEMC PASADENA, INC.,
as Assignor

By: /s/ Kenneth L. Young
______________________________
Name: Kenneth L. Young
Title: Treasurer

Accepted and Agreed to:

E.ON AG
as Agent

By: /s/ Dr. Erhard Schipporeit
__________________________
Name: Dr. Erhard Schipporeit
Title: Chief Financial Officer

By: /s/ Dr. Michael Bangert
__________________________
Name: Dr. Michael Bangert
Title: Vice President

ANNEX A
to
SECURITY
AGREEMENT

SCHEDULE OF CHIEF EXECUTIVE OFFICES
AND OTHER RECORD LOCATIONS

A. MEMC Electronics Materials, Inc.

Chief Executive Office:

MEMC Electronic Materials, Inc.
501 Pearl Drive (City of O'Fallon)
P.O. Box 8
St. Peters, Missouri 63376

Other Record Locations:

Western Regional Sales Office
1740 Technology Drive, Suite 450
San Jose, California 95110

Eastern Regional Sales Office
1A Commons Drive, Suite 1
Londonderry, New Hampshire 03053

Central Regional Sales Office
1721 W. Plano Parkway, Suite 203
Plano, Texas 75075

MEMC SARL
11, rue Bailly
92200 Neuilly sur Seine
Paris, France

MEMC Electronic Materials, S.p.A.
Viale Gherzi, 31
28100 Novara, Italy

MEMC GmbH
Hauptstrasse 8B
D-82008 Unterhaching Germany

MEMC UK Ltd.
Suite 8, Waverley House
Bothwell Road
Hamilton Business Park
Hamilton ML30QA

United Kingdom
MEMC Electronic Materials, Inc.
8F-1, No. 93
Shoei-Yuan St., Hsinchu,
Taiwan, R.O.C. 300

Taisil Electronic Materials Corporation
No. 2 Creation Road 1,
Science-Based Industrial Park,
Hsinchu, Taiwan, R.O.C.

MEMC Japan Ltd.
Head Office
4F Bancho Fifth Building
5-5 Nibancho
Chiyoda-ku, Tokyo 102

MEMC Japan Ltd.
Osaka Sales Office
5^th Floor, Higashitenma Bldg.
1-7-17 Higashi Tenma, Kita-Ku
Osaka City, Osaka 530

MEMC Electronic Materials, Sdn. Bhd.
No. 1 Jalan S.S. 8/2
Sungeway Subang
47300 Petaling Jaya
Selangor Daral Ehsan, Malaysia

MEMC Korea Company
Rm. 411, CAT Bldg.
159-6, Samsung-Dong, Kangnam-Ku
Seoul, Korea 135-728

Shanghai Representative Office
Suite 661, Shanghai Centre
1376 Nanjing Xi Lu
Shanghai 2000040 R.O.C.

B. MEMC Pasadena, Inc.

Chief Executive Office:

MEMC Pasadena, Inc.
3000 N. South Street
Pasadena, Texas 77503

Other Record Locations:

c/o IMC Agrico Company
Highway 44
Uncle Sam, LA 70792 - 9999

ANNEX B
to
SECURITY
AGREEMENT

SCHEDULE OF ELIGIBLE INVENTORY LOCATIONS

MEMC Electronic Materials, Inc.

Raw Materials

MEMC Electronic Materials, Inc.
501 Pearl Drive
P. O. Box 8
St. Peters, MO 63376-0008

Goods In Process

MEMC Electronic Materials, Inc.
501 Pearl Drive
P. O. Box 8
St. Peters, MO 63376-0008

Finished Goods

MEMC Electronic Materials, Inc.
501 Pearl Drive
P. O. Box 8
St. Peters, MO 63376-0008

Consigned

Bax Global San Francisco
342 Allerton Avenue
South San Francisco, CA 94080

USF Worldwide
138/01 Springfield Blvd.
Jamaica, NY 11413

Schenker International, Inc.
4009 Commercial Center Drive
Suite 650
Austin, TX 78744

Schenker International, Inc.
600 East Dallas Road
Suite 100
Grapevine, TX 76051

Schenker International, Inc.
7550 22^nd Avenue South
Suite 127
Minneapolis, MN 55450

Kintetsu World Express, Inc.
5021 Statesman Drive
Irving, TX 75063

Tee Hai Chem Ptd. Ltd.
Tee Hai Building18 Tuas Link 1
Singapore 638599
Singapore

Samsung Electronics Co. Ltd.
Attn; I. S. Kim
CPO Box 8780
Purh 4 Group
FB1 (03) Kiheung
Kyonggi-Do
South Korea

Intersil
Bldg. 61
Palm Bay Road
Palm Bay, FL 32905

Agere
Bldg. 60
Silicon Materials Inspection
555 Union Blvd.
Allentow, PA 18109

Motorola
3501 Ed Bluestein Blvd.
Austin, TX 78721

Motorola
2200 West Broadway
Mesa, AZ 85202

NSC
1111 Bardin Road
Arlington, TX 76017

NSC
5 Foden Rd.
South Portland, ME 04106

Samsung
4009 Commercial Ctr.
Ste 650,
Austin, TX 78744

B. MEMC Pasadena, Inc.

Raw Materials

MEMC Pasadena, Inc.
3000 N. South Street
Pasadena, TX 77503

IMC Agrico Company
Highway 44
Uncle Sam, LA 70792-9999

Goods In Process

MEMC Pasadena, Inc.
3000 N. South Street
Pasadena, TX 77503

Finished Goods

MEMC Pasadena, Inc.
3000 N. South Street
Pasadena, TX 77503

Consigned

Not Applicable

ANNEX C
to
SECURITY
AGREEMENT

SCHEDULE OF TRADE AND FICTITIOUS NAMES
EX-10 9 m10yyy3.htm NY2 - 308044.02
AMENDMENT NO. 1 TO THE SECURITY AGREEMENT

AMENDMENT NO. 1 TO THE SECURITY AGREEMENT, dated September 4, 2001 (this "Amendment"), to the Amended and Restated Security Agreement, dated as of July 26, 2001, among MEMC ELECTRONIC MATERIALS, INC. ("MEMC"), MEMC Pasadena, Inc. and E.ON AG, as the initial lender and agent (the "Security Agreement").
W I T N E S S E T H :

The parties hereto agree as follows:

SECTION 1. Definitions. Capitalized terms used herein and not defined herein have the meanings assigned to them in the Security Agreement.

SECTION 2. Amendment to the Security Agreement. The third WHEREAS clause in the preamble of the Security Agreement is hereby amended by deleting the WHEREAS clause in its entirety and inserting in lieu thereof the following:

WHEREAS, the Existing Credit Agreement has been amended and restated pursuant to the Amended and Restated Revolving Credit Agreement (as such agreement may be further amended, restated, modified or supplemented at any time and from time to time from and after the date hereof, the "Credit Agreement"), dated as of July 26, 2001, among the Assignors, the lenders party thereto (the "Lenders") and the Agent, pursuant to which, among other things, MEMC Pasadena, has been added as a borrower thereunder; and

SECTION 3. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

SECTION 4. Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the first date first written above.

MEMC ELECTRONIC MATERIALS, INC.,
as Assignor

By: /s/ James M. Stolze
__________________________
Name: James M. Stolze
Title: Executive Vice President and Chief Financial Officer

By: /s/ Helene F. Hennelly
__________________________
Name: Helene F. Hennelly
Title: Corporate Vice President, General Counsel & Secretary

MEMC PASADENA, INC.,
as Assignor

By: /s/ Jonathon P. Jansky
__________________________
Name: Jonathon P. Jansky
Title: Chairman of the Board

Accepted and Agreed to:

E.ON AG
as Agent

By: /s/ Hans Gisbert Ulmke
Name: Hans Gisbert Ulmke
Title: Executive Vice President

By: /s/ Dr. Michael Bangert______
Name: Dr. Michael Bangert
Title: Vice President
EX-10 10 m10yyy4.htm NY2 - 307651.07
PLEDGE AGREEMENT

PLEDGE AGREEMENT (as amended, modified or supplemented from time to time, this "Pledge Agreement"), dated as of September 28, 2001, made by MEMC Electronic Materials, Inc., a Delaware corporation ("MEMC" or the "Pledgor") to E.ON AG, a company organized under the laws of the Republic of Germany (the "Pledgee"), for the benefit of the Secured Creditors (as defined below). Except as otherwise defined herein, capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as therein defined.

W I T N E S S E T H :

WHEREAS, the Second Amended and Restated Revolving Credit Agreement, dated as of September 4, 2001, among MEMC, MEMC Pasadena, Inc. (together with MEMC, the "Borrowers"), the lenders (the "Lenders") from time to time party thereto and E.ON AG, as agent (the "Agent" and together with the Lenders, the "Secured Creditors"), has been amended pursuant to Amendment No. 1 to the Second Amended and Restated Revolving Credit Agreement, dated as of September 28, 2001 (as such agreement may be further amended, restated, modified or supplemented at any time and from time to time from and after the date hereof, the "Credit Agreement");

WHEREAS, it is a condition precedent to the making of Advances to the Borrowers under the Credit Agreement that the Pledgor shall have executed and delivered to the Pledgee this Pledge Agreement; and

WHEREAS, the Pledgor desires to enter into this Pledge Agreement in order to satisfy the condition described in the preceding paragraph;

NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to the Pledgor, the receipt and sufficiency of which are hereby acknowledged, the Pledgor hereby makes the following representations and warranties to the Pledgee for the benefit of the Secured Creditors and hereby covenants and agrees with the Pledgee for the benefit of the Secured Creditors as follows:

1. SECURITY FOR OBLIGATIONS. This Pledge Agreement is made by the Pledgor for the benefit of the Secured Creditors to secure:

(i) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations and indebtedness (including, without limitation, indemnities, fees and interest thereon) of the Pledgor to the Secured Creditors, whether now existing or hereafter incurred under, arising out of, or in connection with the Credit Agreement and the due performance and compliance by the Pledgor with all of the terms, conditions and agreements contained in the Credit Agreement;

(ii) any and all sums advanced by the Pledgee in accordance with the terms hereof in order to preserve the Collateral (as hereinafter defined) or preserve its security interest in the Collateral;

(iii) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations or liabilities of the Pledgor, after an Event of Default shall have occurred and be continuing, the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Pledgee of its rights hereunder, together with reasonable attorneys' fees and court costs; and

(iv) all amounts paid by any Secured Creditor as to which such Secured Creditor has the right to reimbursement under Section 11 of this Pledge Agreement;

all such obligations, liabilities, sums and expenses set forth in clauses (i) through (iv) of this Section 1 being herein collectively called the "Obligations," it being acknowledged and agreed that the "Obligations" shall include extensions of credit of the types described above, whether outstanding on the date of this Pledge Agreement or extended from time to time after the date of this Pledge Agreement.

2. DEFINITION OF STOCK, COLLATERAL, ETC. As used herein, the term "Stock" shall mean all of the issued and outstanding shares of capital stock, and all warrants and options to purchase any such capital stock, of MEMC Japan Ltd., a company organized and existing under the laws of Japan (the "Company"). All Stock at any time pledged hereunder is hereinafter called the "Pledged Stock", which Stock and the percentage pledged hereunder is listed in Annex A hereto. All Pledged Stock, together with the proceeds thereof, including any securities and moneys received at the time held by the Pledgee hereunder, are hereinafter called the "Collateral."

3. PLEDGE OF SECURITIES, ETC. To secure the Obligations of the Pledgor and for the purposes set forth in Section 1 hereof, the Pledgor hereby (i) grants to the Pledgee a security interest in all of the Collateral owned by the Pledgor, (ii) pledges and deposits as security with the Pledgee, the Pledged Stock owned by the Pledgor on the date hereof, and delivers to the Pledgee certificates or instruments therefor, and accompanied by undated stock powers duly executed in blank by the Pledgor (and accompanied by any transfer tax stamps required in connection with the pledge of such Pledged Stock), or such other instruments of transfer as are reasonably acceptable to the Pledgee, (iii) assigns, transfers, hypothecates, mortgages, charges and sets over to the Pledgee all of the Pledgor's right, title and interest in and to such Pledged Stock (and in and to the certificates or instruments evidencing such Pledged Stock), to be held by the Pledgee upon the terms and conditions set forth in this Pledge Agree ment.

4.  APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. If and to the extent necessary to enable the Pledgee to perfect its security interest in any of the Collateral or to exercise any of its remedies hereunder, the Pledgee shall have the right, upon written notice to the Borrower (provided that no such notice shall be required to the extent that same may not be permitted to be given under applicable law), to appoint one or more sub-agents for the purpose of retaining physical possession of the Pledged Stock, which must be held in the name of the Pledgor, endorsed in favor of the Pledgee or any nominee or nominees of the Pledgee or a subagent appointed by the Pledgee.

5.  VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there shall have occurred and be continuing an Event of Default, the Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Stock owned by it, and to give consents, waivers or ratifications in respect thereof; provided, that, in each case, no vote shall be cast or any consent, waiver or ratification given or any action taken or omitted to be taken which would violate or be inconsistent with any of the terms of this Pledge Agreement or the Credit Agreement, or which would have the effect of impairing the value of the Collateral or any part thereof or the position or interests of the Pledgee or any other Secured Creditor in the Collateral (including, without limitation, the issuance of additional Stock or the grant of options to purchase the Stock). All such rights of the Pledgor to vote and to give consents, waivers and ratifications shall cease in case an Event of Defaul t has occurred and is continuing, and Section 7 hereof shall become applicable.

6. DIVIDENDS AND OTHER DISTRIBUTIONS. (a) Unless and until there shall have occurred and be continuing an Event of Default, all cash dividends and distributions payable in respect of the Pledged Stock shall be paid to the Pledgor. The Pledgee shall be entitled to receive directly, and to retain as part of the Collateral:

(i) all other or additional stock or other securities (other than cash) paid or distributed by way of dividend, distribution or otherwise in respect of the Collateral;

(ii) all other or additional stock or other securities paid or distributed in respect of the Collateral by way of merger, consolidation, conveyance of assets, liquidation, exchange of stock, stock-split, spin-off, split-up, reclassification, combination of shares or similar rearrangement; and

(iii) all other property (other than cash) paid or distributed by way of dividend or distribution in respect of the Collateral.

All dividends, distributions or other payments which are received by the Pledgor contrary to the provisions of this Section 6 and Section 7 hereof shall be received in trust for the benefit of the Pledgee, shall be segregated from other property or funds of the Pledgor and shall be forthwith paid over to the Pledgee as Collateral in the same form as so received (with any necessary endorsement).

7.  REMEDIES IN CASE OF DEFAULT OR EVENT OF DEFAULT. (a) If there shall have occurred and be continuing an Event of Default, then and in every such case, the Pledgee shall be entitled to exercise all of the rights, powers and remedies (whether vested in it by this Pledge Agreement, any other Loan Document or by law) for the protection and enforcement of its rights in respect of the Collateral, and the Pledgee shall be entitled to exercise all the rights and remedies of a secured party under the Uniform Commercial Code or other applicable law and also shall be entitled, without limitation, to exercise the following rights, which the Pledgor hereby agrees to be commercially reasonable:

(i) to transfer all or any part of the Collateral into the Pledgee's name or the name of its nominee or nominees;

(ii) to vote all or any part of the Pledged Stock (whether or not transferred into the name of the Pledgee) and give all consents, waivers and ratifications in respect of the Collateral and otherwise act with respect thereto as though it were the outright owner thereof (the Pledgor hereby irrevocably constituting and appointing the Pledgee the proxy and attorney-in-fact of the Pledgor, with full power of substitution to do so); and

(iii) at any time and from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Collateral, or any interest therein, at any public or private sale, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof or to redeem or otherwise (all of which are hereby waived by the Pledgor), for cash, on credit or for other property, for immediate or future delivery without any assumption of credit risk, and for such price or prices and on such terms as the Pledgee in its absolute discretion may determine, provided that at least 10 days' written notice of the time and place of any such sale shall be given to the Pledgor. The Pledgee shall not be obligated to make any such sale of Collateral regardless of whether any such notice of sale has theretofore been given. The Pledgor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security for the Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Pledgee on behalf of the Secured Creditors may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of redemption. Neither the Pledgee nor any other Secured Creditor shall be liable for failure to collect or realize upon any or all of the Collateral or for any delay in so doing nor shall any of them be under any obligation to take any action whatsoever with regard thereto.

(b) In the event of a transfer under Section 7(a)(i) or a sale, assignment, delivery or grant of options to a third party under Section 7(a)(iii) (in either case, the "Transferee"), the Pledgor shall cause the board of directors of the Company to approve the transfer of ownership of all or any part of the Collateral or any interest thereof to the Transferee.

8.  REMEDIES, ETC., CUMULATIVE. Each and every right, power and remedy of the Pledgee provided for in this Pledge Agreement or in any other Loan Document, or now or hereafter existing at law or in equity or by statute shall be cumulative and concurrent and shall be in addition to every other such right, power or remedy. The exercise or beginning of the exercise by the Pledgee or any other Secured Creditor of any one or more of the rights, powers or remedies provided for in this Pledge Agreement or in any other Loan Document or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by the Pledgee or any other Secured Creditor of all such other rights, powers or remedies, and no failure or delay on the part of the Pledgee or any other Secured Creditor to exercise any such right, power or remedy shall operate as a waiver thereof. No notice to or demand on the Pledgor in any case shall entitle it to any other or further notic e or demand in similar or other circumstances or constitute a waiver of any of the rights of the Pledgee or any other Secured Creditor to any other or further action in any circumstances without notice or demand. The Secured Creditors agree that this Pledge Agreement may be enforced only by the action of the Agent or the Pledgee, in each case acting upon the instructions of the Secured Creditors and that no other Secured Creditor shall have any right individually to seek to enforce or to enforce this Pledge Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may be exercised by the Agent or the Pledgee, as the case may be, for the benefit of the Secured Creditors upon the terms of this Pledge Agreement.

9.  APPLICATION OF PROCEEDS. (a) All moneys collected by the Pledgee upon any sale or other disposition of the Collateral, together with all other moneys received by the Pledgee hereunder, shall be applied as follows:

(i) first, to the payment of all amounts owing the Pledgee of the type described in clauses (ii), (iii) and (iv) of the definition of "Obligations";

(ii) second, to the extent proceeds remain after the application pursuant to the preceding clause (i), an amount equal to the outstanding Obligations shall be paid to the Secured Creditors as provided in Section 9(c) hereof, with each Secured Creditor receiving an amount equal to such outstanding Obligations or, if the proceeds are insufficient to pay in full all such Obligations, its pro rata share of the amount remaining to be distributed;

(iii) third, to the extent proceeds remain after the application pursuant to the preceding clauses (i) and (ii) and following the termination of this Agreement pursuant to Section 18 hereof, to the Pledgor or to whomever may be lawfully entitled to receive such surplus.

(b) If any payment to any Secured Creditor of its pro rata share of any distribution would result in overpayment to such Secured Creditor, such excess amount shall instead be distributed in respect of the unpaid Obligations of the other Secured Creditors, with each Secured Creditor whose Obligations have not been paid in full to receive an amount equal to such excess amount multiplied by a fraction the numerator of which is the unpaid Obligations of such Secured Creditor and the denominator of which is the unpaid Obligations, of all Secured Creditors entitled to such distribution.

(c) All payments required to be made hereunder shall be made to the Agent under the Credit Agreement for the account of the Secured Creditors.

(d) For purposes of applying payments received in accordance with this Section 9, the Pledgee shall determine the outstanding Obligations owed to the Secured Creditors.

(e) It is understood and agreed that the Pledgor shall remain liable to the extent of any deficiency between the amount of the proceeds of the Collateral hereunder and the aggregate amount of the Obligations.

10.  PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the Pledgee hereunder (whether by virtue of the power of sale herein granted, pursuant to judicial process or otherwise), the receipt of the Pledgee or the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold, and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Pledgee or such officer or be answerable in any way for the misapplication or nonapplication thereof.

11.  INDEMNITY. The Pledgor agrees (i) to indemnify and hold harmless the Pledgee in such capacity and each other Secured Creditor and their respective successors, assigns, employees, agents and servants (individually an "Indemnitee," and collectively the "Indemnitees") from and against any and all claims, demands, losses, judgments and liabilities (including liabilities for penalties) of whatsoever kind or nature, and (ii) to reimburse each Indemnitee for all costs and expenses, including reasonable attorneys' fees, in each case growing out of or resulting from this Pledge Agreement or the exercise by any Indemnitee of any right or remedy granted to it hereunder (but excluding any claims, demands, losses, judgments and liabilities or expenses to the extent incurred by reason of gross negligence or willful misconduct of such Indemnitee). In no event shall the Pledgee be liable, in the absence of gross negligence or willful misconduct on its part, for any matter or thing in connection with this Pledge Agreement other than to account for monies actually received by it in accordance with the terms hereof. If and to the extent that the obligations of the Pledgor under this Section 11 are unenforceable for any reason, the Pledgor hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law.

12.  PLEDGEE NOT BOUND. (a)  The Pledgee shall not be obligated to perform or discharge any obligation of the Pledgor as a result of the collateral assignment hereby effected.

(b) The acceptance by the Pledgee of this Pledge Agreement, with all the rights, powers, privileges and authority so created, shall not at any time or in any event obligate the Pledgee to appear in or defend any action or proceeding relating to the Collateral to which it is not a party, or to take any action hereunder or thereunder, or to expend any money or incur any expenses or perform or discharge any obligation, duty or liability under the Collateral.

13.  FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a)  The Pledgor agrees that it will join with the Pledgee in executing and, at the Pledgor's own expense, file and refile under the Uniform Commercial Code or other applicable law such financing statements, continuation statements and other documents in such offices as the Pledgee may deem necessary and wherever required by law in order to perfect and preserve the Pledgee's security interest in the Collateral and hereby authorizes the Pledgee to file financing statements and amendments thereto relative to all or any part of the Collateral without the signature of the Pledgor where permitted by law, and agrees to do such further acts and things and to execute and deliver to the Pledgee such additional conveyances, assignments, agreements and instruments as the Pledgee may reasonably require or deem necessary to carry into effect the purposes of this Pledge Agreement or to further assure and confirm unto the Pledgee its rights, powers and rem edies hereunder.

(b) The Pledgor hereby appoints the Pledgee the Pledgor's attorney-in-fact, with full authority in the place and stead of the Pledgor and in the name of the Pledgor or otherwise, to act from time to time solely after the occurrence and during the continuance of an Event of Default in the Pledgee's reasonable discretion to take any action and to execute any instrument which the Pledgee may deem necessary or advisable to accomplish the purposes of this Pledge Agreement.

14.  THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with this Pledge Agreement all items of the Collateral at any time received under this Pledge Agreement. It is expressly understood and agreed by each Secured Creditor that by accepting the benefits of this Pledge Agreement each such Secured Creditor acknowledges and agrees that the obligations of the Pledgee as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this Pledge Agreement, are only those expressly set forth in this Pledge Agreement. The Pledgee shall act hereunder on the terms and conditions set forth herein and in the other Loan Documents.

15.  TRANSFER BY THE PLEDGOR. The Pledgor will not sell or otherwise dispose of, grant any option with respect to, or mortgage, pledge or otherwise encumber any of the Collateral or any interest therein, except for the rights of the Pledgee and each other Secured Creditor as set forth herein.

16.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGOR. The Pledgor represents, warrants and covenants that (i) the Stock held by the Pledgor consists of the number and type of shares of the stock of the Company as described in Annex A hereto, (ii) such Stock constitutes all of the issued and outstanding capital stock of the Company as is set forth in Annex A hereto, (iii) no other person or entity holds any Stock or options to purchase the Stock and (iv) it is the legal, record and beneficial owner of all Stock, subject to no Lien (except the Lien created by this Pledge Agreement); (v) it has full power, authority and legal right to pledge all the Pledged Stock pledged by it pursuant to this Pledge Agreement; (vi) this Pledge Agreement has been duly authorized, executed and delivered by the Pledgor and constitutes a legal, valid and binding obligation of the Pledgor enforceable in accordance with its terms except to the extent that the enforceability hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law); (vii) except as have been obtained by the Pledgor as of the date hereof, no consent of any other party (including, without limitation, any stockholder, partner or creditor of the Pledgor or any of its Subsidiaries) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required to be obtained by the Pledgor in connection with the execution, delivery or performance of this Pledge Agreement, the validity or enforceability of this Pledge Agreement, the perfection or enforceability of the Pledgee's security interest in the Collateral or, except for compliance with or as may be required by applicable securities laws, the exercise by the Pledgee of any of its rights or remedies provided herein; (viii) the execution, delivery and performance of this Pledge Agreement by the Pledgor will not violate any provision of any applicable law or regulation or of any order, judgment, writ, award or decree of any court, arbitrator or governmental authority, domestic or foreign, applicable to the Pledgor, or of the certificate of incorporation or by-laws (or equivalent organizational documents) of the Pledgor or of any securities issued by the Pledgor or any of its Subsidiaries, or of any mortgage, indenture, lease, deed of trust, loan agreement, credit agreement or other material contract, agreement or instrument or undertaking to which the Pledgor or any of its Subsidiaries is a party or which purports to be binding upon the Pledgor or any of its Subsidiaries or upon any of their respective assets and will not result in the creation or imposition of (or the obligation to create or impose) any lien or encumbrance on any of the assets of the Pledgor or any of its Subsidiaries ex cept as contemplated by this Pledge Agreement; (ix) all the shares of the Stock have been duly and validly issued, are fully paid and non-assessable and are subject to no options to purchase or similar rights; (x) the pledge, assignment and delivery to the Pledgee of the endorsed Pledged Stock pursuant to this Pledge Agreement creates a valid and perfected first priority Lien in the Pledged Stock, and the proceeds thereof, subject to no other Lien or to any agreement purporting to grant to any third party a Lien on the Pledged Stock; (xi) there are no currently effective financing statements under the UCC covering any property which is now or hereafter may be included in the Collateral and the Pledgor will not, without the prior written consent of the Pledgee, execute and, until the Termination Date (as hereinafter defined), there will not ever be on file in any public office any enforceable financing statement or statements covering any or all of the Collateral, except financing statements filed o r to be filed in favor of the Pledgee as secured party; (xii) the Pledgor shall give the Pledgee prompt notice of any written claim it receives relating to the Collateral; and (xiii) the Pledgor shall deliver to the Pledgee a copy of each other demand, notice or document received by it which may adversely affect the Pledgee's interest in the Collateral promptly upon, but in any event within 10 days after, the Pledgor's receipt thereof. The Pledgor covenants and agrees that it will defend the Pledgee's right, title and security interest in and to the Collateral against the claims and demands of all persons whomsoever; and the Pledgor covenants and agrees that it will have like title to and right to pledge any other property at any time hereafter pledged to the Pledgee as Collateral hereunder and will likewise defend the right thereto and security interest therein of the Pledgee and the other Secured Creditors.

17.  PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of the Pledgor under this Pledge Agreement shall be absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstance or occurrence whatsoever, including, without limitation: (i) any renewal, extension, amendment or modification of or addition or supplement to or deletion from any Loan Document or any other instrument or agreement referred to therein, or any assignment or transfer of any thereof; (ii) any waiver, consent, extension, indulgence or other action or inaction under or in respect of any such agreement or instrument including, without limitation, this Pledge Agreement; (iii) any furnishing of any additional security to the Pledgee or its assignee or any acceptance thereof or any release of any security by the Pledgee or its assignee; (iv) any limitation on any party's liability or ob ligations under any such instrument or agreement or any invalidity or unenforceability, in whole or in part, of any such instrument or agreement or any term thereof; or (v) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to the Pledgor or any Subsidiary of the Pledgor, or any action taken with respect to this Pledge Agreement by any trustee or receiver, or by any court, in any such proceeding, whether or not the Pledgor shall have notice or knowledge of any of the foregoing.

18.  TERMINATION; RELEASE. (a)  After payment in full of the Obligations and termination of the Credit Agreement, this Pledge Agreement and the security interest created hereby shall terminate (provided that all indemnities set forth herein including, without limitation, in Section 11 hereof shall survive any such termination), and the Pledgee, at the request and expense of the Pledgor, will execute and deliver to the Pledgor a proper instrument or instruments acknowledging the satisfaction and termination of this Pledge Agreement, and will duly assign, transfer and deliver to the Pledgor (without recourse and without any representation or warranty) such of the Collateral as has not theretofore been sold or otherwise applied or released pursuant to this Pledge Agreement, together with any moneys at the time held by the Pledgee or any of its sub-agents hereunder.

(b) In the event that any part of the Collateral is released at the direction of the Secured Creditors and the proceeds of such sale or sales or from such release are applied in accordance with Section 9, to the extent required to be so applied, the Pledgee, at the request and expense of the Pledgor, will duly assign, transfer and deliver to the Pledgor (without recourse and without any representation or warranty) such of the Collateral (and releases therefor) as is then being (or has been) so sold or released and has not theretofore been released pursuant to this Pledge Agreement.

(c) At any time that the Pledgor desires that the Pledgee assign, transfer and deliver Collateral (and releases therefor) as provided in Section 18(a) or (b) hereof, it shall deliver to the Pledgee a certificate signed by a principal executive officer of the Pledgor stating that the release of the respective Collateral is permitted pursuant to Section 18(a) or (b).

(d) The Pledgee shall have no liability whatsoever to any other Secured Creditor as the result of any release of Collateral by it in accordance with this Section 18.

19.  NOTICES, ETC. Except as otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be made as provided in Section 9.02 of the Credit Agreement.

20. JURISDICTION, ETC. 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 the Loan Documents, 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 the Loan Documents in the courts of any jurisdiction.

21.  WAIVER; AMENDMENT. None of the terms and conditions of this Pledge Agreement may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by the Pledgor and the Pledgee (with the written consent of the Secured Creditors).

22.  MISCELLANEOUS. This Pledge Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of and be enforceable by each of the parties hereto and its successors and assigns, provided that the Pledgor may not assign any of its rights or obligations under this Pledge Agreement without the prior consent of the Pledgee. THIS PLEDGE AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK. The headings in this Pledge Agreement are for purposes of reference only and shall not limit or define the meaning hereof. This Pledge Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument. In the event that any provision of this Pledge Agreement shall prove to be invalid or unenforceable, such provision shall be deemed to be severable from the other provisions of this Pledge Agreem ent which shall remain binding on all parties hereto.

23.  RECOURSE. This Pledge Agreement is made with full recourse to the Pledgor and pursuant to and upon all the representations, warranties, covenants and agreements on the part of the Pledgor contained herein and in the other Loan Documents and otherwise in writing in connection herewith or therewith.

24.  CONTROLLED FOREIGN CORPORATION. Notwithstanding any provision of this Pledge Agreement to the contrary, (i) no more than 65% of the capital stock in or of the Company, to the extent the Company is a "controlled foreign corporation" within the meaning of Section 957(a) of the Internal Revenue Code of 1986, as amended, shall be pledged or similarly hypothecated to guaranty or support any of the Obligations, (ii) the Company shall not guaranty or support any of the Obligations, and (iii) no security or similar interest shall be granted in the assets of the Company, which security or similar interest guarantees or supports any of the Obligations. The parties agree that any pledge, guaranty or security or similar interest made or granted in contravention of this Section 24 shall be void ab initio.

* * * *

IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this Pledge Agreement to be executed by their duly elected officers duly authorized as of the date first above written.

MEMC ELECTRONIC MATERIALS, INC.,
  as Pledgor

By /s/ James M. Stolze
Name: James M. Stolze
Title: Executive Vice President and
Chief Financial Officer

By /s/ Kenneth L. Young
Name: Kenneth L. Young
Title: Treasurer

Accepted and Agreed to:

E.ON AG,
  as Pledgee

By /s/ Dr. Erhard Schipporeit
Name: Dr. Erhard Schipporeit
Title: Chief Financial Officer

By /s/ Dr. Michael Bangert
Name: Dr. Michael Bangert
Title: Vice President

ANNEX A to
PLEDGE AGREEMENT

LIST OF STOCK

Issuer

Number of Shares Owned by Pledgor

Type of Shares

% of Outstanding Shares
Owned by Pledgor

% of Outstanding Shares Constituting
Pledged Stock

MEMC Japan Ltd.

750,000

Common

100%

65%

EX-10 11 m10yyy5.htm NY3 - 264370.08
AMENDED AND RESTATED PLEDGE AGREEMENT

AMENDED AND RESTATED PLEDGE AGREEMENT (as amended, modified or supplemented from time to time, this "Pledge Agreement"), dated as of September 28, 2001, made by MEMC Electronic Materials, Inc., a Delaware corporation ("MEMC" or the "Pledgor") to E.ON AG, a company organized under the laws of the Republic of Germany (the "Pledgee"), for the benefit of the Secured Creditors (as defined below). Except as otherwise defined herein, capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as therein defined.

W I T N E S S E T H :

WHEREAS, MEMC, MEMC Pasadena, Inc. (together with MEMC, the "Borrowers"), the lenders (the "Lenders") from time to time party thereto and E.ON AG, as agent (the "Agent" and together with the Lenders, the "Secured Creditors"), have entered into a Second Amended and Restated Revolving Credit Agreement, dated as of September 4, 2001, providing for the making of Advances to the Borrowers, as contemplated therein (the "Existing Credit Agreement");

WHEREAS, in connection with the Existing Credit Agreement, MEMC and E.ON AG, as agent, under the Existing Credit Agreement entered into a Pledge Agreement, dated as of September 4, 2001, by and between MEMC and the Agent (the "Existing Pledge Agreement") pursuant to which MEMC agreed to pledge all of the issued and outstanding shares of capital stock of the Company (as defined below);

WHEREAS, the Existing Credit Agreement has been amended pursuant to the Amendment No. 1 to Second Amended and Restated Revolving Credit Agreement, dated as of September 28, 2001 (as such agreement may be further amended, restated, modified or supplemented at any time and from time to time from and after the date hereof, the "Credit Agreement");

WHEREAS, it was the understanding of the parties to the Existing Pledge Agreement that prior to September 30, 2001, the Pledge Agreement would be amended so as to release the pledge of 35% of the issued and outstanding shares of capital stock of the Company;

NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to the Pledgor, the receipt and sufficiency of which are hereby acknowledged, the Pledgor hereby makes the following representations and warranties to the Pledgee for the benefit of the Secured Creditors and hereby covenants and agrees with the Pledgee for the benefit of the Secured Creditors as follows:

1. SECURITY FOR OBLIGATIONS. This Pledge Agreement is made by the Pledgor for the benefit of the Secured Creditors to secure:

(i) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations and indebtedness (including, without limitation, indemnities, fees and interest thereon) of the Pledgor to the Secured Creditors, whether now existing or hereafter incurred under, arising out of, or in connection with the Credit Agreement and the due performance and compliance by the Pledgor with all of the terms, conditions and agreements contained in the Credit Agreement;

(ii) any and all sums advanced by the Pledgee in accordance with the terms hereof in order to preserve the Collateral (as hereinafter defined) or preserve its security interest in the Collateral;

(iii) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations or liabilities of the Pledgor, after an Event of Default shall have occurred and be continuing, the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Pledgee of its rights hereunder, together with reasonable attorneys' fees, applicable registration tax and stamp duty, and court costs; and

(iv) all amounts paid by any Secured Creditor as to which such Secured Creditor has the right to reimbursement under Section 11 of this Pledge Agreement;

all such obligations, liabilities, sums and expenses set forth in clauses (i) through (iv) of this Section 1 being herein collectively called the "Obligations," it being acknowledged and agreed that the "Obligations" shall include extensions of credit of the types described above, whether outstanding on the date of this Pledge Agreement or extended from time to time after the date of this Pledge Agreement.

2. DEFINITION OF STOCK, COLLATERAL, ETC. As used herein, the term "Stock" shall mean all of the issued and outstanding shares of capital stock, and all warrants and options to purchase any such capital stock, of MEMC Electronic Materials, S.p.A., a company organized and existing under the laws of Italy, with a registered office at Viale Gherzi, 31, 28100 Novara, Italy (the "Company"). All Stock at any time pledged hereunder is hereinafter called the "Pledged Stock", which Stock and the percentage pledged hereunder is listed in Annex A hereto. All Pledged Stock, together with the proceeds thereof, including any securities and moneys received at the time held by the Pledgee hereunder, are hereinafter called the "Collateral."

3. PLEDGE OF SECURITIES, ETC. (a)  To secure the Obligations of the Pledgor and for the purposes set forth in Section 1 hereof, the Pledgor hereby (i) grants to the Pledgee a security interest in all of the Collateral owned by the Pledgor, (ii) pledges and deposits as security with the Pledgee, the Pledged Stock owned by the Pledgor on the date hereof, and delivers to the Pledgee certificates or instruments therefor, which bear an endorsement in favor of the Pledgee substantially in the form and substance of Annex B (and accompanied by any transfer tax stamps required in connection with the pledge of such Pledged Stock), or such other instruments of transfer as are reasonably acceptable to the Pledgee, (iii) assigns, transfers, hypothecates, mortgages, charges and sets over to the Pledgee all of the Pledgor's right, title and interest in and to such Pledged Stock (and in and to the certificates or instruments evidencing such Pledged Stock), to be held by the Pledgee upon the terms and con ditions set forth in this Pledge Agreement.

(b) Promptly following the endorsement of the certificates representing the Pledged Stock described in paragraph (a) above, the Pledgor shall (i) cause the pledge granted hereby to be registered in the Shareholders' Book of the Company, substantially in the form and substance of Annex C hereto, and (ii) deliver to the Pledgee a copy of the page evidencing such registration.

4.  APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. If and to the extent necessary to enable the Pledgee to perfect its security interest in any of the Collateral or to exercise any of its remedies hereunder, the Pledgee shall have the right, upon written notice to the Borrower (provided that no such notice shall be required to the extent that same may not be permitted to be given under applicable law), to appoint one or more sub-agents for the purpose of retaining physical possession of the Pledged Stock, which must be held in the name of the Pledgor, endorsed in favor of the Pledgee or any nominee or nominees of the Pledgee or a subagent appointed by the Pledgee.

5.  VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there shall have occurred and be continuing an Event of Default, the Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Stock owned by it, and to give consents, waivers or ratifications in respect thereof; provided, that, in each case, no vote shall be cast or any consent, waiver or ratification given or any action taken or omitted to be taken which would violate or be inconsistent with any of the terms of this Pledge Agreement or the Credit Agreement, or which would have the effect of impairing the value of the Collateral or any part thereof or the position or interests of the Pledgee or any other Secured Creditor in the Collateral (including, without limitation, the issuance of additional Stock or the grant of options to purchase the Stock). All such rights of the Pledgor to vote and to give consents, waivers and ratifications shall cease in case an Event of Default has o ccurred and is continuing, and Section 7 hereof shall become applicable.

6. DIVIDENDS AND OTHER DISTRIBUTIONS. (a) Unless and until there shall have occurred and be continuing an Event of Default, all cash dividends and distributions payable in respect of the Pledged Stock shall be paid to the Pledgor. The Pledgee shall be entitled to receive directly, and to retain as part of the Collateral:

(i) all other or additional stock or other securities (other than cash) paid or distributed by way of dividend, distribution or otherwise in respect of the Collateral;

(ii) all other or additional stock or other securities paid or distributed in respect of the Collateral by way of merger, consolidation, conveyance of assets, liquidation, exchange of stock, stock-split, spin-off, split-up, reclassification, combination of shares or similar rearrangement; and

(iii) all other property (other than cash) paid or distributed by way of dividend or distribution in respect of the Collateral.

All dividends, distributions or other payments which are received by the Pledgor contrary to the provisions of this Section 6 and Section 7 hereof shall be received in trust for the benefit of the Pledgee, shall be segregated from other property or funds of the Pledgor and shall be forthwith paid over to the Pledgee as Collateral in the same form as so received (with any necessary endorsement).

(b) The Pledgee shall take all reasonable actions required by applicable mandatory provisions of Italian law in order to enable the Pledgor to exercise all the rights to which the Pledgor is entitled under Sections 5 and 6 hereof.

7.  REMEDIES IN CASE OF DEFAULT OR EVENT OF DEFAULT. If there shall have occurred and be continuing an Event of Default, then and in every such case, the Pledgee shall be entitled to exercise all of the rights, powers and remedies (whether vested in it by this Pledge Agreement, any other Loan Document or by law) for the protection and enforcement of its rights in respect of the Collateral, and the Pledgee shall be entitled to exercise all the rights and remedies of a secured party under the Uniform Commercial Code or other applicable law and also shall be entitled, without limitation, to exercise the following rights, which the Pledgor hereby agrees to be commercially reasonable:

(a) to vote all or any part of the Pledged Stock (whether or not transferred into the name of the Pledgee) and give all consents, waivers and ratifications in respect of the Collateral and otherwise act with respect thereto as though it were the outright owner thereof (the Pledgor hereby irrevocably constituting and appointing the Pledgee the proxy and attorney-in-fact of the Pledgor, with full power of substitution to do so); and

(b) except as otherwise required by mandatory provisions of applicable law, at any time and from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Collateral, or any interest therein, at any public or private sale, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof or to redeem or otherwise (all of which are hereby waived by the Pledgor), for cash, on credit or for other property, for immediate or future delivery without any assumption of credit risk, and for such price or prices and on such terms as the Pledgee in its absolute discretion may determine, provided that at least 10 days' written notice of the time and place of any such sale shall be given to the Pledgor. The Pledgee shall not be obligated to make any such sale of Collateral regardless of whether any such notice of sale has theretofore been given. The Pledgor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security for the Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Pledgee on behalf of the Secured Creditors may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of redemption. Neither the Pledgee nor any other Secured Creditor shall be liable for failure to collect or realize upon any or all of the Collateral or for any delay in so doing nor shall any of them be under any obligation to take any action whatsoever with regard thereto.

8.  REMEDIES, ETC., CUMULATIVE. Each and every right, power and remedy of the Pledgee provided for in this Pledge Agreement or in any other Loan Document, or now or hereafter existing at law or in equity or by statute shall be cumulative and concurrent and shall be in addition to every other such right, power or remedy. The exercise or beginning of the exercise by the Pledgee or any other Secured Creditor of any one or more of the rights, powers or remedies provided for in this Pledge Agreement or in any other Loan Document or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by the Pledgee or any other Secured Creditor of all such other rights, powers or remedies, and no failure or delay on the part of the Pledgee or any other Secured Creditor to exercise any such right, power or remedy shall operate as a waiver thereof. No notice to or demand on the Pledgor in any case shall entitle it to any other or further notic e or demand in similar or other circumstances or constitute a waiver of any of the rights of the Pledgee or any other Secured Creditor to any other or further action in any circumstances without notice or demand. The Secured Creditors agree that this Pledge Agreement may be enforced only by the action of the Agent or the Pledgee, in each case acting upon the instructions of the Secured Creditors and that no other Secured Creditor shall have any right individually to seek to enforce or to enforce this Pledge Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may be exercised by the Agent or the Pledgee, as the case may be, for the benefit of the Secured Creditors upon the terms of this Pledge Agreement.

9.  APPLICATION OF PROCEEDS. (a) All moneys collected by the Pledgee upon any sale or other disposition of the Collateral, together with all other moneys received by the Pledgee hereunder, shall be applied as follows:

(i) first, to the payment of all amounts owing the Pledgee of the type described in clauses (ii), (iii) and (iv) of the definition of "Obligations";

(ii) second, to the extent proceeds remain after the application pursuant to the preceding clause (i), an amount equal to the outstanding Obligations shall be paid to the Secured Creditors as provided in Section 9(c) hereof, with each Secured Creditor receiving an amount equal to such outstanding Obligations or, if the proceeds are insufficient to pay in full all such Obligations, its pro rata share of the amount remaining to be distributed;

(iii) third, to the extent proceeds remain after the application pursuant to the preceding clauses (i) and (ii) and following the termination of this Agreement pursuant to Section 18 hereof, to the Pledgor or to whomever may be lawfully entitled to receive such surplus.

(b) If any payment to any Secured Creditor of its pro rata share of any distribution would result in overpayment to such Secured Creditor, such excess amount shall instead be distributed in respect of the unpaid Obligations of the other Secured Creditors, with each Secured Creditor whose Obligations have not been paid in full to receive an amount equal to such excess amount multiplied by a fraction the numerator of which is the unpaid Obligations of such Secured Creditor and the denominator of which is the unpaid Obligations of all Secured Creditors entitled to such distribution.

(c) All payments required to be made hereunder shall be made to the Agent under the Credit Agreement for the account of the Secured Creditors.

(d) For purposes of applying payments received in accordance with this Section 9, the Pledgee shall determine the outstanding Obligations owed to the Secured Creditors.

(e) It is understood and agreed that the Pledgor shall remain liable to the extent of any deficiency between the amount of the proceeds of the Collateral hereunder and the aggregate amount of the Obligations.

10.  PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the Pledgee hereunder (whether by virtue of the power of sale herein granted, pursuant to judicial process or otherwise), the receipt of the Pledgee or the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold, and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Pledgee or such officer or be answerable in any way for the misapplication or nonapplication thereof.

11.  INDEMNITY. The Pledgor agrees (i) to indemnify and hold harmless the Pledgee in such capacity and each other Secured Creditor and their respective successors, assigns, employees, agents and servants (individually an "Indemnitee," and collectively the "Indemnitees") from and against any and all claims, demands, losses, judgments and liabilities (including liabilities for penalties) of whatsoever kind or nature, and (ii) to reimburse each Indemnitee for all costs and expenses, including reasonable attorneys' fees, in each case growing out of or resulting from this Pledge Agreement or the exercise by any Indemnitee of any right or remedy granted to it hereunder (but excluding any claims, demands, losses, judgments and liabilities or expenses to the extent incurred by reason of gross negligence or willful misconduct of such Indemnitee). In no event shall the Pledgee be liable, in the absence of gross negligence or willful misconduct on its part, for any matter or thing in connection with this Pledge Agreement other than to account for monies actually received by it in accordance with the terms hereof. If and to the extent that the obligations of the Pledgor under this Section 11 are unenforceable for any reason, the Pledgor hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law.

12.  PLEDGEE NOT BOUND. (a)  The Pledgee shall not be obligated to perform or discharge any obligation of the Pledgor as a result of the collateral assignment hereby effected.

(b) The acceptance by the Pledgee of this Pledge Agreement, with all the rights, powers, privileges and authority so created, shall not at any time or in any event obligate the Pledgee to appear in or defend any action or proceeding relating to the Collateral to which it is not a party, or to take any action hereunder or thereunder, or to expend any money or incur any expenses or perform or discharge any obligation, duty or liability under the Collateral.

13.  FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a)  The Pledgor agrees that it will join with the Pledgee in executing and, at the Pledgor's own expense, file and refile under the Uniform Commercial Code or other applicable law such financing statements, continuation statements and other documents in such offices as the Pledgee may deem necessary and wherever required by law in order to perfect and preserve the Pledgee's security interest in the Collateral and hereby authorizes the Pledgee to file financing statements and amendments thereto relative to all or any part of the Collateral without the signature of the Pledgor where permitted by law, and agrees to do such further acts and things and to execute and deliver to the Pledgee such additional conveyances, assignments, agreements and instruments as the Pledgee may reasonably require or deem necessary to carry into effect the purposes of this Pledge Agreement or to further assure and confirm unto the Pledgee its rights, powers and rem edies hereunder.

(b) The Pledgor hereby appoints the Pledgee the Pledgor's attorney-in-fact, with full authority in the place and stead of the Pledgor and in the name of the Pledgor or otherwise, to act from time to time solely after the occurrence and during the continuance of an Event of Default in the Pledgee's reasonable discretion to take any action and to execute any instrument which the Pledgee may deem necessary or advisable to accomplish the purposes of this Pledge Agreement.

14.  THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with this Pledge Agreement all items of the Collateral at any time received under this Pledge Agreement. It is expressly understood and agreed by each Secured Creditor that by accepting the benefits of this Pledge Agreement each such Secured Creditor acknowledges and agrees that the obligations of the Pledgee as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this Pledge Agreement, are only those expressly set forth in this Pledge Agreement. The Pledgee shall act hereunder on the terms and conditions set forth herein and in the other Loan Documents.

15.  TRANSFER BY THE PLEDGOR. The Pledgor will not sell or otherwise dispose of, grant any option with respect to, or mortgage, pledge or otherwise encumber any of the Collateral or any interest therein, except for the rights of the Pledgee and each other Secured Creditor as set forth herein.

16.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGOR. The Pledgor represents, warrants and covenants that (i) the Stock held by the Pledgor consists of the number and type of shares of the stock of the Company as described in Annex A hereto, (ii) such Stock constitutes all of the issued and outstanding capital stock of the Company as is set forth in Annex A hereto, (iii) no other person or entity holds any Stock or options to purchase the Stock; (iv) it is the legal, record and beneficial owner of all Stock, subject to no Lien (except the Lien created by this Pledge Agreement); (v) it has full power, authority and legal right to pledge all the Pledged Stock pledged by it pursuant to this Pledge Agreement; (vi) this Pledge Agreement has been duly authorized, executed and delivered by the Pledgor and constitutes a legal, valid and binding obligation of the Pledgor enforceable in accordance with its terms except to the extent that the enforceability hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law); (vii) except as have been obtained by the Pledgor as of the date hereof, no consent of any other party (including, without limitation, any stockholder, partner or creditor of the Pledgor or any of its Subsidiaries) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required to be obtained by the Pledgor in connection with the execution, delivery or performance of this Pledge Agreement, the validity or enforceability of this Pledge Agreement, the perfection or enforceability of the Pledgee's security interest in the Collateral or, except for compliance with or as may be required by applicable securities laws, the exercise by the Pledgee of any of its rights or remedies provided herein; (viii) the execution, delivery and performance of this Pledge Agreement by the Pledgor will not violate any provision of any applicable law or regulation or of any order, judgment, writ, award or decree of any court, arbitrator or governmental authority, domestic or foreign, applicable to the Pledgor, or of the certificate of incorporation or by-laws (or equivalent organizational documents) of the Pledgor or of any securities issued by the Pledgor or any of its Subsidiaries, or of any mortgage, indenture, lease, deed of trust, loan agreement, credit agreement or other material contract, agreement or instrument or undertaking to which the Pledgor or any of its Subsidiaries is a party or which purports to be binding upon the Pledgor or any of its Subsidiaries or upon any of their respective assets and will not result in the creation or imposition of (or the obligation to create or impose) any lien or encumbrance on any of the assets of the Pledgor or any of its Subsidiaries excep t as contemplated by this Pledge Agreement; (ix) all the shares of the Stock have been duly and validly issued, are fully paid and non-assessable and are subject to no options to purchase or similar rights; (x) upon the pledge, assignment and delivery to the Pledgee of the endorsed Pledged Stock pursuant to this Pledge Agreement and the registration in the Shareholders' Book of the Company, the Pledgee in favor of the Secured Creditors will have a valid and perfected first priority Lien in the Pledged Stock, and the proceeds thereof, subject to no other Lien or to any agreement purporting to grant to any third party a Lien on the Pledged Stock; (xi) there are no currently effective financing statements under the UCC covering any property which is now or hereafter may be included in the Collateral and the Pledgor will not, without the prior written consent of the Pledgee, execute and, until the Termination Date (as hereinafter defined), there will not ever be on file in any public office any enforce able financing statement or statements covering any or all of the Collateral, except financing statements filed or to be filed in favor of the Pledgee as secured party; (xii) the Pledgor shall give the Pledgee prompt notice of any written claim it receives relating to the Collateral; and (xiii) the Pledgor shall deliver to the Pledgee a copy of each other demand, notice or document received by it which may adversely affect the Pledgee's interest in the Collateral promptly upon, but in any event within 10 days after, the Pledgor's receipt thereof. The Pledgor covenants and agrees that it will defend the Pledgee's right, title and security interest in and to the Collateral against the claims and demands of all persons whomsoever; and the Pledgor covenants and agrees that it will have like title to and right to pledge any other property at any time hereafter pledged to the Pledgee as Collateral hereunder and will likewise defend the right thereto and security interest therein of the Pledgee and the o ther Secured Creditors.

17.  PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of the Pledgor under this Pledge Agreement shall be absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstance or occurrence whatsoever, including, without limitation: (i) any renewal, extension, amendment or modification of or addition or supplement to or deletion from any Loan Document or any other instrument or agreement referred to therein, or any assignment or transfer of any thereof; (ii) any waiver, consent, extension, indulgence or other action or inaction under or in respect of any such agreement or instrument including, without limitation, this Pledge Agreement; (iii) any furnishing of any additional security to the Pledgee or its assignee or any acceptance thereof or any release of any security by the Pledgee or its assignee; (iv) any limitation on any party's liability or ob ligations under any such instrument or agreement or any invalidity or unenforceability, in whole or in part, of any such instrument or agreement or any term thereof; or (v) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to the Pledgor or any Subsidiary of the Pledgor, or any action taken with respect to this Pledge Agreement by any trustee or receiver, or by any court, in any such proceeding, whether or not the Pledgor shall have notice or knowledge of any of the foregoing.

18. TERMINATION; RELEASE. (a)  After payment in full of the Obligations and termination of the Credit Agreement, this Pledge Agreement and the security interest created hereby shall terminate (provided that all indemnities set forth herein including, without limitation, in Section 11 hereof shall survive any such termination), and the Pledgee, at the request and expense of the Pledgor, will execute and deliver to the Pledgor a proper instrument or instruments acknowledging the satisfaction and termination of this Pledge Agreement, and will duly assign, transfer and deliver to the Pledgor (without recourse and without any representation or warranty) such of the Collateral as has not theretofore been sold or otherwise applied or released pursuant to this Pledge Agreement, together with any moneys at the time held by the Pledgee or any of its sub-agents hereunder.

(b) In the event that any part of the Collateral is released at the direction of the Secured Creditors and the proceeds of such sale or sales or from such release are applied in accordance with Section 9, to the extent required to be so applied, the Pledgee, at the request and expense of the Pledgor, will duly assign, transfer and deliver to the Pledgor (without recourse and without any representation or warranty) such of the Collateral (and releases therefor) as is then being (or has been) so sold or released and has not theretofore been released pursuant to this Pledge Agreement.

(c) At any time that the Pledgor desires that the Pledgee assign, transfer and deliver Collateral (and releases therefor) as provided in Section 18(a) or (b) hereof, it shall deliver to the Pledgee a certificate signed by a principal executive officer of the Pledgor stating that the release of the respective Collateral is permitted pursuant to Section 18(a) or (b).

(d) The Pledgee shall have no liability whatsoever to any other Secured Creditor as the result of any release of Collateral by it in accordance with this Section 18.

19.  NOTICES, ETC. Except as otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be made as provided in Section 9.02 of the Credit Agreement.

20. JURISDICTION, ETC. 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 the Loan Documents, 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 the Loan Documents in the courts of any jurisdiction.

21.  WAIVER; AMENDMENT. None of the terms and conditions of this Pledge Agreement may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by the Pledgor and the Pledgee (with the written consent of the Secured Creditors).

22.  MISCELLANEOUS. This Pledge Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of and be enforceable by each of the parties hereto and its successors and assigns, provided that the Pledgor may not assign any of its rights or obligations under this Pledge Agreement without the prior consent of the Pledgee. THIS PLEDGE AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK. The headings in this Pledge Agreement are for purposes of reference only and shall not limit or define the meaning hereof. This Pledge Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument. In the event that any provision of this Pledge Agreement shall prove to be invalid or unenforceable, such provision shall be deemed to be severable from the other provisions of this Pledge Agreem ent which shall remain binding on all parties hereto.

23.  RECOURSE. This Pledge Agreement is made with full recourse to the Pledgor and pursuant to and upon all the representations, warranties, covenants and agreements on the part of the Pledgor contained herein and in the other Loan Documents and otherwise in writing in connection herewith or therewith.

24.  CONTROLLED FOREIGN CORPORATION. Notwithstanding any provision of this Pledge Agreement to the contrary, (i) no more than 65% of the capital stock in or of the Company, to the extent the Company is a "controlled foreign corporation" within the meaning of Section 957(a) of the Internal Revenue Code of 1986, as amended, shall be pledged or similarly hypothecated to guaranty or support any of the Obligations, (ii) the Company shall not guaranty or support any of the Obligations, and (iii) no security or similar interest shall be granted in the assets of the Company, which security or similar interest guarantees or supports any of the Obligations. The parties agree that any pledge, guaranty or security or similar interest made or granted in contravention of this Section 24 shall be void ab initio.

* * * *

IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this Pledge Agreement to be executed by their duly elected officers duly authorized as of the date first above written.

MEMC ELECTRONIC MATERIALS, INC.,
  as Pledgor

By /s/ James M. Stolze
Name: James M. Stolze
Title: Executive Vice President and
Chief Financial Officer

By /s/ Kenneth L. Young
Name: Kenneth L. Young
Title: Treasurer

Accepted and Agreed to:

E.ON AG,
  as Pledgee

By /s/ Dr. Erhard Schipporeit
Name: Dr. Erhard Schipporeit
Title: Chief Financial Officer

By /s/ Dr. Michael Bangert
Name: Dr. Michael Bangert
Title: Vice President

ANNEX A to
PLEDGE AGREEMENT

LIST OF STOCK

Issuer

Number of Shares Owned by Pledgor

Type of Shares

% of Outstanding Shares
Owned by Pledgor

% of Outstanding Shares Constituting Pledged Stock

MEMC Electronic Materials S.p.A.

65,000,000

Common

100%

65%

ANNEX B to
PLEDGE AGREEMENT

TEXT OF THE ENDORSEMENT OF THE SHARE CERTIFICATES

Il presente certificato viene girato in garanzia a favore della E. ON AG, società tedesca con sede a E.ON-Platz 1, D-40479 Dusseldorf, Germania, per conto dei Creditori Garantiti, senza diritto al voto e senza diritto agli utili, tranne che in caso di inadempimento delle obbligazioni garantite.

______________________
autentica notarile e Apostille

* * *

This certificate is pledged to E. ON AG, a company organized and existing under the laws of Germany, with offices at E.ON-Platz 1, D-40479 Dusseldorf, Germany, on behalf of the Secured Creditors, with no right to vote and no right to dividend, except in case of non-fulfillment of the secured obligations.

_______________________
Notary certification and Apostille

ANNEX C to
PLEDGE AGREEMENT

TEXT OF THE REGISTRATION OF THE PLEDGE IN THE SHAREHOLDERS' BOOK

Si prende e si dà atto che:

E.ON AG ha rinunciato al pegno precedentemente costituito in suo favore da MEMC Electronic Materials, Inc. su n. 22.750.000 azioni, mantenendo il pegno a suo favore sulle restanti No. 42.250.000 azioni della Società;

su congiunta richiesta di E.ON AG e MEMC Electronic Materials, Inc. si è proceduto all'annullamento dei certificati azionari n. 60 e n. 61 rappresentanti rispettivamente n. 64.999.200 azioni e n. 800 azioni e alla loro sostituzione con due nuovi certificati n. 62 e n. 63 rappresentanti rispettivamente n. 42.250.000 e n. 22.750.000 azioni della Società;

MEMC Electronic Materials, Inc. ha girato in garanzia, senza diritto di voto e senza diritto ai dividendi (tranne che in caso di inadempimento delle obbligazioni garantite) a favore della E.ON AG, il certificato azionario n. 62 rappresentante n. 42.250.000 azioni della Società, in tal modo confermando il pegno precedentemente istituito su tali azioni;

Data: ________________________
Un amministratore

* * *

It is acknowledged that:

E.ON AG has released the pledge created in its favour by MEMC Electronic Materials, Inc. on No. 22.750.000 shares, maintaining its pledge on the remaining No. 42.250.000 shares of the Company;

upon joint request of E.ON AG and MEMC Electronic Materials, Inc., the share certificates n. 60 and n. 61 representing respectively No. 64,999,200 shares and No. 800 shares of the Company have been rendered null and void and have been replaced with the two new certificates n. 62 and 63, respectively representing No. 42,250,000 shares and No. 22,750,000 shares of the Company;

MEMC Electronic Materials, Inc. has pledged, with no right to vote and no right to dividend (except in case of non-fulfilment of the secured obligations) in favor of E.ON AG the No. 42,250,000 shares embodied in the said share certificate n. 62, thus confirming the pledge previously created on such shares.

Data: ________________________
A Director
-----END PRIVACY-ENHANCED MESSAGE-----

(a)	the sum of:
(i)	Consolidated Net Income for such period, plus
(ii)	Consolidated Working Capital Adjustment, plus
(iii)	Consolidated depreciation and amortization expense during such period, plus
(iv)	the amount of cash dividends and distributions paid to Guarantor by Guarantor's unconsolidated joint ventures during such period, plus
(v)	the excess, if any, of (i) the amount of expense for contributions to be made to the MEMC Pension Plan and Guarantor's other retirement plans included in Consolidated Net Income, over (ii) the amount of cash contributions made to the MEMC Pension Plan and Guarantor's other retirement plans, plus
(vi)	any non-cash losses during such period not included in the foregoing items (ii) through (v),
minus (b)	the sum of:
(i)	the amount of Approved Capital Expenditures during such period, plus
(ii)	the aggregate amount of scheduled or required permanent principal payments of Debt for borrowed money of Guarantor and its Subsidiaries during such period, plus
(iii)	the aggregate amount of any voluntary permanent repayments of principal by Guarantor on E.ON Loans (which repayments, in the case of any E.ON Loan that is a revolving loan, are accompanied by a concurrent permanent reduction of the revolving loan commitment) during such period, plus
(iv)	the excess, if any, of (i) the amount of cash contributions made to the MEMC Pension Plan and Guarantor's other retirement plans, but only to the extent such contributions are required pursuant to such plans or to meet minimum funding standards or to avoid participant notice requirements of ERISA, over (ii) the amount of expense for contributions to be made to the MEMC Pension Plan and Guarantor's other retirement plans included in Consolidated Net Income, plus
(v)	any non-cash income during such period not included in items (i) through (iv).

E.ON AG, as Agent for the Lenders parties to the Credit Agreement referred to below E.ON-Platz 1, D-40479 Düsseldorf Germany	[Date]
Attention:_______________________

Issuer	Number of Shares Owned by Pledgor	Type of Shares	% of Outstanding Shares Owned by Pledgor	% of Outstanding Shares Constituting Pledged Stock
MEMC Japan Ltd.	750,000	Common	100%	65%