Exhibit 3


                                                                  EXECUTION COPY






================================================================================





                                $116,000,000

                               CREDIT AGREEMENT

                         dated as of February 3, 2004,

                                     among

                        SGL CARBON AKTIENGESELLSCHAFT,

                               SGL CARBON, LLC,

                         THE GUARANTORS PARTY HERETO,

                           THE LENDERS PARTY HERETO

                                      and

                          CREDIT SUISSE FIRST BOSTON,

                            as Administrative Agent

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

                         Credit Suisse First Boston,
                              as Sole Bookrunner

                          Credit Suisse First Boston,
                               Deutsche Bank AG
                             and Dresdner Bank AG,
                               as Lead Arrangers




================================================================================






<PAGE>


                                    ARTICLE I

                                  Definitions



SECTION 1.01.  Defined Terms.................................................  1
SECTION 1.02.  Terms Generally............................................... 26



                                  ARTICLE II


                                  The Credits

SECTION 2.01.  Commitments................................................... 27
SECTION 2.02.  Loans......................................................... 27
SECTION 2.03.  Borrowing Procedure........................................... 28
SECTION 2.04.  Evidence of Debt; Repayment of Loans.......................... 29
SECTION 2.05.  Fees.......................................................... 29
SECTION 2.06.  Interest on Loans............................................. 29
SECTION 2.07.  Default Interest.............................................. 30
SECTION 2.08.  Alternate Rate of Interest.................................... 30
SECTION 2.09.  Termination and Reduction of Commitments...................... 30
SECTION 2.10.  Conversion and Continuation of Borrowings..................... 31
SECTION 2.11.  Repayment of Borrowings....................................... 32
SECTION 2.12.  Optional Prepayments.......................................... 33
SECTION 2.13.  Mandatory Prepayments......................................... 33
SECTION 2.14.  Reserve Requirements; Change in Circumstances................. 36
SECTION 2.15.  Change in Legality............................................ 37
SECTION 2.16.  Indemnity..................................................... 37
SECTION 2.17.  Pro Rata Treatment............................................ 38
SECTION 2.18.  Sharing of Setoffs............................................ 38
SECTION 2.19.  Payments...................................................... 38
SECTION 2.20.  Taxes......................................................... 39
SECTION 2.21.  Assignment of Commitments Under Certain Circumstances; Duty to
                   Mitigate.................................................  40



                                  ARTICLE III


                        Representations and Warranties

SECTION 3.01.  Representations and Warranties................................ 41
SECTION 3.02.  Reliance on Representations and Warranties.................... 47



                                   ARTICLE IV


                             Conditions of Lending

SECTION 4.01.  Conditions Precedent to Effectiveness of Finance Documents.... 48
SECTION 4.02.  Further Conditions Precedent to Borrowing..................... 48


                                       3

<page>
                                   ARTICLE V


                             Affirmative Covenants

SECTION 5.01.  General Covenants............................................  49
SECTION 5.02.  Reports and Information......................................  53
SECTION 5.03.  Use of Proceeds..............................................  58



                                  ARTICLE VI


                              Negative Covenants

SECTION 6.01.  Negative Pledge............................................... 58
SECTION 6.02.  Disposals..................................................... 58
SECTION 6.03.  Options....................................................... 59
SECTION 6.04.  Change of Business............................................ 59
SECTION 6.05.  Constitutional Documents...................................... 59
SECTION 6.06.  Share Capital................................................. 59
SECTION 6.07.  Dividends and Other Distributions............................. 59
SECTION 6.08.  Subordinated and Intra-Group Debt............................. 60
SECTION 6.09.  Cash Flow Restrictions........................................ 60
SECTION 6.10.  Merger........................................................ 60
SECTION 6.11.  Indebtedness.................................................. 60
SECTION 6.12.  Loans Out..................................................... 60
SECTION 6.13.  Guarantees or Contingent Liabilities.......................... 60
SECTION 6.14.  Treasury Transactions......................................... 61
SECTION 6.15.  Acquisitions.................................................. 61
SECTION 6.16.  Joint Ventures................................................ 61
SECTION 6.17.  Amendments to Finance and Other Documents..................... 61
SECTION 6.18.  Material Adverse Effect....................................... 61
SECTION 6.19.  Arm's Length Terms............................................ 61
SECTION 6.20.  Net Worth..................................................... 61
SECTION 6.21.  Interest Coverage Ratio....................................... 61
SECTION 6.22.  Leverage Ratio................................................ 62
SECTION 6.23.  Minimum Guarantor Coverage.................................... 63
SECTION 6.24.  Senior Net Debt to Consolidated EBITDA........................ 63
SECTION 6.25.  Fixed Charge Coverage Ratio................................... 63
SECTION 6.26.  Maximum Capital Expenditure................................... 64
SECTION 6.27.  Calculations.................................................. 64
SECTION 6.28.  Financial Testing............................................. 65



                                  ARTICLE VII


                               Events of Default




                                 ARTICLE VIII


                           The Administrative Agent

                                       4


<PAGE>


                                  ARTICLE IX


                            Guarantee and Indemnity

SECTION 9.01.  Guarantee and Indemnity......................................  71
SECTION 9.02.  Continuing Guarantee.........................................  71
SECTION 9.03.  Reinstatement................................................  71
SECTION 9.04.  Waiver of Defenses...........................................  71
SECTION 9.05.  Immediate Recourse...........................................  72
SECTION 9.06.  Appropriations...............................................  72
SECTION 9.07.  Deferral of Guarantors' Rights...............................  72
SECTION 9.08.  Additional Security..........................................  73
SECTION 9.09.  Limitations for German Guarantors............................  73
SECTION 9.10.  Limitations for Austrian Obligors............................  74
SECTION 9.11.  Limitations for French Obligors..............................  75
SECTION 9.12.  Limitations for Italian Obligors.............................  75
SECTION 9.13.  Limitations for Spanish Obligors.............................  76
SECTION 9.14.  Limitations for US Obligors..................................  76
SECTION 9.15.  Limitations for Canadian Obligors............................  76
SECTION 9.16.  Additional Guarantors........................................  76



                                   ARTICLE X


                                 Miscellaneous

SECTION 10.01.  Notices...................................................... 77
SECTION 10.02.  Survival of Agreement........................................ 77
SECTION 10.03.  Binding Effect............................................... 78
SECTION 10.04.  Successors and Assigns....................................... 78
SECTION 10.05.  Expenses; Indemnity.......................................... 81
SECTION 10.06.  Right of Setoff.............................................. 83
SECTION 10.07.  Applicable Law............................................... 83
SECTION 10.08.  Waivers; Amendment........................................... 83
SECTION 10.09.  Interest Rate Limitation..................................... 84
SECTION 10.10.  Entire Agreement............................................. 84
SECTION 10.11.  WAIVER OF JURY TRIAL......................................... 85
SECTION 10.12.  Severability................................................. 85
SECTION 10.13.  Counterparts................................................. 85
SECTION 10.14.  Headings..................................................... 85
SECTION 10.15.  Jurisdiction; Consent to Service of Process.................. 85
SECTION 10.16.  Judgment Currency............................................ 86
SECTION 10.17.  Confidentiality.............................................. 87


Schedule 1      Lenders and Commitments
Schedule 2      Existing Competition Law Proceedings
Schedule 3      Existing Indebtedness
Schedule 4      Current Material Subsidiaries
Schedule 5      Original Guarantors




                                      5
<PAGE>

Schedule 6      Permitted Guarantees and Contingent Liabilities
Schedule 7      Existing Security
Schedule 8      Existing Intra-Group Loans
Schedule 9      Conditions Precedent
Schedule 10     Conditions Subsequent to Initial Borrowing
Schedule 11     Conditions Precedent Required to be Delivered by a Proposed
                Additional Guarantor

Exhibit A       Form of Administrative Questionnaire
Exhibit B       Form of Assignment and Acceptance
Exhibit C-1     Form of Borrowing Request
Exhibit C-2     Form of Interest Election Request
Exhibit C-3     Form of Notice of Prepayment
Exhibit D       Form of Guarantor Accession Letter
Exhibit E       Form of Compliance Certificate
Exhibit F       Form of Intercreditor Agreement
Exhibit G       Form of Security Trust Agreement

                                        6


<PAGE>


                          CREDIT  AGREEMENT  dated as of February 3, 2004 among
                    SGL  CARBON  AKTIENGESELLSCHAFT,  a  corporation  organized
                    under the laws of Germany (the "Company"), SGL CARBON, LLC,
                    a Nevada limited  liability  company  (the "Borrower"), the
                    Original  Guarantors (as defined herein)  the  Lenders  (as
                    defined herein)  and  CREDIT  SUISSE  FIRST  BOSTON, a bank
                    organized under the laws of Switzerland, acting through its
                    Cayman  Islands  Branch, as administrative agent  (in  such
                    capacity, the "Administrative Agent") for the Lenders.


The parties hereto agree as follows:



                                   ARTICLE I



                                  Definitions

             SECTION  1.1. Defined Terms.   As  used  in  this  Agreement,  the
following terms shall have the meanings specified below:

       "ABR", when used  in  reference  to  any  Loan  or  Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.

       "Acquisition"  shall mean (a) the purchase, subscription  for  or  other
acquisition of any shares  (or other securities or any interest therein) in, or
incorporation, formation or  organization  of,  any  other  company  or (b) the
purchase  or other acquisition of any assets or (without limitation to  any  of
the foregoing) acquisition of any business or interest therein.

       "Administrative Agent Fees" shall have the meaning assigned to such term
in Section 2.05(a).

       "Additional  EU Competition Law Liabilities" shall mean the fine imposed
on the Company or any  Group  Member  by  the  competition  directorate  of the
European  Commission  in  the  amount  of  e23,600,000  in  relation  to the EU
Competition Law Proceedings.

       "Additional  Guarantor"  shall  mean a person that becomes an Additional
Guarantor in accordance with Section 9.16.

       "Administrative   Questionnaire"   shall    mean    an    administrative
questionnaire in the form of Exhibit A, or such other form as may  be  supplied
from time to time by the Administrative Agent.

       "Affiliate" shall mean, in relation to any person, a Subsidiary of  that
person  or  a  Holding  Company  of that person or any other Subsidiary of that
Holding Company.


<PAGE>

       "Alternate Base Rate" shall mean, for any day, a rate per annum equal to
the greater of (a) the Prime Rate  in  effect  on  such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2  of  1%.  Any change in the
Alternate  Base  Rate  due to a change in the Prime Rate or the  Federal  Funds
Effective Rate shall be  effective  on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

       "Amortization and Other Payments" shall mean, in respect of any Relevant
Period, the aggregate of (a) all repayments,  prepayments and other payments of
principal and premium paid or falling due in respect  of  the Senior Facilities
(but  excluding  any  amounts  paid  or falling due under the Revolving  Credit
Facility and capable of being simultaneously  redrawn  under  the  terms of the
German  Credit  Agreement),  and  (b) all  repayments,  prepayments  and  other
payments  of  principal  paid  or falling due in respect of any other Financial
Indebtedness (other than in respect  of  Subordinated Debt) of any Group Member
(but excluding Intra-Group Loans and any amounts  paid or falling due under any
overdraft  or  revolving credit facility and capable  of  being  simultaneously
redrawn under the  terms  of  the relevant facility) and (c) the amount of cash
dividends or distributions paid in respect of that period.

       "Applicable Percentage"  shall  mean  (a) with respect to any Eurodollar
Loan, 3.00%, or (b) with respect to any ABR Loan, 2.00%.

       "Approved  Bank"  shall mean any bank which  is  an  authorized  banking
institution under applicable legislation and whose debt securities are rated at
least A1 by Moody's or A+ by S&P, or as the Administrative Agent may approve.

       "Assignment and Acceptance"  shall  mean  an  assignment  and acceptance
entered  into  by  a Lender and an assignee, and accepted by the Administrative
Agent, in the form of  Exhibit B or such other form as shall be approved by the
Administrative Agent.

       "Authorization"  shall   mean   an   authorization,  consent,  approval,
resolution, license, exemption, filing or registration.

       "Availability  Period"  shall mean the period  from  and  including  the
Signing Date to and including February 23, 2004.

       "Bafin" shall mean Bundesanstalt f{u"}r Finanzdienstleistungsaufsicht.

       "Banking Day" shall mean,  in  relation  to a place, a day (other than a
Saturday, Sunday or public holiday) on which banks are open for general banking
business and for dealings in foreign exchange and  foreign currency deposits in
that place.

       "Base  Financial Statements" shall mean (a) the  consolidated  financial
statements of the  Group  for  the  financial  year  ended  December  31, 2002,
prepared  by  the Company and audited by BDO and (b) the unaudited consolidated
interim financial statements of the Company as of and for the nine months ended
September 30, 2003.

       "Board"  shall mean the Board of Governors of the Federal Reserve System
of the United States.

       "BDO"      shall      mean      Deutsche      Warentreuhand      AG     -
Wirtschaftspr{u"}fungsgesellschaft.


                                       2

<PAGE>

       "Borrowing"  shall  mean  Loans  of  the  same  Type  made, converted or
continued on the same date and, in the case of Eurodollar Loans,  as to which a
single Interest Period is in effect.

       "Borrowing  Request" shall mean a request by the Borrower in  accordance
with the terms of Section 2.03.

       "Bridge Arrangers"  shall  mean Credit Suisse First Boston International
and Deutsche Bank AG London.

       "Bridge Lenders" shall mean the lenders making available the Bridge Loan
from time to time.

       "Bridge Loan" shall mean the loan agreement to be entered into by, inter
alia, the Company as borrower and Credit  Suisse First Boston International and
Deutsche Bank AG London as lenders, providing  for bridge loans in an amount of
up to e270,000,000, as amended from time to time.

       "Bridge Loan Agent" shall mean Credit Suisse First Boston International,
as agent with respect to the Bridge Loan.

       "Bridge Loan Documents" shall mean the Bridge  Loan,  the  Intercreditor
Agreement, the Exchange Notes Indenture, the Exchange Notes Registration Rights
Agreement,  the  Exchange Notes Escrow Agreement, any fee letter, any  security
document,  any  accession   letter,   any   hedging   agreement,  any  transfer
certificate, any subfacility document and any other document designated as such
by the Bridge Loan Agent and the Company and "Bridge Loan  Document"  means any
of them.

       "Budget" shall mean with respect to each financial year commencing on or
after January 1, 2004, the latest annual budget delivered by the Company to the
Administrative Agent pursuant to Section 5.02(f).

       "Business Day" shall mean any day other than a Saturday, Sunday  or  day
on  which  banks  in  New York City are authorized or required by law to close;
provided, however, that  when  used  in  connection with a Eurodollar Loan, the
term "Business Day" shall also exclude any  day on which banks are not open for
dealings in dollar deposits in the London interbank market.

       "Canadian Competition Law Liabilities"  shall  mean the fines imposed on
the  Company  or  any  Group  Member by the Canadian antitrust  authorities  in
relation to Existing Competition  Law  Proceedings in Canada in the outstanding
amount of Canadian Dollars 6,000,000 as of the Signing Date.

       "Canadian Dollar" shall mean lawful money of Canada.

       "Capital Expenditure" shall mean  any capital expenditure that should in
accordance with IFRS or the Relevant GAAP  be treated as capital expenditure in
the audited consolidated financial statements of the Group.

       "Cartel  Deposit  Account"  shall  mean  the   account  of  the  Company
established  with  Deutsche  Bank, Augsburg Branch to fund  the  Additional  EU
Competition Law

                                       3

<page>

Liabilities,  the  Canadian  Competition  Law  Liabilities,  any civil  lawsuits
settled in 2004 up to an amount of Euro  3,000,000,  and the US Competition  Law
Liabilities,  in each case  including  interest  accruing  thereon and  currency
hedging  losses with respect  thereto up to the amount of  e125,300,000  (or its
equivalent  in another  currency  or  currencies),  over which the  Lenders  are
granted first ranking and the Bridge Lenders are granted second ranking
security.
       "Cartel Deposit Account Agreement" shall mean the agreement establishing
the Cartel Deposit Account.

       "Cash"  shall  mean (i) cash in hand, (ii) any  credit  balance  on  any
current, savings or deposit account with any Approved Bank that is repayable on
demand or upon not more  than  90 days'  notice and (iii) all such cash held in
the Cartel Deposit Account and Convert Deposit Account.

       "Cash Collateral" shall mean, in relation  to  any  Letter of Credit (as
defined in the German Credit Agreement), a cash deposit in an  interest-bearing
account  or accounts with the European Facility Agent (or such other  financial
institution  reasonably  acceptable to the European Facility Agent) in the name
of the Company (and identified as a Cash Collateral account), that cash deposit
and account to be secured  in  favor  of  the  Security  Agent and the relevant
lenders under the German Credit Agreement on terms and conditions acceptable to
the European Facility Agent and the Security Agent.

       "Cash Collateral Documents" shall mean any documents,  as  the  European
Facility  Agent  and  the  Security  Agent  may  specify, to be entered into in
relation to the Cash Collateral.

       "Cash  Equivalents"  shall  mean  (a) debt  securities   that   are  not
convertible  into  any  other  form  of security, rated or issued by any person
rated  Al  or better by Moody's or A+ or  better  by  S&P  and  not  issued  or
guaranteed by  any  Group  Member,  (b) certificates  of deposit issued by, and
acceptances  by,  banking institutions authorized under applicable  legislation
which at the time of  making  such  issue or acceptances, have outstanding debt
securities rated as provided in clause (a) above, (c) such other securities (if
any) as are approved as such in writing  by the Administrative Agent (acting on
the instructions of the Required Lenders)  and (d) which, in each case, have no
more than 12 months to final maturity, other  than  moneys  held in the Convert
Deposit  Account  which  may  be  held until the redemption of the  Convertible
Bonds.

       "Cash Flow from Investing Activities" shall have the meaning given to it
in IFRS.

       "Cash Flow from Operating Activities" shall have the meaning given to it
in IFRS.

       A "Change of Control" shall  occur  if  any  person  or group of persons
acting in concert gains control of the Company or becomes a Holding  Company of
the  Company.   For  purposes  of this definition, "control" shall mean (a) the
holding of more than 50% of the  issued share capital of the Company or (b) the
possession, directly or indirectly,  of the power (whether by way of ownership,
shares,  proxy,  contract, agency or otherwise)  to  (i) cast,  or  direct  the
casting of, more than 50%  of the maximum number of votes that might be cast at
a general meeting of the shareholders  of  the  Company, (ii) appoint or


                                      4
<PAGE>

remove all, or the majority of, the  directors or other  equivalent  officers of
the  Company,  or (iii)  give  directions  with  respect  to the  operating  and
financial  policies  of the  Company  which the  directors  or other  equivalent
officers  thereof are obliged to comply with.  For purposes of this  definition,
"persons acting in concert" shall comprise persons who, pursuant to an agreement
or understanding (whether formal or informal),  actively co-operate to obtain or
consolidate control of an entity.
       "Change  in  Law"  shall  mean  (a)  the  adoption  of  any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation  or  in the interpretation or application thereof by any  Government
Agency after the  date  of  this Agreement or (c) compliance by any Lender (or,
for purposes of Section 2.14,  by  such  Lender's holding company, if any) with
any request, guideline or directive (whether or not having the force of law) of
any Government Agency made or issued after the date of this Agreement.

       "Charged Assets" shall mean any assets  of  any Obligor that are secured
in  favor  of the Security Agent and/or the other Finance  Parties  and/or  the
Subordinated Finance Parties pursuant to the Security Documents or any of them.

       "Closing  Date"  shall  have  the  meaning  assigned  to  such  term  in
Section 2.01.

       "Code"  shall  mean  the United States Internal Revenue Code of 1986, as
amended.

       "Commitment" shall mean,  with respect to each Lender, the commitment of
such Lender to make a Loan hereunder  as  set  forth  on  Schedule 1, or in the
Assignment and Acceptance pursuant to which such Lender assumed its Commitment,
as  applicable, as the same may be (a) reduced from time to  time  pursuant  to
Section 2.09  and  (b)  reduced  or  increased  from  time  to time pursuant to
assignments by or to such Lender pursuant to Section 10.04.

       "Commitment  Fees"  shall  have  the  meaning assigned to such  term  in
Section 2.05(b).

       "Competition  Law  Liabilities" shall mean  the  fines  imposed  on  the
Company or any Group Member  by  any relevant court or authority in relation to
Existing Competition Law Proceedings.

       "Consolidated EBITDA" shall  mean,  in  respect  of any Relevant Period,
consolidated  net  pre-taxation profits of the Group for such  Relevant  Period
adjusted by adding back  (without duplication) (a)  Net Interest Costs, (b) any
amount attributable to the  depreciation  of  tangible  assets or impairment of
shareholdings,   (c) any   amount  attributable  to  the  amortization   and/or
impairment of goodwill, intellectual property and other intangible assets, (d)
any amount attributable to net  write-offs  of tangible fixed assets, inventory
and  deferred  tax assets including but not limited  to  as  a  consequence  of
impairment tests  or restructuring measures and (e)  any amount attributable to
the provisions taken  for  the  Competition  Law  Liabilities and for any other
future competition law related fines.

       "Convert  Deposit  Account"  shall  mean  the  account  of  the  Company
established  with  Credit Suisse First Boston, Frankfurt  Branch  to  fund  the

                                       5

<PAGE>

repurchase of the Convertible  Bond,  over  which the Lenders are granted first
ranking and the Bridge Lenders, if any, are granted second ranking security.

       "Convert   Deposit   Account  Agreement"  shall   mean   the   agreement
establishing the Convert Deposit Account.

       "Convertible Bond(s)"  shall  mean,  collectively,  the 3.5% convertible
bonds issued by the Company in 2000 and due in 2005.

       "Dangerous  Substance" shall mean any radioactive emissions,  noise  and
any  natural  or  artificial  substance  (in  whatever  form)  the  generation,
transportation, storage,  treatment, use or disposal of which (whether alone or
in combination with any other  substance)  gives rise to a risk of causing harm
to  man  or any other living organism or damaging  the  Environment  or  public
health  or  welfare,  including  any  controlled,  special,  hazardous,  toxic,
radioactive or dangerous waste.

       "Debt  Issue"  shall  mean any issue after the Signing Date of public or
privately placed debt securities of any Group Member.

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

       "Dormant  Company" shall mean  each  Group  Member  (a) which  has  been
dormant since its incorporation or since the end of its previous financial year
and (b) the value  of  whose  total  gross assets is less than e100,000 (or its
equivalent in another currency or currencies).

       "Eligible  Purpose"  shall  mean  to   (a) fund   e125,300,000  (or  its
equivalent in another currency or currencies) into the Cartel  Deposit  Account
and/or  (b) fund  an  amount  sufficient  to  fund  the  principal and interest
(through maturity) of the Convertible Bonds (expected to be  e143,000,000) into
the Convert Deposit Account and/or (c) refinance amounts outstanding  under the
Existing Credit Agreement.

       "Employee  Plan"  shall  mean  an "employee benefit plan" as defined  in
Section 3(3) of ERISA, other than a Multiemployer  Plan,  which  is  maintained
for,  or under which contributions are made on behalf of, employees of  a  U.S.
Group Member or any ERISA Affiliate.

       "Environment"  shall  mean  all, or any of, the following media: the air
(including the air within buildings  and  the  air within other natural or man-
made  structures above or below ground), water (including  ground  and  surface
water) and land (including surface and sub-surface soil).

       "Environmental  Claim" shall mean any claim by any person (a) in respect
of any loss or liability  suffered or incurred by that person as a result of or
in connection with any violation  of  Environmental Law or (b) that arises as a
result of or in connection with Environmental Contamination and that could give
rise to any remedy or penalty (whether  interim  or final) that may be enforced
or  assessed  by  private  or  public legal action or administrative  order  or
proceedings.


                                       6

<PAGE>

       "Environmental Contamination" shall mean each of the following and their
consequences: (a) any release, discharge,  emission, leakage or spillage of any
Dangerous Substance at or from any site owned,  leased, occupied or used by any
Group  Member  into  any  part  of  the  Environment, (b) any  accident,  fire,
explosion or sudden event at any site owned,  leased,  occupied  or used by any
Group Member which is directly or indirectly caused by or attributable  to  any
Dangerous Substance or (c) any other pollution of the Environment.

       "Environmental   Law"  shall  mean  all  laws  (including  common  law),
regulations, directives, codes of practice, circulars, guidance notices and the
like  having legal effect  concerning  the  protection  of  human  health,  the
Environment,   the   conditions   of   the   work   place  or  the  generation,
transportation, storage, treatment or disposal of Dangerous Substances.

       "Environmental License" shall mean any permit,  license,  authorization,
consent or other approval required by any Environmental Law.

       "Equity Issue" shall mean any issue of shares by any Group Member or any
issue  or  grant  of rights to subscribe for shares in any Group Member,  other
than any issue of shares or rights to subscribe for shares under a stock option
or similar program  of the Company, whereby such issue or granting of rights is
funded through cash payments  provided  by  any  third  party not being a Group
Member.

       "ERISA" shall mean the U.S. Employee Retirement Income  Security  Act of
1974  or  any successor legislation to that Act and the regulations promulgated
and rulings issued under that Act or any such successor legislation.

       "ERISA Affiliate" shall mean any person that for purposes of Title I and
Title IV of  ERISA  and  section  412  of  the Code is a member of a U.S. Group
Member's controlled group, or under common control  with  a  U.S. Group Member,
within the meaning of section 414(b) or (c) of the Code.

       "ERISA Event" shall mean (a) any reportable event, as defined in section
4043 of ERISA, with respect to an Employee Plan, as to which PBGC  has  not  by
regulation  waived  the  requirement  of  section  403(a)  of  ERISA that it be
notified  within  30 days  of  the  occurrence of such event (provided  that  a
failure to meet the minimum funding standard  of  section  412  of  the Code or
section  302  of  ERISA  shall  be a reportable event for the purposes of  this
clause (a) regardless of the issuance of any waivers in accordance with section
412(d) of the Code) or the requirements  of subsection (1) of section 403(b) of
ERISA (taking into account subsection (2) of such section) are met with respect
to a contributing sponsor, as defined in section  4001(a)(13)  of  ERISA, of an
Employee Plan and an event described in paragraph (9), (10), (11) (12)  or (13)
of  section  4043(c)  of ERISA is reasonably expected to occur with respect  to
such Employee Plan within  the  following 30 days; (b) the filing under section
4041(c) of ERISA of a notice of intent  to  terminate  any Employee Plan or the
termination  of  any  Employee  Plan  under section 4041(c) of  ERISA;  (c) the
institution of proceedings under section  4042  of  ERISA  by  the PBGC for the
termination  of,  or  the appointment of a trustee to administer, any  Employee
Plan; (d) the failure to make a required contribution to any Employee Plan that
would result in the imposition  of an Encumbrance under section 412 of the Code
or  section 302 of ERISA; and (e) an  engagement  in  a  non-exempt  prohibited
transaction  within  the


                                       7
<PAGE>


meaning  of  section  4795 of the Code or  section  406 of ERISA  which upon the
occurrence  of any of the events  described  in clauses  (a) to (c)  (inclusive)
above could reasonably be expected to have a Material Adverse Effect.

       "EU  Competition Law Liabilities" shall mean the Original EU Competition
Law Liabilities and the Additional EU Competition Law Liabilities.

       "EU Competition Law Proceedings" shall mean the Existing Competition Law
Proceedings  initiated   by   the   competition  directorate  of  the  European
Commission.

       "Euro" or "e" shall mean the lawful currency of the member states of the
European Union that adopted a single  currency  in  accordance  with the Treaty
establishing  the  European  Community,  as  amended by the Treaty on  European
Union.

       "Eurodollar", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the LIBO Rate.

       "Event  of Default" shall have the meaning  assigned  to  such  term  in
Article VII.

       "Excess Cash Flow" shall mean, in respect of any financial year of the
Group, consolidated Cash Flow from Operating Activities, adding back any
amounts paid in respect of the US Competition Law Liabilities, the Canadian
Competition Law Liabilities, the EU Competition Law Liabilities to the extent
paid from the Cartel Deposit Account, and any civil lawsuits settled in 2004 up
to an amount of e3,000,000, less (a) Acquisitions and Capital Expenditure for
that financial year and (b) Amortization and Other Payments during that
financial year.

       "Exchange Notes" shall mean the high yield exchange notes issued or to
be issued by the Issuer in exchange for Bridge Loans, escrowed on the Closing
Date, and issued in accordance with the terms of the Bridge Loan and the
related Bridge Loan Documents; provided that such high yield exchange notes are
subject to the terms of, and issued in accordance with the provisions set forth
in the Intercreditor Agreement.

       "Exchange Notes Escrow Agent" shall mean the entity named as escrow
agent under the Exchange Notes Escrow Agreement.

       "Exchange Notes Escrow Agreement" shall mean the escrow agreement to be
dated the Closing Date, relating to the escrow of the Exchange Notes on the
Closing Date, among the Company, the Issuer, the Bridge Loan Agent, the
Exchange Notes Trustee and the Exchange Notes Escrow Agent.

       "Exchange Notes Indenture" shall mean the indenture governing the
Exchange Notes, to be dated the Closing Date, among the Issuer, the Exchange
Notes Trustee and the Subordinated Guarantors.

       "Exchange Notes Investors" shall mean the noteholders of the Exchange
Notes from time to time.

                                      8

<PAGE>

       "Exchange Notes Registration Rights Agreement" shall mean the
registration rights agreement, to be dated the Closing Date, relating to the
registration of the Exchange Notes with the United States Securities and
Exchange Commission.

       "Exchange Notes Security Agent" shall mean the entity or entities named
as security agent for the Exchange Notes Investors under the Exchange Notes.

       "Exchange Notes Trustee" shall mean The Bank of New York as the trustee
for the Exchange Notes Investors under the Exchange Notes.

       "Excluded  Taxes"  shall mean, with respect to the Administrative Agent,
any Lender or any other recipient of any payment to be made by or on account of
any obligation of the Borrower  hereunder,  (a)  income,  franchise  or similar
taxes imposed on (or measured by) its net income by the United States or by the
jurisdiction  under  the laws of which such recipient is organized or in  which
its principal office is  located  (or,  in the case of any Lender, in which its
applicable lending office is located), (b) any  branch profits taxes imposed by
the  United  States  or  any  similar  tax  imposed by any  other  jurisdiction
described in clause (a) above and (c) in the  case  of  a Foreign Lender (other
than  as  an  assignee  pursuant  to  a request by the Borrower  under  Section
2.21(a)), any withholding tax that (i)  is  imposed  on amounts payable to such
Foreign  Lender  at  the  time  such Foreign Lender becomes  a  party  to  this
Agreement (or designates a new lending  office), except to the extent that such
Foreign  Lender  (or  its  assignor, if any)  was  entitled,  at  the  time  of
designation of a new lending  office  (or  assignment),  to  receive additional
amounts  from  the  Borrower with respect to such withholding tax  pursuant  to
Section 2.20(a) or (ii) is  attributable to, or would not be payable other than
for, such Foreign Lender's failure to comply with Section 2.20(e).

       "Existing Competition  Law  Proceedings"  shall mean the competition law
related litigation, civil lawsuits and/or other proceedings  of  or  before any
court or agency set out in Schedule 2.

       "Existing Credit Agreement" shall mean the Term Facilities and Revolving
Credit  Agreement  dated  December 20,  2002,  among  the Company, the entities
listed in Part I of Schedule 1 to that agreement, Deutsche  Bank  AG,  Dresdner
Kleinworth  Wasserstein,  the Investment Banking Division of Dresdner Bank  AG,
the financial institutions  listed  in  Part II of Schedule I to that agreement
and Deutsche Bank Luxembourg S.A.

       "Existing Indebtedness" shall mean  the  Financial  Indebtedness  of the
Group outstanding on the Signing Date as set forth in Schedule 3.

       "European Facility Agent" shall mean Deutsche Bank Luxembourg S.A.

       "Facility"  shall mean the senior secured credit facility documented  by
this Agreement.

       "Federal Funds  Effective  Rate"  shall  mean, for any day, 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 on
the next succeeding  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 the day for such

                                       9

<PAGE>

transactions  received  by the  Administrative  Agent from three  Federal  funds
brokers of recognized standing selected by it.

       "Fee Letter" shall mean  the  letter  agreement dated on or prior to the
Signing Date between the Company and the Administrative  Agent, setting out the
Administrative Agent Fees.

       "Fees" shall mean the Commitment Fees and the Administrative Agent Fees.

       "Finance  Documents"  shall  mean  this  Agreement,  the  German  Credit
Agreement, the Intercreditor Agreement, any Fee Letter, any Security  Document,
the  Convert  Deposit  Account Agreement, the Cartel Deposit Account Agreement,
any Guarantor Accession Letter, any Hedging Agreement, any Transfer Certificate
(as defined in the German  Credit  Agreement),  any  Subfacility  Document  (as
defined  in  the  German Credit Agreement) and any other document designated as
such by the Administrative  Agent and the Company, and "Finance Document" shall
mean any of them.

       "Finance Parties" shall  mean the Documentation Agent (as defined in the
German  Credit  Agreement), the Administrative  Agent,  the  European  Facility
Agent, the Security  Agent,  the Lead Arrangers, an Issuing Bank, a Subfacility
Bank (as defined in the German  Credit Agreement), a Hedge Counterparty and the
Senior Lenders and "Finance Party" means any of them.

       "Financial Covenants" shall  mean  the covenants in Sections 6.20, 6.21,
6.22,  6.23, 6.24, 6.25 and 6.26 (together with  the  related  calculation  and
testing conventions in Sections 6.27 and 6.28).

       "Financial  Indebtedness"  shall mean any indebtedness for or in respect
of: (a) moneys borrowed and debt balances  at  banks,  (b) any amount raised by
acceptance under any acceptance credit facility, (c) any amount raised pursuant
to  any note purchase facility or the issue of bonds, notes,  debentures,  loan
stock  or any similar instrument, (d) the amount of any liability in respect of
any lease  or  hire  purchase  contract  which  would,  in  accordance with the
Relevant   GAAP   or   IFRS,   be  treated  as  a  finance  or  capital  lease,
(e) receivables sold or discounted  (other  than  any receivables to the extent
they are sold on a non-recourse basis), (f) any amount  raised  under any other
transaction  (including  any  forward  sale  or purchase agreement) having  the
commercial effect of a borrowing, (g) any derivative  transaction  entered into
in connection with protection against or benefit from fluctuation in  any  rate
or  price  (and, when calculating the value of any derivative transaction, only
the marked to  market  value  shall  be  taken  into account), (h) any counter-
indemnity  obligation in respect of a guarantee, indemnity,  bond,  standby  or
documentary  letter  of  credit  or  any  other  instrument issued by a bank or
financial institution, (i) any amount raised by the issue of redeemable shares,
(j) any amount of any liability under an advance or deferred purchase agreement
if one of the primary reasons behind the entry into  such agreement is to raise
finance, (k) (without double counting) the amount of any  liability  in respect
of   any   guarantee  or  indemnity  for  any  of  the  items  referred  to  in
paragraphs (a)  to (j) above; however, for the avoidance of doubt not including
any deferred payment  arrangements  of 180 days or less with trade creditors as
customary in the industry and (l) (without  double  counting) the amount of any
liability  of  third  parties  in respect of any of the items  referred  to  in
paragraphs (a) to (j) above, secured over assets of any Group Member.


                                       10
<PAGE>

       "Financial Quarter" shall  mean  each  of those periods of approximately
thirteen weeks ending on any Quarter Date in each financial year.

       "Foreign Lender" shall mean any Lender that  is organized under the laws
of  a  jurisdiction  other  than  that in which the Borrower  is  located.  For
purposes of this definition, the United  States,  each  State  thereof  and the
District of Columbia shall be deemed to constitute a single jurisdiction.

       "Funding Loans" shall mean one or more loans from the Issuer (as lender)
to the Company (as borrower), in an amount equal to the principal amount of the
High Yield Notes which is made subject to the terms of, and in accordance with,
the Intercreditor Agreement.

       "German  Credit  Agreement" shall mean the Term Facilities and Revolving
Credit Agreement dated February  3, 2004 among the Company, the entities listed
in  Part  I  of  Schedule  1 to that agreement,  Credit  Suisse  First  Boston,
Bayerische Landesbank, Deutsche  Bank Luxembourg S.A., Dresdner Bank AG and the
financial institutions listed in Part II of Schedule I of that agreement.

       "German Facilities" shall mean  the  senior  secured  credit  facilities
documented by the German Credit Agreement.

       "Government Agency" shall mean (a) a government or government department
or  other  body,  (b) a  governmental, semi-governmental or judicial person  or
(c) a person (whether autonomous or not) who is charged with the administration
of a law under statute or the rules of any stock exchange.

       "Granting Lender" shall  have  the  meaning  assigned  to  such  term in
Section 10.04(i).

       "Group" shall mean the Company and its Subsidiaries from time to time.

       "Group  Member"  shall mean the Company and any Subsidiary from time  to
time.

       "Group Structure Chart" shall mean a group structure chart of the Group,
in agreed form, delivered  by  the Company to the Administrative Agent pursuant
to Article IV.

       "Guaranteed Party" shall  have  the  meaning  assigned  to  such term in
Section 9.01.

       "Guarantor" shall mean an Original Guarantor or an Additional Guarantor,
unless it has ceased to be a Guarantor in accordance with this Agreement.

       "Guarantor Accession Letter" shall mean a document substantially  in the
form set out in Exhibit D.

       "Hedge  Counterparty"  shall  mean  any  financial institution that is a
party to an outstanding Hedging Agreement with any  Group  Member  from time to
time and entitled to the same security rights as the Finance Parties under this
Agreement after accession to the Security Trust Agreement upon notification  to
the  Security  Agent by the Company pursuant to the terms of the Security Trust
Agreement. Such  Hedge  Counterparty will

                                       11
<PAGE>

benefit  from  the   Transaction   Security  up  to  its  Hedge   Counterparty's
Participation  Amount as notified by the Company.  The Security  Agent will keep
updated  lists  of  the  Hedging   Counterparties  and  their  respective  Hedge
Counterparty's  Participation  Amounts by means of the list of  Secured  Parties
maintained pursuant to the Security Trust Agreement.

       "Hedge Counterparty's Participation Amount" has the meaning ascribed  to
such term in the Security Trust Agreement.

       "Hedging  Agreements"  shall mean each of the agreements entered into or
to be entered into between certain  Group  Members and hedge counterparties for
the  purpose  of  hedging  interest  rate liabilities  and  currency  risks  in
accordance with Section 5.01(n).

       "High Yield Indenture" shall mean  the  indenture  under  which the High
Yield Notes are issued.

       "High Yield Investors" shall mean the High Yield Trustee and the holders
of the High Yield Notes from time to time.

       "High Yield Notes" shall mean the 8- 1/2% Senior Notes due  2012  in  an
aggregate  principal  amount  of  e270,000,000  issued  or  to be issued by the
Issuer, provided that such high yield notes are issued in accordance  with  the
Intercreditor Agreement.

       "High  Yield  Trustee"  shall  mean  The Bank of New York as the trustee
under the High Yield Indenture.

       "Hitco Options" shall mean the option  exercisable  under a shareholders
agreement  between  Hitco  Carbon  Composites,  Inc.  and  Paul W.  Pendorf  as
described  in  more  detail  in the annual report on Form 20-F filed  with  the
Securities and Exchange Commission  on  July  1,  2002,  provided that, for the
avoidance of doubt, all such options exist in respect to shares in Hitco Carbon
Composites, Inc. only and there are no options relating to  the  shares  of the
Borrower.

       "Holding  Company"  shall mean, in relation to a company or corporation,
any other company or corporation in respect of which it is a Subsidiary.

       "IFRS"  shall  mean  international   financial  reporting  standards  as
promulgated by the International Accounting Standards  Board  and  consistently
applied.

       "Indemnified Taxes" shall mean Taxes other than Excluded Taxes.

       "Information  Memorandum"  shall  mean the document dated January  2004,
concerning the Company and the Group which, at the Company's request and on its
behalf, has been prepared in relation to this  transaction,  agreed between the
Lead Arrangers and the Company, approved by the Company and distributed  by the
Lead Arrangers prior to the Signing Date to the Lenders.

       "Insurance  Proceeds"  shall  mean  the  total proceeds of any insurance
claim  intended  to  compensate  for  damage to any asset  or  interruption  of
business  received by any Group Member,  after  deducting  (a)  any  reasonable
out-of-pocket  expenses  incurred  by  any  Group  Member in relation to such a
claim, (b) proceeds relating to third party

                                       12

<PAGE>

claims  which are  applied  towards  meeting  such claims and (c) Taxes paid (or
reasonably  estimated  to be  payable)  by any Group  Member in  respect of such
claims.

       "Intellectual  Property"  shall  mean  any  and all rights and interests
existing  now  or  in the future in any part of the world  in  or  relating  to
registered and unregistered  trade  marks  and  service  marks,  domain  names,
patents,  registered  designs,  utility  models,  trade  names, business names,
titles,  registered  or  unregistered copyrights in published  and  unpublished
works, unregistered designs,  inventions  registered or unregistered, data base
rights, know-how, any other intellectual property  rights  and any applications
for any of the foregoing and any goodwill therein.

       "Intellectual  Property  Rights"  shall  mean any Intellectual  Property
owned by any Group Member.

       "Intercreditor  Agreement"  shall  mean  the  intercreditor   agreement,
substantially in the form set out in Exhibit F among, inter alia, the  Security
Agent,  the  Company,  the Obligors, the Issuer, the Hedge Counterparties,  the
Secured Creditors and (upon  accession)  the High Yield Trustee and the Bank of
New  York, as trustee for the holders of the  Convertible  Bonds,  setting  out
certain subordination, delayed maturity and blockage provisions in favor of the
Senior Lenders.

       "Interest Coverage Ratio" shall mean, for any Relevant Period, the ratio
of Consolidated EBITDA for such period to Net Interest Expense for such period.

       "Interest  Payable"  shall  mean, in respect of any Relevant Period, the
aggregate amount of interest (including  the  interest  element  of leasing and
hire  purchase  payments),  expenses  (cash  or  non-cash),  commission,  fees,
discounts and other finance charges of any nature payable (whether or not paid,
payable  or  capitalized) by any Group Member (including any commission,  fees,
discounts and  other  finance  charges  payable  by  any Group Member under any
interest rate hedging arrangement) but after deducting  any  commission,  fees,
discounts  and  other  finance charges receivable by any Group Member under any
interest rate hedging arrangement,  and  deducting  any  fees and costs paid in
connection  with  the transactions contemplated by this Agreement,  the  German
Credit Agreement, the Bridge Loan and the High Yield Notes.

       "Interest Payment Date" shall mean (a) with respect to any ABR Loan, the
last Business Day of  each  March,  June,  September and December, and (b) with
respect to any Eurodollar Loan, the last day  of the Interest Period applicable
to the Borrowing of which such Loan is a part and,  in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
that would have been an Interest Payment Date had successive  Interest  Periods
of  three  months' duration been applicable to such Borrowing and, in addition,
the date of  any  prepayment  of  a  Eurodollar  Borrowing  or  conversion of a
Eurodollar Borrowing to an ABR Borrowing.

       "Interest Period" shall mean, with respect to any Eurodollar  Borrowing,
the  period  commencing  on  the  date  of  such  Borrowing  and  ending on the
numerically  corresponding  day  (or,  if there is no numerically corresponding
day,  on  the  last day) in the calendar month  that  is  one,  two,  three  or
six months thereafter,  as  the  Borrower may elect; provided, however, that if
any Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next  succeeding  Business Day

                                       13
<PAGE>

unless such next succeeding  Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day.
Interest shall accrue from and including the first day of an Interest  Period to
but excluding the last day of such Interest  Period.  For purposes  hereof,  the
date of a Borrowing  initially shall be the date on which such Borrowing is made
and  thereafter  shall be the  effective  date of the most recent  conversion or
continuation of such Borrowing.

       "Intra-Group Loan" shall mean any loan between Group  Members other than
the Funding Loan.

       "Intra-Group Loan Document" shall mean any document, in the agreed form,
setting out the terms on which an Intra-Group Loan is to be made  available  in
accordance with the terms of this Agreement.

       "Issuer"  shall  mean  (a) SGL  Carbon  Luxembourg S.A., a wholly-owned,
special purpose direct Subsidiary of the Company  incorporated  in  Luxembourg,
formed to issue the High Yield Notes or (b) any other issuer of the High  Yield
Notes.

       "Issuing Banks" shall mean an "Issuing Bank" under and as defined in the
German Credit Agreement.

       "Joint  Venture" shall mean any joint venture entity, whether a company,
unincorporated firm,  undertaking, association, joint venture or partnership or
any other entity.

       "Lead Arrangers" shall mean Credit Suisse First Boston, Deutsche Bank AG
and Dresdner Bank AG.

       "Lenders" shall  mean  (a)  the persons listed on Schedule 1 (other than
any such person that has ceased to be  a party hereto pursuant to an Assignment
and Acceptance) and (b) any person that  has  become a party hereto pursuant to
an Assignment and Acceptance.

         "Leverage Ratio" shall mean, for any Relevant  Period,  the  ratio  of
Total Net  Debt  on the last day of that period to Consolidated EBITDA for that
period.

       "LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for any
Interest Period, the  rate  per annum determined by the Administrative Agent at
approximately 11:00 a.m., London  time,  on  the date that is two Business Days
prior to the commencement of such Interest Period  by  reference to the British
Bankers' Association Interest Settlement Rates for deposits in U.S. dollars (as
set forth by the Bloomberg Information Service or any successor  thereto or any
other service selected by the Administrative Agent which has been  nominated by
the  British Bankers' Association as an authorized information vendor  for  the
purpose  of  displaying such rates) for a period equal to such Interest Period;
provided that,  to  the  extent  that  an  interest  rate  is not ascertainable
pursuant to the foregoing provisions of this definition, the  "LIBO Rate" shall
be the interest rate per annum determined by the Administrative Agent to be the
average  of the rates per annum at which dollar deposits are offered  for  such
relevant Interest  Period  to  major  banks  in  the London interbank market in
London, England by the

                                       14

<PAGE>

Administrative  Agent at approximately 11:00 a.m. (London time) on the date that
is two Business Days prior to the beginning of such Interest Period.

       "Loans"  shall  mean  the  Loans  made  by  the  Lenders to the Borrower
pursuant to this Agreement.  Each Loan shall be a Eurodollar  Loan  or  an  ABR
Loan.

       "Management  and Employee Benefit Plans" shall mean (a) the stock option
plan, the matching shares  plan,  the  share  bonus plan and the employee share
ownership plan, each relating to shares in the  Company and each adopted in the
ordinary shareholders' meeting of the Company on  April 27,  2000,  and (b) the
stock option plan relating to shares in Hitco Carbon Composites, Inc.,  adopted
in January 2002, each as described in more detail in the annual report on  Form
20-F  filed  by the Company with the U.S. Securities and Exchange Commission on
July 1, 2002.

       "Material  Adverse Change" shall mean any event or circumstance that has
had or could reasonably be expected to have a Material Adverse Effect.

       "Material Adverse  Effect"  shall  mean  a  material  adverse  effect on
(a) the  business,  operations,  assets, condition (financial or otherwise)  or
prospects  of the Group taken as whole;  (b) the  ability  of  any  Obligor  to
perform and  comply  with  its  obligations under any Finance Document; (c) the
validity, legality or enforceability  of  any Finance Document or any rights or
remedies of any Finance Party under any Finance  Document; or (d) the validity,
legality or enforceability of any Security created  pursuant  to  the  Security
Documents or on the priority or ranking of any such Security.

       "Material  Subsidiary"  shall  mean (a) any company listed in Schedule 4
and (b) any Group Member having more than  5%  of EBITDA and/or turnover of the
Group  by  reference  to the most recent respective  annual  audited  financial
statements.  For purposes of this definition:

               (i) the (A) turnover or (B) EBITDA of a  Subsidiary  of the Group
          will be determined from its financial statements upon which the latest
          audited financial statements of the Group have been based;

               (ii) if a company  becomes a Group Member after the Closing Date,
          the (A) turnover or (B) EBITDA of that company will be  determined  as
          set out in its latest audited  financial  statements as at the date it
          becomes  a Group  Member  and  based  on the most  recently  available
          financial  information of the Group, adjusted to give pro forma effect
          to the acquisition of such company;

               (iii)  in  relation  to a Group  Member  which  has  acquired  or
          disposed  of a company or business  the (A)  turnover or (B) EBITDA of
          that Group Member will be determined from its latest audited financial
          statements adjusted to reflect such acquisition or disposals; and

               (iv) if a Material  Subsidiary  disposes of all or  substantially
          all of  its  assets  to  another  Subsidiary  of the  Group,  it  will
          immediately cease to be a Material Subsidiary and the other Subsidiary
          (if it is not already) will immediately become a Material  Subsidiary.
          The subsequent financial statements of such Subsidiaries

                                       15

<PAGE>

          and the Group will be used for  determining the status of the relevant
          Subsidiaries as Material Subsidiaries.

If there is a dispute as to whether or not a company is a Material Subsidiary,
a certificate of the Company's appointed auditors will be, in the absence of
manifest error, conclusive.

       "Maturity Date" shall mean December 31, 2009.

       "Moody's" shall mean Moody's Investors Service, Inc.,  or  any successor
thereto.

       "Multiemployer  Plan"  shall  mean a "multiemployer plan" as defined  in
section 4001(a)(3) of ERISA, maintained  or  contributed  to for employees of a
U.S. Group Member or any ERISA Affiliate.

       "Net  Interest  Costs"  shall  mean,  for any Relevant Period,  Interest
Payable for such period, but after deducting any  non-cash  interest,  interest
receivable  or  accrued  during  such  period  by  any Group Member on any cash
deposit or bank account or on any Cash Equivalents.

       "Net Interest Expense" shall mean Net Interest Costs less (a) imputed or
actual interest on the U.S. Department of Justice fines and interest accrued or
imputed  interest  on  European  Commission  fines,  (b) interest   on  pension
provisions  and (c) amortization of capitalized debt financing costs,  in  each
case accrued or recognized during such period.

       "Net Proceeds"  shall  mean, in relation to (a) any disposal of an asset
by a Group Member, the total proceeds  of  such disposal received by such Group
Member, after deducting (i) any out-of-pocket  costs  and  expenses incurred by
any Group Member in respect of such disposal, (ii) the unpaid  balance  on  the
date of such disposal of any Permitted Indebtedness which must be repaid by the
seller  on  such disposal (together with any premium, interest or fees required
to be paid in  connection therewith), (iii) Taxes paid (or reasonably estimated
to be payable) by any Group Member in connection with such disposal and (iv) in
the case of a disposal effected by a Group Member other than the Borrower, such
provision as is  reasonable  for  all costs and Taxes incurred by the Group and
fairly attributable to upstreaming the cash proceeds or making any distribution
in connection with such proceeds to  enable  them  to  reach  the  Company or a
borrower  under  the  German Credit Agreement by such means as results  in  the
lowest possible liability  in  respect of such costs and Taxes and (b) any Debt
Issue and/or any Equity Issue by  a  Group  Member,  the total proceeds of such
issue  received  by  such  Group Member, after deducting (i) any  out-of-pocket
costs and expenses incurred  by  any  Group Member in respect of such issue and
(ii) Taxes paid (or reasonably estimated  to be payable) by any Group Member in
connection with such issue.

       "Net  Worth"  shall  mean the shareholders'  equity,  including  capital
stock, additional paid-in capital  (other than shares which are expressed to be
redeemable),  retained  earnings and minority  interest  as  reflected  in  the
relevant consolidated balance sheet of the Group, adjusted (a) to disregard any
capital gains and losses  from  disposals made after September 30, 2003, (b) to
disregard the impacts of the conversion  of  the relevant amounts in respect of
any non-German Subsidiaries from the original  reporting  currency  into  Euro,
(c) to  disregard  impairments  and other write-offs in respect of goodwill and
other intangible assets and (d) to  disregard  movements on deferred tax


                                       16

<PAGE>
assets  resulting  from  extraordinary  items to the extent the same occur after
September  30,  2003.  For the  purpose  of this  definition,  adjustments  made
pursuant to clauses  (b) and (c) over the  lifetime  of the  Facility  shall not
exceed *60,000,000 in the aggregate.

       "Obligor" shall mean the Borrower, the Company and each other Guarantor.

       "Original EU Competition Law Liabilities" shall mean  the  fines imposed
on  the  Company  or  any  Group  Member by the competition directorate of  the
European Commission in the amounts  of  e80,200,000 and e27,750,000 in relation
to the EU Competition Law Proceedings.

       "Original Guarantor" shall mean the  companies  listed  in Schedule 5 as
original guarantors.

       "Other  Taxes"  shall  mean  any  and  all  present  or future stamp  or
documentary  taxes  or any other excise or property taxes, charges  or  similar
levies arising from any  payment  made  under  any Finance Document or from the
execution,  delivery  or  enforcement of, or otherwise  with  respect  to,  any
Finance Document.

       "PBGC" shall mean the  U.S. Pension Benefit Guaranty Corporation, or any
entity succeeding to all or any of its functions under ERISA.

       "Perfection Requirements"  shall  mean  the  execution  of  any Security
Document  and  the making of appropriate registrations, transfers of possession
or endorsements  of  the Security Documents as specifically contemplated by any
legal opinion to be delivered in accordance with Article IV.

       "Permitted Acquisition" shall mean Acquisitions (a) made in the ordinary
course  of  business;  and/or   (b) where   the   consideration  for  all  such
Acquisitions in the aggregate does not exceed e10,000,000 (or its equivalent in
another currency or currencies) per annum, provided  that such limitation shall
not apply as long as (i)  the Leverage Ratio (as tested  quarterly  against the
Company's  latest  consolidated financial statements on a four quarter  rolling
basis)  will  be  less  than  3.0:1.0;  (ii) on  a  pro forma  basis  for  such
Acquisition the Leverage Ratio is at least 0.25 lower than the applicable ratio
set out opposite the  relevant  Quarter Date in Section 6.22 and (iii) there is
at  least  e10,000,000 of unused commitments,  available  under  the  Revolving
Credit Facility;  and/or  (c) where the consideration for all such Acquisitions
in aggregate does not exceed 25% of the Net Proceeds of any Equity Issue (other
than the Rights Issue) realized after the Signing Date; provided that where any
assets are so acquired by the relevant Group Member such assets are not subject
to any material liabilities or to Security other than Permitted Security.

       "Permitted Disposal"  shall  mean  (a) disposals  of  inventory  made on
customary  terms  in  the  ordinary  course of trading of the disposing entity,
(b) disposals of assets in exchange for  other assets comparable or superior as
to type, value and quality, (c) disposals  between  Group Members provided that
if  the assets disposed of are pledged or assigned in  favor  of  the  Security
Agent they remain subject to the same or equivalent security after the disposal
and further  provided  that  this  clause (c)  will not permit a disposal by an
Obligor or its Subsidiary to a Group Member which  is  not  an  Obligor  or its
Subsidiary,  (d) disposals on arm's length terms of any surplus or obsolete  or
worn-out assets  which in the reasonable opinion of the Group Member making the
disposal are not

                                       17

<PAGE>

required for the efficient  operation of the business of the Group as a whole or
by any  Group  Member,  (e)  disposals  of Cash  Equivalents,  other  than  Cash
Equivalents  deposited  in the  Convert  Deposit  Account or the Cartel  Deposit
Account, on arm's length terms for Cash or in exchange for Cash Equivalents, (f)
disposals of Cash,  other than Cash deposited in the Convert  Deposit Account or
the Cartel Deposit Account,  where such disposal is not otherwise  prohibited by
the  Finance  Documents,  (g)  disposals  constituted  by  the  creation  of any
Permitted   Security,   (h)  a  sale  or  securitization  of  receivables  on  a
non-recourse  basis  only to the extent  that it is entered  into with the prior
written  consent of the Required  Lenders,  such consent not to be  unreasonably
withheld,  (i) any  disposal  of land  and/or  buildings  of SGL Carbon AG, Werk
Ringsdorff,  Werksteil Nord in Bonn, relating to the real estate registered with
Amtsgericht Bonn,  Grundbuchamt  Lannesdorf,  Blatt 01105, Flur 2, Flurst{u"}cke
972,  968,  967,  laufende  Nummer 3, 4 and 5,  Amtsgericht  Bonn,  Grundbuchamt
Muffendorf,  Blatt 0488, Flur 3, Flurst{u"}cke  418/69,  1127, 1217, 1276, 1279,
laufende  Nummer 2, 8, 9, 10, 12, (j) disposals of Cash or Cash  Equivalents  in
the Convert Deposit Account to purchase Convertible Bonds in the Tender Offer or
in the open  market  (at a price no higher  than par)  after  completion  of the
Tender  Offer,  and to redeem or repay the  Convertible  Bonds at maturity,  (k)
disposals of Cash or Cash  Equivalents in the Cartel Deposit  Account to satisfy
the Additional EU  Competition  Law  Liabilities  and the U.S.  Competition  Law
Liabilities;  or  (l)  disposals  where  the  higher  of  the  market  value  or
consideration receivable (when aggregated with the higher of the market value or
consideration  receivable for any other sale, lease, transfer or other disposal,
other  than any  permitted  under  clauses  (a) to (k)  above)  does not  exceed
e25,000,000  (or its  equivalent  in  another  currency  or  currencies)  in any
financial year.

       "Permitted  Guarantees  and Contingent Liabilities" shall  mean  (a) any
guarantees  and  indemnities  required   by   the  Finance  Documents,  (b) any
guarantees and indemnities given by any Group Member  in the ordinary course of
and  on  terms  customary  in  its  business  in  respect  of  obligations  not
constituting Financial Indebtedness, (c) any guarantees constituting  Permitted
Indebtedness,  (d) any  guarantees  issued  by  any Group Member in respect  of
liabilities of an Obligor, or a Subsidiary of an  Obligor  which are secured by
any  Security  specified  in  the  form  of Security Trust Agreement,  (e)  any
guarantee or indemnity given by any Group Member for the benefit of the lenders
under  the  German  Credit  Agreement, provided  that  the  same  guarantee  or
indemnity, ranking equally, has been or will concurrently therewith be provided
for the benefit of the Lenders,  (f)  any  guarantee  for  the  benefit  of the
Subordinated  Creditors,  provided  that  a guarantee substantially on the same
terms  (other  than  with  respect  to  its subordination)  has  been  or  will
concurrently therewith be issued for the benefit of the Senior Lenders and that
such  Subordinated  Guarantee is provided subject  to  the  terms  of,  and  in
accordance with, the Intercreditor Agreement, (g) any guarantee for the benefit
of the holders of the  Convertible  Bonds,  provided  that  the same guarantee,
ranking equally, has been or will concurrently therewith, be  provided  for the
benefit  of  the  Subordinated  Creditors  and  that such guarantee is provided
subject to the terms of, and in accordance with,  the  Intercreditor  Agreement
and  (h)  any  guarantees  and  indemnities  to  which the Administrative Agent
(acting on the instructions of the Required Lenders) shall have given its prior
written consent.

       "Permitted   Indebtedness"   shall   mean  any  Financial   Indebtedness
(a) arising  under  or  permitted  pursuant  to the  Finance  Documents  in  an
aggregate  principal  amount  at  any  time  outstanding   not   in  excess  of
$116,000,000 (in respect of this Agreement) and

                                       18


<PAGE>

e227,000,000  (in  respect  of  the  other  Finance  Documents),   (b)  that  is
subordinated on terms  acceptable to the Required  Lenders (acting  reasonably),
(c) pursuant to the Convertible  Bonds,  (d) arising under Permitted  Loans, (e)
arising under Permitted Guarantees and Contingent Liabilities, (f) arising under
and  permitted  by Section 6.14 and Section  5.01(n),  (g) to which the Required
Lenders shall have given their prior written consent, (h) incurred under leasing
arrangements  existing  at the  Signing  Date in an amount not  exceeding  a net
present value of e5,000,000 at any time,  (i) incurred for leasing  arrangements
over assets in the ordinary  course of business in an amount not exceeding a net
present value of  e5,000,000 at any time,  (j) incurred by the Issuer in respect
of the High Yield Notes and the Exchange Notes, (k) incurred by an Obligor other
than the Company, individually in an amount not exceeding e2,000,000 at any time
and in aggregate in an amount not exceeding  e20,000,000  at any time (which may
also be guaranteed  by the Company),  (l) incurred by a Group Member that is not
an Obligor,  individually in an amount not exceeding  e5,000,000 at any time and
in aggregate in an amount not exceeding  e30,000,000 at any time (which may also
be guaranteed by the Company), (m) incurred by the Company under the Bridge Loan
or the Funding Loan,  provided that such Financial  Indebtedness is subordinated
pursuant to the Intercreditor Agreement to the obligations under this Agreement,
(n) in the  case  of the  acquisition  of  Fortafil,  an  amount  not  exceeding
e10,000,000 of state  subsidized  Financial  Indebtedness  of such company,  (o)
incurred with banks or financial  institutions  providing  lines for  commercial
letters of credit and guarantees  (including  confirmations and avals) (but only
insofar as they are not securing Financial Indebtedness in excess of e10,000,000
in the aggregate (or its equivalent in another  currency or currencies)) for the
Group and having registered the maximum amount and tenor of such lines (with the
approval of the Company)  with the Security  Agent  provided  that the aggregate
amount of such lines shall not at any time be in excess of  e90,000,000  (or its
equivalent  in  another  currency  or  currencies),  which  banks  or  financial
institutions  are at the Signing  Date or at any time  thereafter a creditor and
accede  to  the  Security  Trust  Agreement  and  therefore   benefit  from  the
Transaction Security as a Secured Creditor provided that any such creditor shall
cease to be a Secured Creditor if (i) the Company so notifies the Security Agent
and (ii) such Secured  Creditor  confirms in writing to the Security  Agent that
all claims in respect to the relevant Financial  Indebtedness incurred have been
satisfied in full,  (p) incurred by SGL Carbon Polska and SGL Angraph  SP.ZO.O.,
both Poland, in an aggregate amount of Polish Zloty  60,000,000,  granted by BNP
Paribas  Bank Polska S.A.,  Poland,  pursuant to the credit  facility  agreement
dated December 6, 2000, as amended by an amendment  agreement dated December 18,
2003,  providing  for a facility not maturing  before  December 30, 2008,  under
which no  repayments  are to be made prior to such  maturity  date  (other  than
Polish Zloty  10,000,000 to be repaid on December 31, 2007,  and (q) not falling
within clauses (a) to (p) above provided that the aggregate  amount of Financial
Indebtedness  falling within this clause (q) does not exceed e25,000,000 (or its
equivalent in another  currency or currencies) at any time and provided  further
that at no time shall the  aggregate  amount of Financial  Indebtedness  falling
within  clauses  (k),  (l) and (o) exceeds  e50,000,000  (or its  equivalent  in
another currency or currencies).

       "Permitted Joint Ventures" shall mean Joint Ventures where the aggregate
amount  of  net  assets  transferred  to  the  Joint  Venture  does  not exceed
e10,000,000 per annum.

                                       19

<PAGE>

       "Permitted  Loans"  shall  include  (a)  trade credit given by any Group
Member in the ordinary course of and on terms customary  in  its  business, (b)
any  loans to employees under benefit schemes provided that such loans  do  not
exceed e5,000,000 at any time, (c) any Intra-Group Loan, provided that (i) such
Intra-Group Loan is specified in the Group Structure Chart, (ii) no Security is
taken  by the Intra-Group lender in respect to such Intra-Group Loan, (iii) the
borrower  of  such  Intra-Group  Loan  is  an Obligor and the lender is another
Obligor  or,  provided  that  the  claims  under  such   Intra-Group  Loan  are
subordinated  to  the  obligations under the Senior Facilities  pursuant  to  a
written agreement to that  effect,  in  form  and substance satisfactory to the
Administrative Agent, a non-Obligor, (iv) the borrower of such Intra-Group Loan
is a non-Obligor, the lender is an Obligor and  the aggregate outstandings from
such Intra-Group Loans do not exceed e40,000,000 at any time or (v) neither the
borrower nor the lender of such Intra-Group Loan  are Obligors, (d) the Funding
Loans and (e) any loans to which the Required Lenders  shall  have  given their
prior written consent.

       "Permitted   Merger"   shall  mean  any  merger  between  the  following
companies, provided that any Security  granted  by  the  merged companies shall
continue to be fully effective (where applicable) after the merger and provided
further  that  the  surviving  company  shall  become an Obligor  prior  to  or
concurrently  with  the  effectiveness of the merger  in  case  of  any  merger
involving one or more Obligors:

             (a)  RK Carbon  International  Ltd.,  Wilmslow,  England,  UK,  RK
Technologies International  Ltd.,  Wilmslow, England, UK, and SGL Technic Ltd.,
Muir of Ord, Scotland, UK; and

             (b) SGL Acotec (Wuhan)  Co.  Ltd.,  Wuhan/China  and  NANTONG  SGL
NANBAO  Graphite  Equipment Co. Ltd., Nantong/China, and shall also include any
merger between non-Obligors  to  the extent the shares in such non-Obligors are
not encumbered in favor of the Finance Parties.

       "Permitted Security" shall  mean  (a) any Security granted in connection
with  the  Original  Financing  Documents (as  defined  in  the  German  Credit
Agreement), provided that all such  Security  shall  be  released  on or before
March 31, 2004 and the Security listed in Schedule 7 except to the extent  that
the principal amount of obligations secured by that Security exceeds the amount
stated in that Schedule; (b) any netting or set-off arrangement entered into by
any  Group  Member  in  the ordinary course of its banking arrangements for the
purpose of netting debit  and  credit  balances (but not any netting or set-off
relating to such hedging agreement in respect  of  cash collateral or any other
Security except as otherwise permitted hereunder); (c) any  Security arising by
operation of law and in the ordinary course of trading other  than by reason of
default,  provided  that  any  such Security (other than a landlord's  lien  or
contractor's lien existing in respect  of  agreements made prior to the Signing
Date) is discharged within ten days after having  arisen; (d) any Security over
any assets of any Group Member (if any), existing at the Signing Date, provided
that the amount thereby secured is not increased and further provided that such
Security shall be released as soon as possible but  in  any  event  prior to or
concurrently  with  the  Closing  Date; (e) any Security over or affecting  any
asset acquired by a Group Member after  the  Signing  Date  and existing at the
time  of  acquisition  of  such asset, if (i) the Security was not  created  in
contemplation of the acquisition  of  that  asset  by  a Group Member, (ii) the
principal amount secured has not been increased in contemplation  of  or  since
the  acquisition  of  that  asset  by  a Group

                                       20

<PAGE>

Member and (iii) the  Security is removed or  discharged  within 3 months of the
date of acquisition of such asset;  (f) any Security over or affecting any asset
acquired by any company which becomes a Group Member after the Signing Date, and
existing on the date on which the relevant  company  becomes a Group Member,  if
(i) the Security was not created in  contemplation  of the  acquisition  of that
company,   (ii)  the  principal   amount  secured  has  not  been  increased  in
contemplation of or since the acquisition of that company and (iii) the Security
is  removed  or  discharged  within 3 months of that  company  becoming  a Group
Member; (g) any retention of title arrangement  entered into by any Group Member
in the normal course of its trading activities on the counterparty's standard or
usual terms to the extent that such terms are  customary;  (h) any lien in favor
of a bank over goods and  documents  of title to goods  arising in the  ordinary
course of documentary credit transactions entered into in the ordinary course of
trade provided that such lien is discharged  within 15 days of arising;  (i) any
Security  arising  under the general  business  conditions  of any German credit
institution or similar non-German institution with whom a Group Member maintains
a banking  relationship  in its ordinary  course of  business;  (j) any Security
arising by  operation of law in favor of any  Governmental  Agency in respect of
taxes,  assessments  or  government  charges  which are being  contested  by the
relevant  Group  Member  in good  faith;  (k) any  security  over  real  estate,
equipment,   inventory,  accounts  receivable,  bank  accounts  or  intellectual
property  rights located or generated in Poland of the Group Members  identified
in clause (p) of the definition of Permitted  Indebtedness,  in each case, which
is  created  by  mortgages,  one or more  charges  to  equipment  or  inventory,
assignments of accounts  receivable,  pledges of bank accounts or assignments of
intellectual  property rights and secures  Financial  Indebtedness  permitted by
clause  (p) of the  definition  of  Permitted  Indebtedness;  (l)  any  Security
securing  Financial  Indebtedness the principal amount of which (when aggregated
with the  principal  amount of any other  Financial  Indebtedness  which has the
benefit of Security (other than any Security  permitted under clauses (a) to (k)
above)) does not exceed  e5,000,000  (or its  equivalent in another  currency or
currencies);  (m) any first  ranking  Security over the Funding Loan in favor of
the Subordinated  Creditors;  (n) any Security given by any Group Member for the
benefit of the lenders under the German Credit Agreement, provided that the same
Security,  ranking equally, has been or will concurrently  therewith be provided
for the benefit of the Lenders;  (o) any  Security in favor of the  Subordinated
Creditors,  provided that such Security,  substantially on the same terms (other
than with respect to its subordination), has been or will concurrently therewith
be issued for the  benefit  of the  Senior  Lenders  and that such  Security  is
provided  subject to the terms of, and in  accordance  with,  the  Intercreditor
Agreement;  (p) any Security  for the benefit of the holders of the  Convertible
Bonds,  provided  that  the same  Security,  ranking  equally,  has been or will
concurrently therewith be provided for the benefit of the Subordinated Creditors
that such Security is provided  subject to the terms of, and in accordance  with
the  Intercreditor  Agreement;  (q) any Security to which the  Required  Lenders
shall have given their prior written consent (provided that the principal amount
of the  indebtedness  secured by such Security shall not be increased beyond the
amount  expressly so  permitted);  (r) any Security  required to be given by any
Group  Member  pursuant  to the terms of the Bridge Loan  Documents  or the High
Yield  Indenture,  provided that such Security is provided  subject to the terms
of, and in accordance  with,  the  Intercreditor  Agreement;  and (s) any of the
Security created pursuant to the Security Documents.

                                       21

<PAGE>


       "person" shall mean any natural  person,  corporation,  business  trust,
joint  venture,  association,  company, limited liability company, partnership,
Government Agency or other entity.

       "Polish Zloty" shall mean lawful money of Poland.

       "Prepayment Account" shall  mean an interest-bearing account or accounts
held with the Security Agent (or such  other  financial  institution reasonably
acceptable to the Administrative Agent) in the name of the  Company and pledged
to the Security Agent (for the benefit of the Finance Parties)  and  into which
sums are deposited in accordance with Section 2.13 and may not be withdrawn  by
any Group Member other than as provided for in Section 2.13.

       "Prime  Rate"  shall mean the rate of interest per annum determined from
time to time by the Administrative  Agent to be its prime rate in effect at its
principal office in New York City.

       "Quarter Date" shall mean each  of  March 31,  June 30, September 30 and
December 31.

       "Register"   shall   have   the  meaning  assigned  to  such   term   in
Section 10.04(d).

       "Regulation T" shall mean Regulation T of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.

       "Regulation U" shall mean Regulation U of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.

       "Regulation X" shall mean Regulation X of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.

       "Related Fund" shall  mean,  with  respect  to any Lender that is a fund
that invests  in  commercial  loans,  any other fund that invests in commercial
loans and is advised or managed  by the same investment advisor as such  Lender
or by an Affiliate of such investment advisor.

       "Related Parties" shall mean, with respect to any specified person, such
person's Affiliates and the respective  directors, officers, employees, agents,
trustees and advisors of such person and such person's Affiliates.

       "Release Agreement" shall mean the  release  agreement  relating  to the
Original Facilities Agreement entered into on or about the date of signing this
Agreement  by, inter alia, the Company, certain of its subsidiaries and certain
financial institutions  for the purpose of releasing certain obligations of the
Original Obligors under the  Original  Finance  Documents  and certain security
granted in connection with the Original Finance Documents.

       "Relevant  GAAP"  shall  mean  (a) in respect of the Company,  IFRS  and
(b) in  respect  of  any other Group Member  (either  alone  or  including  its
Subsidiaries) the generally accepted accounting principles and practices of its
jurisdiction of incorporation.

                                       22


<PAGE>

       "Relevant Period" shall mean each period of 12 months ending on the last
day of each of the Company's  financial  years  and/or each period of 12 months
that corresponds with four consecutive Financial Quarters ending on the Quarter
Date on which the relevant calculation falls to be made.

       "Repayment  Date"  shall  have  the meaning assigned  to  such  term  in
Section 2.11.

       "Required Lenders" shall mean, at  any  time, Lenders having Commitments
(or, if the Commitments have terminated, Loans)  representing  more than 50% of
the  Total  Commitment  (or  if the Commitments have terminated, the  aggregate
amount of Loans outstanding) at such time.

       "Revolving Credit Facility" shall have the meaning assigned to such term
in the German Credit Agreement.

       "Rights Issue" shall mean  the  proposed  issuance of rights to purchase
33,277,437 ordinary shares of the Company.

       "S&P" shall mean Standard and Poor's Ratings  Service, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.

       "Secured Creditor" shall mean any bank or financial institution which is
a creditor of any Group Member under any Permitted Indebtedness  Agreement  (as
defined  in the Security Trust Agreement) from time to time and entitled to the
same security  rights  as  the  Finance  Parties  under  this  Agreement  after
accession  to  the  Security  Trust Agreement upon notification to the Security
Agent by the Company pursuant to  the  terms  of  the Security Trust Agreement.
Such  Secured Creditor will benefit from the Transaction  Security  up  to  its
Secured  Creditor's  Participation  Amount  as  notified  by  the  Company. The
Security  Agent  will  keep  updated  lists of the Secured Creditors and  their
respective Secured Creditor's Participation  Amounts  by  means  of the List of
Secured Parties (as defined in the Security Trust Agreement).

       "Secured  Creditor's  Participation Amount" has the meaning ascribed  to
such term in the Security Trust Agreement.

       "Secured  Parties"  shall   mean   the   Finance  Parties,  the  Hedging
Counterparties and the other Secured Creditors, each a "Secured Party".

       "Security" shall mean a mortgage, charge, pledge, lien or other security
interest  securing  any  obligation of any person or  any  other  agreement  or
arrangement having a similar effect.

       "Security Agent" shall mean Deutsche Bank Luxembourg S.A.

       "Security Documents"  shall  mean  (a) each  document  listed  under the
heading "Transaction Security Documents" in part 2 in Schedule 9 and in parts 1
through  7  in Schedule 10, (b) any Cash Collateral Document and (c) any  other
document entered  into by any Group Member creating or evidencing or purporting
to create or evidence  Security  for  all or any part of the obligations of the
Obligors or any of them under the Finance Documents or any of them.

                                       23


<PAGE>

       "Security Trust Agreement" shall  mean  the  security  trust  agreement,
substantially  in  the  form  set out in Exhibit G, to be made between, amongst
others, the Obligors and the Secured Parties.

       "Senior Facilities" shall mean the Facility and the German Facilities.

       "Senior Lenders" shall mean  (a) the  Lenders  and (b) the lenders under
the German Credit Agreement.

       "Senior Net Debt" shall mean Total Net Debt less  the  aggregate  amount
outstanding under the High Yield Notes, the Exchange Notes, the Bridge Loan and
all other Subordinated Debt.

       "Signing Date" shall mean February 3, 2004, the date of the execution of
this Agreement.

       "SPC" shall have the meaning assigned to such term in Section 10.04(i).

       "Spot  Rate"  shall  mean,  on  any  day,  the  rate  determined  by the
Administrative  Agent,  in  accordance  with  its  usual  practice  and  in the
interbank market selected by it, to be the rate at which it is able to purchase
one currency by payment in another currency (whether directly or through one or
more  intermediate  currencies) at or about 11:00 a.m. (local time in the place
of that market) (a) in  the  case of Euro, two TARGET Business Days before that
day, and (b) in the case of any  other currency, two Banking Days (in the place
of that market) before that day, for delivery on that day.

       "Subordinated Creditors" shall  mean  the  Exchange Notes Investors, the
Exchange Notes Trustee, the High Yield Investors and the Bridge Lenders.

       "Subordinated  Debt"  shall  mean Financial Indebtedness  of  the  Group
subordinated pursuant to the Intercreditor  Agreement  to all amounts which may
be or become payable to the Finance Parties under the Finance Documents.

       "Subordinated  Finance Documents" shall mean, collectively,  the  Bridge
Loan Documents, the Exchange Notes, the Funding Loan, the High Yield Indenture,
and the High Yield Notes.

       "Subordinated Finance Parties" shall mean any Subordinated Creditor, the
Bridge Loan Agent, any  other  agent  under  the  Bridge  Loan  Documents,  the
Exchange  Notes  Security Agent, the Exchange Notes Trustee, the Exchange Notes
Escrow Agent, the High Yield Trustee and the Bridge Arrangers and "Subordinated
Finance Party" means any of them.

       "Subordinated  Guarantees"  shall  mean the guarantees to be provided by
the Subordinated Guarantors for the benefit  of  the Subordinated Creditors and
the holders of the Convertible Bonds in relation to  the  High Yield Notes, the
Exchange Notes, the Bridge Loans and/or the Convertible Bonds,  as the case may
be, in each case issued subject to the terms of, and subordinated to the claims
of  the  Senior  Lenders  in  accordance with the provisions set forth  in  the
Intercreditor Agreement.

                                       24


<PAGE>


       "Subordinated Guarantors"  shall  mean  (a)  with  respect to the Bridge
Loans, each of the Guarantors, to the extent legally permissible,  and (b) with
respect  to  the High Yield Notes, the Company and certain Guarantors,  to  the
extent legally permissible.

        "Subsidiary"  shall  mean,  in  relation to any company, corporation or
partnership (a) a company, corporation or  partnership  which  is "controlled",
directly  or  indirectly, by and therefore is a "dependent enterprise"  of  the
first mentioned company, partnership or corporation, in the case of the latter,
within the meaning  of Sec. 17 of the German Stock Corporation Act, or which is
a "subsidiary" within  the meaning of Sec. 290 of the German Commercial Code of
such  company,  corporation  or  partnership;  (b) a  company,  corporation  or
partnership more  than half of the issued share capital and issued voting share
capital of which is  beneficially  owned,  directly or indirectly, by the first
mentioned  company, corporation or partnership;  (c) a  partnership  in  which,
(i) there is a participation of more than 50% in the assets of such partnership
by the first  mentioned  company,  corporation  or  partnership, (ii) the first
mentioned company, corporation or partnership has the  power  to  (A)  cast, or
control the casting of, more than 50% of the maximum number of votes that might
be  cast  at a general meeting, (B) appoint or remove all, or the majority  of,
the directors or other equivalent officers, or (C) give directions with respect
to the operating and financial policies which the directors or other equivalent
officers thereof  are  obliged to comply with or (iii) in the case of a limited
partnership, the general  partner has control over such limited partnership and
the first mentioned company,  corporation  or  partnership  has  control of the
general  partner, and, for this purpose, a company, corporation or  partnership
shall be treated  as  being  controlled  by  another  if  that  other  company,
corporation or partnership is able to direct its affairs and/or to control  the
composition  of  its  board  of directors or equivalent body.  Unless otherwise
specified, all references herein  to a Subsidiary shall be deemed to refer to a
Subsidiary of the Company.

       "TARGET" shall mean Trans-European  Automated Real-time Gross Settlement
Express Transfer payment system.

       "TARGET  Day"  shall  mean  any day on which  TARGET  is  open  for  the
settlement of payments in Euro.

       "Taxes" shall mean any and all present or future taxes, levies, imposts,
duties,  charges,  deductions,  liabilities  or  withholdings  imposed  by  any
Government Agency.

       "Term Facility Loan" shall have the meaning assigned to such term in the
German Credit Agreement.

       "Total Commitment" shall mean,  at any time, the aggregate amount of the
Commitments,  as  in effect at such time.   The  initial  Total  Commitment  is
$116,000,000.

       "Total Net Debt" shall mean, at any time (but so that no amount shall be
included or excluded  more  than once), the aggregate indebtedness of the Group
Members constituting Financial  Indebtedness (but excluding indebtedness of any
Group  Member  to another Group Member  to  the  extent  permitted  under  this
Agreement) less  Cash  and Cash Equivalents, plus (a) the amount of receivables
sold  or securitized, but  disregarding  the  amount  of  receivables  sold  or
securitized on a non-recourse basis provided the proceeds from this disposal or
securitization have been applied in full for the prepayment and


                                       25


<PAGE>

cancellation  of the  Revolving  Credit  Facility  in  accordance  with  Section
2.13(f);  and (b) the aggregate  amount of fines offered  against the Company in
relation to any Competition Law Liabilities,  any other  competition law related
fines,  civil  proceedings  and costs related to either of them, or, if greater,
(i) in relation to the fines  imposed on the Company or any Group  Member by the
European  Commission,  the aggregate  amount of such fines plus accrued interest
therein, such interest calculated at the rate as set by the European Commission;
and (ii) in relation to the fines  imposed on the Company or any Group Member by
the U.S. Department of Justice, the total amount of all such fines together with
all other amounts arising from hedging activities relating to those fines.

       "Transaction Security" shall mean any Security for all  or  any  part of
the  obligations of the Obligors or any of them under the Finance Documents  or
any of  them  expressed to be created by or pursuant to, or to be evidenced in,
the Security Documents or any of them.

       "Treasury Transaction" shall mean any currency or interest purchase, cap
or collar agreement,  forward  rate agreement, interest rate or currency future
or option contract, foreign exchange  or  currency  purchase or sale agreement,
interest rate swap, currency swap or combined interest  rate  and currency swap
agreement and any other similar agreement.

       "Type",  when used in respect of any Loan or Borrowing, shall  refer  to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is  determined.   For  purposes  hereof,  the  term "Rate" shall
include the LIBO Rate and the Alternate Base Rate.

       "U.S. Competition Law Liabilities" shall mean the fines  imposed  on the
Company  or  any Group Member by the U.S. Department of Justice in relation  to
Existing Competition  Law  Proceedings  in the USA in the outstanding amount of
$79,250,000 as of the Signing Date.

       "U.S. Competition Law Proceedings"  shall  mean the Existing Competition
Law Proceedings initiated by the U.S. Department of Justice.

       "U.S. dollars" or "$" shall mean lawful money of the United States.

       "U.S. Group Member" shall mean any Group Member  incorporated,  resident
or  with  its principal place of business in the United States of America,  any
state thereof  or the District of Columbia, or which owns or leases property or
otherwise conducts  business in the United States of America, any state thereof
or the District of Columbia.

       SECTION  1.2.  Terms  Generally.   The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall  include  the corresponding
masculine,  feminine  and  neuter  forms.  The words "include", "includes"  and
"including" shall be deemed to be followed  by the phrase "without limitation".
The word "will" shall be construed to have the  same  meaning and effect as the
word "shall", and the words "asset" and "property" shall be construed as having
the same meaning and effect and to refer to any and all tangible and intangible
assets  and  properties,  including  cash,  securities, accounts  and  contract
rights.  All references herein to Articles, Sections,  Exhibits  and  Schedules

                                       26

<PAGE>

shall be deemed  references  to  Articles  and  Sections  of, and  Exhibits  and
Schedules to, this Agreement unless the context shall otherwise require.  Except
as otherwise  expressly provided herein, all terms of an accounting or financial
nature  shall be construed in  accordance  with IFRS,  as in effect from time to
time.

                                  ARTICLE II


                                  The Credits

               SECTION 2.01.  Commitments.  Subject to the terms and  conditions
and relying  upon the  representations  and  warranties  herein set forth,  each
Lender  agrees,  severally and not jointly,  to make a Loan to the Borrower on a
single date occurring during the Availability Period on which all the conditions
precedent  specified  or referred to in Article IV shall have been  satisfied or
waived (the "Closing Date"), in an aggregate principal amount not to exceed such
Lender's  Commitment.  Amounts repaid or prepaid in respect of the Loans may not
be reborrowed.

SECTION  2.02.  Loans.  (a)  Each  Loan  shall  be made  as part of a  Borrowing
consisting  of Loans  made by the  Lenders  ratably  in  accordance  with  their
respective  Commitments;  provided,  however,  that the failure of any Lender to
make any Loan shall not in itself  relieve any other Lender of its obligation to
lend  hereunder  (it  being  understood,   however,  that  no  Lender  shall  be
responsible  for the failure of any other Lender to make any Loan required to be
made by such  other  Lender).  (b)  Subject  to  Sections  2.08 and  2.15,  each
Borrowing  shall be comprised  entirely of ABR Loans or Eurodollar  Loans as the
Borrower  may request  pursuant to Section  2.03.  Each Lender may at its option
make any Eurodollar  Loan by causing any domestic or foreign branch or Affiliate
of such  Lender to make such Loan;  provided  that any  exercise  of such option
shall not affect the obligation of the Borrower to repay such Loan in accordance
with  the  terms  of this  Agreement.  Borrowings  of more  than one Type may be
outstanding at the same time; provided,  however, that the Borrower shall not be
entitled to request any Borrowing  that, if made,  would result in more than six
Eurodollar  Borrowings  outstanding  hereunder at any time.  For purposes of the
foregoing,  Borrowings having different Interest Periods,  regardless of whether
they commence on the same date, shall be considered separate Borrowings.

(c) Each Lender  shall make each Loan to be made by it  hereunder on the Closing
Date by wire transfer of immediately available funds to such account in New York
City as the  Administrative  Agent may designate not later than 11:00 a.m.,  New
York City time, and the  Administrative  Agent shall promptly credit the amounts
so  received to an account in the name of the  Borrower  and  designated  by the
Borrower in the  Borrowing  Request  or, if a Borrowing  shall not occur on such
date because any condition  precedent  herein specified shall not have been met,
return the amounts so received to the respective Lenders.

             (d)   Unless  the Administrative Agent shall have received  notice
from a Lender prior to the date  of  the  Borrowing  hereunder that such Lender
will not make available to the Administrative Agent such  Lender's  portion  of
such  Borrowing,  the Administrative Agent may assume that such Lender has made
such portion available  to  the  Administrative  Agent  on  the  date  of  such
Borrowing  in  accordance with paragraph (c)


                                       27


<PAGE>

above and the Administrative  Agent may, in reliance upon such assumption,  make
available  to  the  Borrower  on  such  date  a  corresponding  amount.  If  the
Administrative Agent shall have so made funds available then, to the extent that
such Lender  shall not have made such portion  available  to the  Administrative
Agent,   such  Lender  and  the  Borrower   severally  agree  to  repay  to  the
Administrative Agent forthwith on demand such corresponding amount together with
interest  thereon,  for each day from the date such amount is made  available to
the Borrower until the date such amount is repaid to the Administrative Agent at
(i) in the case of the Borrower, the interest rate applicable at the time to the
Loans  comprising  such  Borrowing  and (ii) in the case of such Lender,  a rate
determined  by the  Administrative  Agent to represent  its cost of overnight or
short-term  funds  (which  determination  shall be  conclusive  absent  manifest
error).   If  such  Lender  shall  repay  to  the   Administrative   Agent  such
corresponding amount, such amount shall constitute such Lender's Loan as part of
such Borrowing for purposes of this Agreement.

               SECTION  2.03.  Borrowing  Procedure.  In  order to  request  the
Borrowing  to be made  on the  Closing  Date,  the  Borrower  shall  notify  the
Administrative  Agent  of  such  request  by  telephone  (a)  in the  case  of a
Eurodollar  Borrowing,  not later than  11:00  a.m.,  New York City time,  three
Business  Days  before  the  proposed  Borrowing,  and (b) in the case of an ABR
Borrowing,  not later than 11:00  a.m.,  New York City time,  one  Business  Day
before the proposed Borrowing. The Borrowing Request shall be irrevocable, shall
be confirmed promptly by hand delivery or telecopy to the  Administrative  Agent
of a written Borrowing Request  substantially in the form of Exhibit C-1 or such
other form as shall be acceptable to the Administrative  Agent and shall specify
the following information:  (i) whether the Borrowing then being requested is to
be a Eurodollar  Borrowing or an ABR Borrowing,  (ii) the date of such Borrowing
(which shall be a Business Day), (iii) the number and location of the account to
which funds are to be  disbursed,  (iv) the amount of such  Borrowing and (v) if
such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect
thereto; provided,  however, that, notwithstanding any contrary specification in
the  Borrowing  Request,   each  requested   Borrowing  shall  comply  with  the
requirements  set  forth  in  Section  2.02.  If no  election  as to the Type of
Borrowing is specified in any such notice, then the requested Borrowing shall be
an ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing
is  specified  in any such  notice,  then the  Borrower  shall be deemed to have
selected an Interest Period of one month's duration.  The  Administrative  Agent
shall  promptly  advise the Lenders of any notice given pursuant to this Section
2.03 (and the contents  thereof),  and of each Lender's portion of the requested
Borrowing.

             SECTION  2.04. Evidence   of  Debt;  Repayment  of  Loans.  (a) The
Borrower hereby unconditionally promises  to pay to the Administrative Agent for
the account of each Lender the principal  amount  of each Loan of such Lender as
provided in Section 2.11.

             (b)   Each  Lender  shall  maintain in  accordance with  its  usual
practice an account or accounts evidencing  the indebtedness  of the Borrower to
such Lender resulting from each Loan made by  such  Lender  from  time  to time,
including the amounts of principal and interest payable and paid to  such Lender
from time to time under this Agreement.

             (c)  The Administrative  Agent shall maintain accounts  in which it
will  record  (i) the amount of each Loan  made hereunder, the Type thereof  and
the Interest

                                       28

<PAGE>

Period applicable thereto,  (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender  hereunder
and (iii) the amount of any sum received by the  Administrative  Agent hereunder
from the Borrower and each Lender's share thereof.

             (d)   The  entries  made  in  the accounts maintained  pursuant  to
paragraphs  (b) and (c) above shall be prima facie evidence of the existence and
amounts of the obligations therein recorded; provided, however, that the failure
of any Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the  obligations of the Borrower to repay
the Loans in accordance with their terms.

             (e)   Any  Lender  may  request  that Loans made by it hereunder be
evidenced by a promissory  note. In such event,  the Borrower  shall execute and
deliver  to such  Lender  a  promissory  note  payable  to such  Lender  and its
registered  assigns and in a form and  substance  reasonably  acceptable  to the
Administrative  Agent and the Borrower.  Notwithstanding  any other provision of
this  Agreement,  in the event any  Lender  shall  request  and  receive  such a
promissory  note,  the  interests  represented  by such note  shall at all times
(including  after any  assignment of all or part of such  interests  pursuant to
Section  10.04) be represented  by one or more  promissory  notes payable to the
payee named therein or its registered assigns.

             SECTION  2.05.  Fees.  (a)  The  Borrower  agrees  to  pay  to  the
Administrative  Agent, for its own account,  the administrative  fees separately
agreed to in writing from time to time by the  Borrower  and the  Administrative
Agent (the "Administrative Agent Fees").

             (b)   The  Borrower  agrees  to  pay  to  each  Lender, through the
Administrative  Agent, on the last Business Day of each month and on the date on
which the  Commitment  of such Lender shall expire or be  terminated as provided
herein, a commitment fee (the "Commitment Fees") equal to 1.00% per annum on the
amount of the Commitment of such Lender. All Commitment Fees shall be calculated
on the basis of the actual number of days elapsed  (including  the first day but
excluding the last day) in a year of 360 days. The  Commitment  Fees due to each
Lender shall commence to accrue on the Signing Date and shall cease to accrue on
the date on which the Commitment of such Lender shall expire or be terminated as
provided herein; provided,  however, that, if the Signing Date shall also be the
Closing Date, then no such Commitment Fees shall be payable.

             (c)   All  Fees  shall  be  paid  on the dates due, in  immediately
available  funds,  to  the  Administrative  Agent  for  distribution,  if and as
appropriate,  among the Lenders. Once paid, none of the Fees shall be refundable
under any circumstances.

             SECTION 2.06.  Interest on Loans.  (a) Subject to the provisions of
Section  2.07,  the Loans  comprising  each ABR  Borrowing  shall bear  interest
(computed  on the basis of the actual  number of days elapsed over a year of 365
or 366 days, as the case may be, when the  Alternate  Base Rate is determined by
reference to the Prime Rate and over a year of 360 days at all other times) at a
rate per annum equal to the Alternate Base Rate plus the Applicable Percentage.


                                       29

<PAGE>

             (b)   Subject   to   the  provisions  of  Section 2.07,  the  Loans
comprising each Eurodollar Borrowing  shall bear interest (computed on the basis
of the actual number of days elapsed  over  a  year  of 360 days) at a  rate per
annum  equal  to  the  LIBO  Rate for  the Interest Period in  effect  for  such
Borrowing plus the Applicable Percentage.

             (c)  Interest on  each  Loan  shall  be  payable  on  the  Interest
Payment  Dates  applicable  to such Loan  except as  otherwise  provided in this
Agreement.  The  applicable  Alternate  Base Rate or LIBO Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be determined
by the Administrative  Agent, and such determination  shall be conclusive absent
manifest error.

             SECTION  2.07.  Default  Interest.   Upon the occurrence of (a) any
Default in the payment of interest,  Fees or any other  amounts due hereunder or
(b) any Event of Default,  then,  until such  Default or Event of Default  shall
have  been  cured  or  waived,  to the  extent  permitted  by law,  all  amounts
outstanding  under this Agreement  shall bear interest  (after as well as before
judgment),  payable on demand, (x) in the case of overdue principal, at the rate
otherwise applicable to such Loan pursuant to Section 2.06 plus 1.25% per annum,
and (y) in all other  cases,  at a rate per annum  (computed on the basis of the
actual  number of days elapsed  over a year of 365 or 366 days,  as the case may
be, when  determined  by reference to the Prime Rate and over a year of 360 days
at all other  times) equal to the rate that would be  applicable  to an ABR Loan
plus 1.25%.

             SECTION 2.08.  Alternate  Rate  of  Interest.  In the event, and on
each occasion,  that on the day two Business Days prior to the  commencement  of
any Interest Period for a Eurodollar  Borrowing the  Administrative  Agent shall
have  determined  that  dollar  deposits in the  principal  amounts of the Loans
comprising  such Borrowing are not generally  available in the London  interbank
market, or that reasonable means do not exist for ascertaining the LIBO Rate, or
the  Administrative  Agent shall have been informed by the Required Lenders that
the rates at which such dollar  deposits are being  offered will not  adequately
and fairly  reflect the cost to the  Required  Lenders of making or  maintaining
their or its Eurodollar  Loan during such Interest  Period,  the  Administrative
Agent shall, as soon as practicable thereafter,  give written or telecopy notice
of such determination to the Borrower and the Lenders.  In the event of any such
determination,  until the  Administrative  Agent shall have advised the Borrower
and the  Lenders  that the  circumstances  giving  rise to such notice no longer
exist,  (i) any request by the Borrower for a Eurodollar  Borrowing  pursuant to
Section 2.03 shall be deemed to be a request for an ABR  Borrowing  and (ii) any
request by the Borrower to convert an ABR  Borrowing  to a Eurodollar  Borrowing
pursuant to Section  2.10 shall be of no force and effect and shall be denied by
the Administrative  Agent. Each determination by the Administrative  Agent under
this Section 2.08 shall be conclusive absent manifest error.

             SECTION 2.09.  Termination  and Reduction of  Commitments.  (a) The
Commitments shall  automatically  terminate after the making of the Loans on the
Closing Date;  provided,  however,  that the Commitments shall terminate at 5:00
p.m. New York City time,  on February  23,  2004,  if the Closing Date shall not
have occurred by such time.

             (b)  Upon at least three Business Days' prior  irrevocable written
or  telecopy  notice  (or  telephone  notice promptly confirmed by  written  or
telecopy notice) to the Administrative  Agent,  the Borrower may at any time in
whole permanently terminate,

                                       30


<PAGE>

or from time to time in part  permanently  reduce,  the  Commitments;  provided,
however,  that each partial reduction of the Commitments shall be in an integral
multiple of $1,000,000 and in a minimum amount of $10,000,000.

             (c)   Each  reduction  in  the Commitments hereunder shall be made
ratably among the Lenders in accordance with their respective Commitments.

             SECTION  2.10. Conversion and  Continuation  of  Borrowings.   The
Borrower shall have the  right  at  any  time upon prior irrevocable written or
telecopy notice (or telephone notice promptly  confirmed by written or telecopy
notice) to the Administrative Agent (a) not later  than  11:00 a.m.,  New  York
City  time,  one  Business  Day  prior to conversion, to convert any Eurodollar
Borrowing into an ABR Borrowing, (b) not  later  than 11:00 a.m., New York City
time, three Business Days prior to conversion or continuation,  to  convert any
ABR  Borrowing  into  a  Eurodollar  Borrowing  or  to  continue any Eurodollar
Borrowing  as  a  Eurodollar Borrowing for an additional Interest  Period,  and
(c) not later than 11:00 a.m., New York City time, three Business Days prior to
conversion, to convert  the  Interest  Period  with  respect  to any Eurodollar
Borrowing to another permissible Interest Period, subject in each  case  to the
following:

          (i)  each conversion or continuation  shall be made pro rata among the
               Lenders in accordance  with the respective  principal  amounts of
               the Loans comprising the converted or continued Borrowing;

          (ii) if  less  than  all  the  outstanding  principal  amount  of  any
               Borrowing  shall be converted or continued,  then each  resulting
               Borrowing  shall  satisfy the  limitations  specified  in Section
               2.02(b)  regarding  the  maximum  number  of  Borrowings  of  the
               relevant Type;

          (iii)each  conversion  shall  be  effected  by  each  Lender  and  the
               Administrative  Agent by recording for the account of such Lender
               the new Loan of such Lender  resulting  from such  conversion and
               reducing  the Loan (or  portion  thereof)  of such  Lender  being
               converted by an equivalent principal amount;  accrued interest on
               any Eurodollar Loan (or portion thereof) being converted shall be
               paid by the Borrower at the time of conversion;

          (iv) if any Eurodollar Borrowing is converted at a time other than the
               end of the Interest Period applicable thereto, the Borrower shall
               pay,  upon  demand,  any amounts  due to the Lenders  pursuant to
               Section 2.16;

          (v)  any portion of a  Borrowing  maturing or required to be repaid in
               less than one month may not be  converted  into or continued as a
               Eurodollar Borrowing;

          (vi) any portion of a  Eurodollar  Borrowing  that cannot be converted
               into or  continued  as a  Eurodollar  Borrowing  by reason of the
               immediately preceding clause shall be automatically  converted at
               the end of the Interest  Period in effect for such Borrowing into
               an ABR Borrowing;

          (vii)no Interest  Period may be selected for any Eurodollar  Borrowing
               that would end later than a Repayment  Date occurring on or after
               the first day of such

                                       31

<PAGE>


               Interest  Period  if,  after  giving  effect  to such  selection,
               the aggregate outstanding amount of (A) the Eurodollar Borrowings
               with Interest  Periods  ending on or prior to such Repayment Date
               and (B) the ABR  Borrowings  would  not be at least  equal to the
               principal amount of Borrowings to be paid on such Repayment Date;
               and

          (viii) upon notice to the Borrower from the Administrative Agent given
               at the request of the Required Lenders,  after the occurrence and
               during the  continuance  of an Event of Default  or  Default,  no
               outstanding  Loan  may be  converted  into,  or  continued  as, a
               Eurodollar  Loan and, unless repaid,  each  Eurodollar  Borrowing
               shall  be  converted  into  an ABR  Borrowing  at the  end of the
               Interest Period applicable thereto.

             Each notice pursuant to  this  Section 2.10  shall be irrevocable,
shall be  substantially in the form of Exhibit C-2 or such  other form as shall
be acceptable to the Administrative Agent and shall refer to this Agreement and
specify (i) the identity and amount of the Borrowing that the Borrower requests
be converted or continued, (ii) whether such Borrowing is to be converted to or
continued as a Eurodollar Borrowing or an ABR Borrowing, (iii) if  such  notice
requests  a  conversion, the date of such conversion (which shall be a Business
Day) and (iv) if  such  Borrowing  is  to  be  converted  to  or continued as a
Eurodollar Borrowing, the Interest Period with respect thereto.  If no Interest
Period  is  specified in any such notice with respect to any conversion  to  or
continuation  as  a  Eurodollar Borrowing, the Borrower shall be deemed to have
selected an Interest Period  of one month's duration.  The Administrative Agent
shall advise the Lenders of any  notice given pursuant to this Section 2.10 and
of  each Lender's portion of any converted  or  continued  Borrowing.   If  the
Borrower  shall  not  have given notice in accordance with this Section 2.10 to
continue any Eurodollar  Borrowing into a subsequent Interest Period (and shall
not otherwise have given notice in accordance with this Section 2.10 to convert
such Borrowing), such Borrowing  shall,  at  the  end  of  the  Interest Period
applicable thereto (unless repaid pursuant to the terms hereof),  automatically
be converted into an ABR Borrowing.

             SECTION 2.11.  Repayment of Borrowings.  (a) The Borrower shall pay
to the  Administrative  Agent, for the account of the Lenders,  on the dates set
forth below,  or if any such date is not a Business  Day, on the next  preceding
Business  Day (each such date being  called a  "Repayment  Date"),  a  principal
amount of the Loans (as adjusted from time to time pursuant to Sections 2.11(b),
2.12 and 2.13(f)) equal to the amount set forth below for such date, together in
each case with accrued and unpaid interest on the principal amount to be paid to
but excluding the date of such payment:

 <TABLE>
<CAPTION>
Date                    Amount
<S>                     <C>
June 30, 2004           $580,000
December 31, 2004       $580,000
June 30, 2005           $580,000
December 31, 2005       $580,000
June 30, 2006           $580,000
December 31, 2006       $580,000
June 30, 2007           $580,000
December 31, 2007       $580,000
</TABLE>

                                       32
<PAGE>

June 30, 2008           $580,000
December 31, 2008       $580,000
June 30, 2009           $55,100,000
Maturity Date           $55,100,000


             (b) In the event and on each occasion that any Commitments shall be
reduced or shall expire or  terminate  other than as a result of the making of a
Loan, the installments  payable on each Repayment Date shall be reduced pro rata
by an aggregate  amount  equal to the amount of such  reduction,  expiration  or
termination.

             (c) To the extent not  previously  paid, all Loans shall be due and
payable on the Maturity Date,  together with accrued and unpaid  interest on the
principal amount to be paid to but excluding the date of payment.

             (d) All  repayments  pursuant to this Section 2.11 shall be subject
to Section 2.16, but shall otherwise be without premium or penalty.

          SECTION 2.12.  Optional  Prepayments.  (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing,  in whole or in
part,  upon at least three Business  Days' prior written or telecopy  notice (or
telephone  notice promptly  confirmed by written or telecopy notice) in the case
of  Eurodollar  Loans,  or upon at least one  Business  Days'  prior  written or
telecopy notice (or telephone  notice promptly  confirmed by written or telecopy
notice) in the case of ABR Loans, to the Administrative Agent before 11:00 a.m.,
New York City time; provided,  however, that each partial prepayment shall be in
an amount that is an integral multiple of $500,000 and not less than $1,000,000.

             (b)  Optional  prepayments  shall be applied  pro rata  against the
remaining scheduled  installments of principal due in respect of the Loans under
Section 2.11.

             (c) Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing (or portion thereof) to be prepaid, shall
be irrevocable, shall commit the Borrower to prepay such Borrowing by the amount
stated therein on the date stated therein and shall be substantially in the form
of Exhibit C-3 or such other form as shall be acceptable  to the  Administrative
Agent. All prepayments  under this Section 2.12 shall be subject to Section 2.16
but otherwise  without premium or penalty.  All  prepayments  under this Section
2.12 (other  than  prepayment  of an ABR Loan that does not occur in  connection
with,  or as a  result  of,  the  prepayment  in full  of the  Loans)  shall  be
accompanied by accrued and unpaid interest on the principal amount to be prepaid
to but excluding the date of payment.

             SECTION 2.13. Mandatory  Prepayments.  (a) The Company shall ensure
that an  amount  equal to 100% of the Net  Proceeds  arising  from a Debt  Issue
(other than the issue of the High Yield Notes and an amount  equal to 75% of the
Net Proceeds  arising  from an Equity Issue (other than the Rights  Issue) (such
Equity Issue only to be made in accordance  with  applicable  laws) by any Group
Member are, promptly upon the receipt of such Net Proceeds by such Group Member,
used to prepay  outstandings  under the Senior  Facilities  in  accordance  with
Section 2.13(f).

                                       33
<PAGE>

             (b) (i) Subject to clauses (ii) and (iii) below, the Company shall
ensure that the  Net Proceeds arising from each disposal of assets by any Group
Member are, promptly  upon  the  receipt  of  such  Net  Proceeds by such Group
Member, used to prepay outstandings under the Senior Facilities  in  accordance
with  Section  2.13(f);  (ii) clause  (i) above shall not apply to Net Proceeds
arising from any disposal referred to in clause (i) above (A) if the Company or
the  relevant  Group  Member  can  demonstrate   to  the  satisfaction  of  the
Administrative Agent that such disposal was on arm's  length terms and that the
Net Proceeds are to be re-invested in similar or like assets of a comparable or
superior quality, type or value within a period of 180  days  from  the date of
receipt  of such Net Proceeds by such Group Member, (B) if such disposal  falls
within clauses  (a)  (subject to a limit of e500,000 per disposal), (b), (c) or
(e) of the definition  of Permitted Disposal, (C) if such disposal relates to a
sale of electrical contacts (graphite specialties) by Gelter Ringsdorff S.A. or
(D)  if  the Net Proceeds  per  disposal  do  not  exceed  e1,000,000  (or  its
equivalent  in  another  currency)  or,  when  aggregated with the Net Proceeds
received by any Group Member from any other disposals  of  assets  made  in the
immediately preceding 12 calendar month period (excluding the Net Proceeds from
disposals  falling  within  clauses (A),  (B)  or  (C)  above),  do  not exceed
e7,500,000 (or its equivalent in another currency); and (iii) the Company shall
ensure  that  any  Net Proceeds to be applied in accordance with clause (ii)(A)
above are promptly deposited  in  the  Prepayment  Account  upon receipt by the
relevant  Group  Member.   The  relevant  Group  Member that received  the  Net
Proceeds shall be entitled, during the period of 180  days  from  the  date  of
receipt of such Net Proceeds, to withdraw such Net Proceeds from the Prepayment
Account  only  to the extent that it is able to demonstrate to the satisfaction
of the Administrative  Agent  that  such  Net  Proceeds will be immediately re-
invested  in accordance with clause (ii)(A) above.   Any  amounts  not  so  re-
invested during  such  180  day  period  shall  thereafter  be  used  to prepay
outstandings under the Senior Facilities in accordance with Section 2.13(f).

             (c) (i) Subject to clauses (ii), (iii) and (iv) below, the Company
shall  ensure  that  any  Insurance  Proceeds received by any Group Member are,
promptly upon the receipt of such Insurance Proceeds by such Group Member, used
to prepay outstandings under the Senior  Facilities  in accordance with Section
2.13(f); (ii) clause (i) above shall not apply to any Insurance Proceeds unless
the  Insurance  Proceeds  exceed  e1,000,000  (or  its  equivalent  in  another
currency)  or, when aggregated with the Insurance Proceeds  received  by  Group
Members from  claims made in the immediately preceding 12 calendar month period
(excluding the  Insurance  Proceeds  from disposals falling within clause (iii)
below), exceed e7,500,000 (or its equivalent in another currency); (iii) clause
(i) above shall not apply to any Insurance Proceeds to the extent that (A) such
Insurance  Proceeds are promptly upon receipt  by  the  relevant  Group  Member
deposited in  the  Prepayment  Account in accordance with clause (iv) below and
(B)  such  Insurance  Proceeds  are   applied,   to  the  satisfaction  of  the
Administrative Agent, towards the replacement, reinstatement  and/or  repair of
the  assets  and/or the satisfaction of business interruption losses in respect
of which the relevant insurance claim was made (or to refinance any expenditure
incurred in the  replacement, reinstatement and/or repair of such assets and/or
the satisfaction of  business  interruption losses) within a period of 180 days
from the date of receipt of such  Insurance  Proceeds  by  the  relevant  Group
Member; (iv) the Company shall ensure that any Insurance Proceeds to be applied
in  accordance with clause (iii) above are promptly deposited in the Prepayment
Account,  upon receipt by the relevant Group Member.  The relevant Group Member
that received  the  Insurance

                                       34


<PAGE>

Proceeds  shall be entitled,  during the period of 180 days from the date of its
receipt of such Insurance Proceeds, to withdraw such Insurance Proceeds from the
Prepayment  Account  only to the extent  that it is able to  demonstrate  to the
satisfaction of the  Administrative  Agent that such Insurance  Proceeds will be
immediately  applied in  accordance  with clause  (iii)  above.  Any sums not so
withdrawn  during  the 180  day  period  shall  thereafter  be  used  to  prepay
outstandings under the Senior Facilities in accordance with Section 2.13(f).

             (d) The Company  shall ensure  that,  within 30 days of delivery to
the  Administrative  Agent of the most  recent  audited  consolidated  financial
statements of the Company  pursuant to Section  5.02(a)(i),  commencing with the
audited consolidated  financial statements of the Company for the financial year
ending  December  31,  2003,  an amount equal to 50% of the amount of the Excess
Cash Flow  exceeding a minimum  amount of e7,500,000  for the financial  year to
which such  financial  statements  relate  shall be used to prepay  outstandings
under the Senior  Facilities  in  accordance  with Section  2.13(f).  (e) If the
Company   makes  any   dividend,   return  of  capital,   repayment  of  capital
contributions  or other  distribution  (whether  in cash or  kind) or makes  any
distribution  of assets or other payment  whatsoever in respect of share capital
whether directly or indirectly,  the Company shall ensure that within 30 days of
the same,  an amount  equal to such  payment  or  distribution  shall be used to
prepay  outstandings  under the Senior  Facilities  in  accordance  with Section
2.13(f).

             (f) Subject to paragraph (h) below,  amounts required to be used to
prepay  outstandings  under the Senior Facilities  pursuant to this Section 2.13
shall be applied to the prepayment on a pro rata basis of the Loans and the Term
Facility Loans and, with respect to the Loans, shall be applied pro rata against
the remaining  scheduled  installments  of principal due in respect of the Loans
under Section 2.11; provided,  however, that any prepayment required pursuant to
paragraph  (b)  above  arising  as a result  of the sale or  other  disposal  of
accounts  receivable  by  any  Group  Member  shall  be  applied  first,  to the
prepayment of outstanding  loans and the cancelation of outstanding  commitments
in respect of the Revolving  Credit  Facility and second,  as provided  above in
this paragraph (h).

             (g) The Borrower shall deliver to the Administrative  Agent, at the
time of each  prepayment  required  under this Section  2.13,  (i) a certificate
signed by the chief financial officer of the Company setting forth in reasonable
detail the  calculation of the amount of such  prepayment and (ii) at least four
days' prior written notice of such  prepayment.  Each notice of prepayment shall
specify the  prepayment  date and the principal  amount of each Loan (or portion
thereof) to be prepaid and shall be  substantially in the form of Exhibit C-3 or
such  other  form as  shall  be  acceptable  to the  Administrative  Agent.  All
prepayments  of  Borrowings  under this Section 2.13 shall be subject to Section
2.16, but shall otherwise be without premium or penalty.

             (h) Notwithstanding the foregoing, so long as (i) any Term Facility
Loans remain outstanding and (ii) any mandatory  prepayment  required under this
Section  2.13 would also be required to be used to prepay  Term  Facility  Loans
under the German  Credit  Agreement,  any  Lender  may  elect,  by notice to the
Administrative  Agent in writing no later than 3:00 p.m., New York City time, at
least three Business Days prior to

                                       35
<PAGE>

any  prepayment of Loans  required to be made by the Borrower for the account of
such Lender  pursuant to this  Section  2.13,  to cause all or a portion of such
prepayment to be applied instead to prepay the Term Facility Loans in accordance
with the terms of the German Credit Agreement.

             SECTION 2.14. Reserve Requirements; Change in Circumstances.

             (a) Notwithstanding  any other provision of this Agreement,  if any
Change in Law shall  impose,  modify or deem  applicable  any  reserve,  special
deposit or similar  requirement  against  assets  of,  deposits  with or for the
account of or credit  extended  by any Lender or shall  impose on such Lender or
the London  interbank  market any other  condition  affecting  this Agreement or
Eurodollar  Loans made by such  Lender,  and the result of any of the  foregoing
shall be to  increase  the cost to such  Lender  of making  or  maintaining  any
Eurodollar  Loan or to reduce the amount of any sum  received or  receivable  by
such Lender hereunder (whether of principal, interest or otherwise) by an amount
deemed by such Lender to be material,  then the Borrower will pay to such Lender
upon demand such additional amount or amounts as will compensate such Lender for
such additional costs incurred or reduction suffered.

             (b)  If any  Lender  shall  have determined that any Change in Law
regarding capital adequacy has or would have the effect of reducing the rate of
return on such Lender's capital or on the  capital  of  such  Lender's  holding
company,  if any, as a consequence of this Agreement or the Loans made by  such
Lender pursuant hereto to a level below that which such Lender or such Lender's
holding company  could  have  achieved  but for such Change in Law (taking into
consideration such Lender's policies and  the policies of such Lender's holding
company with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time the Borrower  shall pay to such Lender such
additional amount or amounts as will compensate such  Lender  or  such Lender's
holding company for any such reduction suffered.

             (c)  A certificate of a Lender setting forth the amount or amounts
necessary  to compensate such Lender or its holding company, as applicable,  as
specified in  paragraph (a) or (b) above shall be delivered to the Borrower and
shall be conclusive  absent manifest error.  The Borrower shall pay such Lender
the amount shown as due  on any such certificate delivered by it within 10 days
after its receipt of the same.

             (d)  Failure  or  delay  on  the  part  of  any  Lender  to demand
compensation  for  any  increased  costs  or  reduction  in amounts received or
receivable or reduction in return on capital shall not constitute  a  waiver of
such  Lender's  right  to  demand such compensation; provided that the Borrower
shall not be under any obligation  to compensate any Lender under paragraph (a)
or (b) above with respect to increased  costs or reductions with respect to any
period prior to the date that is 120 days  prior to such request if such Lender
knew or could reasonably have been expected to know of the circumstances giving
rise  to  such  increased  costs  or  reductions and  of  the  fact  that  such
circumstances would result in a claim for  increased  compensation by reason of
such  increased  costs  or  reductions;  provided  further that  the  foregoing
limitation shall not apply to any increased costs or  reductions arising out of
the retroactive application of any Change in Law within  such  120-day  period.
The protection of this Section shall be available to each Lender regardless  of
any  possible  contention of the invalidity or inapplicability of the Change in
Law that shall have occurred or been imposed.

                                       36

<PAGE>

             SECTION  2.15.  Change  in  Legality. (a) Notwithstanding any other
provision of this Agreement, if any Change  in  Law  shall make it unlawful for
any Lender to make or maintain any Eurodollar Loan or  to  give  effect  to its
obligations  as  contemplated hereby with respect to any Eurodollar Loan, then,
by written notice to the Borrower and to the Administrative Agent:

                    (i) such Lender may declare that  Eurodollar  Loans will not
               thereafter  (for the  duration of such  unlawfulness)  be made by
               such Lender  hereunder (or be continued for  additional  Interest
               Periods and ABR Loans will not thereafter  (for such duration) be
               converted  into  Eurodollar  Loans),  whereupon any request for a
               Eurodollar  Borrowing  (or  to  convert  an  ABR  Borrowing  to a
               Eurodollar Borrowing or to continue a Eurodollar Borrowing for an
               additional  Interest  Period)  shall,  as to such Lender only, be
               deemed a request for an ABR Loan (or a request to continue an ABR
               Loan as such for or to  convert  a  Eurodollar  Loan  into an ABR
               Loan,  as the case  may be),  unless  such  declaration  shall be
               subsequently withdrawn; and

                    (ii) such Lender may require that all outstanding Eurodollar
               Loans made by it be  converted  to ABR Loans,  in which event all
               such  Eurodollar  Loans shall be  automatically  converted to ABR
               Loans as of the  effective  date of such  notice as  provided  in
               paragraph (b) below.

In the event  any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar  Loans  that  would  have  been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting  from the conversion of,
such Eurodollar Loans.

             (b)  For purposes of this Section 2.15, a notice  to  the Borrower
by  any  Lender  shall  be  effective  as to each Eurodollar Loan made by  such
Lender, if lawful, on the last day of the  Interest  Period  then applicable to
such Eurodollar Loan; in all other cases such notice shall be  effective on the
date of receipt by the Borrower.

             SECTION 2.16. Indemnity.  The Borrower shall indemnify each Lender
against  any  loss  or  expense  that  such  Lender may sustain or incur  as  a
consequence  of  (a) any event, other than a default  by  such  Lender  in  the
performance of its  obligations  hereunder,  which  results  in (i) such Lender
receiving or being deemed to receive any amount on account of  the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor,
(ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of
the  Interest  Period with respect to any Eurodollar Loan, in each  case  other
than on the last  day  of  the Interest Period in effect therefor, or (iii) any
Eurodollar Loan to be made by  such Lender (including any Eurodollar Loan to be
made pursuant to a conversion or  continuation  under  Section 2.10)  not being
made  after notice of such Loan shall have been given by the Borrower hereunder
(any of  the  events  referred  to  in this clause (a) being called a "Breakage
Event") or (b) any default in the making  of any payment or prepayment required
to  be  made hereunder.  In the case of any Breakage  Event,  such  loss  shall
include an amount equal to the excess, as reasonably determined by such Lender,
of (i) its  cost of obtaining funds for the Eurodollar Loan that is the subject
of such Breakage  Event  for the period from the date of such Breakage Event to
the last day of the Interest  Period  in  effect  (or  that  would have been in
effect) for such Loan over

                                       37

<PAGE>

(ii) the amount of interest  likely to be realized by such Lender in redeploying
the funds  released or not  utilized by reason of such  Breakage  Event for such
period.  A certificate  of any Lender  setting forth any amount or amounts which
such  Lender is  entitled  to receive  pursuant  to this  Section  2.16 shall be
delivered to the Borrower and shall be conclusive absent manifest error.

             SECTION 2.17. Pro Rata Treatment.  Except as required under Section
2.15 and in respect of any  election  made  pursuant  to Section  2.13(h),  each
Borrowing,  each  payment or  prepayment  of principal  of any  Borrowing,  each
payment of interest on the Loans,  each  reduction of the  Commitments  and each
conversion of any Borrowing to or  continuation  of any Borrowing as a Borrowing
of any Type shall be  allocated  pro rata among the Lenders in  accordance  with
their respective Commitments (or, if such Commitments shall have expired or been
terminated,  in  accordance  with  the  respective  principal  amounts  of their
outstanding  Loans).  Each Lender agrees that in computing such Lender's portion
of any  Borrowing to be made  hereunder,  the  Administrative  Agent may, in its
discretion,  round each Lender's percentage of such Borrowing to the next higher
or lower whole dollar amount.

             SECTION  2.18.  Sharing of Setoffs.  Each Lender  agrees that if it
shall,  through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower or any other Obligor,  or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other  security or interest
arising from, or in lieu of, such secured  claim,  received by such Lender under
any applicable bankruptcy,  insolvency or other similar law or otherwise,  or by
any other means,  obtain payment  (voluntary or  involuntary)  in respect of any
Loan or Loans as a result of which the  unpaid  principal  portion  of its Loans
shall be proportionately  less than the unpaid principal portion of the Loans of
any other Lender, it shall be deemed  simultaneously to have purchased from such
other  Lender at face value,  and shall  promptly  pay to such other  Lender the
purchase price for, a participation  in the Loans of such other Lender,  so that
the aggregate  unpaid principal  amount of the Loans and  participations  in the
Loans  held by each  Lender  shall be in the same  proportion  to the  aggregate
unpaid principal amount of all Loans then outstanding as the principal amount of
its Loans prior to such exercise of banker's  lien,  setoff or  counterclaim  or
other event was to the principal amount of all Loans  outstanding  prior to such
exercise of banker's  lien,  setoff or  counterclaim  or other event;  provided,
however,  that if any such  purchase or purchases or  adjustments  shall be made
pursuant  to this  Section  2.18  and the  payment  giving  rise  thereto  shall
thereafter be  recovered,  such  purchase or purchases or  adjustments  shall be
rescinded to the extent of such  recovery  and the  purchase  price or prices or
adjustment  restored without  interest.  The Borrower and the Company  expressly
consent  to the  foregoing  arrangements  and agree  that any  Lender  holding a
participation  in a Loan deemed to have been so  purchased  may exercise any and
all rights of banker's lien,  setoff or counterclaim with respect to any and all
moneys owing by the Borrower and the Company to such Lender by reason thereof as
fully as if such Lender had made a Loan  directly to the  Borrower in the amount
of such participation.

             SECTION 2.19.  Payments.  (a) The Borrower  shall make each payment
(including  principal  of or  interest  on any  Borrowing  or any  Fees or other
amounts)  hereunder  and under any other  Finance  Document not later than 12:00
(noon),  New York City time, on the date when due in immediately  available U.S.
dollars, without setoff,

                                       38

<PAGE>


defense or counterclaim.  Each such payment shall be made to the  Administrative
Agent  at its  offices  at  Eleven  Madison  Avenue,  New  York,  NY 10010 or as
otherwise instructed by the Administrative Agent.

             (b) Except as otherwise  expressly  provided  herein,  whenever any
payment  (including  principal  of or interest on any  Borrowing  or any Fees or
other amounts)  hereunder or under any other Finance  Document shall become due,
or otherwise  would occur, on a day that is not a Business Day, such payment may
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or Fees, if applicable.

             SECTION 2.20.  Taxes.  (a) Any and all payments by or on account of
any obligation of the Borrower or any other Obligor hereunder or under any other
Finance  Document shall be made free and clear of and without  deduction for any
Indemnified  Taxes or Other  Taxes;  provided  that if the Borrower or any other
Obligor  shall be required to deduct any  Indemnified  Taxes or Other Taxes from
such payments,  then (i) the sum payable shall be increased as necessary so that
after  making  all  required  deductions  (including  deductions  applicable  to
additional  sums payable  under this Section) the  Administrative  Agent or such
Lender (as the case may be)  receives  an amount  equal to the sum it would have
received  had no such  deductions  been made,  (ii) the  Borrower  or such other
Obligor shall make such  deductions and (iii) the Borrower or such other Obligor
shall  pay the  full  amount  deducted  to the  relevant  Government  Agency  in
accordance  with  applicable  law. (b) In addition,  the Borrower  shall pay any
Other Taxes to the relevant Government Agency in accordance with applicable law.

             (c) The Borrower shall indemnify the Administrative  Agent and each
Lender, within 10 days after written demand therefor, for the full amount of any
Indemnified  Taxes  or  Other  Taxes  paid by the  Administrative  Agent or such
Lender,  as the case may be, on or with  respect to any payment by or on account
of any  obligation of the Borrower or any other  Obligor  hereunder or under any
other Finance Document  (including  Indemnified  Taxes or Other Taxes imposed or
asserted on or  attributable  to amounts  payable  under this  Section)  and any
penalties,  interest and reasonable  expenses arising  therefrom or with respect
thereto,  whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant  Government Agency. A certificate as
to the amount of such  payment  or  liability  delivered  to the  Borrower  by a
Lender, or by the  Administrative  Agent on its behalf or on behalf of a Lender,
shall be conclusive absent manifest error.

             (d) As soon as practicable  after any payment of Indemnified  Taxes
or Other Taxes by the Borrower or any other Obligor to a Government  Agency, the
Borrower shall deliver to the  Administrative  Agent the original or a certified
copy of a receipt issued by such Government  Agency  evidencing such payment,  a
copy of the return  reporting  such  payment or other  evidence of such  payment
reasonably satisfactory to the Administrative Agent.

             (e) Any Foreign  Lender that is  entitled to an  exemption  from or
reduction  of  withholding  tax under the law of the  jurisdiction  in which the
Borrower is located,  or any treaty to which such  jurisdiction is a party, with
respect to payments under this 39

<PAGE>

Agreement  shall  deliver  to the  Borrower  (with a copy to the  Administrative
Agent),  at the  time or times  prescribed  by  applicable  law,  such  properly
completed and executed documentation  prescribed by applicable law or reasonably
requested  by the  Borrower  as will permit  such  payments  to be made  without
withholding or at a reduced rate.

             SECTION    2.21.   Assignment   of   Commitments   Under   Certain
Circumstances;  Duty to  Mitigate.  (a) In the event (i) any  Lender  delivers a
certificate  requesting  compensation  pursuant to Section 2.14, (ii) any Lender
delivers a notice  described in Section 2.15,  (iii) the Borrower is required to
pay any additional  amount to any Lender or any Government  Agency on account of
any Lender pursuant to Section 2.20 or (iv) any Lender refuses to consent to any
amendment,  waiver or other  modification of this Agreement or any other Finance
Document  requested  by the  Borrower  that  requires  the  consent of a greater
percentage of the Lenders than the Required  Lenders and such amendment,  waiver
or other modification is consented to by the Required Lenders, the Borrower may,
at its sole expense and effort  (including  with respect to the  processing  and
recordation fee referred to in Section 10.04(b)), upon notice to such Lender and
the Administrative  Agent,  require such Lender to transfer and assign,  without
recourse (in accordance with and subject to the restrictions
contained in Section 10.04), all of its interests,  rights and obligations under
this Agreement to an assignee that shall assume such assigned obligations (which
assignee may be another Lender, if a Lender accepts such  assignment);  provided
that (x) such assignment  shall not conflict with any law, rule or regulation or
order of any  court or other  Government  Agency  having  jurisdiction,  (y) the
Borrower  shall have  received the prior written  consent of the  Administrative
Agent, which consent shall not unreasonably be withheld, and (z) the Borrower or
such assignee shall have paid to the affected  Lender in  immediately  available
funds an amount equal to the sum of the principal of and interest accrued to the
date of such payment on the outstanding Loans of such Lender, respectively, plus
all Fees and other  amounts  accrued for the  account of such  Lender  hereunder
(including  any amounts under Section 2.14 and Section 2.16);  provided  further
that, if prior to any such transfer and  assignment the  circumstances  or event
that  resulted in such  Lender's  claim for  compensation  under Section 2.14 or
notice under  Section 2.15 or the amounts paid  pursuant to Section 2.20, as the
case may be, cease to cause such Lender to suffer  increased costs or reductions
in amounts received or receivable or reduction in return on capital, or cease to
have the  consequences  specified in Section 2.15, or cease to result in amounts
being  payable  under Section 2.20, as the case may be (including as a result of
any action  taken by such Lender  pursuant to paragraph  (b) below),  or if such
Lender shall waive its right to claim further compensation under Section 2.14 in
respect  of such  circumstances  or event or shall  withdraw  its  notice  under
Section 2.15 or shall waive its right to further  payments under Section 2.20 in
respect  of such  circumstances  or  event  or  shall  consent  to the  proposed
amendment, waiver, consent or other modification,  as the case may be, then such
Lender shall not thereafter be required to make any such transfer and assignment
hereunder.  Each Lender hereby agrees to execute and deliver,  promptly upon its
receipt of notice from the Borrower  requiring  the transfer and  assignment  of
such  Lender's  interests  hereunder  pursuant  to  this  Section  2.21(a),  any
Assignment  and Acceptance  necessary to effectuate  such  assignment;  provided
that,  notwithstanding  the foregoing,  the Administrative  Agent may effectuate
such assignment, without any action by such Lender, by recording such assignment
in the Register.

                                       40

<PAGE>


             (b)  If (i) any Lender  shall request compensation  under  Section
2.14, (ii) any Lender  delivers a notice described in Section 2.15 or (iii) the
Borrower  is required to pay any additional amount or indemnity payment to  any
Lender or any  Government  Agency on account of any Lender, pursuant to Section
2.20, then such Lender shall  use  reasonable  efforts (which shall not require
such Lender to incur an unreimbursed loss or unreimbursed  cost  or  expense or
otherwise  take any action inconsistent with its internal policies or legal  or
regulatory restrictions or suffer any disadvantage or burden deemed by it to be
significant)  (x)  to  file any certificate or document reasonably requested in
writing by the Borrower  or  (y) to assign its rights and delegate and transfer
its obligations hereunder to another of its offices, branches or affiliates, if
such  filing or assignment would  reduce  its  claims  for  compensation  under
Section  2.14  or  enable it to withdraw its notice pursuant to Section 2.15 or
would reduce amounts  payable  pursuant to Section 2.20, as the case may be, in
the  future.  The Borrower hereby  agrees  to  pay  all  reasonable  costs  and
expenses  incurred  by  any  Lender  in  connection  with  any  such  filing or
assignment, delegation and transfer.


                                  ARTICLE III


                        Representations and Warranties

             SECTION 3.01. Representations and Warranties.  On the Signing Date,
the  Company  (in  respect  of  its  own  affairs  and each Group Member), each
Original Obligor (in respect of its own affairs and  those of its Subsidiaries)
and, on the date of its accession to this Agreement, each Additional Guarantor,
represents and warrants to the Administrative Agent and  each  of  the  Lenders
that:

             (a)  (Status) (i) it is a corporation or limited partnership, duly
incorporated  or  formed and validly existing under the law of the jurisdiction
of its place of incorporation  or its seat and (ii) it has the power to own its
assets and carry on its business as it is currently being conducted;

             (b)   (No  Winding-Up)   no  administrator,  receiver,  insolvency
trustee, examiner, liquidator or similar officer or official has been appointed
with respect to it or any of its assets  and  (to the best of its knowledge and
belief) no petition by a third party or proceeding  for any such appointment is
pending nor has any resolution for any such appointment been passed;

             (c)  (Binding Obligations) the obligations expressed to be assumed
by  it  in each Finance Document to which it is a party  are,  subject  to  any
general principles  of  law  limiting  its  obligations  which are specifically
referred  to  in  any  legal  opinion  delivered  pursuant  to (i) Article  IV,
(ii) Section 9.16 or (iii) the conditions precedent set forth  in  the  Finance
Documents, legal, valid, binding and enforceable obligations;

             (d)   (Non-Conflict  with  Other  Obligations)  the entry into and
performance  by  it  of,  and  the  transaction  contemplated  by, the  Finance
Documents to which it is a party do not and will not conflict with  (i) any law
or regulation applicable to it, (ii) its constitutional documents or  (iii) any
agreement  or  instrument  binding upon it or any of its assets, nor will  such
entry into and performance (except  as  provided  in  any  Security  Documents)
result  in  the  creation of, or oblige it to create, any Security (other  than
Permitted Security) over any of its assets;


                                       41

<PAGE>

             (e)   (Power  and  Authority)  (i) it has the power to enter into,
perform and deliver, and has taken all necessary  action to authorize its entry
into, performance and delivery of, the Finance Documents to which it is a party
and the transactions contemplated by those Finance  Documents and (ii) no limit
on  its  powers  will  be  exceeded  as  a  result of such entry,  delivery  or
performance;

             (f)  (Validity and Admissibility into Evidence) all Authorizations
required  (i)  to enable it lawfully to enter into,  exercise  its  rights  and
comply with its  obligations  in  the Finance Documents to which it is a party,
(ii) to make the Finance Documents  to  which  it  is  a  party  admissible  in
evidence  in  its  jurisdiction of incorporation, (iii) to enable it to own its
material assets and  carry on its business as it is being conducted and (iv) to
enable it to create any  Security  expressed to be created by it by or pursuant
to, or as the case may be, any Security  expressed  to  have been created by it
and to be evidenced in, any Security Document and to ensure  that such Security
has  the  priority  and ranking it is expressed to have, have (other  than  any
filings or registrations  required in relation to the Security Documents, which
filings or registrations will  be made promptly after execution of the relevant
documents no later than the time  frame  agreed  with the Security Agent and in
any event within applicable time limits) been obtained  or  effected and are in
full force and effect;

             (g)  (Governing Law and Enforcement) (i) the choice  of  New  York
law as the governing law of this Agreement and the Intercreditor Agreement, and
in  respect  of any Security Document to which it is a party, the choice of the
relevant governing  law  of  that  Security  Document,  will  in  each  case be
recognized  and  enforced  in  its  jurisdiction  of  organization and (ii) any
judgment obtained in a U.S. Federal or New York state court in relation to this
Agreement and the Intercreditor Agreement (except with  respect  to any Obligor
incorporated in Poland), and in respect of any Security Document to which it is
a  party,  any  judgment  obtained  in  the courts which are expressed to  have
jurisdiction to hear disputes under that  Security  Document, will in each case
be recognized and enforced in its jurisdiction of organization;

             (h)  (Deduction of Tax) it is not required  under  the  law of its
jurisdiction (other than Italy) of organization to make any deduction for or on
account of Tax from any payment it may make under any Finance Document;

             (i)   (No  Filing  or  Stamp  Taxes) it is not necessary that  the
Finance Documents be filed, recorded or enrolled  with any Government Agency in
any jurisdiction where an Obligor is domiciled or that  any stamp, registration
or  similar  tax  be  paid  on or in relation to the Finance Documents  or  the
transactions  contemplated  therein   (other  than  complying  with  Perfection
Requirements);

             (j)  (No Default and no Material  Adverse  Effect) (i) no Event of
Default is continuing or might reasonably be expected to result from the making
of  any  Borrowing,  (ii) no other event or circumstance is  outstanding  which
constitutes a default  under any other agreement or instrument which is binding
on it or to which its assets  are  subject  which might have a Material Adverse
Effect, (iii) no other event or circumstance  is  outstanding which would, with
the lapse of time, the giving of notice, the making  of any determination under
the relevant document or any combination of the foregoing, constitute a default
under  any  other  agreement  or instrument relating to Financial  Indebtedness
which  is  binding  on  it or to which  its  assets  are  subject  which  might

                                       42
<PAGE>


reasonably be expected to  have  a Material Adverse Effect and (iv) no Material
Adverse Effect has occurred since December 31, 2002;

             (k)  (Information) any written information provided by the Company
on its own behalf or on behalf of  any  Group  Member  to  any Finance Party in
connection  with the Finance Documents was true and accurate  in  all  material
respects as of  the date it was provided or as of the date (if any) at which it
is stated and is not untrue or misleading in any material respect;

             (l)   (Good  Title  to  Assets) except in relation to certain toll
manufacturing  equipment,  it has, subject  to  Permitted  Security,  good  and
marketable title to, or valid  leases  or licenses of, or is otherwise entitled
to use (in each case, on arm's length terms)  all  material assets necessary to
carry on its business as it is being conducted;

             (m)  (Intellectual Property Rights) it (i) owns or has licensed to
it  on  arm's  length  terms  all the Intellectual Property  Rights  which  are
required by it in order for it  to  carry  on  its  business  in  all  material
respects  as  it is currently being conducted (the "Material IPR") and, to  the
best of its knowledge  and  belief,  it  does not, in carrying on its business,
infringe any Intellectual Property Rights  of  any  third party in any material
respect, (ii) has taken all formal or procedural actions  (including payment of
fees) required to maintain in full force and effect any registered Material IPR
owned by it, and (iii) is not aware of any adverse circumstance relating to the
validity,  subsistence or use of any of its Intellectual Property  which  might
reasonably be expected to have a Material Adverse Effect;

             (n)   (Creation of Security) (i) it is, or upon the execution (and
the fulfillment of any  conditions  included therein) of the Security Documents
to  which  it  is a party, will be, subject  to  any  Permitted  Security,  the
absolute legal and beneficial owner of all the assets over which it purports to
create Security  (other  than  as  provided  in  any  Security  Document) by or
pursuant  to  or  as evidenced in the Security Documents; (ii) subject  to  any
general principles  of  law  limiting  its  obligations  which are specifically
referred  to  in  any  legal  opinion  delivered  pursuant  to (A) Article  IV,
(B) Section 9.16 or (C) the Perfection Requirements, each Security  Document to
which  it  is or is to be a party creates, or upon such execution will  create,
the Security  which  that  Security  Document  purports  to create and with the
ranking  and  priority  it  is expressed to have or, if that Security  Document
purports to evidence Security,  accurately  evidences,  or  upon such execution
will so evidence, Security which has been validly created;

             (o)  (Pension Schemes) (i) each Group Member is in compliance with
all applicable laws and contracts relating to the pension schemes  (if any) for
the time being operated by it or in which it participates and each such pension
scheme is adequately provided for (either by way of being funded or  by  way of
provision  in  the  balance  sheet)  based  on reasonable actuarial assumptions
applicable  to  the  jurisdiction  in  which  the relevant  pension  scheme  is
maintained and administered and funded in accordance  with  applicable law; and
(ii)  except as disclosed to the Lenders prior to the Signing  Date,  no  Group
Member  has  (to the best of its knowledge and belief) any liability in respect
of any pension  scheme  and there are no circumstances which would give rise to
such liability;

             (p)   (Pari Passu  Ranking)  its  payment  obligations  under  the
Finance Documents rank at least pari passu with the claims of all its unsecured
and
                                       43

<PAGE>

unsubordinated  creditors  except for obligations  mandatorily  preferred by law
applying to companies generally;

             (q)  (Intra-Group Loans) other than the existing Intra-Group Loans
and similar financial arrangements set forth  in Schedule 8, there are no other
Intra-Group Loans;

             (r)   (No  Proceedings  Pending  or  Threatened)   (i) subject  to
clause (iii) below, no litigation, arbitration or administrative  proceeding of
or  before  any  court, arbitral body or agency which, if adversely determined,
might reasonably be  expected  to  have  a  Material  Adverse  Effect, has been
started or (to the best of its knowledge and belief) threatened against it, nor
are  there  (to  the  best  of  its  knowledge  and  belief)  any circumstances
reasonably   likely   to   give   rise  to  such  litigation,  arbitration   or
administrative proceeding which, if  adversely  determined, might reasonably be
expected to have a Material Adverse Effect, (ii) no  labor disputes which might
reasonably be expected to have a Material Adverse Effect  have  (to the best of
its knowledge and belief) been started or threatened against it and (iii) other
than  the  Existing  Competition  Law  Proceedings, no competition law  related
(A) civil litigation, civil lawsuits or  other  civil  proceedings of or before
any court have been started in accordance with the applicable  procedural rules
or  (to  the  best  of  its  knowledge  and  belief) threatened in any relevant
jurisdiction  against any Group Member which, if  adversely  determined,  might
reasonably be expected  to  have  a  Material Adverse Effect nor have (B) fines
other than the EU Competition Law Liabilities,  the  Canadian  Competition  Law
Liabilities  and the US Competition Law Liabilities been assessed by way of any
administrative  proceedings  by  any  Government  Agency in an aggregate amount
exceeding e2,500,000;

             (s)  (Environmental Compliance) (i) it  has obtained all requisite
Environmental  Licenses  required  for  the  carrying  on of  its  business  as
currently  conducted  and  has  at  all times complied with (A) all  applicable
Environmental  Laws,  (B) the  terms  and   conditions  of  such  Environmental
Licenses, and (C) all other covenants, conditions,  restrictions and agreements
directly  or indirectly concerned with any Environmental  Contamination,  where
failure to  do  so  might have a Material Adverse Effect, and (ii) there are to
its knowledge no circumstances  which  may prevent or interfere in any material
respect with the compliance in the future  of  it  and each of its Subsidiaries
with all applicable Environmental Laws, the terms of all Environmental Licenses
referred to in clause (i) above and all covenants, conditions, restrictions and
agreements referred to in clause (i) above;

             (t)   (Environmental  Releases)  no  (i)  property   currently  or
previously  owned, leased, occupied or controlled by it (including any  offsite
waste  management   or   disposal  location  utilized  by  it  or  any  of  its
Subsidiaries) is contaminated  with any Dangerous Substance and (ii) discharge,
release, leaching, migration or  escape  of  any  Dangerous  Substance into the
Environment  has  occurred or is occurring on, under or from any  property,  in
each  case to the best  of  its  knowledge,  in  circumstances  where  this  is
reasonably likely to have a Material Adverse Effect;

             (u)   (Environmental  Claims)  no  Environmental  Claim  has  been
started  or  (to the best of its knowledge and belief) threatened against it or
any of its Subsidiaries  which  might reasonably be expected to have a Material
Adverse Effect;

                                       44


<PAGE>

             (v)  (Taxation) (i) it has duly and punctually paid and discharged
all Taxes imposed upon it or its  assets within the time period allowed without
incurring  penalties  (other than to  the  extent  that  (A) payment  is  being
contested  in good faith  and  in  accordance  with  the  relevant  procedures,
(B) adequate  reserves  are being maintained for those Taxes in accordance with
Relevant GAAP and (C) payment  can  be lawfully withheld and will not result in
the imposition of any material penalty  nor in any material Security ranking in
priority to the claims of any Finance Party  under  any  Finance Document or to
any  Security  created under any Security Document; or (D) failure  to  pay  is
caused by administrative  or  technical  error  that  is  remedied  as  soon as
possible   after   receipt  of  notification  thereof  from  the  relevant  Tax
authorities), (ii) it  is  not  materially  overdue  in  the  filing of any Tax
returns and (iii) no claims are being or are likely to be asserted  against  it
with  respect  to  Taxes  which might reasonably be expected to have a Material
Adverse Effect;

             (w)  (No Indebtedness) it has (i) no Financial Indebtedness (other
than Permitted Indebtedness)  and  (ii) no  other  indebtedness, except for any
which has been incurred in the ordinary course of its business;

             (x)   (No  Security or Guarantees) (i) other  than  any  Permitted
Security (A) no Security  exists  over  all  or  any  of  its assets and (B) no
arrangement or transaction as described in clause (b) of the  first sentence of
Section 6.01 has been entered into by it and is outstanding and (ii) other than
any  Permitted  Guarantees  or  Contingent Liabilities, it has not  granted  or
agreed to grant any guarantee;

             (y)  (No Immunity) in any proceedings taken in its jurisdiction of
organization in relation to any Finance  Document  to  which  it is a party, it
will not be entitled to claim for itself or any of its assets any immunity from
suit, execution, attachment or other legal process;

             (z)   (Information Memorandum) (i) the Information  Memorandum  is
not misleading in any material respects and all factual information provided by
or on behalf of any  Obligor to the Lead Arrangers was true and accurate at the
date it was provided or  as at the date at which it is stated, (ii) there is no
expression of opinion, forecast  or  projection  contained  in  the Information
Memorandum  or  conclusion reached in the Information Memorandum which  is  not
fair and reasonable  in  all  material respects and all expressions of opinion,
forecasts, and projections provided  by or on behalf of any Obligor to the Lead
Arrangers were arrived at after careful consideration, were fair and were based
on reasonable grounds, (iii) nothing has  occurred  or  been  omitted  from the
Information  Memorandum  and  no  information  has  been given or withheld that
results in the information contained in the Information Memorandum being untrue
or misleading in any material respect and (iv) nothing  has  occurred  or  been
omitted  from  the  Information Memorandum and no information has been given or
withheld that results  in  the opinions, forecasts, projections and conclusions
contained in the Information Memorandum being other than fair and reasonable in
all material respects;

             (aa)   (Base  Financial   Statements)   (i) the   Base   Financial
Statements   (A) were  prepared  in  accordance  with  IFRS  or  Relevant  GAAP
consistently applied  and  (B) (in  the  case  of  the  unaudited  nine  months
consolidated  interim financial statements of the Company for the period ending
September 30, 2003)  fairly represent the financial condition and operations of
the Group as at the date  to  which  they were prepared and

                                       45


<PAGE>

during the relevant  financial period for which they were prepared,  subject to
normal year end  adjustments,  and take into account all  material  liabilities
(contingent or otherwise),  and all  unrealized or anticipated  losses,  of the
Group  as of the date to which  they  were  prepared,  (ii)  there  has been no
material  adverse change in the business or financial  condition of any Obligor
since the date of which the latest Base  Financial  Statements was prepared and
(iii) the financial year of the Group is the calendar year;

             (bb)   (Group  Structure  Chart)  (i) the  Group  Structure  Chart
contains  descriptions,  which are true,  complete  and correct in all  material
respects,  of the  corporate  ownership  structure  of the  Group  as it will be
immediately  after the initial  borrowings  under the Senior  Facilities  on the
Closing Date, including details of (A) all Subsidiaries,  direct or indirect, of
the  Company,  (B) all  minority  shareholdings  in any Group Member held by any
person who is not a Group  Member,  (C) all  companies,  partnerships  and Joint
Ventures in which any Group Member has an interest or participation  and (D) all
Intra-Group  Loans in an  amount of more than  e1,000,000  which are not  merely
temporary trading  balances,  in each case as they will be immediately after the
initial  borrowings under the Senior  Facilities on the Closing Date, (ii) there
are no re-organizational  steps relating to the corporate ownership structure of
the Group contemplated at the Signing Date (including any significant  transfers
of  businesses  or  assets  from one  Group  Member  to  another)  which are not
reflected in the Group  Structure  Chart and (iii) all  re-organizational  steps
resulting  in the  Group  corporate  ownership  structure  set out in the  Group
Structure  Chart  have  been or will be  taken  in  compliance  in all  material
respects  with all relevant laws and  regulations  and all  requirements  of all
relevant regulatory authorities;

             (cc)   (Issue  of  Share  Capital)  except  for the Management and
Employee  Benefit Plans,  the Hitco Options and the conversion  rights under the
Convertible  Bonds,  there are no agreements  in force or corporate  resolutions
passed which call for the present or further  issue or allotment of, or grant to
any person the right (whether conditional or otherwise) to call for the issue or
allotment of, any share,  partnership interest, loan note or loan capital of any
Group Member (including an option or right of pre-emption or conversion).
             (dd)  (ERISA and Multiemployer Plans) (i) neither  any  U.S. Group
Member nor any ERISA  Affiliate  is making or  accruing  an  obligation  to make
contributions or has within any of the five calendar years immediately preceding
the Signing  Date made or accrued an  obligation  to make  contributions  to any
Multiemployer  Plan to an  extent  or in a  manner  which  might  reasonably  be
expected  to have a  Material  Adverse  Effect;  (ii) each  Employee  Plan is in
compliance  in all material  respects in form and  operation  with ERISA and the
Code and all other  applicable  laws and  regulations;  (iii) each Employee Plan
which is  intended to be  qualified  under  section  401(a) of the Code has been
determined by the IRS to be so qualified or is in the process of being submitted
to the IRS for approval or will be so submitted  during the applicable  remedial
amendment  period and, to the  knowledge  of the  Company,  nothing has occurred
since  the  date  of  such   determination  that  would  adversely  affect  such
determination  (or,  in the  case of an  Employee  Plan  with no  determination,
nothing has occurred that would adversely affect such  qualification);  (iv) the
fair market  value of the assets of each  Employee  Plan  subject to Title IV of
ERISA  is at  least  equal  to the  present  value  of all  accumulated  benefit
obligations under such Employee Plan (based on the assumptions used for the
                                      46

<PAGE>


purposes  of  Statement  of  Financial Accounting No. 87) as of the date of the
most recent financial statements  reflecting  such  amounts  or,  if additional
contributions  are required to make such Employee Plan sufficient, the  Company
does not believe  that  such  might  reasonably  be expected to have a Material
Adverse  Effect; (v) there are no material actions,  suits  or  claims  pending
against an  Employee  Plan (other than routine claims for benefits), or (to the
knowledge of the Company,  any  U.S.  Group  Member  or  any  ERISA  Affiliate)
threatened,  which  might  reasonably  be  expected to be asserted successfully
against any Employee Plan; (vi) each U.S. Group  Member and any ERISA Affiliate
has  made  all  material  contributions  to or under each  such  Employee  Plan
required by law within the applicable time  limits  prescribed  by  law  by the
terms  of  such  Employee  Plan  or  by  any  contract  or  agreement requiring
contributions to an Employee Plan; (vii) neither any U.S. Group  Member nor any
ERISA Affiliate has ceased operations at a facility so as to become  subject to
the provisions of section 4068(a) of ERISA, withdrawn as a substantial employer
so  as  to become subject to the provisions of section 4063 of ERISA or  ceased
making contributions  to  any Employee Plan subject to section 4064(a) of ERISA
to which it made contributions;  and  (viii) neither  any U.S. Group Member nor
any ERISA Affiliate has incurred or reasonably expects  to  incur  any material
liability to PBGC;

             (ee)    (Margin   Stock)  (i) no  U.S.  Group  Member  is  engaged
principally, or as one of its important  activities,  in the business of owning
or extending credit for the purpose of purchasing or carrying any Margin Stock;
(ii) the  Facility will not be used, directly or indirectly,  for  any  purpose
which might  constitute  all  or  any  part  of the Facility a "purpose credit"
within the meaning of Regulation U or Regulation  X;  and  (iii) no  U.S. Group
Member  or  any  agent  acting  on its behalf has taken or will take any action
which might cause the Finance Documents  to violate any regulation of the Board
of Governors of the Federal Reserve System of the United States;

             (ff)   (Certain  Regulations)  no   Group  Member  is  subject  to
regulation under the United States Public Utility  Holding  Company Act of 1935
or  the  United  States  Investment  Company  Act of 1940 or any United  States
Federal  or  state  statute  or  regulation  limiting   its  ability  to  incur
indebtedness;

             (gg)   (Insurance)  (i)  the  insurance arrangements  required  by
Section 5.01(f) are in full force and effect  as required by this Agreement and
(ii) no event or circumstance has occurred, and  there  has  been no failure to
disclose a material fact, which would (to the best of its knowledge and belief)
entitle any insurer to reduce or avoid its liability under any  such  insurance
arrangement;

             (hh)  (Auditors) the Company's appointed auditors and the auditors
for  each Obligor are one of the internationally recognized "big four" firm  of
accountants or BDO; and

             (ii)   (Certain Treasury Regulation Matters) the Borrower does not
intend to treat the Loans  and  related  transactions  as  being a "reportable"
transaction (within the meaning of U.S. Treasury Regulation 1.6011-4).

             SECTION  3.02.  Reliance  on Representations and Warranties.   Each
Obligor  acknowledges that the Lenders have  entered  into  this  Agreement  in
reliance  on   the  representations  and  warranties  that  are  made  in  this
Article III.

                                      47

<PAGE>


                                  ARTICLE IV


                             Conditions of Lending

             SECTION  4.01.  Conditions  Precedent  to  Effectiveness of Finance
Documents.  This Agreement and the other Finance Documents become effective upon
receipt by the  Administrative  Agent of all the  documents  and other  evidence
listed  in  part I of  Schedule  9 in form  and  substance  satisfactory  to the
Administrative  Agent. The  Administrative  Agent shall notify the Company,  the
Borrower and the Lenders promptly upon being so satisfied.

             SECTION  4.02. Further  Conditions  Precedent  to  Borrowing.   The
obligations  of the  Lenders  to make  the  Loans  hereunder  shall  not  become
effective until the date on which each of the following conditions is satisfied:

             (a)  The  Administrative  Agent  shall  have  received  all  of the
documents  and  other  evidence  listed  in Part II of  Schedule  9 in form  and
substance  satisfactory to the Administrative  Agent. The  Administrative  Agent
shall notify the Company,  the Borrower and the Lenders  promptly  upon being so
satisfied.

             (b) The  Administrative  Agent  shall  have  received  a  Borrowing
Request as required by Section 2.03.

             (c) Each of the  representation and warranties set forth in Article
III shall be true and correct in all material  respects on and as of the date of
such Borrowing with the same effect as though made on and as of such date.

             (d) No Event of  Default  or Default  shall  have  occurred  and be
continuing.

             (e) The Administrative Agent shall have received all Fees and other
amounts  due and  payable on or prior to the  Closing  Date,  including,  to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be  reimbursed  or paid by the Borrower  hereunder or under any other Finance
Document.  (f) To the extent  requested,  the Lenders  shall have  received  all
documentation  and other  information  required by bank  regulatory  authorities
under  applicable  "know your  customer"  and  anti-money  laundering  rules and
regulations, including the USA Patriot Act.


                                   ARTICLE V

                             Affirmative Covenants

             The Company  covenants  and agrees with each Lender that so long as
this  Agreement  shall  remain in effect  and  until the  Commitments  have been
terminated  and the  principal  of and  interest on each Loan,  all Fees and all
other expenses or amounts payable  hereunder or under any other Finance Document
with  respect  to the Loans  shall have been paid in full,  unless the  Required
Lenders shall otherwise consent in writing, that:


                                    48

<PAGE>

             SECTION 5.01. General Covenants.

             (a)  (Authorizations)  (i) each  Obligor  shall  (and  the Company
shall  ensure  that each other Group Member will) promptly obtain, comply  with
and do all that  is  necessary to maintain in full force and effect, and supply
certified copies to the  Administrative  Agent  of,  any Authorization required
under any law or regulation of its jurisdiction of incorporation  to  enable it
to  perform  its  obligations  under  the  Finance  Documents and to ensure the
legality,  validity,  enforceability  or  admissibility  in   evidence  in  its
jurisdiction  of  incorporation  of any Finance Document and (ii) each  Obligor
shall (and the Company shall ensure  that  each other Group Member will) ensure
that it has the right and is duly qualified  to  conduct  its business as it is
conducted from time to time in all applicable jurisdictions  and  shall obtain,
comply with and do all that is necessary to maintain in full force  and  effect
any  Authorization  which  is  necessary for the conduct of its business or the
business of the Group as a whole  and  upon  the Administrative Agent's written
request supply the Administrative Agent with copies of any such Authorizations;

             (b)  (Compliance with Laws) each  Obligor  shall  (and the Company
shall ensure that each other Group Member will) comply in all respects with all
laws  to  which  it  may  be  subject, if failure so to comply would materially
impair its ability to perform its  obligations  under  the Finance Documents to
which it is a party;

             (c)   (Year End) commencing January 1, 2004,  each  Obligor  shall
(and the Company shall  ensure  that  each other Group Member will) ensure that
each of its financial years and each Financial Quarter in each of its financial
years  shall  end on a Quarter Date and the  Company  shall  ensure  that  each
financial year, and each Financial Quarter of each financial year, of the Group
shall end on a Quarter Date;

             (d)   (Record  Keeping)  upon reasonable notice being given by the
Administrative  Agent to the relevant Obligor,  that  Obligor  shall  (and  the
Company  shall  ensure   that   each   other  Group  Member  will)  permit  the
Administrative  Agent  and/or  any  professional   advisers  appointed  by  the
Administrative Agent to examine during normal business  hours  the  records and
books  of  account  of  such Obligor and to discuss financial matters with  its
officers and auditors or  those  of  any  other Group Member for the purpose of
ascertaining compliance with the Finance Documents,  with  the reasonable costs
thereof to be paid by the Company;

             (e)  (Preservation of Assets) each Obligor shall  (and the Company
shall  ensure that each other Group Member will) maintain and preserve  all  of
its assets  that  are  necessary in the conduct of its business in good working
order and condition (ordinary wear and tear excepted);

             (f)  (Insurance  Arrangements)  (i)  each  Obligor  shall (and the
Company  shall ensure that each other Group Member will) maintain insurance  on
and in relation  to  its  business  and  assets  with reputable underwriters or
insurance  companies against such risks and to such  extent  as  is  usual  for
prudent companies  carrying  on  a  business  such  as  that carried on by such
Obligor or Group Member in the country or countries in which  such  Obligor  or
Group  Member  owns  or  leases  property  or  otherwise conducts its business;
(ii) without limiting clause (i) above, each Obligor  shall  (and  the  Company
shall  ensure  that  each  other  Group Member will) maintain insurance against
business interruption, professional  indemnity  (i.e.  directors' and officers'
liability insurance),


                                    49

<PAGE>

pollution,  public liability,  product liability and third party liability,  in
each case at levels no lower than  those in place  prior to the  Signing  Date;
(iii) each  Obligor  shall (and the Company  shall ensure that each other Group
Member  will) pay all  premiums  and do all other  things  necessary to keep in
place the insurance  arrangements  required to be effected and maintained by it
pursuant  to clauses  (i) and (ii) above;  (iv) the  Company  shall  supply the
Administrative  Agent on reasonable request with copies of each receipt for all
premiums and other  amounts  payable by any Obligor or other Group Member under
the insurance  arrangements  effected and maintained by any of them pursuant to
clauses  (i) and  (ii)  above  and  shall,  in any  event,  use all  reasonable
endeavors to procure that the insurer in respect of such insurance arrangements
undertakes to the  Administrative  Agent to notify it should any renewal fee or
other sum payable by any  Obligor or other  Group  Member not be paid when due;
(v) upon reasonable request,  the Company shall supply the Administrative Agent
with a copy of all insurance  policies or certificates of insurance  evidencing
compliance with clauses (i) and (ii) above or (in the absence of the same) such
other  evidence of the existence of any insurance  arrangements  referred to in
clauses  (i)  and  (ii)  above  as  may  be   reasonably   acceptable   to  the
Administrative  Agent and shall, in any event, notify the Administrative  Agent
of any material  changes to any such insurance  arrangements  made from time to
time;  (vi) if any Obligor (or any Group  Member) fails to purchase or maintain
any insurance required by this paragraph (f), the  Administrative  Agent or the
Security  Agent may purchase  such  insurance as may be necessary to remedy any
such  failure and each  Obligor  shall (and the Company  shall ensure that each
other Group Member will) indemnify the  Administrative  Agent,  or, as the case
may be, the Security Agent on demand  against any reasonable  costs or expenses
incurred by it in  purchasing  any such  insurance;  and (vii) no Obligor shall
(and the Company shall ensure that no other Group Member will) do or omit to do
anything which might render any insurance  required by this paragraph (f) void,
voidable or unenforceable;

             (g)  (Intellectual Property)  each  Obligor shall (and the Company
shall ensure that each other Group Member will) (i) make such registrations and
pay  such  fees  and other amounts as are necessary to  keep  those  registered
Intellectual Property  Rights  which are necessary for carrying on the business
of  the  Group  as a whole in force,  and  to  record  its  interest  in  those
Intellectual  Property  Rights,  (ii) observe  and  comply  with  all  material
obligations and  laws  to  which  it  in its capacity as registered proprietor,
beneficial  owner,  user, licensor or licensee  of  the  Intellectual  Property
Rights (or any part thereof) is subject where failure to do so might reasonably
be expected to have a  Material  Adverse  Effect,  (iii) do  all  acts  as  are
reasonably  practicable  (including  the  institution  of legal proceedings) to
maintain,  protect  and  safeguard  the  Intellectual  Property  necessary  for
carrying  on  the business of the Group as a whole, and (iv) not  terminate  or
discontinue the  use  of any Intellectual Property necessary for carrying on of
the business of the Group,  other  than that licensing arrangements in relation
to  such  Intellectual Property may be  entered  into  between  Group  Members,
provided that  such  licensing  arrangements  (A) do not allow any further sub-
licensing by the licensee and (B) do not have a  material adverse effect on the
value of any of the Intellectual Property licensed under such sub-license;

             (h)   (Environmental  Compliance)  each  Obligor  shall  (and  the
Company shall ensure that each other Group Member will) obtain and maintain all
requisite Environmental Licenses and comply with  all  applicable Environmental
Laws, and the


                                    50

<PAGE>

terms and conditions of all Environmental  Licenses  applicable to it, and take
all reasonable  steps in anticipation of known or expected future changes to or
obligations under the same, in each case, where failure to do so would or might
reasonably be expected to have a Material Adverse Effect;

             (i)   (Environmental   Claims)  the  Company   shall   inform  the
Administrative  Agent in writing  as soon as  reasonably  practicable  upon its
becoming  aware of (i) any  Environmental  Claim  which has been  commenced  or
threatened  against any Group Member or (ii) any facts or  circumstances  which
will or are  reasonably  likely  to  result in any  Environmental  Claim  being
commenced or  threatened  against any Group Member,  where the claim might,  if
determined against that Group Member, reasonably be expected to have a Material
Adverse Effect;

             (j)    (Pension  Schemes)  (i) the  Company  will,  if  reasonably
requested by the Administrative  Agent, deliver to the Administrative Agent (A)
at such time as those reports are prepared in order to comply with then current
statutory or auditing requirements (if any) and (B) if the Administrative Agent
reasonably believes that any relevant  statutory  or  auditing requirements are
not being complied with, actuarial reports in relation  to  the pension schemes
operated by Group Members; and (ii) each Obligor shall (and the  Company  shall
ensure  that  each  other  Group  Member  will) ensure that all pension schemes
applicable to it are fully provided for (either  by  way  of being funded or by
way  of  provision  in  its  balance  sheet)  based  on  reasonable   actuarial
assumptions  to the extent required by applicable law and are administered  and
funded in accordance with applicable law;

             (k)   (Taxation)  (i) each  Obligor  shall  (and the Company shall
ensure that each other Group Member will) pay and discharge  all  Taxes imposed
upon  it  or  its  assets  within  the  time  period  allowed without incurring
penalties, other than to the extent that (A) payment is being contested in good
faith  and  in accordance with relevant procedures, (B) adequate  reserves  are
being maintained  for  those  Taxes  in  accordance  with Relevant GAAP and (C)
payment can be lawfully withheld and will not result in  the  imposition of any
material penalty nor in any material Security ranking in priority to the claims
of  any  Finance  Party  under any Finance Document or to any Security  created
under any Security Document;  (ii)  no  Obligor  shall  (and  the Company shall
ensure that no other Group Member will) be materially overdue in  the filing of
any  Tax  returns;  and (iii) each Obligor shall (and the Company shall  ensure
that each other Group  Member  will)  do  all  such  things as are necessary to
ensure that no claims are or are reasonably likely to  be  asserted against any
Group Member with respect to Taxes which might reasonably be expected to have a
Material Adverse Effect;

             (l)   (Security) (i) each Obligor shall ensure that  any  Security
expressed to be created  by  it  by  or  pursuant  to,  or, as the case may be,
expressed  to  have  been created by it and to be evidenced  in,  any  Security
Document remains in full  force  and effect with the ranking and priority it is
expressed to have; (ii) no Obligor  shall (and the Company shall ensure that no
other Group Member will) do or omit to do anything or knowingly permit or cause
anything to be done or omitted to be done which would or could adversely affect
any Security expressed to be created  by  any Obligor by or pursuant to, or any
Security expressed to have been created by  any Obligor and to be evidenced in,
any Security Document; (iii) each Obligor shall  take  all  such actions as the
Administrative  Agent  or  the  Security Agent may reasonably request  for  the
purpose of perfecting any


                                    51

<PAGE>


Security  granted  or to be  granted  pursuant  to the  Finance  Documents  and
preserving  the Security to be created or  evidenced by the Finance  Documents;
and (iv) each Obligor shall, if the Security Agent lawfully exercises any power
(whether of sale or other  disposal or  otherwise) or right with respect to the
Charged Assets,  do all reasonable acts to permit the exercise of such power or
right;  and (v) the Company shall ensure that no later than March 31, 2004, all
of the documents and other evidence listed in Schedule 10 shall be delivered to
the  Administrative  Agent,  each in form  and  substance  satisfactory  to the
Security Agent;

             (m)    (Pari   Passu  Ranking)  without  limiting  clause (i)   of
paragraph (l) of this Section 5.01,  each  Obligor  shall (and shall cause each
other Group Member to) ensure that its payment obligations  under  the  Finance
Documents  will  rank  at least pari passu with the claims of all its unsecured
and unsubordinated creditors  except  for  obligations mandatorily preferred by
law applying to companies generally;

             (n)  (Hedging) the Borrower shall  (and  the  Company shall ensure
that  each  other  Group  Member  will)  within  180 days of the date  of  this
Agreement enter into and/or maintain Hedging Agreements  so  as  to ensure that
for a period of not less than three years commencing on the Signing  Date,  the
Group  has hedging of interest rate exposure in respect of not less than 50% of
the  aggregate   amounts  outstanding  from  time  to  time  under  the  Senior
Facilities, the Bridge  Loan  and  the  High Yield Notes, which rank pari passu
with the claims of the Finance Parties under the Finance Documents;

             (o)  (Compliance with ERISA)  the  Company  shall ensure that each
U.S. Group Member and each ERISA Affiliate shall not cause  or  permit to occur
either an event which would result in the imposition of Security  under section
412 of the Code or section 302 or section 4068 of ERISA or an ERISA  Event that
might reasonably be expected to have a Material Adverse Effect;

             (p)   (Federal Reserve Regulations) the Company shall ensure  that
each U.S. Group Member  and  each ERISA Affiliate will use the Facility without
violating Regulation T, U or X;

             (q) (Additional Guarantors)  the  Company  shall  ensure  that any
Subsidiary  which  qualifies  as a Material Subsidiary (other than HITCO Carbon
Composites Inc.) becomes an Additional  Guarantor  no  later than 90 days after
the Signing Date or, if such Subsidiary only qualifies as a Material Subsidiary
after  such  date, after the relevant audited financial statements  are  to  be
delivered  in accordance  with  5.02(a),  that  the  shares  in  such  Material
Subsidiary are  pledged  or  assigned  and  that  the  assets  of such Material
Subsidiary  are  pledged  or  assigned  in  favor  of  the  Finance Parties  in
accordance with the applicable laws; however, should any Obligor acquire shares
in  a  target  company which will qualify as a Material Subsidiary,  the  above
applies mutatis mutandis within 90 days of the date of such acquisition;

             (r)   (Non-German  Accounts)  each  German  Obligor  undertakes to
provide  the  Administrative  Agent within 15 Business Days after each  Quarter
Date with (i) a list identifying  all  such  bank accounts held outside Germany
and evidencing the balances of such accounts as  of  the  relevant Quarter Date
together with (ii) written confirmation by the relevant German  Obligor  or  by
the  Company,  respectively,  that  the relevant balances


                                    52

<PAGE>

at no time exceed the maximum  amount of e500,000 and  e2,000,000,  as the case
may be, in the  aggregate of all such  non-German  bank  accounts of all German
Obligors;

             (s)  (Tender Offer) the  Company shall (i) commence a tender offer
for  the  Convertible  Bonds  as  soon  as  practicable   after  the  Company's
extraordinary general meeting at which approval therefor is sought and obtained
and in any event no later than three days after the Closing  Date  (the "Tender
Offer"),  (ii) on or; prior to the Closing Date, irrevocably deposit  into  the
Convert Deposit  Account  an  amount  sufficient to fund principal and interest
(through maturity) of the Convertible Bonds,  (iii)  from the submitting of the
tender documents to Bafin until close of the tender for  the  Convertible Bonds
not  make  or  permit any amendment to the terms and conditions of  the  Tender
Offer and (iv) ensure that the principal and related interest amounts deposited
in the Convert Deposit Account in respect of any Convertible Bonds not tendered
shall remain in  the  Convert  Deposit  Account  and shall further pay into the
Convert Deposit Account an additional amount equal  to the present value of the
remaining interest obligation in respect of such Convertible Bonds;

             (t)   (Dormant Companies) (i) the Company  shall  ensure  that  no
Group Member shall,  while it is a Dormant Company (A) carry on any business or
incur any liability or  (B)  demand or accept payment of any indebtedness owing
to it by any other Group Member;  and  (ii)  no  Group  Member  shall  pay  any
indebtedness owing to any Dormant Company;

             (u)  (Certain  Treasury  Regulation Matters) in the event that the
Borrower determines to take any action  inconsistent  with its intention as set
forth in the first sentence of Section 3.01(hh), it will  promptly  notify  the
Administrative Agent thereof.

             SECTION  5.02.  Reports and  Information.  (a) The  Company  shall
supply to the  Administrative  Agent (i) as soon as the same become  available,
but in any event within 120 days after the end of each of its  financial  years
(A) its audited  consolidated and unconsolidated  financial statements for that
financial  year  and  (B)  at the  request  of the  Administrative  Agent,  the
financial   statements  of  each  Obligor  (audited  where  audited   financial
statements  are  available)  for that  financial  year,  each  comprised of its
respective  balance sheet,  profit and loss account and cash flow statement and
(ii) as soon as the same  become  available,  but in any  event  within 50 days
after the end of each  Financial  Quarter in each of its financial  years,  its
unaudited  consolidated  financial  statements (in a form  satisfactory  to the
Administrative  Agent) for that  Financial  Quarter  comprised  of its  balance
sheet,  profit  and loss  account  and cash  flow  statement,  together  with a
description of the business,  market and financial  developments of the Company
and each business segment.

             (b)   The Company shall supply to the Administrative  Agent,  with
each set of financial statements delivered pursuant to clause (i)(A) or (ii) of
paragraph (a) above,  a  Compliance  Certificate  setting  out  (in  reasonable
detail),  in each case as at the date to which those financial statements  were
drawn up:  (i) computations as to compliance with the Financial Covenants, (ii)
(in  the case  of  a  Compliance  Certificate  accompanying  audited  financial
statements)  computations establishing the amount of Excess Cash Flow (if any),
together with  a  calculation  of how that amount has been determined, (iii) in
the case of the annual audited consolidated  financial  statements certified by
the Company's auditors, a confirmation that the Minimum Guarantor  Coverage has
been  met  as  per the


                                    53

<PAGE>

relevant  balance sheet date and (iv) (in the case of a Compliance  Certificate
accompanying  unaudited quarterly financial  statements) a list of all Material
Subsidiaries.  The Company shall ensure that each Compliance  Certificate shall
be signed by two directors of the Company and, if required to be delivered with
the financial  statements  delivered pursuant to clause (i)(A) of paragraph (a)
above, by the auditors that certified such statements.

             (c)   Each  set  of  financial statements delivered by the Company
pursuant to clause (i)(A) of paragraph (a) above shall be audited and certified
without  material  qualification  by  an  internationally  recognized  firm  of
independent auditors approved by the Administrative Agent.

             (d)  Each set of financial  statements  delivered  by  the Company
pursuant to paragraph (a) above shall be certified by two directors or,  as the
case  may  be,  two  members of the management board of the Company or relevant
Obligor as fairly representing its financial condition and operations as at the
date as at which those financial statements were drawn up.

             (e)  Each  set  of  financial  statements delivered by the Company
pursuant to clause (ii) of paragraph (a) above  shall  be  in  such form as the
Administrative Agent may reasonably require and shall include a  comparison  of
actual  performance  with  the performance projected by the relevant Budget for
the period to which those financial  statements relate, as well as a comparison
with the preceding year, and shall provide management commentary explaining any
differences  in such performance and any  material  developments  or  proposals
affecting the Group or its business.

             (f)  The Company will ensure that each set of financial statements
delivered by it  pursuant to paragraph (a) above is prepared using the IFRS and
accounting practices  and  financial  reference  periods  consistent with those
applied in the preparation of the Base Financial Statements unless, in relation
to any set of financial statements, it notifies the Administrative  Agent  that
such  financial  statements have been prepared on a different basis as a result
of a change in accounting principles and its auditors (being an internationally
recognized firm of  independent  auditors approved by the Administrative Agent)
and shall deliver to the Administrative  Agent  (i) a description of any change
necessary  for  those  financial  statements to reflect  the  IFRS,  accounting
practices and reference periods upon  which  the Base Financial Statements were
prepared  and (ii) sufficient information, in form  and  substance  as  may  be
reasonably  required  by  the  Administrative  Agent,  to enable the Lenders to
determine  whether  the  Financial  Covenants have been complied  with  and  to
establish any of the other matters referred  to  in  paragraph (b) above and to
make an accurate comparison between the financial position  indicated  in those
financial statements and the Base Financial Statements.  Any reference in  this
Agreement  to  those  financial statements shall be construed as a reference to
those financial statements as adjusted to reflect the basis upon which the Base
Financial Statements were prepared.

             (g)  If the  Company notifies the Administrative Agent of a change
in accordance with paragraph  (f)  above  then  the  Company and Administrative
Agent shall enter into negotiations in good faith with  a  view to agreeing (i)
whether  or  not  the  change  might result in any material alteration  in  the
commercial effect of any of the  terms  of  this  Agreement and (ii) if so, any
amendments to this Agreement which may be necessary  to


                                    54

<PAGE>

ensure  that the  change  does not  result in any  material  alteration  in the
commercial effect of those terms, and if any amendments are agreed and approved
in accordance  with Section 10.08 they shall take effect and be binding on each
of the parties hereto in accordance with their terms.

             (h)  The  Company shall, as soon as the same becomes available and
in  any  event no later than  three  months  after  the  commencement  of  each
financial  year of the Group, deliver to the Administrative Agent a budget (the
"Budget") for  that  financial  year  and  the  following three financial years
(together, the "Financial Years under Review") (in  a  form  and  showing  such
detailed  information  as  the  Administrative  Agent  may  reasonably require)
prepared by reference to each Financial Quarter and including  (i) forecasts of
any   projected  disposals  (including  timing  and  amount  of  any  projected
disposals)  on  a consolidated basis of the Group for each Financial Year under
Review; (ii) projected  profit  and loss accounts (including projected turnover
and  operating  costs), broken down  in  respect  of  operating  profit  before
depreciation  and  amortization  in  different  business  units/divisions,  and
projected balance  sheets  and  cash  flow  statements,  together with the main
operating  assumptions relating to such projected financial  statements,  on  a
quarterly basis,  for  each Financial Year under Review on a consolidated basis
for the Group; (iii) revisions  to  the  projections  set out in the Budget and
actuals  of  the  preceding year, together with the main operating  assumptions
relating thereto, for  each Financial Year under Review, based on the financial
condition  and  performance   and   prospects   of  the  Group  at  such  time;
(iv) projected Capital Expenditure to be incurred  on a Financial Quarter basis
for the Financial Years under Review on a consolidated basis for the Group; and
(v) projected Consolidated EBITDA as at the end of each Financial Quarter.  The
Company shall provide the Administrative Agent with  details  of  any  material
changes  in  the  projections  delivered  under  this  paragraph (h) as soon as
reasonably practicable after it becomes aware of any such change.

          (i)  The Company shall supply to the Administrative Agent:

               (i) all material documents  dispatched by any Group Member to its
          shareholders (or any class of them) or by the Company and its Material
          Subsidiaries  to its creditors (or any class of them) generally at the
          same time as they are dispatched;

               (ii)  promptly upon  becoming  aware of them,  the details of any
          litigation,   arbitration  or  administrative  proceedings  which  are
          current,  threatened  or pending  against  any Group  Member and which
          might, if adversely determined, have a Material Adverse Effect and any
          details  of any  litigation  or  administrative  proceeding  which are
          current,  or  any  material  litigation  or  material   administrative
          proceedings which are threatened or pending, regarding competition law
          proceedings and related civil lawsuits,  including,  for the avoidance
          of  doubt,   any  fines  which  have  been  assessed  by  way  of  any
          administrative  proceedings  by any  Government  Authority,  including
          details   regarding  the  Existing   Competition  Law  Proceedings  as
          identified in Schedule 2;

               (iii) in  relation to each  Financial  Quarter,  a status  report
          relating to the Existing  Competition  Law  Proceedings  signed by the
          Company's in-house legal counsel;




                                    55

<PAGE>

               (iv)  promptly upon  becoming  aware of them,  the details of any
          labor  dispute  which is current,  threatened  or pending  against any
          Group Member and which might, if adversely  determined,  have, whether
          in  respect  of that  Group  Member or the Group  taken as a whole,  a
          Material Adverse Effect;

               (v)  promptly  upon  becoming  aware of them,  the details of any
          rating or, following the issuance of any such rating, any change in an
          Obligor's credit rating or the rating of the Facility by Moody's or by
          S{ampersand}P;  (vi) promptly upon becoming aware of them, the details
          of any proposed  acquisition(s) (as defined below), to the extent such
          details are not subject to the terms of a  reasonable  confidentiality
          undertaking,  in excess of e2,500,000  per annum,  including,  but not
          limited to (A) the provision of the target  company's  audited  annual
          financial statements, (B) due diligence reports prepared in connection
          with such  acquisition(s)  and (C) pro forma projections for the Group
          after the  acquisition of the target company;  "acquisitions"  for the
          purposes of this clause (vi) shall mean any  investment or acquisition
          of any share or any  interest  in the  capital of any  person,  or the
          investment  or  acquisition  of any  business or going  concern or the
          whole or  substantially  the whole of any  assets or  business  of any
          person (or any assets that  constitute a division or operation unit of
          the business of any person);

               (vii)  promptly upon becoming  aware of them,  the details of any
          material change with regard to lines of credit  exceeding in each case
          e1,000,000  granted by banks and/or financial  institutions other than
          the Senior Lenders in relation to the Senior Facilities;

               (viii) details of any change in the corporate ownership structure
          of the Group from that set out in the Group Structure Chart;

               (ix) at each  Quarter  Date a cash flow  analysis,  signed by the
          chief financial  officer of the Company,  in relation to the preceding
          Financial Quarter;

               (x) promptly,  and, in any event,  prior to the date on which any
          Subsidiary becomes a Guarantor, such further information regarding the
          financial  condition,  business and  operations of any Group Member as
          any Lender (through the  Administrative  Agent) may reasonably request
          (including  any  requirements  with respect to  applicable  "know your
          customer" and anti-money  laundering rules and regulations,  including
          the USA Patriot Act);

               (xi) any communication received by it in respect of any actual or
          alleged  breach of or  liability  under  Environmental  Law which,  if
          substantiated,  might  have a  Material  Adverse  Effect  or result in
          liabilities  of, and/or  expenditure  by, one or more Group Members in
          excess  of  e5,000,000  (or its  equivalent  in  another  currency  or
          currencies) in aggregate;

               (xii)  promptly upon becoming  aware of them,  the details of any
          claim(s)  and/or  potential  claim(s)  for  an  amount  in  excess  of
          e10,000,000  (or its equivalent in another  currency or currencies) in
          aggregate made by or on behalf of any Group Member under any insurance
          policy;



                                    56

<PAGE>


               (xiii)  promptly upon becoming  aware of them, the details of any
          Group Member which becomes or ceases to be a Dormant Company; and

               (xiv)  to the  extent  not  provided  pursuant  to the  foregoing
          clauses (i) through (xiii),  any notice or written  information (other
          than notices of  borrowings or other  routine  notices  related to the
          administration  of  the  German  Credit  Agreement)  delivered  to the
          lenders  generally  under  the  German  Credit  Agreement  (or  to the
          European Facility Agent for delivery to such lenders).

             (j)  Each Obligor shall notify the  Administrative  Agent  of  any
Default  (and  the  steps,  if  any,  being  taken  to remedy it) promptly upon
becoming  aware  of  its  occurrence  (unless  that Obligor  is  aware  that  a
notification has already been provided by another Obligor), and promptly upon a
request  by  the  Administrative  Agent,  the  Company   shall  supply  to  the
Administrative  Agent  a certificate signed by two of its directors  or  senior
officers on its behalf certifying  that  no  Default  is  continuing  (or  if a
Default  is  continuing,  specifying  the  Default and the steps, if any, being
taken to remedy it).

             (k)  (i) The Company shall ensure  that each U.S. Group Member and
each ERISA Affiliate (each a "Relevant Company") shall (A)  promptly and in any
event within 30 days after any Relevant Company knows  or  has  reason  to know
that  any  ERISA  Event  which  would reasonably be expected to have a Material
Adverse Effect has occurred and (B)  promptly  and  in any event within 10 days
after any Relevant Company knows or has reason to know  that  a  request  for a
minimum  funding  waiver  under  section 412  of  the  Code has been filed with
respect   to   any  Tile IV  Plan  or  Multiemployer  Plan,  deliver   to   the
Administrative Agent  a written statement of the chief financial officer of the
Company describing such  ERISA  Event or waiver request and the action, if any,
that it proposes to take with respect  thereto  and  a copy of any notice filed
with the PBGC or the IRS pertaining thereto and (ii) the  Company  shall ensure
that  each  Relevant  Company  shall,  simultaneously  with  the date that  any
Relevant  Company files a notice of intent to terminate any Title IV  Plan  (if
such termination would require material additional contributions in order to be
considered  a  standard  termination  with  the  meaning  of section 4041(b) of
ERISA), deliver to the Administrative Agent a copy of such notice.

             (l)  Each Obligor shall (and the Company shall  ensure  that  each
Group  Member  will)  keep  books  and  records which accurately reflect in all
material respects all of its business, affairs and transactions.

             (m) (i)  If an Event of Default  is  continuing  or  the  Required
Lenders  reasonably  believe,  after  consultation  with  the Company, that any
financial statement, certificate or calculation provided under  this  Agreement
is  inaccurate or incomplete in any material respect, the Administrative  Agent
(acting  on  the  instructions  of  the Required Lenders) may (A)  instruct (or
require the Company to instruct) the  auditors  of  the  Company (or such other
internationally recognized big four firm of accountants as  the  Administrative
Agent selects) to investigate the affairs, financial performance or  accounting
and other reporting procedures and standards of the Group or (B) instigate such
other  investigations  and  commission such other reports as the Administrative
Agent (acting on the instructions of the Required Lenders) reasonably requires,
with the  reasonable costs and  expense of each such investigation or report be
borne by the



                                    57

<PAGE>

Company,  and (ii) each Obligor  shall (and the Company  shall ensure that each
other  Group  Member  will)  cooperate  fully with any person  carrying  out an
investigation or preparing a report pursuant to clause (i) above.

             SECTION 5.03. Use of  Proceeds.   The Company shall ensure that the
proceeds of the Loans only be used for an Eligible Purpose.


                                  ARTICLE VI


                              Negative Covenants

             The Company covenants and agrees with each Lender that, so long as
this  Agreement  shall remain in effect and until  the  Commitments  have  been
terminated and the  principal  of  and  interest on each Loan, all Fees and all
other expenses or amounts payable hereunder or under any other Finance Document
with respect to the Loans have been paid  in  full, unless the Required Lenders
shall otherwise consent in writing:

             SECTION 6.01. Negative Pledge.  No  Obligor  shall (and the Company
shall ensure that no other Group Member will) (a) create or  permit  to subsist
any  Security  over  any  of  its assets or (b) (i) sell, transfer or otherwise
dispose of any of its assets on  terms  whereby they are or may be leased to or
re-acquired by any Group Member, (ii) sell,  transfer  or  otherwise dispose of
any  of  its  receivables  on recourse terms, (iii) enter into any  arrangement
under which money or the benefit  of  a  bank  or other account may be applied,
set-off or made subject to a combination of accounts,  or  (iv) enter  into any
other  preferential  arrangement  having  a  similar  effect,  in each case, in
circumstances where the arrangement or transaction is entered into primarily as
a  method of raising Financial Indebtedness or of financing the acquisition  of
an asset.  Clauses (a)  and  (b)  of  the immediately preceding sentence do not
apply to Permitted Security.  No Obligor  shall  (and  the Company shall ensure
that  no  other  Group Member will) agree to create or permit  to  subsist  any
covenant in any document,  other  than  the Finance Documents, the Bridge Loan,
the Exchange Notes Indenture, the High Yield  Notes  and the Convertible Bonds,
that  it  will not create or permit to subsist any Security  over  any  of  its
assets.

             SECTION 6.02. Disposals. (a) Other than pursuant to the Management
and Employee Benefit Plans, the Hitco Options,  any Permitted Joint Venture and
the conversion  rights under the  Convertible  Bonds, no Obligor shall (and the
Company  shall  ensure  that no other  Group  Member  will) enter into a single
transaction or a series of  transactions  (whether  related or not) and whether
voluntary or involuntary to sell,  lease,  transfer or otherwise dispose of any
shares in any Group Member,  unless such sale,  lease,  transfer or disposal of
shares is made to an Obligor and the Company provides evidence  satisfactory to
the Security Agent (including a confirmation of the relevant Obligor's external
legal counsel  addressed to such Obligor and expressed to be made available to,
and to be relied upon by, the Security  Agent on behalf of the  Lenders),  that
the Security  created  over such shares in favor of the Secured  Parties is not
impaired thereby.

             (b) No Obligor shall (and the Company shall ensure  that  no other
Group  Member will) enter into a single transaction or a series of transactions
(whether  related  or not) and whether voluntary or involuntary to sell, lease,
transfer or otherwise  dispose  of


                                    58

<PAGE>

all or any part of its  respective  assets  (other than  shares  referred to in
paragraph (a) above), other than Permitted Disposals.

             SECTION  6.03. Options.  Other than pursuant to the Management  and
Employee Benefit Plans,  the  Hitco Options and the conversion rights under the
Convertible Bonds, no Obligor shall (and the Company shall ensure that no other
Group  Member  will) enter into or  permit  to  subsist  any  option  or  other
arrangement whereby  any  person has the right (whether or not exercisable only
on a contingency) to require  any Group Member to purchase or otherwise acquire
or sell or otherwise dispose of  any  material  property or any interest in any
material  property otherwise than where any such arrangement  is  permitted  by
Section 6.14.

             SECTION  6.04.  Change  of  Business.   No  Obligor  shall (and the
Company shall ensure that no other Group Member will) make, or take  any  steps
to make, any substantial change to the general nature of its business from that
carried on at the Signing Date or carry on any other business which results  in
any  substantial change to the general nature of the business of the Group as a
whole from that carried on at the Signing Date.

             SECTION  6.05. Constitutional Documents.  No Obligor shall request,
permit or make any change  to  its  constitutional  documents  without  written
notification  to  the  Administrative  Agent  where  such change relates to the
shareholders, the share capital, the management, the registered  office  or the
legal form of such Obligor.

             SECTION  6.06.  Share  Capital.   No Obligor shall (and the Company
shall ensure that no other Group Member will) (a)  redeem,  purchase, return or
make any repayment in respect of any of its share capital or  make  any capital
distribution  or  enter  into any agreement to do so or (b) allot or issue  any
shares or grant to any person  the  right (whether conditional or otherwise) to
call for the issue or allotment of any  share,  partnership interest, loan note
or loan capital of such Obligor or other Group Member (including an option or a
right of pre-emption or conversion) or enter into  any  agreement  or  pass any
corporate resolution to do any of the foregoing other than (i) for the purposes
of  an issue of shares by one wholly-owned Subsidiary of the Company to another
wholly-owned Subsidiary of the Company provided that Security is, in respect of
the shares  of  an  Obligor,  created  over such shares in favor of the Secured
Parties or (ii) for the purposes of an issue  of  shares  by  the  Company to a
person  who  acts  or  is to act as the trustee of any Group pension scheme  or
employee or management incentive  scheme  provided  that  such  scheme has been
approved  in  writing  by  the  Administrative Agent, such approval not  to  be
unreasonably withheld.

             SECTION 6.07.  Dividends and Other  Distributions.  As long as the
Leverage  Ratio is  greater  than 1.00 to 1.00:  (a) the  Company to the extent
permissible  under German law, will recommend not to make and not to propose to
make any dividend,  return on capital,  repayment of capital  contributions  or
other distribution (whether in cash or kind) or make any distribution of assets
or other payment  whatsoever in respect of share  capital  whether  directly or
indirectly; and

             (b)   the  Company  will  refrain  from making any share buy-backs
other than as provided for in the Management and Employee Benefit Plans.


                                    59

<PAGE>


             SECTION 6.08. Subordinated and Intra-Group  Debt.  No Obligor shall
(and the Company shall ensure that no other Group Member  will) (a) pay, repay,
prepay,  redeem,  purchase  or  otherwise retire the principal  amount  of  any
indebtedness, (b) pay any interest  or  return  on  principal  or  repayment of
principal  or  other distribution (whether in cash or kind) but excluding,  for
the avoidance of  doubt, the capitalization of interest of any payment in kind,
or  PIK  interest, or  make  any  distribution  of  assets  or  other  payments
whatsoever  in  respect  of  any  indebtedness or (c) set apart any sum for any
aforesaid purpose, including, without limitation, by depositing any moneys in a
defeasance  trust or the taking of any  similar  action,  in  each  case  which
indebtedness  (A)  is  subordinate  or  junior  in  right  of  payment  to  the
obligations under the Senior Facilities pursuant to a written agreement to that
effect  (other than, in the case of this clause (A), regular scheduled payments
of interest  or  other amounts as and when due, to the extent not prohibited by
applicable subordination  provisions)  or  (B) is  under  any  Intra-Group Loan
Document with a member of the Group which is not an Obligor.  Without affecting
the ranking of the High Yield Notes, this Section 6.08 shall apply  thereto  as
if they were within the classes of indebtedness covered hereby.

             SECTION  6.09.  Cash  Flow  Restrictions.  The Company shall ensure
that, other than the Finance Documents, the  Bridge  Loan  and  the  High Yield
Notes,  no  Group  Member  will  be  a  party  to  any  contractual  or similar
arrangement  pursuant  to which any Group Member is prohibited from making  any
payments of dividends or  other  distributions,  or  from  lending  monies,  to
another Group Member.

             SECTION 6.10. Merger.  With the exception of Permitted Mergers, no
Obligor  shall  (and  the Company shall ensure that no other Group Member will)
enter into any amalgamation, demerger, merger or corporate reconstruction which
results in assets being transferred from it to an entity that is not an Obligor
unless the Administrative  Agent  (acting  on  the instructions of the Required
Lenders) shall have given its prior written consent  thereto,  such consent not
to be unreasonably withheld.

             SECTION  6.11.  Indebtedness.  No Obligor shall (and  the  Company
shall ensure that no other Group  Member  will)  incur,  create  or  permit  to
subsist or have outstanding:

             (a)  any Financial Indebtedness other than Permitted Indebtedness;
or

             (b) any  other  indebtedness, except in the ordinary course of its
business.

             SECTION 6.12. Loans  Out.  No Obligor shall (and the Company shall
ensure that no other Group Member will)  make  any  loans,  grant any credit or
provide any other financial accommodation to or for the benefit  of any person,
including any of its shareholders, except Permitted Loans.

             SECTION  6.13. Guarantees or Contingent Liabilities.   No  Obligor
shall (and the Company  shall  ensure that no other Group Member will) (a) give
any guarantee or indemnity to or  for  the  benefit  of any person or otherwise
voluntarily assume any liability, whether actual or contingent,  in  respect of
any  obligation  of  any  person or (b) be or become directly or indirectly  or
actually or contingently liable  for any loss, damage or expense resulting from
the non-payment or breach of any obligation  of  any  other  person, except for
Permitted Guarantees or Contingent Liabilities.


                                    60

<PAGE>


             SECTION 6.14. Treasury Transactions.  No Obligor  shall  (and  the
Company  shall  ensure that no other Group Member will) enter into any Treasury
Transaction except  for  (a) Treasury  Transactions  entered into in accordance
with Section 5.01(n), and (b) any other foreign exchange  transactions for spot
or forward delivery entered into in the ordinary course of  business  (and  not
for  investment  or speculative purposes) to hedge actual or projected interest
rate, currency value  or commodity price exposures incurred by any Group Member
in the ordinary course of business.

             SECTION 6.15.  Acquisitions.   No  Obligor  shall (and the Company
shall ensure that no other Group Member will) engage in any  Acquisitions other
than Permitted Acquisitions or as otherwise permitted by Section 6.16.

             SECTION  6.16.  Joint  Ventures.  (a) No  Obligor  shall  (and the
Company  shall ensure that no other Group Member will) form,  or enter into, or
permit to subsist, purchase,  subscribe for or otherwise acquire any shares (or
other securities or any interest therein) in or transfer any assets to, or lend
to, or guarantee  or give  security for the  obligations  of, any  partnership,
consortium,  Joint Venture or other like  arrangement or agree to do any of the
foregoing.

             (b)  Paragraph  (a) above shall not apply to (i) any  partnership,
consortium, Joint Venture or other  like  arrangement  existing  at the Signing
Date, (ii) any Permitted Loans, (iii) any Permitted Joint Ventures  or (iv) any
Permitted Guarantees and Contingent Liabilities.

             SECTION 6.17. Amendments to Finance and Other Documents.   Neither
the  Company nor any Obligor shall amend, vary, novate, supplement or terminate
any Finance Document (other than the German Credit Agreement), any Subordinated
Finance Document or any document delivered to the Administrative Agent pursuant
to Article IV  or  Section  9.16,  or  waive  any  right thereunder, except for
(a) any of the foregoing which is expressly consented  to  in  writing  by  the
Administrative  Agent  (acting  on the instructions of the Required Lenders) or
(b) any amendment, variation or waiver which is of a minor or technical nature.

             SECTION 6.18. Material  Adverse Effect.  No Obligor shall (and the
Company shall ensure that no other Group  Member will) enter into any agreement
or obligation (a) which is reasonably likely  to have a Material Adverse Effect
or (b) the performance of which would result in  a  breach  of any provision of
any Finance Document by any Obligor.

             SECTION  6.19.  Arm's  Length  Terms.  No Obligor shall  (and  the
Company shall ensure that no Group Member will)  enter  into  any  contract  or
arrangement with or for the benefit of any other person (including any disposal
to  that  person)  other  than  in the ordinary course of business and on arm's
length terms.

             SECTION 6.20. Net Worth.   Net Worth shall at all times throughout
the term of the Facility exceed e325,000,000.

             SECTION 6.21. Interest Coverage  Ratio.   The  Company must ensure
that  the  Interest  Coverage  Ratio  for each Relevant Period ending  on  each
Quarter Date


                                    61

<PAGE>


specified  in Column A below shall  equal or exceed the ratio set out  opposite
such Quarter Date in Column B below:


<TABLE>
<CAPTION>
Column A                     Column B
(Quarter Date)               (Ratio)
<S>                           <C>
March 31, 2004               2.00 to 1.00
June 30, 2004                2.00 to 1.00
September 30, 2004           2.25 to 1.00
December 31, 2004            2.45 to 1.00
March 31, 2005               2.55 to 1.00
June 30, 2005                2.65 to 1.00
September 30, 2005           2.75 to 1.00
December 31, 2005            2.85 to 1.00
March 31, 2006               3.00 to 1.00
June 30, 2006                3.15 to 1.00
September 30, 2006           3.30 to 1.00
December 31, 2006            3.45 to 1.00
March 31, 2007               3.50 to 1.00
June 30, 2007                3.60 to 1.00
September 30, 2007           3.65 to 1.00
December 31, 2007            3.75 to 1.00
March 31, 2008               3.90 to 1.00
June 30, 2008                4.00 to 1.00
September 30, 2008           4.20 to 1.00
December 31, 2008 and        4.35 to 1.00
 each Quarter Date thereafter
</TABLE>

             SECTION 6.22. Leverage Ratio.  The Company must  ensure  that  the
Leverage  Ratio  for each Relevant Period ending on each Quarter Date specified
in Column A below  shall  not  be  greater than the ratio set out opposite such
Quarter Date in Column B below:

<TABLE>
<CAPTION>
Column A                       Column B
(Quarter Date)                 (Ratio)
<S>                             <C>
March 31, 2004                 5.85 to 1.00
June 30, 2004                  5.85 to 1.00
September 30, 2004             5.15 to 1.00
December 31, 2004              4.65 to 1.00
March 31, 2005                 4.45 to 1.00
June 30, 2005                  4.35 to 1.00
September 30, 2005             4.05 to 1.00
December 31, 2005              3.90 to 1.00
March 31, 2006                 3.55 to 1.00
June 30, 2006                  3.40 to 1.00
September 30, 2006             3.10 to 1.00
December 31, 2006              2.85 to 1.00
March 31, 2007                 2.75 to 1.00
</TABLE>



                                      62

<PAGE>

<TABLE>
<CAPTION>
Column A                       Column B
(Quarter Date)                 (Ratio)
<S>                             <C>
June 30, 2007                  2.70 to 1.00
September 30, 2007             2.55 to 1.00
December 31, 2007              2.40 to 1.00
March 31, 2008                 2.25 to 1.00
June 30, 2008                  2.20 to 1.00
September 30, 2008 and         2.00 to 1.00
   each Quarter Date thereafter
</TABLE>

             SECTION 6.23. Minimum Guarantor Coverage.  The Company must ensure
that the contribution to Consolidated  EBITDA  and  turnover  of the Guarantors
represent at all times at least 85% of the Consolidated EBITDA  and turnover of
the Group (the "Minimum Guarantor Coverage").

             SECTION 6.24. Senior Net Debt to Consolidated EBITDA.  The Company
must ensure that the ratio of Senior Net Debt to Consolidated EBITDA  for  each
Relevant  Period ending on a Quarter Date specified in Column A below shall not
be greater than the ratio set out opposite such Quarter Date in Column B below:

<TABLE>
<CAPTION>
Column A                       Column B
(Quarter Date)                 (Ratio)
<S>                             <C>
March 31, 2004                 2.55 to 1.00
June 30, 2004                  2.55 to 1.00
September 30, 2004             2.20 to 1.00
December 31, 2004              1.95 to 1.00
March 31, 2005                 1.85 to 1.00
June 30, 2005                  1.80 to 1.00
September 30, 2005             1.65 to 1.00
December 31, 2005              1.55 to 1.00
March 31, 2006                 1.30 to 1.00
June 30, 2006                  1.25 to 1.00
September 30, 2006             1.05 to 1.00
December 31, 2006 and          1.00 to 1.00
   each Quarter Date thereafter
</TABLE>


             SECTION  6.25.  Fixed  Charge  Coverage  Ratio.   The Company must
ensure that the fixed charge cover ratio being:

             (A - B) + C
             -----------
               (C + D)


             where:

             A      is the Group's Cash Flow from Operating Activities plus any
fees paid in relation to this Agreement, the Bridge Loan, the High Yield Notes,
the Rights Issue and the Tender Offer, plus any amounts paid in  respect of the
U.S. Competition

                                      63

<PAGE>


Law Liabilities,  the Canadian Competition Law Liabilities,  the EU Competition
Law  Liabilities  to the extent paid from the Cartel Deposit  Account,  and any
civil lawsuits settled in 2004 up to an amount of e3,000,000;

             B      is the Group's Cash Flow from Investing Activities;

             C      is the Net Interest Expense; and

             D      is the Amortization and Other Payments;

in each case for each Relevant Period ending  on  a Quarter Date (commencing on
December 31, 2004), shall not be lower than 1.00 to 1.00.

             SECTION  6.26.  Maximum  Capital Expenditure.   The  Company  must
ensure that the aggregate Capital Expenditure  of  the Group in respect of each
financial year of the Company specified in Column A below, shall not exceed the
amount set out opposite such financial year in Column B below:

<TABLE>
<CAPTION>
Column A             Column B
(Financial Year Date)(Amount e)
<S>                   <C>
December 31, 2004    53,000,000
December 31, 2005    55,000,000
December 31, 2006    54,600,000
December 31, 2007    53,600,000
December 31, 2008    53,600,000
December 31, 2009    53,600,000
</TABLE>

If  in any financial year (the "Original Financial Year")  the  amount  of  the
Capital  Expenditure is less than the maximum amount permitted for the Original
Financial Year (the difference being referred to below as the "Unused Amount"),
then  the maximum  expenditure  amount  set  out  in  Column B  above  for  the
immediately  following  financial  year  shall  be  increased by an amount (the
"Carry-Forward Amount") equal to the lesser of (i) 50%  of  the  maximum amount
permitted for the Original Financial year and (ii) the Unused Amount.

             SECTION  6.27.  Calculations.   All  calculations  made  for   the
purposes  of  the Financial Covenants set out in Sections 6.21 to 6.25 shall be
made by reference  to, where the Relevant Period to which such covenant relates
ends on, or the Quarter Date to which such covenant relates falls on:

             (a) any  day  other than the last day of any financial year of the
Company, the unaudited consolidated  financial  statements  of  the Company for
each of the four consecutive Financial Quarters within that Relevant Period or,
as  the  case  may be, the unaudited consolidated financial statements  of  the
Company for the  Financial Quarter ending on that Quarter Date, in each case as
delivered pursuant to Section 5.02(a); and

             (b) the  last  day  of  any  financial  year of the Company, as in
paragraph (a) above or, when so delivered, the audited  consolidated  financial
statements of the Company for that financial year.

                                      64

<PAGE>


             SECTION   6.28.   Financial  Testing. (a) Each  of  the  Financial
Covenants (other than Minimum Guarantor  Coverage) shall be tested by reference
to each of the financial statements and each  Compliance  Certificate delivered
pursuant to Section 5.02(a) and (b).

             (b)  All Financial Covenants set out in Sections  6.21, 6.22, 6.24
and  6.25  shall be tested against the Company's latest consolidated  financial
statements on a four Financial Quarter rolling basis and adjusted pro forma for
Permitted Acquisitions  and  Permitted Disposals assuming such transactions had
occurred  at  the  beginning of the  Relevant  Period.  The  Minimum  Guarantor
Coverage shall be tested  on  the basis of the Company's consolidated financial
statements as of September 30,  2003,  and  subsequently  on  the  basis of the
Company's  consolidated  financial  statements  as  per year-end starting  with
December 31, 2004.

                                  ARTICLE VII


                               Events of Default

             Each of these events or circumstances is an "Event of Default":

             (a)  (Non-Payment)  An Obligor does not  pay  on  the due date any
amount payable pursuant to a Finance Document at the place and in  the currency
in which it is expressed to be payable, unless (i) its failure to pay is caused
by   administrative   or  technical  error  and  (ii) payment  is  made  within
two Business Days of its due date.

             (b)  (Financial  Covenants)   Any  requirement  of  the  Financial
Covenants is not satisfied.

             (c)   (Other  Obligations)   An  Obligor  does  not comply with  a
material  provision  of  the  Finance Documents (other than those  referred  to
in (a) and (b) above) or does not  comply  with  any  provision  of the Finance
Documents which is capable of remedy and fails to remedy such breach  within  a
grace  period  specified  by  the  Administrative  Agent  of  not more than ten
Business Days.

             (d)  (Misrepresentation)  Any representation or statement  made or
deemed  to be made by an Obligor in the Finance Documents or any other document
delivered  by  or  on  behalf  of  any  Obligor under or in connection with any
Finance  Document is or proves to have been  incorrect  or  misleading  in  any
material respect  when made or deemed to be made and which has or is reasonably
likely to have a Material Adverse Effect.

             (e)  (Cross  Default)  (i) Any Financial Indebtedness of any Group
Member is not paid when due  and  payable  nor within any originally applicable
grace period; (ii) any Financial Indebtedness  of  any Group Member is declared
to be or otherwise becomes due and payable prior to its specified maturity as a
result of an event of default (however described); (iii) any commitment for any
Financial  Indebtedness  of any Group Member is cancelled  or  suspended  by  a
creditor of any Group Member  as  a  result  of  an  event  of default (however
described);  or  (iv) any  creditor  of  any Group Member becomes  entitled  to
declare any Financial Indebtedness of any Group Member due and payable prior to
its specified maturity as a result of an event  of default (however described);

                                      65


<PAGE>

provided that no Event of Default will occur under  this  paragraph (e)  if the
aggregate   amount  of  Financial  Indebtedness  or  commitment  for  Financial
Indebtedness  falling  within clauses (i) to (iv) above is less than e2,500,000
(or its equivalent in any other currency or currencies).

             (f)  (Insolvency)   (i) A  Group Member located in an OECD country
or  a  Material Subsidiary (each a "Relevant  Company")  is  unable  or  admits
inability to pay its debts as they fall due, suspends making payments on any of
its debts  or,  by  reason  of  actual  or  anticipated financial difficulties,
commences  negotiations  with  one or more of its  creditors  with  a  view  to
rescheduling  any of its indebtedness.  In  particular,  any  Relevant  Company
incorporated under  the laws of Germany (a "German Relevant Company") is unable
to pay its debts as they  fall  due or is over indebted, commences negotiations
with any one or more of its creditors  with  a view to the general readjustment
or  rescheduling  of its indebtedness or makes a  general  assignment  for  the
benefit of or a composition  with  its creditors or, for any of the reasons set
out  in  Sections 17-19 of the German  Insolvenzordnung,  any  German  Relevant
Company files  for  insolvency or the board of directors of any German Relevant
Company is required by  law to file for insolvency or the competent court takes
any of the actions set out  in  Section  21  of  the German Insolvenzordnung or
institutes insolvency proceedings against any German  Relevant  Company  or any
event  occurs  with respect to any other Relevant Company which, under the laws
of any jurisdiction  to  which  it  is subject or in which it has assets, has a
similar or analogous effect; (ii) any  event  or  proceedings  are  taken  with
respect  to  any  Relevant  Company  that  has  a  similar effect to any of the
provisions set out in clause (i) above; or (iii) a moratorium  is  declared  in
respect of any indebtedness of any Relevant Company.

             (g)    (Insolvency   Proceedings)   Any  corporate  action,  legal
proceedings  or  other  procedure or step  is  taken  in  relation  to  (i) the
suspension  of  payments,  a   moratorium   of  any  indebtedness,  winding-up,
dissolution, administration or reorganization (by way of voluntary arrangement,
scheme  of  arrangement  or otherwise) of any Relevant  Company  other  than  a
solvent liquidation or reorganization  of  any Relevant Company which is not an
Obligor; (ii) a composition, assignment or arrangement with any creditor of any
Relevant Company; (iii) the appointment of a  liquidator (other than in respect
of  a  solvent liquidation of a Relevant Company  which  is  not  an  Obligor),
receiver,  administrator,  provisional  administrator, administrative receiver,
compulsory manager or other similar officer  in respect of any Relevant Company
or any of its assets; or (iv) enforcement of any  Security  over  any  material
assets of any Relevant Company, or any analogous procedure or step is taken  in
any  jurisdiction, unless such corporate action, legal proceedings or analogous
procedure   or   step  is  fully  discontinued  within  fourteen  days  of  its
commencement.

             (h)  (Creditors' Process)  Any attachment, sequestration, distress
or execution affects  any  asset  or  assets  of  a  Relevant Company having an
aggregate value of e1,500,000 and is not discharged within 14 days.

             (i)  (Ownership of the Obligors)  Except  in relation to a sale of
shares in Hitco Carbon Composites, Inc. under an existing  call option with its
chief executive officer, an Obligor (other than the Company)  is  not or ceases
to be a wholly-owned Subsidiary of the Company on or after the Closing Date.


                                      66

<PAGE>

             (j)  (Finance Documents)  If (i) it is or becomes unlawful  for an
Obligor  to perform any of its obligations under the Finance Documents; (ii) an
Obligor repudiates  a Finance Document or evidences an intention to repudiate a
Finance Document; or  (iii) any Finance Document is not or ceases to be binding
on or enforceable against  an  Obligor, and, in each case, the risk or security
position of the Lenders is materially adversely affected thereby.

             (k)  (Transaction Security)   If  (i) any  Transaction Security is
not in full force and effect with the ranking and priority  it  is expressed to
have;  or  (ii) an  Obligor  repudiates  any  of  the  Transaction Security  or
evidences an intention to repudiate any of the Transaction  Security,  and,  in
either  case,  the  security  or  risk  position  of  the  Lender is materially
adversely affected thereby.

             (l)  (Cessation of Business)  Any Obligor suspends  or  ceases  to
carry on all or any substantial part of its business or proposes to do so.

             (m)   (Auditors'  Qualification)   The  Company's auditors qualify
their report on the audited consolidated financial statements  of  the Group in
any manner that is, in the opinion of the Required Lenders (acting reasonably),
materially adverse in the context of the Finance Documents and the transactions
contemplated by the Finance Documents.

             (n)    (Material   Adverse   Change   or  Effect)   Any  event  or
circumstance occurs which the Required Lenders reasonably  believe  has  had or
could  have  a  Material  Adverse  Effect  on  the  Lenders'  risk and security
position.

             (o)   (Guarantor  Accession) Any of the Material Subsidiaries  has
not become an Additional Guarantor  on or before the date falling 90 days after
the respective date referred to in Section 9.16.

             (p)  (Compulsory Acquisition)   All  or  any part of the assets of
any  Group  Member  having  a  value  in  excess  of  e5,000,000   are  seized,
nationalized, expropriated or compulsorily acquired by, or by the order of, any
Government  Agency  where  such  seizure,  nationalization,  expropriation   or
compulsory acquisition might have a Material Adverse Effect.

             (q)  (Change of Control)  There is a Change of Control.

             (r)   (Proceedings)  Any litigation, arbitration, labor dispute or
administrative proceedings  of  or  before  any  court, arbitral body or agency
(other  than  the proceedings referred to in (ii) below)  which,  if  adversely
determined, could,  in  the  reasonable  opinion  of  the  Required Lenders, be
expected  to  have a Material Adverse Effect, is or are started  in  accordance
with the applicable procedural rules in the relevant jurisdiction or threatened
against any Group Member;  other than the Existing Competition Law Proceedings,
any competition law related (A) civil litigation, civil lawsuits or other civil
proceedings of  or  before  any  court  are  started  in  accordance  with  the
applicable  procedural  rules  in  any  relevant jurisdiction against any Group
Member which, if adversely determined, could,  in the reasonable opinion of the
Required Lenders, be expected to have a Material  Adverse  Effect  (B) fines in
the   aggregate  amount  exceeding  e2,500,000  are  assessed  by  way  of  any
administrative proceedings by any

                                      67

<PAGE>


Government  Agency or (C) fines in relation  to the  Existing  Competition  Law
Proceedings  are  subsequently  increased.  However,  before  accelerating  the
Facility pursuant to this Article VII, the parties will enter into negotiations
in good faith for a period not exceeding 30 days after the occurrence of any of
the events set out in clauses  (A),  (B) and (C) above with a view to  continue
the Loans as outstanding.]

             (s)  (Unlawfulness)  It is  or  becomes  unlawful  for  any person
(other  than  a  Finance  Party)  to  perform  any of its obligations under the
Finance Documents.

             (t)   (Repudiation)   Any  person (other  than  a  Finance  Party)
repudiates a Finance Document or evidences  an intention to repudiate a Finance
Document.

             (u)   (Intercreditor  Agreement) (i)   Any  party  (other  than  a
Finance Party) fails to comply with  its  obligations  under  the Intercreditor
Agreement;  (ii)  any  warranty  made  by any Group Member in the Intercreditor
Agreement  is  incorrect  in  any  material  respect   when   made;  (iii)  the
Intercreditor  Agreement  is  not  or  ceases  to  be binding on or enforceable
against any party thereto or shall otherwise not be  effective by reason of any
act or omission by any Group Member or any other party thereto.

In case of the happening of an Event of Default, then,  and in every such event
(other than an event described in paragraph (f) or (g) above  with  respect  to
any  Obligor  under  Title 11  of  the  United States  Code),  and  at any time
thereafter during the continuance of such event, the Administrative Agent  may,
and  at  the  request of the Required Lenders shall, by notice to the Borrower,
take either or  both  of the following actions, at the same or different times:
(i) terminate  forthwith  the  Commitments  and  (ii) declare  the  Loans  then
outstanding to be  forthwith due and payable in whole or in part, whereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and  any  unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and  under  any other Finance Document, shall become
forthwith due and payable, without presentment,  demand,  protest  or any other
notice  of any kind, all of which are hereby expressly waived by the  Borrower,
anything  contained  herein  or  in  any other Finance Document to the contrary
notwithstanding; and in any event described  in paragraph (f) or (g) above with
respect  to  any  Obligor  under  Title 11  of  the  United States   Code,  the
Commitments  shall automatically terminate and the principal of the Loans  then
outstanding, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Borrower accrued hereunder and under any other
Finance  Document,   shall   automatically  become  due  and  payable,  without
presentment, demand, protest or  any other notice of any kind, all of which are
hereby expressly waived by the Borrower,  anything  contained  herein or in any
other Finance Document to the contrary notwithstanding.



                                 ARTICLE VIII

                           The Administrative Agent

             Each of the Lenders hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on   its   behalf  and  to  exercise  such  powers  as  are  delegated  to  the
Administrative  Agent by the terms of the Finance Documents, together with such
actions and powers  as are reasonably incidental thereto.  Without limiting the
generality of the foregoing,  the  Administrative  Agent  is

                                      68

<PAGE>

hereby  expressly  authorized to execute any and all documents  (including  the
Intercreditor  Agreement,  the  Security  Trust  Document,  any other  Security
Document and releases and  authorizations to the Security Trustee) with respect
to the Security and the rights of the parties  secured  thereunder with respect
thereto,  as  contemplated  by and in  accordance  with the  provisions of this
Agreement and the Finance Documents.

             The bank serving as the Administrative  Agent hereunder shall have
the same rights and powers in its capacity as a Lender  as any other Lender and
may exercise the same as though it were not the Administrative  Agent, and such
bank  and its Affiliates may accept deposits from, lend money to and  generally
engage  in any kind of business with the Company, the Borrower, any other Group
Member or  other  Affiliate  thereof as if it were not the Administrative Agent
hereunder.

             The Administrative  Agent shall not have any duties or obligations
except  those expressly set forth in  this  Agreement.   Without  limiting  the
generality  of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary  or  other implied duties, regardless of whether a Default has
occurred and is continuing,  (b) the  Administrative  Agent  shall not have any
duty  to  take  any discretionary action or exercise any discretionary  powers,
except discretionary  rights  and powers expressly contemplated hereby that the
Administrative Agent is required to exercise in writing by the Required Lenders
(or such other number or percentage  of the Lenders as shall be necessary under
the circumstances as provided in Section 10.08),  and  (c) except  as expressly
set forth in this Agreement, the Administrative Agent shall not have  any  duty
to  disclose,  and  shall  not  be  liable  for  the  failure  to disclose, any
information  relating  to  the Company, the Borrower or any other Group  Member
that is communicated to or obtained by the bank serving as Administrative Agent
or any of its Affiliates in  any  capacity.  The Administrative Agent shall not
be liable for any action taken or not  taken  by  it with the consent or at the
request  of the Required Lenders (or such other number  or  percentage  of  the
Lenders  as   shall  be  necessary  under  the  circumstances  as  provided  in
Section 10.08)  or  in  the  absence  of  its  own  gross  negligence or wilful
misconduct.  The Administrative Agent shall not be deemed to  have knowledge of
any  Default  unless  and  until  written  notice  thereof  is  given  to   the
Administrative  Agent  by  the  Company,  the  Borrower  or  a  Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or  inquire into (i) any statement, warranty or representation made  in  or  in
connection  with  any  Finance  Document, (ii) the contents of any certificate,
report  or other document delivered  thereunder  or  in  connection  therewith,
(iii) the  performance  or  observance  of  any of the covenants, agreements or
other terms or conditions set forth in any Finance Document, (iv) the validity,
enforceability, effectiveness or genuineness  of  any  Finance  Document or any
other  agreement,  instrument  or  document,  or  (v) the satisfaction  of  any
condition set forth in Article IV or elsewhere in any  Finance  Document, other
than  to  confirm  receipt of items expressly required to be delivered  to  the
Administrative Agent.

             The Administrative Agent shall be entitled to rely upon, and shall
not incur any liability  for  relying  upon,  any notice, request, certificate,
consent, statement, instrument, document or other  writing believed by it to be
genuine  and  to  have  been  signed  or  sent  by  the  proper   person.   The
Administrative Agent may also rely upon any statement made to it orally  or  by
telephone  and believed by it to have been made by the proper person, and shall
not incur any  liability  for  relying  thereon.   The Administrative


                                      69

<PAGE>


Agent may consult  with legal  counsel  (who may be counsel for the  Borrower),
independent  accountants  and other  experts  selected  by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.

             The Administrative Agent  may  perform  any and all its duties and
exercise  its  rights  and  powers  by  or through any one or  more  sub-agents
appointed by it.  The Administrative Agent  and  any such sub-agent may perform
any and all its duties and exercise its rights and  powers  by or through their
respective  Related  Parties.   The  exculpatory  provisions  of the  preceding
paragraphs shall apply to any such sub-agent and to the Related  Parties of the
Administrative  Agent  and  any  such  sub-agent,  and  shall  apply  to  their
respective activities in connection with the syndication of the Commitments  as
well as activities as Administrative Agent.

             Subject   to   the  appointment  and  acceptance  of  a  successor
Administrative Agent as provided  below, the Administrative Agent may resign at
any time by notifying the Lenders and the Borrower.  Upon any such resignation,
the Required Lenders shall have the  right,  in consultation with the Borrower,
to appoint a successor.  If no successor shall  have  been  so appointed by the
Required Lenders and shall have accepted such appointment within  30 days after
the  retiring  Administrative Agent gives notice of its resignation,  then  the
retiring Administrative  Agent  may,  on  behalf  of  the  Lenders,  appoint  a
successor  Administrative  Agent  which  shall  be a bank with an office in New
York, New York, or an Affiliate of any such bank.   Upon  the acceptance of its
appointment  as Administrative Agent hereunder by a successor,  such  successor
shall succeed  to and become vested with all the rights, powers, privileges and
duties of the retiring  Administrative  Agent,  and the retiring Administrative
Agent shall be discharged from its duties and obligations  hereunder.  The fees
payable  by the Borrower to a successor Administrative Agent shall be the  same
as those payable  to  its  predecessor  unless  otherwise  agreed  between  the
Borrower  and  such  successor.   After  the Administrative Agent's resignation
hereunder, the provisions of this Article VIII and Section 10.05 shall continue
in effect for the benefit of such retiring Administrative Agent, its sub-agents
and their respective Related Parties in respect of any actions taken or omitted
to be taken by any of them while acting as Administrative Agent.

             Each Lender acknowledges that  it  has,  independently and without
reliance upon the Administrative Agent or any other Lender  and  based  on such
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
Administrative Agent or any other  Lender  and  based  on  such  documents  and
information  as  it  shall from time to time deem appropriate, continue to make
its own decisions in taking  or  not  taking  action  under  or based upon this
Agreement or any other Finance Document, any related agreement  or any document
furnished hereunder or thereunder.


                                      70

<PAGE>


                                  ARTICLE IX


                            Guarantee and Indemnity

     SECTION 9.01.  Guarantee and  Indemnity.  Subject to Sections  9.09,  9.10,
9.11, 9.12, 9.13, 9.14 and 9.15, each Guarantor  irrevocably and unconditionally
jointly and severally:

             (a) guarantees to the Administrative Agent and each Lender (each, a
"Guaranteed  Party")  punctual  performance  by  the  Borrower  of  all  of  the
Borrower's obligations under the Finance Documents;

             (b) undertakes with each Guaranteed  Party that whenever an Obligor
does  not pay any  amount  when  due  under or in  connection  with any  Finance
Document,  that Guarantor  shall  immediately on demand pay that amount as if it
were the principal obligor; and

             (c) indemnifies each Guaranteed Party immediately on demand against
any cost, loss or liability  suffered by that Guaranteed Party if any obligation
guaranteed by it is or becomes unenforceable,  invalid or illegal. The amount of
the cost,  loss or liability  shall be equal to the amount which that Guaranteed
Party would otherwise have been entitled to recover.

             SECTION 9.02. Continuing Guarantee.  This guarantee is a continuing
guarantee and will extend to the ultimate balance of sums payable by any Obligor
under the Finance Documents, regardless of any intermediate payment or discharge
in whole or in part.

             SECTION  9.03.  Reinstatement.  If any payment by an Obligor or any
discharge given by a Guaranteed  Party (whether in respect of the obligations of
any Obligor or any security for those  obligations  or  otherwise) is avoided or
reduced as a result of insolvency or any similar event:

             (a) the liability of each Obligor shall continue as if the payment,
discharge, avoidance or reduction had not occurred; and

             (b) each Guaranteed Party shall be entitled to recover the value or
amount of that  security  or  payment  from  each  Obligor,  as if the  payment,
discharge, avoidance or reduction had not occurred.

             SECTION 9.04. Waiver of Defenses. The obligations of each Guarantor
under this Article IX will not be affected by an act, omission,  matter or thing
which,  but for this  section,  would  reduce,  release or prejudice  any of its
obligations  under this Article IX (without  limitation and whether or not known
to it or any Guaranteed Party) including:

             (a) any time,  waiver or consent  granted to, or composition  with,
any Obligor or other person;

             (b) the release of any other  Obligor or any other person under the
terms of any composition or arrangement with any creditor of any Group Member;


                                      71

<PAGE>


             (c) the taking, variation, compromise, exchange, renewal or release
of, or refusal or neglect to perfect, take up or enforce, any rights against, or
security over assets of, any Obligor or other person or any non- presentation or
non-observance  of  any  formality  or  other  requirement  in  respect  of  any
instrument or any failure to realize the full value of any security;

             (d) any incapacity or lack of power, authority or legal personality
of or  dissolution or change in the members or status of an Obligor or any other
person;

             (e) any amendment (however fundamental) or replacement of a Finance
Document or any other document or security;

             (f)  any   unenforceability,   illegality   or  invalidity  of  any
obligation  of any person  under any Finance  Document or any other  document or
security; or

             (g) any insolvency or similar proceedings.

             SECTION 9.05.  Immediate Recourse.  Each Guarantor waives any right
it may have of first  requiring  any  Guaranteed  Party (or any  trustee  on its
behalf) to proceed  against or enforce  any other  rights or  security  or claim
payment from any person before  claiming from that Guarantor  under this Article
IX. This waiver  applies  irrespective  of any law or any provision of a Finance
Document to the contrary.

             SECTION  9.06.  Appropriations.  Until all amounts  which may be or
become payable by the Obligors under or in connection with the Finance Documents
have been irrevocably paid in full, each Guaranteed Party (or any trustee on its
behalf) may:

             (a) refrain from applying or enforcing  any other moneys,  security
or rights  held or  received  by that  Guaranteed  Party (or any  trustee on its
behalf) in  respect  of those  amounts,  or apply and  enforce  the same in such
manner and order as it sees fit (whether against those amounts or otherwise) and
no Guarantor shall be entitled to the benefit of the same; and

             (b)  hold  in  an  interest-bearing  suspense  account  any  moneys
received from any  Guarantor or on account of any  Guarantor's  liability  under
this Article IX.

             SECTION 9.07.  Deferral of  Guarantors'  Rights.  Until all amounts
which may be or become payable by the Obligors  under or in connection  with the
Finance   Documents  have  been   irrevocably   paid  in  full  and  unless  the
Administrative  Agent otherwise  directs,  no Guarantor will exercise any rights
which it may have by reason of  performance by it of its  obligations  under the
Finance Documents:

             (a) to be indemnified by an Obligor;

             (b) to claim  any  contribution  from any  other  guarantor  of any
Obligor's obligations under the Finance Documents; and/or

             (c) to take the  benefit (in whole or in part and whether by way of
subrogation  or  otherwise)  of any rights of the  Guaranteed  Parties under the
Finance


                                      72

<PAGE>


Documents  or  of any other  guarantee  or  security  taken  pursuant  to, or in
connection with, the Finance Documents by any Guaranteed Party.

             SECTION 9.08. Additional Security.  This guarantee  is  in addition
to and is not in any way prejudiced by any other guarantee or security  now  or
subsequently held by any Guaranteed Party.

             SECTION 9.09. Limitations for German Guarantors.    Each Guaranteed
Party agrees that the  enforcement  of the guarantee  and indemnity  pursuant to
this Article IX, and any Security provided by a Guarantor  pursuant to the terms
of the Security Documents, other than in respect of Loans made available to such
Guarantor  or to a  Subsidiary  of such  Guarantor  by a Lender,  or by  another
Obligor from the proceeds of Loans, shall be limited, in relation to any Obligor
(other than the Company) which is a German limited  liability company (a "German
Obligor"), to the extent that payment under that guarantee and indemnity, or the
enforcement of the Security,  would cause the higher of (i) the German Obligor's
net assets (including,  for the avoidance of doubt, the amount  corresponding to
such German Obligor's  registered share capital) as per December 31, 2003, minus
10% (the "Base Net Assets") and (ii) the German Obligor's net assets (including,
for the avoidance of doubt,  the amount  corresponding  to such German Obligor's
registered  share  capital) as per the end of the calendar  month  preceding the
date of  enforcement  of this  guarantee  and  indemnity or of any Security (the
"Current Net Assets") to fall below its registered share capital,  provided that
for the purposes of the  calculation  of the Base Net Assets and the Current Net
Assets the following balance sheet items shall be adjusted as follows:

             (A)  the amount of any increase of the registered share capital of
the relevant German Obligor after the Signing  Date  shall be deducted from the
relevant registered share capital;

             (B)   loans provided to the relevant German  Obligor  (or  to  any
direct or indirect  Subsidiary of such German Obligor) by any Group Member shall
be  disregarded  if and to the extent  such loans have been made from funds made
available to a German Obligor  pursuant to the terms of this  Agreement,  or are
subordinated, or are considered subordinated pursuant to Sec. 32a GmbHG; and

             (C)  loans and other  liabilities  incurred  in  violation  of the
provisions of this Agreement shall be disregarded,

and further  provided that the relevant German Obligor shall for the purposes of
the  determination  of the Base Net Assets and the Current Net Assets dispose of
all  assets  where the  relevant  assets are shown in the  balance  sheet of the
German  Obligor with a book value which is  significantly  lower than the market
value of such  assets.  The  above  limitations  shall  not  apply if  following
notification  by a Guaranteed  Party of claims  raised under the  guarantee  and
indemnity pursuant to this Article IX, or of the enforcement of Security by such
Guaranteed  Party,  the  relevant  German  Obligor  does not provide  conclusive
evidence,  including in particular interim financial statements up to the end of
the last  completed  calendar  month  (which  shall  be  audited  if  reasonably
requested by the  Administrative  Agent),  within 25 days after the date of such
notification,  or if after receipt of such unaudited statements  notification is
given to the relevant German Obligor to provide audited financial  statements up
to the end of that same calendar month and


                                      73

<PAGE>


such audited  financial  statements  are not provided  within 50 days after the
date of such notification.

             (b)  Each German Obligor may at any time request by giving written
notice  to the  Administrative  Agent  that the  amount  of the Base Net  Assets
relevant for the purpose of this  Section is reduced to an amount (the  "Reduced
Amount")  corresponding to the amount of such German Obligor's actual net assets
(to be  determined as set out in clause (a) above),  plus or minus,  as the case
may be, any  decrease or increase to be  reasonably  expected in the course of a
period of one month from the date of receipt by the Administrative  Agent of the
notice (the  "Notice  Period").  Together  with any such  written  request,  the
relevant German Obligor shall provide the  Administrative  Agent with reasonable
evidence (substantially applying the rules applicable for setting up a statement
of  overindebtedness  ("{U"}berschuldungsstatus"))  showing the German Obligor's
net assets position (to be determined as set out in clause (a) above), and shall
further provide the Administrative Agent with a written confirmation setting out
the German  Obligor's  projected  net assets as per the end of the Notice Period
and stating the reasons  therefor in  reasonable  detail.  Upon the lapse of the
Notice Period,  the Base Net Assets shall be deemed to correspond to the Reduced
Amount, unless the Lenders have terminated this Agreement in accordance with the
provisions  of this  Agreement  and notified  the  respective  German  Guarantor
thereof before the lapse of such Notice Period.

             SECTION  9.10.   Limitations  for  Austrian  Obligors.   (a)  Each
Guarantor established in Austria ("Austrian Guarantor") acknowledges that (i) it
will receive  valuable  direct or indirect  benefits as a result of the Facility
made available under this Agreement,  (ii) it will receive an adequate and arm's
length annual fee for granting the  guarantee  under this Article IX from one or
more other Group Members, (iii) each Guaranteed Party has acted in good faith in
connection  with  the  guarantee  given  by  that  Austrian  Guarantor  and  the
transactions  contemplated by the Finance Documents and (iv) it has not incurred
and does not intend to incur debts,  including contingent liabilities beyond its
ability to pay as they mature.

             (b)  Notwithstanding  anything to  the contrary contained herein or
any other Finance Document,  the liability of each Austrian  Guarantor (i) shall
be limited to funds applied by the Borrower for the valuable  direct or indirect
benefits of the  Austrian  Guarantors  and (ii) shall be limited to an amount of
(A) the  Future  Additional  Net  Asset  Value  of that  Austrian  Guarantor  in
addition, if applicable,  (B) the equivalent in Euro of the aggregate Borrowings
(plus accrued  interest  commission  and fee thereon)  on-lent to the respective
Austrian  Guarantor  calculated  by the  Administrative  Agent on the date which
Borrowings  are made. For the purposes of this Section,  "Future  Additional Net
Asset  Value" shall mean the future  increase of the value of the balance  sheet
positions "Eigenkapital" (as defined under the provisions of Austrian accounting
laws,  currently Art. 224 sec. 3 lit A Austrian  Commercial Code) as of the date
of the execution of this Agreement (the  "Reference Net Asset Value") as opposed
to the value of this  balance  sheet  position on the day of the payment  demand
under the Guarantee pursuant to this Article IX. An interim financial  statement
of that Austrian  Guarantor  established  upon the date of the execution of this
Agreement  and certified by the  statutory  auditors of that Austrian  Guarantor
shall be prima facie evidence as to the amount of the Reference Net Asset Value.



                                      74

<PAGE>


             (c)  Each Austrian Guarantor shall procure to record its potential
obligation under its guarantee and indemnity pursuant to this Article IX in its
financial statements to be established after the execution of this Agreement or
its  Accession  to  this Agreement, respectively, pursuant to Art. 199 Austrian
Commercial Code.

             (d)  Each  Austrian  Guarantor  agrees  that  the  benefit of this
guarantee  and  indemnity shall be transferred and shall remain in  full  legal
effect when an existing  Lender  seeks  to  transfer its rights and obligations
under  the Finance Documents by assignment or  by  novation  to  a  new  Lender
pursuant to Section 10.04.

             SECTION 9.11.  Limitations for French Obligors. (a) Each Guarantor
organized under the laws of France (a "French Guarantor") acknowledges that (i)
it has not incurred and does not intend to incur  debts,  including  contingent
liabilities beyond its ability to pay as they mature and (ii) the guarantee and
indemnity has been  authorized by the assembly of the  shareholders  before the
contract  had been  signed as defined  in  articles L 227-9 and L 227-10 of the
French  Commercial  Code if such an  authorization  is  necessary  according to
article L 225-38 and article L 223-19 French Commercial Code.

             (b)  The liability of each French Guarantor under this Section (i)
shall not include any obligation which does not present an  economic, social or
financial interest for the entire group, (ii) shall be limited to funds applied
by  the  Borrower for the valuable direct or indirect benefits  of  the  French
Guarantors,  (iii)  shall  not  include any obligation which is contrary to the
statutory object of the French Guarantor, (iv) shall not include any obligation
which if incurred would constitute  the  provision  of  financial assistance as
defined by article L 225-216 of the French Commercial Code  and  (v)  shall  be
limited  at any time to the greater of (A) the equivalent to Euros of the Loans
(plus any accrued interest thereon, commissions and fees) made available to any
Obligor (other  than,  if  applicable,  the  French  Guarantor)  to  the extent
directly  or  indirectly  on-lent  to  the  French  Guarantor calculated by the
Administrative Agent on the date on which such Loans  are  made,  to the extent
that  such Loans have been on lent by such Obligor to the French Guarantor  and
(B) 70%  of  the  greater  of  (1)  the Net Asset Value of the French Guarantor
calculated and certified by the statutory  auditors  of the French Guarantor on
the basis of the last audited financial statements available at the date hereof
and (2) the Net Asset Value of the French Guarantor calculated and certified by
the statutory auditors of the French Guarantor on the basis of the last audited
financial  statements  available  at the date on which demand  is  made  on  it
pursuant to this Article IX.  For the  purposes  of  this  Section  "Net  Asset
Value"  of  the  French  Guarantor  shall mean the capitaux propres (as defined
under  the  provisions  of  French accounting  laws,  decrees  and  regulations
consistently applied) of the  French  Guarantor. A certificate of the statutory
auditors of the French Guarantor as to the Net Asset Value shall be prima facie
evidence as to the amount to which it relates.

             SECTION 9.12. Limitations  for  Italian  Obligors.   Each  Finance
Party agrees that the enforcement of the guarantee and indemnity given pursuant
to  this  Article  IX  by  any  Guarantor  incorporated  in  Italy (an "Italian
Guarantor") shall be limited as follows: each Italian Guarantor  shall  not  be
liable  for  any  amounts in respect of the guarantee and indemnity pursuant to
this Article IX in excess of an amount of e20,000,000.


                                      75

<PAGE>


             SECTION  9.13.  Limitations  for  Spanish  Obligors.  Each Finance
Party agrees that the guarantee, indemnity and any other  obligations  of  each
Guarantor  incorporated  in  Spain  (a  "Spanish Guarantor") assumed under this
Agreement and any Security provided pursuant  to the terms of this Agreement by
a Spanish Guarantor shall not include and shall not extend to any amount of the
Facilities  utilized  in breach of Article 81.1 of  Spanish  Corporation's  Act
("Ley de Sociedades An{o'}nimas")  to  fund  the  acquisition  of  such Spanish
Guarantor and/or the acquisition of its dominant company and/or future upstream
dominant  companies,  together  with interest accrued thereon or other  amounts
owing in respect thereof under this Agreement.

             SECTION 9.14. Limitations  for US Obligors.  Each Guaranteed Party
agrees that the enforcement of the Guarantee  and  Indemnity  pursuant  to this
Article  IX, and any Security provided by a Guarantor organized under the  laws
of a state of the United States of America (a "U.S. Guarantor") pursuant to the
terms of this  Agreement, other than in respect of Loans made available to such
U.S. Guarantor or  to  a  Subsidiary  of such U.S. Guarantor by a Lender, or by
another Obligor from the proceeds of Loans,  shall  be  limited, in relation to
any  U.S.  Guarantor,  to  the  greatest  amount  that  would not  render  such
U.S. Guarantor's  obligations hereunder subject to avoidance  as  a  fraudulent
transfer or conveyance  under Section 548 of Title 11 of the United States Code
or  any  provisions of applicable  state  law  (collectively,  the  "Fraudulent
Transfer Laws"),  in  each case after giving effect to all other liabilities of
such U.S. Guarantor, contingent  or  otherwise,  that  are  relevant  under the
Fraudulent  Transfer Laws (specifically excluding, however, any liabilities  of
such U.S. Guarantor (a) in respect of Intra-Group Loans to the extent that such
indebtedness  would be discharged in an amount equal to the amount paid by such
Subsidiary Guarantor  hereunder and (b) under any guarantee of senior unsecured
indebtedness or Subordinated  Debt, which guarantee contains a limitation as to
maximum amount similar to that  set  forth in this paragraph, pursuant to which
the liability of such U.S. Guarantor hereunder  is  included in the liabilities
taken into account in determining such maximum amount)  and after giving effect
as assets to the value (as determined under the applicable  provisions  of  the
Fraudulent   Transfer   Laws)  of  any  rights  to  subrogation,  contribution,
reimbursement, indemnity  or  similar rights of such U.S. Guarantor pursuant to
(i) applicable law or (ii) any  agreement providing for an equitable allocation
among such U.S. Guarantor and other  Group Members of obligations arising under
guarantees by such parties.

             SECTION 9.15. Limitations  for  Canadian Obligors.  Each guarantor
organized under the federal laws of Canada or any of the Provinces of Canada (a
"Canadian  Guarantor")  hereby  acknowledges,  being   a   direct  or  indirect
subsidiary  of  the  Company, that it will be receiving a direct  and  indirect
benefit from the Loans  being provided to the Borrower, and hereby acknowledges
and  confirms  that  it  is  providing   the   guarantee  contained  herein  in
consideration  of  such direct or indirect benefit,  and  for  other  good  and
valuable consideration.

             SECTION 9.16. Additional Guarantors.  The Company may request that
any of its Subsidiaries  become an Additional Guarantor.  Such Group Member (be
it a Material Subsidiary or  not)  shall  become an Additional Guarantor if (i)
the Company delivers to the Administrative  Agent a duly completed and executed
Guarantor Accession Letter,  (ii) such Additional  Guarantor  provides  and, to
the  extent  permitted  by law, causes any of its Subsidiaries to provide, such
Security for all or any part  of its



                                      76

<PAGE>

obligations  under the  Finance  Documents  as the  Administrative  Agent shall
require and (iii) the  Administrative  Agent has received all of the  documents
and other  evidence  listed  in  Schedule  11 in  relation  to that  Additional
Guarantor, each in form and substance satisfactory to the Administrative Agent.
The Administrative Agent shall notify the Company, the Borrower and the Lenders
promptly  upon being  satisfied  that it has  received  (in form and  substance
satisfactory to it) all the documents and other evidence listed in Schedule 11.
To comply with the Minimum  Guarantor  Coverage,  the Company may, and shall at
the  request of the  Administrative  Agent,  cause any of its  Subsidiaries  to
become  an  Additional  Guarantor  by  causing  such  Subsidiary  to  execute a
Guarantor  Accession  Letter and all other  documents  referred to therein.  In
addition,  the Company  shall cause any Group Member that becomes an Additional
Guarantor  under and as defined in the German  Credit  Agreement to at the same
time become an Additional Guarantor hereunder.


                                   ARTICLE X


                                 Miscellaneous

             SECTION  10.01. Notices.  Notices and other communications provided
for herein shall be in  writing  and  shall  be  delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy, as
follows:

             (a) if to the Borrower, to SGL Carbon,  LLC,  8600 William Ficklen
Drive,  Charlotte,  NC  28256,  USA,  Attention  of  Anna  K. Blackwelder  (Fax
No. (704) 510-4760);

             (b)  if  to  the  Company, to SGL Carbon AG, Rheingaustrasse  182,
65203 Wiesbaden, Germany, Attention  of  Christian  Schwarz  (Fax No. +49 (611)
6029 235);

             (c) if to the Administrative Agent, to Credit Suisse First Boston,
Eleven  Madison  Avenue, OMA-2, New York, NY 10010, Attention of  Agency  Group
Manager (Telecopy No. (212) 325-8304); and

             (d) if  to a Lender, to it at its address (or telecopy number) set
forth on Schedule 1 or  in the Assignment and Acceptance pursuant to which such
Lender shall have become a party hereto.

All notices and other communications  given  to  the Company in accordance with
this Section 10.01 shall be deemed to have been made  or  given  to  each other
Obligor (other than the Borrower).  All notices and other communications  given
to  any  party hereto in accordance with the provisions of this Agreement shall
be deemed  to  have  been  given on the date of receipt if delivered by hand or
overnight courier service or sent by telecopy or on the date five Business Days
after  dispatch by certified  or  registered  mail  if  mailed,  in  each  case
delivered,  sent  or  mailed  (properly addressed) to such party as provided in
this Section 10.01 or in accordance  with  the  latest unrevoked direction from
such party given in accordance with this Section 10.01.

             SECTION 10.02. Survival of Agreement.   All  covenants, agreements,
representations and warranties made by the Borrower or the  Company  herein and
in  the


                                      77

<PAGE>

certificates or other  instruments  prepared or delivered in connection with or
pursuant to this Agreement or any other Finance Document shall be considered to
have been  relied  upon by the  Lenders  and shall  survive  the  making by the
Lenders of the Loans, regardless of any investigation made by the Lenders or on
their  behalf,  and shall  continue  in full  force  and  effect as long as the
principal of or any accrued interest on any Loan or any Fee or any other amount
payable under this Agreement or any other Finance  Document is outstanding  and
unpaid and so long as the Commitments have not been terminated.  The provisions
of Sections 2.14, 2.16, 2.20 and 10.05 shall remain operative and in full force
and effect  regardless  of the  expiration of the term of this  Agreement,  the
consummation of the transactions  contemplated  hereby, the repayment of any of
the  Loans,   the   expiration   of  the   Commitments,   the   invalidity   or
unenforceability  of any  term or  provision  of this  Agreement  or any  other
Finance  Document,   or  any  investigation   made  by  or  on  behalf  of  the
Administrative Agent or any Lender.

             SECTION  10.03.  Binding  Effect.   This  Agreement  shall  become
effective when the conditions precedent  set  forth  or  referred to in Section
4.01 shall have been satisfied or waived and it shall have been executed by the
Borrower, the Company, the other Obligors and the Administrative Agent and when
the Administrative Agent shall have received counterparts  hereof  which,  when
taken together, bear the signatures of each of the other parties hereto.

             SECTION   10.04.  Successors  and  Assigns. (a) Whenever  in  this
Agreement any of the parties hereto  is  referred  to,  such reference shall be
deemed to include the permitted successors and assigns of  such  party; and all
covenants,  promises  and  agreements  by  or  on  behalf of the Borrower,  the
Company, the Administrative Agent or the Lenders that  are  contained  in  this
Agreement  shall  bind  and inure to the benefit of their respective successors
and assigns.

             (b)  Each Lender  may  assign  to  one  or more assignees all or a
portion  of  its  interests,  rights  and  obligations  under   this  Agreement
(including all or a portion of its Commitment and the Loans at the  time  owing
to  it);  provided, however, that (i) except in the case of an assignment to  a
Lender or an  Affiliate  or  Related Fund of a Lender, (x) the Borrower and the
Administrative Agent must give  their  prior written consent to such assignment
(which consent shall not be unreasonably withheld); provided, however, that the
consent of the Borrower shall not be required to any such assignment (1) during
the continuance of any Event of Default  or  (2)  if such assignment is made in
connection  with  the primary syndication of the Loans  to  persons  previously
identified to the Borrower  in  writing (or to Affiliates of such persons), and
(y) the amount of the Commitment  or  Loan  of  the assigning Lender subject to
each such assignment (determined as of the date the  Assignment  and Acceptance
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $1,000,000 (or, if less, the entire remaining amount  of  such
Lender's  Commitment  or  Loan),  except in respect of any assignment among the
Lead Arrangers in connection with,  or  within 15 days following the completion
of,  the  primary  syndication of the Loans,  (ii) the  parties  to  each  such
assignment shall (A)  electronically  execute and deliver to the Administrative
Agent  an  Assignment  and  Acceptance  via  an  electronic  settlement  system
acceptable to the Administrative Agent (which initially shall be ClearPar, LLC)
or (B) manually execute and deliver to the  Administrative  Agent an Assignment
and  Acceptance,  together  with  a  processing and recordation fee  of  $3,500
(unless  such fee is waived at the discretion  of


                                      78

<PAGE>

the  Administrative  Agent),  (iii) the assignee,  if it shall not be a Lender,
shall deliver to the Administrative  Agent an Administrative  Questionnaire and
(iv) the assignee,  if it is to be a Foreign Lender,  shall comply with Section
2.20(e).  Upon  acceptance  and  recording  pursuant to  paragraph  (e) of this
Section 10.04,  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 of the interest  assigned by such  Assignment and  Acceptance,  have the
rights and  obligations  of a Lender under this Agreement and (B) the assigning
Lender  thereunder  shall,  to the  extent  of the  interest  assigned  by such
Assignment  and  Acceptance,  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 but shall  continue to
be entitled to the benefits of Sections 2.14,  2.16, 2.20 and 10.05, as well as
to any Fees accrued for its account and not yet paid).

             (c)  By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder  and  the  assignee  thereunder  shall be deemed to
confirm to and agree with each other and the other parties hereto  as  follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the  interest  being  assigned thereby free and clear of any adverse claim  and
that its Commitment and  the  outstanding  balance of its Loans, without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except  as set forth in (i) above, 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 Finance  Document  or  any  other  instrument  or  document furnished
pursuant hereto, or the financial condition of the Company or any Subsidiary or
the performance or observance by the Company or any Subsidiary  of  any  of its
obligations  under  this  Agreement,  any  other  Finance Document or any other
instrument   or   document  furnished  pursuant  hereto;  (iii) such   assignee
represents and warrants  that  it  is  legally  authorized  to  enter into such
Assignment and Acceptance; (iv) such assignee confirms that it has  received  a
copy  of  this  Agreement,  together  with  copies of the most recent financial
statements   referred  to  in  Section 3.01(aa)  or   delivered   pursuant   to
Section 5.02(a),  the Intercreditor Agreement, the Security Trust Agreement 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;
(v) such  assignee  will  independently   and   without   reliance   upon   the
Administrative  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; (vi) such assignee agrees that it shall be bound by the terms,
and entitled  to  the benefits, of the Intercreditor Agreement and the Security
Trust Agreement; (vii) such assignee appoints and authorizes the Administrative
Agent to take such  action  as  agent on its behalf and to exercise such powers
under this Agreement as are delegated  to the Administrative Agent by the terms
hereof, together with such powers as are  reasonably  incidental  thereto;  and
(viii) such assignee agrees that it will perform in accordance with their terms
all  the  obligations  which  by the terms of this Agreement are required to be
performed by it as a Lender.


                                      79

<PAGE>


             (d)  The Administrative Agent, acting for this purpose as an agent
of the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance  delivered  to it and a register for the
recordation of the names and addresses of the Lenders,  and  the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant  to  the terms
hereof  from time to time (the "Register").  The entries in the Register  shall
be conclusive  and  the  Borrower, the Administrative Agent and the Lenders may
treat each person whose name  is recorded in the Register pursuant to the terms
hereof  as  a  Lender  hereunder  for   all   purposes   of   this   Agreement,
notwithstanding  notice  to the contrary.  The Register shall be available  for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.

             (e)   Upon  its   receipt  of  a  duly  completed  Assignment  and
Acceptance executed by an assigning  Lender  and an assignee, an Administrative
Questionnaire completed in respect of the assignee  (unless  the assignee shall
already be a Lender hereunder), the processing and recordation  fee referred to
in paragraph (b) above (if applicable) and, if required, the written consent of
the   Borrower   and   the   Administrative   Agent  to  such  assignment,  the
Administrative  Agent  shall  (i) accept such Assignment  and  Acceptance,  and
(ii) record the information contained  therein  in the Register.  No assignment
shall be effective unless it has been recorded in  the  Register as provided in
this paragraph (e).

             (f)  Each Lender may without the consent of  the  Borrower  or the
Administrative Agent sell participations to one or more banks or other entities
in  all  or  a  portion  of  its  rights  and  obligations under this Agreement
(including  all or a portion of its Commitment and  the  Loans  owing  to  it);
provided, however,  that  (i) such  Lender's  obligations  under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other  parties  hereto  for  the  performance  of  such obligations,  (iii) the
participating banks or other entities shall be entitled  to  the benefit of the
cost  protection provisions contained in Sections 2.14, 2.16 and  2.20  to  the
same extent  as  if  they  were  Lenders  (but,  with respect to any particular
participant, to no greater extent than the Lender  that  sold the participation
to such participant) and (iv) the Borrower, the Administrative  Agent  and  the
Lenders  shall  continue  to  deal  solely  and  directly  with  such Lender in
connection with such Lender's rights and obligations under this Agreement,  and
such  Lender  shall  retain  the  sole  right to enforce the obligations of the
Borrower relating to the Loans and to approve  any  amendment,  modification or
waiver of any provision of this Agreement (other than amendments, modifications
or waivers decreasing any fees payable hereunder or the amount of  principal of
or the rate at which interest is payable on the Loans, extending any  scheduled
principal payment date or date fixed for the payment of interest on the  Loans,
increasing  or  extending the Commitments or releasing any Guarantor or all  or
substantially all of the Transaction Security).

             (g)   Any  Lender  or  participant  may,  in  connection  with any
assignment or participation or proposed assignment or participation pursuant to
this  Section 10.04,  disclose  to  the  assignee  or  participant  or proposed
assignee or participant any information relating to the Borrower or the Company
furnished  to  such  Lender  by  or  on  behalf of the Borrower or the Company;
provided that, prior to any such disclosure  of  information  designated by the
Borrower or the Company as confidential, each such assignee or  participant  or
proposed  assignee  or  participant  shall  execute  an  agreement whereby such


                                      80

<PAGE>

assignee  or  participant  shall  agree  (subject to customary  exceptions)  to
preserve the confidentiality of such confidential  information on terms no less
restrictive than those applicable to the Lenders pursuant to Section 10.17.

             (h)  Any Lender may (without the consent  of  the  Borrower or the
Administrative Agent) at any time assign all or any portion of its rights under
this Agreement to secure extensions of credit to such Lender or in  support  of
obligations  owed  by  such  Lender  (including,  if such Lender is a fund that
invests in commercial loans, to a trustee for holders  of  obligations owed, or
securities  issued,  by  such  fund);  provided  that no such assignment  shall
release a Lender from any of its obligations hereunder  or  substitute any such
assignee for such Lender as a party hereto and any foreclosure  or  exercise of
remedies by such assignee or trustee shall be subject to the provisions of this
Section 10.04 regarding assignments in all respects.

             (i)   Notwithstanding  anything to the contrary contained  herein,
any Lender (a "Granting Lender") may grant to a special purpose funding vehicle
(an "SPC"), identified as such in writing  from  time  to  time by the Granting
Lender to the Administrative Agent and the Borrower, the option  to  provide to
the  Borrower  all  or  any  part  of  any Loan that such Granting Lender would
otherwise  be obligated to make to the Borrower  pursuant  to  this  Agreement;
provided that (i) nothing  herein  shall  constitute a commitment by any SPC to
make  any  Loan  and  (ii) if an SPC elects not  to  exercise  such  option  or
otherwise fails to provide  all  or  any part of such Loan, the Granting Lender
shall be obligated to make such Loan pursuant  to the terms hereof.  The making
of  a Loan by an SPC hereunder shall utilize the  Commitment  of  the  Granting
Lender  to  the  same  extent,  and as if, such Loan were made by such Granting
Lender.  Each party hereto hereby  agrees  that  no SPC shall be liable for any
indemnity or similar payment obligation under this Agreement (all liability for
which shall remain with the Granting Lender).  In furtherance of the foregoing,
each party hereto hereby agrees (which agreement shall  survive the termination
of this Agreement) that, prior to the date that is one year  and  one day after
the  payment  in  full  of  all  outstanding  commercial  paper or other senior
indebtedness  of  any  SPC, it will not institute against, or  join  any  other
person  in  instituting  against,  such  SPC  any  bankruptcy,  reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the United
States or any State thereof.   In  addition,  notwithstanding  anything  to the
contrary  contained in this Section 10.04, any SPC may (i) with notice to,  but
without the prior written consent of, the Borrower and the Administrative Agent
and without  paying any processing fee therefor, assign all or a portion of its
interests in any  Loans to the Granting Lender or to any financial institutions
(consented to by the  Borrower  and  Administrative  Agent) providing liquidity
and/or credit support to or for the account of such SPC  to support the funding
or  maintenance  of Loans and (ii) disclose on a confidential  basis  any  non-
public information relating to its Loans to any rating agency, commercial paper
dealer or provider  of any surety, guarantee or credit or liquidity enhancement
to such SPC.

             (j)  None  of the Company, the Borrower or any other Obligor shall
assign or delegate any of  its  rights  or  duties  hereunder without the prior
written consent of the Administrative Agent and each  Lender, and any attempted
assignment without such consent shall be null and void.

             SECTION  10.05.  Expenses;  Indemnity.  (a) The  Borrower  and the
Company  agree,  jointly  and  severally,  to pay  all  out-of-pocket  expenses
reasonably


                                      81

<PAGE>

incurred by the Administrative  Agent in connection with the syndication of the
Commitments and the preparation  and  administration  of this Agreement and the
other Finance Documents or in connection with any amendments,  modifications or
waivers of the provisions  hereof or thereof  (whether or not the  transactions
hereby  or  thereby  contemplated  shall be  consummated)  or  incurred  by the
Administrative  Agent or any  Lender  in  connection  with the  enforcement  or
protection  of its  rights  in  connection  with this  Agreement  and the other
Finance  Documents  or in  connection  with the Loans  made  issued  hereunder,
including the fees,  charges and disbursements of Cravath,  Swaine & Moore LLP,
counsel  for  the  Administrative  Agent  and,  in  connection  with  any  such
enforcement or protection,  the fees,  charges and  disbursements  of any other
counsel for the Administrative Agent or any Lender.

             (b)  The Borrower and the Company agree, jointly and severally, to
indemnify the Administrative Agent, each Lender and  each  Related Party of any
of  the  foregoing  persons  (each  such  person  being called an "Indemnitee")
against, and to hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including  reasonable  counsel fees,
charges  and  disbursements,  incurred  by  or  asserted against any Indemnitee
arising out of, in any way connected with, or as  a result of (i) the execution
or delivery of this Agreement or any other Finance Document or any agreement or
instrument  contemplated thereby, the performance by  the  parties  thereto  of
their respective obligations thereunder or the consummation of the transactions
contemplated  by  the  Finance  Documents,  (ii) the use of the proceeds of the
Loans, (iii) any claim, litigation, investigation or proceeding relating to any
of the foregoing, whether or not any Indemnitee is a party thereto, or (iv) any
actual or alleged presence or release of hazardous or environmentally sensitive
materials on any property owned or operated by the Company, the Borrower or any
of the other Group Members, or any Environmental  Liability  related in any way
to the Company, the Borrower or any of the other Group Members;  provided  that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses are determined by
a  court  of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.

             (c)   To  the extent that the Company and the Borrower fail to pay
any amount required to be  paid  by  them  to  the  Administrative  Agent under
paragraph  (a) or (b) of this Section, each Lender severally agrees to  pay  to
the Administrative  Agent  such  Lender's  pro rata share (determined as of the
time that the applicable unreimbursed expense  or  indemnity payment is sought)
of such unpaid amount; provided that the unreimbursed  expense  or  indemnified
loss,  claim,  damage,  liability  or related expense, as the case may be,  was
incurred by or asserted against the  Administrative  Agent  in  its capacity as
such.   For  purposes  hereof, a Lender's "pro rata share" shall be  determined
based  upon  its  share  of  the  Commitments  (or,  if  the  Commitments  have
terminated, based on its share of the outstanding Loans).

             (d)  To the extent  permitted  by applicable law, no Obligor shall
assert, and each hereby waives, any claim against any Indemnitee, on any theory
of  liability, for special, indirect, consequential  or  punitive  damages  (as
opposed  to direct or actual damages) arising out of, in connection with, or as
a result of, this Agreement or any agreement or instrument contemplated hereby,
the transactions  contemplated  hereby  or  any Loan or the use of the proceeds
thereof.


                                      82

<PAGE>


             (e)  The provisions of this Section 10.05  shall  remain operative
and in full force and effect regardless of the expiration of the  term  of this
Agreement,  the  consummation  of  the  transactions  contemplated  hereby, the
repayment  of  any  of  the  Loans,  the  expiration  of  the  Commitments, the
invalidity  or unenforceability of any term or provision of this  Agreement  or
any other Finance  Document,  or  any investigation made by or on behalf of the
Administrative Agent or any Lender.   All  amounts due under this Section 10.05
shall be payable on written demand therefor.

             SECTION 10.06. Right of Setoff.  If an Event of Default shall have
occurred and be continuing, each Lender is hereby  authorized  at  any time and
from time to time, except to the extent prohibited 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  to or
for  the  credit  or  the  account  of  any  Obligor against any of and all the
obligations of the Borrower, the Company or any  other Obligor now or hereafter
existing under this Agreement and other Finance Documents  held by such Lender,
irrespective  of  whether or not such Lender shall have made any  demand  under
this Agreement or such other Finance Document and although such obligations may
be unmatured.  The  rights  of  each  Lender  under  this  Section 10.06 are in
addition to other rights and remedies (including other rights  of setoff) which
such Lender may have.

             SECTION 10.07. Applicable Law.  THIS AGREEMENT SHALL  BE  CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

             SECTION 10.08. Waivers;  Amendment. (a) No failure or delay of the
Administrative  Agent or any Lender in exercising any power or right  hereunder
or under any other  Finance  Document  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  Administrative  Agent and the
Lenders  hereunder and under the other Finance Documents 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 any other  Finance  Document or
consent to any departure by the Borrower or any other Obligor  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 the
Borrower,  the  Company  or any other  Obligor in any case  shall  entitle  the
Borrower,  the Company or any other  Obligor to any other or further  notice or
demand in similar or other circumstances.

             (b)  Except as set forth  in  paragraph  (c)  below,  neither this
Agreement  nor  any provision hereof may be waived, amended or modified  except
pursuant to an agreement or agreements in writing entered into by the Borrower,
the Company and the Required Lenders; provided, however, that no such agreement
shall (i) decrease  the  principal  amount of, or extend the maturity of or any
scheduled principal payment date or date for the payment of any interest on any
Loan, or waive or excuse any such payment  or any part thereof, or decrease the
rate of interest on any Loan, without the prior  written consent of each Lender
affected thereby, (ii) increase or extend the Commitment  or decrease or extend
the  date  for  payment  of  the fees of any Lender without the  prior


                                      83

<PAGE>

written consent of such Lender, (iii) amend or modify the pro rata requirements
of Section 2.17,  the  provisions of Section  10.04(j),  the provisions of this
Section or release any Guarantor or all or substantially all of the Transaction
Security,  without the prior  written  consent of each Lender,  (iv) reduce the
percentage contained in the definition of the term "Required Lenders" (it being
understood that with the consent of the Required Lenders, additional extensions
of credit  pursuant to this Agreement may be included in the  determination  of
the Required Lenders on substantially  the same basis as the Commitments on the
date hereof) or (v) modify the  protections  afforded to an SPC pursuant to the
provisions  of  Section  10.04(i)  without  the  written  consent  of such SPC;
provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the  Administrative  Agent hereunder or under any other
Finance Document without the prior written consent of the Administrative Agent.

             (c)  Notwithstanding  the  foregoing,  if  the  Company  desires a
waiver,  amendment  or  other  modification  of any provision of this Agreement
(other  than (i) any provision specifically referred  to  in  the  provisos  to
paragraph  (b)  above  and  (ii) any provision of Article VI (or any Default or
Event of Default arising from  a  breach or prospective breach of any provision
of Article VI)) and, if in connection  therewith,  the  Company seeks a waiver,
amendment  or  modification  of  the analogous provision of the  German  Credit
Agreement, then such waiver, amendment or modification of this Agreement may be
effected, even if not approved in  writing  by the Required Lenders, so long as
(A) it becomes effective under the German Credit  Agreement, (B) it is approved
in  writing  by  Lenders  and  lenders  under  the  German   Credit   Agreement
representing  at  least  66-2/3% of the aggregate outstanding loans, borrowings
and commitments (whether used  or  unused)  under this Agreement and the German
Credit Agreement (voting as a single class) and  (C)  if  and to the extent the
Company  or any other Group Member pays any fee or other consideration  to  the
lenders under  the  German  Credit  Agreement  in  order to obtain such waiver,
amendment  or  other modification, the Lenders (or, if  such  a  fee  or  other
consideration was  paid  only  to  approving  lenders  under  the German Credit
Agreement,   the   Lenders   that  approve  such  waiver,  amendment  or  other
modification) receive at least the same fee or other consideration.

             SECTION 10.09. Interest  Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time  the  interest  rate  applicable  to any
Loan,  together  with all fees, charges and other amounts which are treated  as
interest on such Loan  under applicable law (collectively the "Charges"), shall
exceed the maximum lawful  rate  (the  "Maximum  Rate") which may be contracted
for, charged, taken, received or reserved by the Lender  holding  such  Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall  be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that  would have been payable in respect of such Loan but were not payable as a
result  of  the  operation  of  this  Section 10.09  shall be cumulated and the
interest  and  Charges  payable to such Lender in respect  of  other  Loans  or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.

             SECTION 10.10.  Entire  Agreement.  This Agreement, the Fee Letter
and the other Finance Documents constitute  the  entire  contract  between  the
parties  relative  to


                                      84

<PAGE>

the subject matter hereof.  Any other previous agreement among the parties with
respect to the subject  matter hereof is  superseded by this  Agreement and the
other  Finance  Documents.  Nothing in this  Agreement or in the other  Finance
Documents,  expressed or implied,  is intended to confer upon any person (other
than the parties hereto and thereto,  their  respective  successors and assigns
permitted  hereunder  and, to the extent  expressly  contemplated  hereby,  the
Related  Parties  of each of the  Administrative  Agent  and the  Lenders)  any
rights,  remedies,  obligations  or  liabilities  under  or by  reason  of this
Agreement or the other Finance Documents.

             SECTION  10.11. 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 ANY OF THE OTHER
FINANCE DOCUMENTS.   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 OTHER FINANCE DOCUMENTS,
AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 10.11.

             SECTION  10.12. Severability.  In the event any one or more of the
provisions contained in  this  Agreement  should  be  held  invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability  of the
remaining  provisions  contained  herein  shall  not  in any way be affected or
impaired  thereby  (it  being understood that the invalidity  of  a  particular
provision in a particular  jurisdiction  shall  not in and of itself affect the
validity  of  such  provision in any other jurisdiction).   The  parties  shall
endeavor  in  good-faith  negotiations  to  replace  the  invalid,  illegal  or
unenforceable provisions  with  valid  provisions  the economic effect of which
comes  as  close as possible to that of the invalid, illegal  or  unenforceable
provisions.

             SECTION  10.13.  Counterparts.   This Agreement may be executed in
counterparts (and by different parties hereto on  different 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 10.03.  Delivery  of  an  executed  signature page to this Agreement by
facsimile transmission shall be as effective  as  delivery of a manually signed
counterpart of this Agreement.

             SECTION 10.14. Headings.  Article and  Section  headings  and  the
Table  of  Contents  used herein are for convenience of reference only, are not
part of this Agreement  and  are  not  to  affect the construction of, or to be
taken into consideration in interpreting, this Agreement.

             SECTION 10.15.  Jurisdiction;  Consent to Service of Process.  (a)
Each Obligor 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  sitting in New York City, and any appellate
court from any thereof, in any action


                                      85

<PAGE>


or proceeding arising out of or relating to this Agreement or the other Finance
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 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  Administrative  Agent or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
or the other  Finance  Documents  against any Obligor or its  properties in the
courts of any jurisdiction.

             (b)   Each  Obligor hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
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  other Finance
Documents  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 10.01.  Nothing in
this Agreement will affect the right of any party to  this  Agreement  to serve
process in any other manner permitted by law.


             SECTION  10.16.  Judgment  Currency.  (a) The  obligations  of the
Borrower and the other Obligors hereunder and under the other Finance Documents
to make  payments in U.S.  dollars  (the  "Obligation  Currency")  shall not be
discharged  or  satisfied  by any tender or recovery  pursuant to any  judgment
expressed in or converted into any currency other than the Obligation Currency,
except to the extent  that such  tender or  recovery  results in the  effective
receipt  by the  Administrative  Agent or a Lender  of the full  amount  of the
Obligation Currency expressed to be payable to the Administrative Agent or such
Lender under this Agreement or the other Finance Documents. If, for the purpose
of obtaining or enforcing  judgment  against the Borrower or any other Obligors
or in any court or in any jurisdiction, it becomes necessary to convert into or
from any currency other than the Obligation Currency (such other currency being
hereinafter  referred  to as the  "Judgment  Currency")  an  amount  due in the
Obligation  Currency,  the conversion  shall be made at the Spot Rate as of the
day on which the judgment is given (the "Judgment Currency Conversion Date").

             (b)   If  there  is  a  change  in the rate of exchange prevailing
between the Judgment Currency Conversion Date and the date of actual payment of
the amount due, the Borrower covenants and agrees  to pay, or cause to be paid,
as  a  separate  obligation and notwithstanding any judgment,  such  additional
amounts, if any (but  in any event not a lesser amount), as may be necessary to
ensure that the amount  paid  in  the  Judgment Currency, when converted at the
rate of exchange prevailing on the date  of payment, will produce the amount of
the Obligation Currency which could have been  purchased  with  the  amount  of
Judgment  Currency  stipulated in the judgment or judicial award at the rate of
exchange prevailing on the Judgment Currency Conversion Date.

                                      86

<PAGE>
             SECTION  10.17. Confidentiality.  Each of the Administrative Agent
and the Lenders agrees  to  maintain the confidentiality of the Information (as
defined below), except that Information  may  be  disclosed  (a) to its and its
Affiliates'  officers, directors, employees and agents, including  accountants,
legal counsel  and other advisors (it being understood that the persons to whom
such disclosure  is  made  will  be informed of the confidential nature of such
Information and instructed to keep  such  Information confidential), (b) to the
extent  requested  by any regulatory authority  or  quasi-regulatory  authority
(such as the National  Association  of  Insurance  Commissioners),  (c) to  the
extent required by applicable laws or regulations or by any subpoena or similar
legal process, (d) in connection with the exercise of any remedies hereunder or
under the other Finance Documents or any suit, action or proceeding relating to
the  enforcement  of  its  rights  hereunder  or  thereunder, (e) subject to an
agreement  containing  provisions  substantially  the same  as  those  of  this
Section 10.17, to (i) any actual or prospective assignee  of  or participant in
any  of  its  rights or obligations under this Agreement and the other  Finance
Documents or (ii) any  actual  or prospective counterparty (or its advisors) to
any swap or derivative transaction  relating  to any Group Member or any of its
obligations, (f) with the consent of the Borrower  or  (g) to  the  extent such
Information  becomes  publicly available other than as a result of a breach  of
this Section 10.17.  For the purposes of this Section, "Information" shall mean
all information received  from  the  Borrower or the Company and related to the
Borrower or the Company or their business, other than any such information that
was available to the Administrative Agent  or  any  Lender on a nonconfidential
basis prior to its disclosure by the Borrower or the Company; provided that, in
the case of Information received from the Borrower or  the  Company  after  the
date  of  this Agreement, such information is clearly identified at the time of
delivery as  confidential.  Any person required to maintain the confidentiality
of Information  as  provided  in this Section 10.17 shall be considered to have
complied with its obligation to  do  so  if  such person has exercised the same
degree of care to maintain the confidentiality  of  such  Information  as  such
person would accord its own confidential information.


                                       87


<PAGE>


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

                                 SGL CARBON AKTIENGESELLSCHAFT



                                        by:
                                              __________________________________
                                              Name:

                                              Title:




                                 SGL CARBON, LLC



                                        by:
                                              __________________________________
                                              Name:

                                              Title:



                                 CREDIT SUISSE FIRST BOSTON, acting through its
                                 Cayman Islands Branch, individually and as
                                 Administrative Agent


                                        by:
                                              __________________________________
                                              Name:

                                              Title:



                                        by:
                                              __________________________________
                                              Name:

                                              Title:


                                 Other Guarantors



                                 SGL CARBON GMBH (Germany)



                                        by:
                                              __________________________________
                                              Name:

                                              Title:



                                 SGL CARBON BETEILIGUNG GMBH



                                        by:
                                              __________________________________
                                              Name:

                                              Title:







                                      88
<PAGE>



                                 SGL ACOTEC GMBH


                                        by:
                                              __________________________________
                                              Name:

                                              Title:



                                 KCH BETEILIGUNGS GMBH


                                        by:
                                              __________________________________
                                              Name:

                                              Title:



                                 SGL TECHNOLOGIES GMBH


                                        by:
                                              __________________________________
                                              Name:

                                              Title:



                                 SGL BRAKES GMBH


                                        by:
                                              __________________________________
                                              Name:

                                              Title:


                                 SGL CARBON S.P.A.


                                        by:
                                              __________________________________
                                              Name:

                                              Title:



                                 SGL CARBON, S.A.



                                        by:
                                              __________________________________
                                              Name:

                                              Title:



                                 SGL CARBON GMBH (Austria)


                                        by:
                                              __________________________________
                                              Name:

                                              Title:



                                      89

<PAGE>


                                 SGL CARBON GMBH & CO. KG


                                        by:
                                              __________________________________
                                              Name:

                                              Title:



                                 RK CARBON INTERNATIONAL LTD.


                                        by:
                                              __________________________________
                                              Name:

                                              Title:



                                 RK TECHNOLOGIES INTERNATIONAL LTD.


                                        by:
                                              __________________________________
                                              Name:

                                              Title:


                                 SGL TECHNIC LTD.


                                        by:
                                              __________________________________
                                              Name:

                                              Title:


                                 SGL CARBON S.A.S.


                                        by:
                                              __________________________________
                                              Name:

                                              Title:



                                 SGL ACOTEC SAS


                                       by:
                                              __________________________________
                                              Name:

                                              Title:



                                 RADION FINANZIARIA S.P.A.





                                        by:
                                              __________________________________
                                              Name:

                                              Title:



                                      90

<PAGE>


                                 SGL CANADA INC.



                                        by:
                                              __________________________________
                                              Name:

                                              Title:



                                 SGL CARBON POLSKA S.A.


                                        by:
                                              __________________________________
                                              Name:

                                              Title:


                                 SGL TECHNIC INC.


                                        by:
                                              __________________________________
                                              Name:

                                              Title:


                                      91
<PAGE>