Document:

SEPARATION AGREEMENT.AND GENERAL RELEASE

Old 97 Company, 4829 East Seventh Avenue Tampa, Florida,
its parent corporation, affiliates, subsidiaries, divisions.
successors and assigns and the employees, officers, directors and
agents thereof (collectively referred to throughout this
Agreement as "Employer"), and Lucille Murphy, 2525 Maryland
Avenue, Tampa, FL, ("Employee") agree that:

          1.  Last Day of Employment.  Employee's last day of
employment with Employer is November 17, 2000.

          2.  Consideration.  In consideration for the Employee
signing this Agreement and General Release and compliance with
the promises made herein, Employer agrees:

              a.  to pay to Employee over a 36 month period three
hundred ninety thousand Dollars and no Cents ($390,000), less
lawful deductions, in accordance with company payroll policies
after receiving the letter from Employee in the form attached
hereto as Exhibit "A"; and

              b.  if Employee elects to continue medical coverage
under the AETNA Plan in accordance with the continuation
requirements of COBRA, the Employer shall pay for the cost of
said coverage beginning on the last day of employment and ending
on December 31, 2000.  Thereafter, Employee shall be entitled to
elect to continue such COBRA coverage for the remainder of the
COBRA period, at her own expense.

          3.  No Consideration Absent Execution of this
Agreement.  Employee understands and agrees that she would not
receive the monies and/or benefits specified in paragraph "2"
above, except for her execution of this Agreement and General
Release and the fulfullment of the promises containced herein.

          4.  Revocation.  Employee may revoke this Agreement and
General Release for a period of seven (7) days following the day
she executes this Agreement and General Release.  Any revokation
within this period must be submitted, in writing, to Employer -
Attn. Frank Ferola and state, "I hereby revoke my acceptance of
our Agreement and General Release."  The revocation must be
personally delivered to Employer - Attn. Frank Ferola or his
designee, or mailed to Employer - Attn. Frank Ferola and
postmarked within seven (7) days of execution of this Agreement
and General Release.  This Agreement and General Release shall
not become effective or enforceable until the revocation period
has expired.  If the last day of the revocation period is a
Saturday, Sunday or leagal holiday in Florida, then the
revocation period shall not expire until the next folling day
which is not a Saturday, Sunday or legal holiday.

          5.  General Release of Claim.  Employee knowingly and
voluntarily releases and forever discharges Employer, of and from
any and all claims, known and unknown, which against Employer,
Employee, her heirs, executors, administrators, successors, and
assigns (referred to collectively throughout this Agreement as
"Employee") have or may have as of the day of execution of this
Agreement and General Release, including, but not limited to, any
alleged violation of:

          The National Labor Relations Act, as amended;

          Title VII of the Civil Rights Act of 1964, as amended;

          Sections 1981 through 1988 of Title 42 of the United
          States Code, as amended;

          the Employee Retirement Income Security Act of 1974, as
          amended;

          The Immigration Reform Control Act, as amended;

          The Age Discrimination in Employment Act of 1967, as
          amended;

          The Fair Labor Standards Act, as amended;

          The Occupational Safety and Health Act, as amended;

          The Family and Medical Leave Act of 1993;

          The Florida Civil Rights Act, as amended;

          The Florida Minimum Wage Law, as amended;

          Equal Pay Law for Florida, as amended;

          any other federal, state or local civil or human rights
          law or any other local, state or federal law,
          regulation or ordinance;

          any public policy, contract, tort, or common law; or

          any claims relating to the Employment Agreement
          effective January 1, 1996 and all applicable amendments
          by and among the Employee and Employer;

          any allegations for costs, fees, or other expenses
          including attorneys' fees incurred in these matters.

          6.  No Claims Exist.  Employee confirms that no claim,
charge, complaint, or action exists in any forum or form.  In the
event that any such claim, charge, complaint or action is filed,
Employee shall not be entitled to recover any relief or recovery
therefrom, including costs and attorney's fees.

          7.  Confidentiality.  Employee agrees not to disclose
any information regarding the existence or substance of this
Agreement and General Release, except to an attorney with whom
Employee chooses to consult regarding her consideration of this
Agreement and General Release.

          8.  No Future Application for Employment.  Employee
shall not apply in the future for employment with Employer.

          9.  Governing Law and Interpretation.  This Agreement
and General Release shall be governed and conformed in accordance
with the laws of the State of Florida without regard to its
conflict of laws provision.  Should any provision of this
Agreement and General Release be declared illegal or
unenforceable by any court of competent jurisdiction and cannot
be modified to be enforcable, excluding the general release
language, such provision shall immediately become null and void,
leeaving the remainder of this Agreement and General Release in
full force and effect.  In a claim, charge, complaint or action
commenced, joined, or participated in by Employee where any
portion of the general release language is ruled to be
unenforceable for any reason, Employee agrees that all
consideration paid hereunder shall be an offset against any
monies Employee shall receive in connection with any such action.

          10.  Nonadmission of Wrongdoing.  Employee agrees that
neither this Agreement and General Release nor the furnishing of
the consideration for this Release shall be deemed or construed
at anytime for any purpose as an admission by Employer of any
liability or unlawful conduct of any kind.

          11.  Amendment.  This Agreement and General Release may
not be modified, altered or changed except upon express written
consent of both Parties wherein specific reference is made to
this Agreement and General Release.

          12.  Entire Agreement.  This Agreement and General
Release sets forth the entire agreement between the parties
hereto, and fully supersedes any prior agreements or
understandings between the parties.  This Agreement additionally
supercedes and terminates the Employment Agreement effective
January 1, 1996 and all amendments thereof by and among the
Employee and Employer with exception to Section 4.2
Confidentiality.  Employee acknowledges that she has not relied
on any representations, promises, or agreements of any kind made
to her in connection with her decision to sign this Agreement and
General Release, except for those set forth in this Agreement and
General Release.

          EMPLOYEE HAS BEEN ADVISED THAT SHE HAS AT LEAST TWENTY-
ONE (21) DAYS TO CONSIDER THIS AGREEMENT AND GENERAL RELEASE AND
HAS BEEN ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO
EXECUTION OF THIS AGREEMENT AND GENERAL RELEASE.

          EMPLOYEE AGREES THAT ANY MODIFICATIONS, MATERIAL OR
OTHERWISE, MADE TO THIS AGREEMENT AND GENERAL RELEASE DO NOT
RESTART OR AFFECT IN ANY MANNER THE ORIGINAL TWENTY-ONE DAY
CONSIDERATION PERIOD.

          HAVING ELECTED TO EXECUTE THIS AGREEMENT AND GENERAL
RELEASE, TO FULFULL THE PROMISES SET FORTH HEREIN, AND TO RECEIVE
THEREBY THE SUMS AND BENEFITS SET FORTH IN PARAGRAPH "2" ABOVE,
EMPLOYEE FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION,
ENTERS INTO THIS AGREEMENT AND GENERAL RELEASE INTENDING TO
WAIVE, SETTLE AND RELEASE ALL CLAIMS SHE HAS OR MIGHT HAVE
AGAINST EMPLOYER.

          IN WITNESS WHEREOF, the parties hereto knowingly and
voluntarily executed this Agreement and General Release as of the
date set forth below:

                                               Employee

                                  _______________________________
                                           Lucille Murphy
__________________________
Witness
                                  _______________________________
                                  Date
__________________________
Witness
                                               Employer

__________________________        By:____________________________
                                     Frank F. Ferola,
                                     President

Notary Public ____________        _______________________________
                                  DateExhibit 4.1

CLIFFORD
CHANCE
PUNDER

                                                                  Execution Copy

                               Dated 8 April 2003

                        GROHE BETEILIGUNGS GMBH & CO. KG

                           FRIEDRICH GROHE AG & CO. KG

                      FRIEDRICH GROHE GESCHAFTSFUHRUNGS AG

                          DRESDNER BANK LUXEMBOURG S.A.

                    CREDIT SUISSE FIRST BOSTON INTERNATIONAL

                           MERRILL LYNCH INTERNATIONAL

                                       and

                        MERRILL LYNCH CAPITAL CORPORATION

   ---------------------------------------------------------------------------
                        SECOND AMENDMENT AND RESTATEMENT
                            AGREEMENT RELATING TO A
                          SECURED FACILITIES AGREEMENT
                      DATED 17 MARCH 2003 AS AMENDED BY AN
                      AMENDMENT AND RESTATEMENT AGREEMENT
                               DATED 2 APRIL 2003
   ---------------------------------------------------------------------------

<PAGE>

THIS AGREEMENT is made on 8 April 2003

BETWEEN

(1)      GROHE BETEILIGUNGS GMBH & CO. KG as parent (the "COMPANY");

(2)      FRIEDRICH GROHE AG & CO. KG;

(3)      FRIEDRICH GROHE GESCHAFTSFUHRUNGS AG;

(4)      DRESDNER BANK LUXEMBOURG S.A as agent (the "AGENT");

(5)      CREDIT SUISSE FIRST BOSTON INTERNATIONAL as joint lead arranger and
         original lender;

(6)      MERRILL LYNCH INTERNATIONAL as joint lead arranger; and

(7)      MERRILL LYNCH CAPITAL CORPORATION as original lender.

IT IS AGREED as follows:

1.       DEFINITIONS AND INTERPRETATION

1.1      Definitions

         In this Agreement:

         "EFFECTIVE DATE" means the date of this Agreement.

         "ORIGINAL FACILITIES AGREEMENT" means the EUR 600,000,000 multicurrency
         term and revolving facilities agreement dated 17 March 2003 as amended
         by an amendment and restatement agreement dated 2 April 2003 between,
         INTER ALIOS, Friedrich Grohe AG & Co. KG and the Company as original
         borrowers, the Company and Friedrich Grohe Geschaftsfuhrungs AG as
         original guarantors, Merrill Lynch International and Credit Suisse
         First Boston International as arrangers, and others.

         "RESTATED AGREEMENT" means the Original Facilities Agreement, as
         amended by this Agreement, the terms of which are set out in Schedule 1
         (RESTATED AGREEMENT).

1.2      Incorporation of Defined Terms

1.2.1    Unless a contrary indication appears, a term used in the Original
         Facilities Agreement has the same meaning as in this Agreement.

                                      -2-
<PAGE>

1.2.2    The principles of construction set out in the Original Facilities
         Agreement shall have effect as if set out in this Agreement.

1.3      Clauses

1.3.1    In this Agreement any reference to a "Clause" or "Schedule" is, unless
         the context otherwise requires, a reference to a Clause or Schedule of
         this Agreement.

1.3.2    Clause and Schedule headings are for ease of reference only.

2.       RESTATEMENT

         With effect from the Effective Date the Original Facilities Agreement
         shall be amended and restated so that it shall be read and construed
         for all purposes as set out in Schedule 1 (RESTATED AGREEMENT.).

3.       REPRESENTATIONS

         The Company (on its own behalf and on behalf of the Obligors) makes the
         Repeated Representations as if each reference in those representations
         to "this Agreement" or "the Finance Documents" includes a reference to
         (a) this Agreement and (b) the Restated Agreement.

4.       CONTINUITY AND FURTHER ASSURANCE

4.1      Continuing obligations

         The provisions of the Original Facilities Agreement shall, save as
         amended in this Agreement, continue in full force and effect.

4.2      Further assurance

         Each of the Obligors shall, at the request of the Agent and at their
         own expense, do all such acts and things necessary or desirable to give
         effect to the amendments effected or to be effected pursuant to this
         Agreement.

5.       FEES, COSTS AND EXPENSES

5.1      Transaction Expenses

         The Company shall, from time to time on demand of the Agent, reimburse
         each of the Finance Parties (on a full indemnity basis whether or not
         any of the Facilities are drawn-down or utilised) for all reasonable
         costs and expenses (including reasonable legal fees) together with any
         VAT thereon incurred by it in connection with the negotiation,
         preparation and execution of this Agreement.

                                      -3-
<PAGE>

5.2      Preservation and Enforcement of Rights

         The Company shall, within three Business Days of demand, reimburse each
         of the Finance Parties for all costs and expenses (including legal
         fees) on a full indemnity basis together with any VAT thereon incurred
         in connection with the preservation and/or enforcement of any of the
         rights of the Finance Parties under this Agreement and any document
         referred to in this Agreement.

6.       MISCELLANEOUS

         The provisions of clause 36 (PARTIAL INVALIDITY), clause 37 (REMEDIES
         AND WAIVERS), clause 38 (AMENDMENTS AND WAIVERS), clause 39
         (COUNTERPARTS), clause 40 (GOVERNING LAW) and clause 41 (ENFORCEMENT)
         of the Original Facilities Agreement shall be incorporated into this
         Agreement as if set out in full in this Agreement and as if references
         in those clauses to "this Agreement" or "the Finance Documents" are
         references to this Agreement.

                                      -4-
<PAGE>

                                   SCHEDULE 1
                               RESTATED AGREEMENT

<PAGE>

                                   SIGNATURES

THE COMPANY

Grohe Beteiligungs GmbH & Co. KG

By:

Address:          ? Friedrich Grohe AG & Co. KG
                  Hauptstrasse 137
                  58675 Hemer
                  Germany

Fax:              0049 (0) 2372 93 1313

Attention:        Sabine Hanfgarn

THE ORIGINAL BORROWERS

Grohe Beteiligungs GmbH & Co. KG

By:

Address:          c/o Friedrich Grohe AG & Co. KG
                  Hauptstrasse 137
                  58675 Hemer
                  Germany

Fax:              0049 (0) 2372 93 1313

Attention:        Sabine Hanfgarn

Friedrich Grohe AG & Co. KG

By:

Address:          Hauptstrasse 137
                  58675 Hemer
                  Germany

Fax:              0049 (0) 2372 93 1313

<PAGE>

Attention:        Sabine Hanfgarn

THE ORIGINAL GUARANTORS

Grohe Beteiligungs GmbH & Co. KG

By:

Address:          ? Friedrich Grohe AG & Co. KG
                  Hauptstrasse 137
                  58675 Hemer
                  Germany

Fax:              0049 (0) 2372 93 1313

Attention:        Sabine Hanfgarn

Friedrich Grohe Geschaftsfuhrungs AG

By:

Address:          ? Friedrich Grohe AG & Co. KG
                  Hauptstrasse 137
                  58675 Hemer
                  Germany

Fax:              0049 (0) 2372 93 1313

Attention:        Sabine Hanfgarn

THE ARRANGERS

Credit Suisse First Boston International

By:

Address:          One Cabot Square
                  London E14 4QJ, UK

Fax:              0044 207 883 5078

Attention:        David Slade

<PAGE>

Merrill Lynch International

By:

Address:          Merrill Lynch Financial Centre
                  2 King Edward Street
                  London EC1A 1HQ, UK

Fax:              00 44 207 995 8601

Attention:        Rob Pulford

THE AGENT

Dresdner Bank Luxembourg S.A.

By:

Address:          26, Rue du Marche-aux-Herbes
                  L-2097 Luxembourg

Fax:              For Agency Matters:                00352 4760 3222
                  For Credit Administration Matters: 00352 4760 565

Attention:        For Agency Matters:                Albertine Prellwitz
                  For Credit Administration Matters: Andrea Stockemer

THE SECURITY AGENT

Dresdner Bank Luxembourg S.A.

By:

Address:          26, Rue du Marche-aux-Herbes
                  L-2097 Luxembourg

Fax:              00352 4760 3222

Attention:        Albertine Prellwitz

<PAGE>

THE ORIGINAL LENDERS

Credit Suisse First Boston International

By:

Address:          One Cabot Square
                  London E14 4QJ, UK

Fax:              For Administrative Matters:        0044 207 888 8398
                  For Credit Matters:                0044 207 888 8386

Attention:        For Administrative Matters: Irina Borisova
                  For Credit Matters: Sergio Di-Lieto

Merrill Lynch Capital Corporation

By:

Address:          4 World Financial Centre
                  250 Vesey Street
                  New York, New York 10080, USA

Fax:              001 212 738 1957

Attention:        Stephen Paras

<PAGE>

CLIFFORD
CHANCE                                                                   ANNEX I
PUNDER

                               Dated 17 March 2003

                                 EUR 600,000,000

                          SECURED FACILITIES AGREEMENT

                                       for

                        GROHE BETEILIGUNGS GMBH & CO. KG
                                       and
                           FRIEDRICH GROHE AG & CO. KG

                                   arranged by

                    CREDIT SUISSE FIRST BOSTON INTERNATIONAL
                                       and
                           MERRILL LYNCH INTERNATIONAL
                                      with

                          DRESDNER BANK LUXEMBOURG S.A.
                                 acting as Agent

                                       and

                          DRESDNER BANK LUXEMBOURG S.A.
                            acting as Security Agent

   ---------------------------------------------------------------------------
              MULTICURRENCY TERM AND REVOLVING FACILITIES AGREEMENT
    AS AMENDED AND RESTATED BY AN AMENDMENT AND RESTATEMENT AGREEMENT DATED 5
                                   APRIL 2003
   ---------------------------------------------------------------------------

<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                                                              PAGE
<S>                                                                                                 <C>

1.       Definitions and Interpretation................................................................1

2.       The Facilities...............................................................................35

3.       Purpose......................................................................................36

4.       Conditions of Utilisation....................................................................37

5.       Utilisation..................................................................................39

6.       Letters of Credit and Bank Guarantees........................................................41

7.       Optional Currencies..........................................................................45

8.       Ancillary Facilities.........................................................................47

9.       Repayment....................................................................................51

10.      Prepayment and Cancellation..................................................................53

11.      Interest.....................................................................................62

12.      Interest Periods.............................................................................64

13.      Changes to the Calculation of Interest.......................................................66

14.      Fees.........................................................................................68

15.      Tax Gross Up and Indemnities.................................................................70

16.      Increased Costs..............................................................................72

17.      Other Indemnities............................................................................73

18.      Mitigation by the Lenders....................................................................75

19.      Costs and Expenses...........................................................................76

20.      Guarantee on First Demand (GARANTIE AUF ERSTES ANFORDERN)....................................77

21.      Representations..............................................................................80

22.      Information Undertakings.....................................................................85

<PAGE>

23.      Financial Covenants..........................................................................92

24.      General Undertakings........................................................................103

25.      Events of Default...........................................................................114

26.      Changes to the Lenders......................................................................121

27.      Changes to the Obligors.....................................................................125

28.      Role of the Agent and the Arrangers.........................................................128

29.      The Lenders and the Fronting Bank...........................................................134

30.      Conduct of Business by the Finance Parties..................................................136

31.      Sharing among the Finance Parties...........................................................136

32.      Payment Mechanics...........................................................................139

33.      Set-Off.....................................................................................142

34.      Notices.....................................................................................142

35.      Calculations and Certificates...............................................................145

36.      Partial Invalidity..........................................................................145

37.      Remedies and Waivers........................................................................145

38.      Amendments and Waivers......................................................................145

39.      Counterparts................................................................................147

40.      Governing Law...............................................................................148

41.      Enforcement.................................................................................148

SCHEDULE 1 The Original Parties......................................................................150

Part I The Original Obligors.........................................................................150

Part II The Original Lenders.........................................................................151

SCHEDULE 2 Conditions Precedent......................................................................152

Part I Conditions Precedent to Initial Utilisation...................................................152

Part II Conditions Precedent to Shareholder Loan Refinancing.........................................157

<PAGE>

Part III Conditions Precedent required to be delivered by an Additional Obligor......................158

SCHEDULE 3 Requests..................................................................................160

Part I Utilisation Request...........................................................................160

Part II Selection Notice.............................................................................162

SCHEDULE 4 Mandatory Cost Formulae...................................................................164

SCHEDULE 5 Form Of Transfer Certificates.............................................................168

SCHEDULE 6 Form of Accession Letter..................................................................170

SCHEDULE 7 Form of Resignation Letter................................................................171

SCHEDULE 8 Form of Compliance Certificate............................................................172

SCHEDULE 9 Existing Security.........................................................................173

Part     I...........................................................................................173

Part     II..........................................................................................178

SCHEDULE 10 Timetables...............................................................................180

SCHEDULE 11 Form of Letter of Credit.................................................................182

SCHEDULE 12 Form of Bank Guarantee...................................................................185

SCHEDULE 13 Form of Confidentiality Undertaking......................................................186

SCHEDULE 14 Borrower Exit Transfer Certificate.......................................................190

SCHEDULE 15 List of Current Investors................................................................191
</TABLE>

<PAGE>

THIS AGREEMENT is dated 17 March 2003 and made

BETWEEN:

(1)      GROHE BETEILIGUNGS GMBH & CO. KG as parent (the "COMPANY");

(2)      FRIEDRICH GROHE AG & CO. KG ("FRIEDRICH GROHE") and GROHE BETEILIGUNGS
         GMBH & CO. KG ("GROHE BETEILIGUNGS") as original borrowers (together
         the "ORIGINAL BORROWERS");

(3)      GROHE BETEILIGUNGS GMBH & CO. KG and FRIEDRICH GROHE GESCHAFTSFUHRUNGS
         AG as guarantors (the "ORIGINAL GUARANTORS");

(4)      CREDIT SUISSE FIRST BOSTON INTERNATIONAL and MERRILL LYNCH
         INTERNATIONAL as joint lead arrangers (the "ARRANGERS");

(5)      THE FINANCIAL INSTITUTIONS listed in Part II of Schedule 1 (THE
         ORIGINAL PARTIES) as lenders (the "ORIGINAL LENDERS");

(6)      DRESDNER BANK LUXEMBOURG S.A. as agent of the other Finance Parties
         (the "AGENT"); and

(7)      DRESDNER BANK LUXEMBOURG S.A. as security agent for the Finance Parties
         (the "SECURITY Agent").

IT IS AGREED as follows:

                                    SECTION 1
                                 INTERPRETATION

1.       DEFINITIONS AND INTERPRETATION

1.1      DEFINITIONS
         In this Agreement:

         "ACCESSION LETTER" means a document substantially in the form set out
         in Schedule 6 (FORM OF ACCESSION LETTER).

         "ADDITIONAL BORROWER" means a company which becomes an Additional
         Borrower in accordance with Clause 27 (CHANGES TO THE OBLIGORS).

         "ADDITIONAL COST RATE" has the meaning given to it in Schedule 4
         (MANDATORY COST FORMULAE).

         "ADDITIONAL GUARANTOR" means a company which becomes an Additional
         Guarantor in accordance with Clause 27 (CHANGES TO THE OBLIGORS).

                                      -1-
<PAGE>

         "ADDITIONAL OBLIGOR" means an Additional Borrower or an Additional
         Guarantor.

         "AFFILIATE" means, 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.

         "AGENT'S SPOT RATE OF EXCHANGE" means the Agent's spot rate of exchange
         for the purchase of the relevant currency with the Base Currency in the
         Frankfurt am Main foreign exchange market at or about 11:00 a.m. on a
         particular day.

         "ANCILLARY BANK" means each Lender which becomes an Ancillary Bank by
         operation of Clause 8 (ANCILLARY FACILITIES).

         "ANCILLARY COMMITMENT" means, in relation to an Ancillary Bank, the
         maximum amount from time to time of the Ancillary Facilities to be made
         available by that Ancillary Bank which has been authorised as such
         under Clause 8 (ANCILLARY FACILITIES) to the extent not cancelled or
         otherwise reduced under this Agreement.

         "ANCILLARY FACILITY" means the ancillary facility made available under
         this agreement as described in Clause 2 (THE FACILITIES).

         "ANCILLARY OUTSTANDINGS" means, at any time, the aggregate equivalent
         Base Currency Amount of all banking arrangements of the following type
         under each Ancillary Facility then in force:

         (a)      all amounts of principal then outstanding under any overdraft
                  facilities;

         (b)      the maximum face amount (excluding amounts in respect of
                  interest) of all guarantees, bonds and letters of credit then
                  outstanding under any guarantee, bonding or letter of credit
                  facilities; and

         (c)      in respect of any other facility (including any foreign
                  exchange facility) or financial accommodation such other
                  amount as the relevant Ancillary Bank may (acting in
                  consultation with the Agent) determine fairly represents the
                  aggregate exposure at such time of the Ancillary Bank
                  providing the same.

         "APPLICABLE MARGIN" means for Facility A1, Facility A2 and the
         Revolving Facility 2.25 per cent. per annum and for Facility B 2.75 per
         cent. per annum, or, for any Interest Period commencing after the date
         which is 12 Months after the date of this Agreement, that rate per
         annum which may be in effect in accordance with Clause 11.3 (MARGIN
         RATCHET) PROVIDED THAT for any Interest Period commencing at least 5
         Business Days after receipt by the Agent of

                                      -2-
<PAGE>

         quarterly accounts of the Grohe Holding Group in accordance with Clause
         22.1(b) and the Compliance Certificate pursuant to Clause 22.2 for the
         Relevant Period ending on the first Quarter Date after the occurrence
         of the Qualifying Public Offering, the Applicable Margin shall be
         reduced by 0.25 per cent. per annum in each case, if as of such Quarter
         Date (taking into account the actual Net IPO Proceeds received by Grohe
         Holding, to the extent not used to repay Indebtedness for Borrowed
         Money of the Grohe Holding Group) the Total Debt Leverage of the Grohe
         Holding Group is less than 2.50:1.

         "AUTHORISATION" means an authorisation, consent, approval, resolution,
         licence, exemption, filing, notarisation or registration.

         "AVAILABILITY PERIOD" means:

         (a)      in relation to the Term Facilities the period from and
                  including the date of this Agreement to and including the date
                  which is two Months following the date of this Agreement; and

         (b)      in relation to the Revolving Facility, the period from and
                  including the date of this Agreement to and including the date
                  which is one Month prior to the Termination Date.

         "AVAILABLE COMMITMENT" means, in relation to a Lender at any time the
         aggregate of its Available Facility A1 Commitment, Available Facility
         A2 Commitment, Available Facility B Commitment and Available Revolving
         Commitment.

         "AVAILABLE FACILITY A1 COMMITMENT" means a Lender's Commitment under
         that Facility minus:

         (a)      the Base Currency Amount of its participation in any
                  outstanding Loans under that Facility; and

         (b)      in relation to any proposed Utilisation, the Base Currency
                  Amount of its participation in any Loans that are due to be
                  made under that Facility on or before the proposed Utilisation
                  Date.

         "AVAILABLE FACILITY A2 COMMITMENT" means a Lender's Commitment under
         that Facility minus:

         (a)      the amount of its participation in any outstanding Loans under
                  that Facility; and

         (b)      in relation to any proposed Utilisation, the amount of its
                  participation in any Loans that are due to be made under that
                  Facility on or before the proposed Utilisation Date.

                                      -3-
<PAGE>

         "AVAILABLE FACILITY B COMMITMENT" means a Lender's Commitment under
         that Facility minus:

         (a)      the amount of its participation in any outstanding Loans under
                  that Facility; and

         (b)      in relation to any proposed Utilisation, the amount of its
                  participation in any Loans that are due to be made under that
                  Facility on or before the proposed Utilisation Date.

         "AVAILABLE FACILITY" means, in relation to a Facility, the aggregate
         for the time being of each Lender's Available Commitment in respect of
         that Facility.

         "AVAILABLE REVOLVING COMMITMENT" means a Lender's Commitment under that
         Facility minus:

         (a)      the Base Currency Amount of its participation in any
                  outstanding Revolving Loans, Letters of Credit or Bank
                  Guarantees under that Facility;

         (b)      in relation to any proposed Utilisation, the amount of its
                  participation in any Revolving Loans, Letters of Credit or
                  Bank Guarantees that are due to be made or issued under that
                  Facility on or before the proposed Utilisation Date, other
                  than that Lender's participation in any Revolving Loans,
                  Letters of Credit and Bank Guarantees that are due to be
                  repaid, prepaid or to expire on or before the proposed
                  Utilisation Date.

         "AVERAGE LIFE" means the quotient obtained by dividing (1) the sum of
         the products of the number of years from the date of determination to
         the dates of each successive principal payment of such indebtedness
         multiplied by the amount of such payment by (2) the sum of all such
         payments.

         "BANK GUARANTEE" means a bank guarantee issued or to be issued by a
         Fronting Bank pursuant to Clause 5 (UTILISATION) outstanding in the
         form set out in Schedule 12 (FORM OF BANK Guarantees) or in such other
         form requested by a Borrower which is acceptable to the Agent and a
         Fronting Bank.

         "BASE CURRENCY" means EUR.

         "BASE CURRENCY AMOUNT" means, in relation to a Loan, Letter of Credit
         or Bank Guarantee, the amount specified in the Utilisation Request
         delivered by a Borrower for that Loan, Letter of Credit or Bank
         Guarantee, or if the amount requested is not denominated in the Base
         Currency, that amount converted into the Base Currency at the Agent's
         Spot Rate of Exchange on the date which is the date falling three
         Business Days before the Utilisation Date or, if later, on the

                                      -4-
<PAGE>

         date the Agent receives the Utilisation Request, adjusted to reflect
         any repayment (other than, in relation to Facility A1, a repayment
         arising from a change in currency), prepayment, consolidation or
         division of a Loan, Letter of Credit or Bank Guarantee.

         "BC FUNDS" means BC European Capital VI-1, BC European Capital VI-2, BC
         European Capital VI-3, BC European Capital VI-4, BC European Capital
         VI-5, BC European Capital VI-6, BC European Capital VI-7, BC European
         Capital VI-8, BC European Capital VI-9, BC European Capital VI-10, BC
         European Capital VI-11, BC European Capital VI-12, BC European Capital
         VI-14, BC European Capital V-1, BC European Capital V-2, BC European
         Capital V-3, BC European Capital V-4, BC European Capital V-5, BC
         European Capital V-6, any BC European Capital VII fund, in each case,
         organized under the laws of Guernsey, Channel Islands and legally
         represented by CIE Management II Ltd and any other fund advised by BC
         Partners Limited.

         "BORROWER" means an Original Borrower or an Additional Borrower unless
         it has ceased to be a Borrower in accordance with Clause 27 (CHANGES TO
         THE OBLIGORS).

         "BORROWER EXIT DATE" means the date the Agent (after consultation with
         the Company) confirms to the Company and the other Finance Parties as
         the Borrower Exit Date for the purpose of the Finance Documents (and in
         particular Clause 27.4 (TRANSFER ON BORROWER EXIT DATE)) PROVIDED THAT
         the Agent may not notify such other Finance Parties of such date unless
         the following has been satisfied:

         (i)      Friedrich Grohe has become a Borrower under a Facility A2 Loan
                  in accordance with Clause 27.2 (ADDITIONAL BORROWERS); and

         (ii)     the Agent has received a Borrower Exit Transfer Certificate
                  executed by Grohe Beteiligungs and Friedrich Grohe in form and
                  substance satisfactory to it.

         "BORROWER EXIT TRANSFER CERTIFICATE" means a certificate executed by
         Grohe Beteiligungs as exiting Borrower and Friedrich Grohe as new
         Borrower and the Agent in substantially the form set out in Schedule 14
         (BORROWER EXIT TRANSFER CERTIFICATE).

         "BREAK COSTS" means the amount (if any) by which:

         (a)      the interest which a Lender should have received for the
                  period from the date of receipt of all or any part of its
                  participation in a Loan or Unpaid Sum to the last day of the
                  current Interest Period in respect of that Loan

                                      -5-
<PAGE>

                  or Unpaid Sum, had the principal amount or Unpaid Sum received
                  been paid on the last day of that Interest Period;

         exceeds:

         (b)      the amount which that Lender would be able to obtain by
                  placing an amount equal to the principal amount or Unpaid Sum
                  received by it on deposit with a leading bank in the Relevant
                  Interbank Market for a period starting on the Business Day
                  following receipt or recovery and ending on the last day of
                  the current Interest Period.

         "BUDGET" means the profit and loss account, balance sheet and cash flow
         statement in agreed terms for the period beginning on 1 January 2003
         and ending on 31 December 2003 to be delivered by the Company to the
         Agent pursuant to Clause 4.1 (INITIAL CONDITIONS PRECEDENT) and
         thereafter any budget to be delivered by the Company to the Agent
         pursuant to Clause 22.6 (BUDGET).

         "BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
         banks are open for general business in London, Frankfurt/Main and
         Luxembourg and:

         (a)      (in relation to any date for payment or purchase of a currency
                  other than euro) the principal financial centre of the country
                  of that currency; or

         (b)      (in relation to any date for payment or purchase of euro) any
                  TARGET Day.

         "BUSINESS PLAN" means the financial model including profit and loss,
         balance sheet and cash flow projections in agreed form relating to the
         Grohe Holding Group for the period beginning 31 December 2002 and
         ending 31 December 2009.

         "CASH COLLATERAL" means, in relation to any Letter of Credit or L/C
         Proportion of a Letter of Credit or any Bank Guarantee or Guarantee
         Proportion of a Bank Guarantee, a deposit in an interest-bearing
         account or accounts as the Agent may specify, that deposit and account
         to be secured in favour of, and on terms and conditions acceptable to,
         the Security Agent.

         "CHARGED PROPERTY" means all the assets of a member of the Grohe
         Holding Group which from time to time are, or are expressed to be, the
         subject of the Transaction Security.

         "CHANGE OF CONTROL" means:

         (a)      prior to the occurrence of the Qualifying Public Offering or
                  Listing of Grohe Holding or a company of which Grohe Holding
                  is a wholly-owned Subsidiary, the Current Investors as a group
                  ceasing to hold (directly or

                                      -6-
<PAGE>

                  indirectly) at least 51 per cent. of the share capital or the
                  voting rights in Grohe Holding; or

         (b)      following a Listing or the occurrence of the Qualifying Public
                  Offering of Grohe Holding or a company of which Grohe Holding
                  is a wholly-owned Subsidiary, a person (or a group of persons
                  acting in concert (as defined in Section 2 (5) of the German
                  Takeover Code (WERTPAPIERERWERBS- UND UBERNAHMEGESETZ)) owning
                  at least 35 per cent. of the voting rights in Grohe Holding or
                  otherwise taking effective control over Grohe Holding and the
                  Current Investors holding a percentage of the voting rights in
                  Grohe Holding which is less than the percentage held by such
                  person or group of persons.

         "COMMITMENT" means a Facility A1 Commitment, a Facility A2 Commitment,
         a Facility B Commitment or a Revolving Commitment.

         "COMPLIANCE CERTIFICATE" means a certificate substantially in the form
         set out in Schedule 8 (FORM OF COMPLIANCE CERTIFICATE).

         "CONFIDENTIALITY UNDERTAKING" means a confidentiality undertaking
         substantially in the form set out in Schedule 13 (FORM OF
         CONFIDENTIALITY UNDERTAKING) or any other form agreed between the
         Company and the Agent.

         "CONSENT SOLICITATION STATEMENT" means the consent solicitation
         statement of Grohe Holding dated 6 March 2003 relating to the Senior
         Notes;

         "CURRENT INVESTORS" means BC Funds, Teabar Capital Corporation, and
         Capital d'Amerique CDPQ, Inc. and any other shareholder of Grohe
         Holding as of the date of this Agreement and as set out in Schedule 15
         (LIST OF CURRENT INVESTORS).

         "DEFAULT" means an Event of Default or any event or circumstance
         specified in Clause 25 (EVENTS OF DEFAULT) which would (with the expiry
         of a grace period, the giving of notice, the making of any
         determination under the Finance Documents or any combination of any of
         the foregoing) be an Event of Default.

         "ENVIRONMENTAL CLAIM" means any claim, proceeding or investigation by
         any person in respect of any Environmental Law.

         "ENVIRONMENTAL LAW" means any applicable law in any jurisdiction in
         which any member of the Group conducts business which relates to the
         pollution or protection of the environment or harm to or the protection
         of human health or the health of animals or plants.

         "ENVIRONMENTAL PERMITS" means any permit, licence, consent, approval
         and other authorisation and the filing of any notification, report or
         assessment

                                      -7-
<PAGE>

         required under any Environmental Law for the operation of the business
         of any member of the Group conducted on or from the properties owned or
         used by the relevant member of the Group.

         "ESCROW ACCOUNT" means the Escrow Account as defined in the Escrow
         Account Agreement.

         "ESCROW ACCOUNT AGREEMENT" means the escrow account agreement dated on
         or about the date thereof between the Original Borrowers, the Agent and
         HypoVereinsbank Luxembourg Societe Anonyme as escrow agent.

         "EURIBOR" means, in relation to any Loan in euro:

         (a)      the applicable Screen Rate; or

         (b)      (if no Screen Rate is available for the Interest Period of
                  that Loan) the arithmetic mean of the rates (rounded upwards
                  to four decimal places) as supplied to the Agent at its
                  request quoted by the Reference Banks to leading banks in the
                  European interbank market;

         as of the Specified Time on the Quotation Day for the offering of
         deposits in euro for a period comparable to the Interest Period of the
         relevant Loan.

         "EVENT OF DEFAULT" means any event or circumstance specified as such in
         Clause 25 (EVENTS OF DEFAULT).

         "EXISTING SENIOR CREDIT AGREEMENT" means the facility agreement dated
         15 July 1999, as last amended by an amendment agreement dated 27 August
         2002, entered into between, INTER ALIA, Friedrich Grohe and Grohe
         Beteiligungs and Dresdner Bank Luxembourg S.A. as facility agent and
         Dresdner Bank AG as lead arranger and Bayerische Hypo- und Vereinsbank
         AG as co-arranger, as amended and novated.

         "EXPIRY DATE" means, in relation to any Letter of Credit or Bank
         Guarantee, the date on which the maximum aggregate liability under that
         Letter of Credit or Bank Guarantee is to be reduced to zero.

         "FACILITY" means a Term Facility or the Revolving Facility (including
         without limitation any Ancillary Facility).

         "FACILITY A1" means the EUR 180,000,000 multicurrency term loan
         facility made available under this Agreement as described in Clause 2
         (THE FACILITIES).

                                      -8-
<PAGE>

         "FACILITY A1 COMMITMENT" means:

         (a)      in relation to an Original Lender, the amount in the Base
                  Currency set opposite its name under the heading "FACILITY A1
                  COMMITMENT" in Part II of Schedule 1 (THE ORIGINAL PARTIES)
                  and the amount of any other Facility A1 Commitment transferred
                  to it under this Agreement; and

         (b)      in relation to any other Lender, the amount in the Base
                  Currency of any Facility A1 Commitment transferred to it under
                  this Agreement,

         to the extent not cancelled, reduced or transferred by it under this
         Agreement.

         "FACILITY A1 LOAN" means a loan made or to be made under Facility A1 or
         the principal amount outstanding for the time being of that loan.

         "FACILITY A2" means the EUR 270,000,000 term loan facility made
         available under this Agreement as described in Clause 2 (THE
         FACILITIES).

         "FACILITY A2 COMMITMENT" means:

         (a)      in relation to an Original Lender, the amount set opposite its
                  name under the heading "FACILITY A2 COMMITMENT" in Part II of
                  Schedule 1 (THE ORIGINAL PARTIES) and the amount of any other
                  Facility A2 Commitment transferred to it under this Agreement;
                  and

         (b)      in relation to any other Lender, the amount of any Facility A2
                  Commitment transferred to it under this Agreement,

         to the extent not cancelled, reduced or transferred by it under this
         Agreement.

         "FACILITY A2 LOAN" means a loan made or to be made under Facility A2 or
         the principal amount outstanding for the time being of that loan.

         "FACILITY B" means the EUR 100,000,000 term loan facility made
         available under this Agreement as described in Clause 2 (THE
         FACILITIES).

         "FACILITY B COMMITMENT" means:

         (a)      in relation to an Original Lender, the amount set opposite its
                  name under the heading "FACILITY B COMMITMENT" in Part II of
                  Schedule 1 (THE ORIGINAL PARTIES) and the amount of any other
                  Facility B Commitment transferred to it under this Agreement;
                  and

         (b)      in relation to any other Lender, the amount of any Facility B
                  Commitment transferred to it under this Agreement,

         to the extent not cancelled, reduced or transferred by it under this
         Agreement.

                                      -9-
<PAGE>

         "FACILITY B LOAN" means an advance made or to be made under Facility B
         or the principal amount outstanding for the time being of that advance.

         "FACILITY OFFICE" means the office or offices notified by a Lender to
         the Agent in writing on or before the date it becomes a Lender (or,
         following that date, by not less than five Business Days' written
         notice) as the office or offices through which it will perform its
         obligations under this Agreement.

         "FEE LETTER" means any letter or letters dated 6 March 2003 and/or on
         or about the date hereof between the Arrangers and the Company and/or
         Friedrich Grohe (or the Agent and/or the Security Agent and the Company
         and/or Friedrich Grohe) setting out any of the fees referred to in
         Clause 14 (FEES).

         "FINANCE DOCUMENT" means this Agreement, the Security Documents, any
         Fee Letter, any Accession Letter, any Resignation Letter, any Letter of
         Credit, any Bank Guarantee, any document entered into in connection
         with any Ancillary Facility, the Hedging Agreements, the Intercreditor
         Agreement, the Syndication Letter and any other document designated as
         such by the Agent and the Company.

         "FINANCE LEASE" means a lease contract where the leased asset and
         liability, in accordance with GAAP in the Relevant Jurisdiction, is
         accounted for in the balance sheet of the lessee.

         "FINANCE PARTIES" means the Agent, any Arranger, the Security Agent,
         any Lender (including an Ancillary Bank), the Hedge Counterparties and
         any Fronting Bank.

         "FINANCIAL INDEBTEDNESS" means any indebtedness for or in respect of:

         (a)      moneys borrowed;

         (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 be treated as a Finance Lease;

         (e)      receivables sold or discounted (other than any receivables to
                  the extent they are sold on a non-recourse basis);

         (f)      any derivative transaction entered into in connection with
                  protection against or benefit from fluctuation in any rate or
                  price (and, when

                                      -10-
<PAGE>

                  calculating the value of any derivative transaction, only the
                  marked to market value shall be taken into account);

         (g)      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;

         (h)      any amount raised by the issue of redeemable shares
                  (excluding, for clarification purposes, any amount raised by
                  the repurchase of own shares (RUCKKAUF EIGENER AKTIEN));

         (i)      any amount of any liability under an advance or deferred
                  purchase agreement if one of the primary reasons behind the
                  entry into this agreement is to raise finance;

         (j)      any amount raised under any other transaction (including any
                  forward sale or purchase agreement) not referred to under
                  paragraphs (a) to (i) above having the commercial effect of a
                  borrowing; and

         (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.

         "FRIEDRICH GROHE MANDATORY PREPAYMENT ACCOUNT" means the
         interest-bearing account of Friedrich Grohe held in the Federal
         Republic of Germany with Dresdner Bank AG which is pledged in favour of
         the Finance Parties and which is identified in a letter from the
         Company to the Agent and is designated as a Mandatory Prepayment
         Account by the Company and the Agent (as the same may be redesignated,
         substituted or replaced from time to time) from which no withdrawals
         may be made by Friedrich Grohe.

         "FRONTING BANK" means any Lender which has notified the Agent that it
         has agreed to a Borrower's request to be a fronting bank for a
         particular Letter of Credit or Bank Guarantee pursuant to the terms of
         this Agreement.

         "GAAP" means generally accepted accounting principles in the Relevant
         Jurisdiction in effect from time to time and consistently applied
         PROVIDED THAT in respect of any consolidated financial statements of
         the Grohe Holding Group "GAAP" means generally accepted accounting
         principles in the Federal Republic of Germany from time to time and
         consistently applied.

         "GROHE BETEILIGUNGS MANDATORY PREPAYMENT ACCOUNT" means the
         interest-bearing account of Grohe Beteiligungs held in the Federal
         Republic of Germany with Dresdner Bank AG which is pledged in favour of
         the Finance Parties and which is identified in a letter from Grohe
         Beteiligungs to the Agent

                                      -11-
<PAGE>

         and is designated as a Mandatory Prepayment Account by Grohe
         Beteiligungs and the Agent (as the same may be redesignated,
         substituted or replaced from time to time) from which no withdrawals
         may be made by Grohe Beteiligungs.

         "GROHE HOLDING" means Grohe Holding GmbH.

         "GROHE HOLDING GROUP" means Grohe Holding, Grohe Consult GmbH and any
         member of the Group from time to time but excluding any Unrestricted
         Company.

         "GROHE HOLDING SHAREHOLDER LOANS" means the loans made available by any
         shareholder of Grohe Holding to Grohe Holding pursuant to the Grohe
         Holding Shareholder Loan Agreements.

         "GROHE HOLDING SHAREHOLDER LOAN AGREEMENTS" means the loan agreements
         dated 27 July 1999 and entered into between Grohe Holding and certain
         of its shareholders.

         "GROHE HOLDING SUBORDINATION AGREEMENT" means the subordination
         agreement dated on or about the date hereof and entered into between
         Grohe Holding, the Security Agent and the lenders under the Grohe
         Holding Shareholder Loans.

         "GROUP" means the Company and its Subsidiaries from time to time but
         excluding any Unrestricted Company.

         "GROUP STRUCTURE CHART" means the group structure chart showing:

         (a)      all members of the Grohe Holding Group, including current name
                  and company registration number, its jurisdiction of
                  incorporation and/or establishment and a list of shareholders;

         (b)      any person in which any member of the Grohe Holding Group
                  holds shares in its issued share capital or equivalent
                  ownership interest of such person.

         "GUARANTEE AMOUNT" means:

         (a)      each sum paid or due and payable by a Fronting Bank to the
                  beneficiary of a Bank Guarantee pursuant to the terms of that
                  Bank Guarantee; and

         (b)      all liabilities (including, without limitation, any costs
                  incurred in funding any amount which falls due from a Fronting
                  Bank under a Bank Guarantee), claims, losses and expenses
                  which that Fronting Bank incurs or sustains in connection with
                  a Bank Guarantee,

                                      -12-
<PAGE>

         in each case which has not been reimbursed pursuant to Clause 6.6
         (BORROWER'S INDEMNITY TO THE FRONTING BANK).

         "GUARANTEE COMMISSION RATE" means, from time to time, a guarantee
         commission equal to the Applicable Margin for a Revolving Loan at that
         time.

         "GUARANTEE PROPORTION" means in respect of any Bank Guarantee and save
         as otherwise provided in this Agreement, the proportion (expressed as a
         percentage) born by that Lender's Available Revolving Commitment to the
         Available Revolving Facility immediately prior to the issue of that
         Bank Guarantee.

         "GUARANTOR" means an Original Guarantor or an Additional Guarantor.

         "HEDGE COUNTERPARTY" means Dresdner Bank AG and any Lender or an
         Affiliate of a Lender which has become a party to the Intercreditor
         Agreement as Hedge Counterparty.

         "HEDGING AGREEMENTS" means each of the agreements entered into between
         the Group member(s) approved by the Agent and a Hedge Counterparty for
         the purpose of hedging interest rate liabilities in accordance with
         Clause 24.22 (HEDGING).

         "HOLDING COMPANY" means, in relation to a company or corporation, any
         other company or corporation in respect of which it is a Subsidiary.

         "INDEBTEDNESS FOR BORROWED MONEY" means Financial Indebtedness save for
         any indebtedness for as in respect of paragraphs (f) and (g) of the
         definition of "FINANCIAL INDEBTEDNESS".

         "INDENTURE" means the indenture dated 13 November 2000 pursuant to
         which Grohe Holding issued certain notes, as amended or novated.

         "INFORMATION MEMORANDUM" means the document in the form approved by the
         Company concerning the Grohe Holding Group which, at the Company's
         request and on its behalf, will be prepared in relation to this
         transaction and distributed by the Arrangers to selected financial
         institutions.

         "INITIAL TERM LOAN" means the initial Facility A1 Loan and initial
         Facility A2 Loan made or to be made in an amount equal to the amounts
         due under the Refinanced Facilities.

         "INTELLECTUAL PROPERTY" means any patents, trade marks, service marks,
         designs, business names, copyrights, design rights, moral rights,
         inventions, confidential information, know-how and other intellectual
         property rights and interests,

                                      -13-
<PAGE>

         whether registered or unregistered, and the benefit of all applications
         and rights to use such assets of each member of the Group.

         "INTERCREDITOR AGREEMENT" means the security trust and intercreditor
         agreement dated on or about the date hereof and entered into between,
         INTER ALIA, the Obligors and the Finance Parties.

         "INTEREST PERIOD" means, in relation to a Loan, each period determined
         in accordance with Clause 12 (INTEREST PERIODS) and, in relation to an
         Unpaid Sum, each period determined in accordance with Clause 11.4
         (DEFAULT INTEREST).

         "L/C AMOUNT" means:

         (a)      each sum paid or due and payable by a Fronting Bank to the
                  beneficiary of a Letter of Credit pursuant to the terms of
                  that Letter of Credit; and

         (b)      all liabilities, costs (including, without limitation, any
                  costs incurred in funding any amount which falls due from a
                  Fronting Bank under a Letter of Credit), claims, losses and
                  expenses which a Fronting Bank incurs or sustains in
                  connection with a Letter of Credit,

         in each case which has not been reimbursed pursuant to Clause 6.6
         (BORROWERS' INDEMNITY TO THE FRONTING BANK).

         "L/C COMMISSION RATE" means, from time to time, a letter of credit
         commission equal to the Applicable Revolving Margin at that time.

         "L/C PROPORTION" means, in relation to a Lender in respect of any
         Letter of Credit and save as otherwise provided in this Agreement, the
         proportion (expressed as a percentage) borne by that Lender's Available
         Revolving Commitment to the Available Revolving Facility immediately
         prior to the issue of that Letter of Credit.

         "LEGAL OPINIONS" means the legal opinions delivered to the Agent
         pursuant to Schedule 2 (CONDITIONS PRECEDENT).

         "LENDER" means:

         (a)      any Original Lender; and

         (b)      any bank, financial institution, trust, fund or other entity
                  which has become a Party in accordance with Clause 26 (CHANGES
                  TO THE LENDERS),

         which in each case has not ceased to be a Party in accordance with the
         terms of this Agreement.

                                      -14-
<PAGE>

         "LETTER OF CREDIT" means a Letter of Credit issued or to be issued by a
         Fronting Bank pursuant to Clause 5 (UTILISATION) substantially in the
         form set out in Schedule 11 (FORM OF LETTER OF CREDIT) or in such other
         form requested by a Borrower which is acceptable to the Agent and a
         Fronting Bank.

         "LIBOR" means, in relation to any Loan in an Optional Currency:

         (a)      the applicable Screen Rate; or

         (b)      (if no Screen Rate is available for the currency or Interest
                  Period of that Loan) the arithmetic mean of the rates (rounded
                  upwards to four decimal places) as supplied to the Agent at
                  its request quoted by the Reference Banks to leading banks in
                  the London interbank market,

         as of the Specified Time on the Quotation Day for the offering of
         deposits in the currency of that Loan and for a period comparable to
         the Interest Period for that Loan.

         "LISTING" means the admission to trading of all or any part of the
         share capital of a company on any recognised investment or securities
         exchange in any country.

         "LMA" means the Loan Market Association.

         "LOAN" means a Facility A1 Loan, a Facility A2 Loan, a Facility B Loan
         or a Revolving Loan.

         "MAJORITY LENDERS" means:

         (a)      if there are no Loans, Letters of Credit or Bank Guarantees
                  then outstanding, a Lender or Lenders whose Commitments
                  aggregate more than 51 per cent. of the Total Commitments (or,
                  if the Total Commitments have been reduced to zero, aggregated
                  more than 51 per cent. of the Total Commitments immediately
                  prior to the reduction); or

         (b)      at any other time, a Lender or Lenders whose participations in
                  the Loans, Letters of Credit or Bank Guarantees then
                  outstanding aggregate more than 51 per cent. of all the Loans,
                  Letters of Credit and Bank Guarantees then outstanding.

         "MANDATORY COST" means the percentage rate per annum calculated by the
         Agent in accordance with Schedule 4 (MANDATORY COST FORMULAE).

         "MANDATORY PREPAYMENT ACCOUNT" means the Friedrich Grohe Mandatory
         Prepayment Account and/or the Grohe Beteiligungs Mandatory Prepayment
         Account, as the case may be.

                                      -15-
<PAGE>

         "MATERIAL ADVERSE EFFECT" means:

         (a)      a material adverse effect on the business, assets or financial
                  condition of the Group taken as a whole; or

         (b)      a material adverse effect on the ability of an Obligor to
                  perform its payment obligations under the Finance Documents;
                  or

         (c)      a material adverse effect on the ability of Grohe Beteiligungs
                  to meet its obligations under Clause 23 (FINANCIAL COVENANTS);
                  or

         (d)      the validity or enforceability of the Finance Documents or the
                  rights or remedies of any Finance Party under the Finance
                  Documents is materially adversely affected.

         "MATERIAL COMPANY" means, at any time, a Subsidiary of the Company
         which is not an Unrestricted Company and which:

         (a)      is listed in Schedule 1 Part I (ORIGINAL PARTIES); or

         (b)      Grohe International GmbH, Grohe Deutschland Vertriebs GmbH,
                  AQUA Butzke GmbH, Friedrich Grohe Portugal, Grohe Sarl, Grohe
                  S.p.A., Grohe Gesellschaft m. b. H, Wien, Grohe America Inc.,
                  DAL GmbH & Co. KG, Grohe Nederland B.V. and Grohe Pacific Pte
                  Ltd.; or

         (c)      has EBITA (as defined in Clause 23 (FINANCIAL COVENANTS))
                  representing 5 per cent. or more of the consolidated EBITA of
                  the Grohe Holding Group; or

         (d)      has gross assets representing 5 per cent. or more of the
                  consolidated gross assets of the Grohe Holding Group; or

         (e)      has turnover representing 5 per cent. or more of the
                  consolidated turnover of the Grohe Holding Group,

         excluding in the case of paragraphs (c) to (e) above intra-group items.

         Compliance with the conditions set out in paragraphs (c), (d) and (e)
         shall be determined by reference to the most recent Compliance
         Certificate supplied by the Company and/or the latest audited (if
         required by law) financial statements of that Subsidiary (aggregated,
         in the case of a Subsidiary which itself has one or more Subsidiaries,
         with the EBITA, gross assets and turnover of such Subsidiaries) and the
         latest audited consolidated financial statements of the Grohe Holding
         Group.

                                      -16-
<PAGE>

         "MONTH" means a period starting on one day in a calendar month and
         ending on the numerically corresponding day in the next calendar month,
         except that:

         (a)      if the numerically corresponding day is not a Business Day,
                  that period shall end on the next Business Day in that
                  calendar month in which that period is to end if there is one,
                  or if there is not, on the immediately preceding Business Day;
                  and

         (b)      if there is no numerically corresponding day in the calendar
                  month in which that period is to end, that period shall end on
                  the last Business Day in that calendar month.

         The above rules will only apply to the last Month of any period.

         "NOTE DOCUMENTS" means the Indenture, the Senior Notes, the Consent
         Solicitation Statement, the subordination agreement dated 13 November
         2000 relating to INTER ALIA the subordination of the Grohe Holding
         Shareholder Loans behind the Senior Notes and the subordination
         agreement dated on or about the date hereof and entered into between
         Grohe Holding, Grohe Beteiligungs and Bank of New York as note trustee
         relating to the subordination of loans made from the Company to Grohe
         Holding in connection with the Shareholder Loan Refinancing.

         "OBLIGORS" means a Borrower or a Guarantor.

         "OPTIONAL CURRENCY" means a currency (other than the Base Currency)
         which complies with the conditions set out in Clause 4.3 (CONDITIONS
         RELATING TO OPTIONAL CURRENCIES).

         "ORIGINAL FINANCIAL STATEMENTS" means:

         (a)      in relation to Grohe Holding, the audited consolidated
                  financial statements of the Grohe Holding Group for the
                  financial year ended 31 December 2001; and

         (b)      in relation to each Original Obligor, its audited financial
                  statements for its financial year ended 31 December 2001.

         "ORIGINAL OBLIGOR" means an Original Borrower or an Original Guarantor.

         "PARTICIPATING MEMBER STATE" means any member state of the European
         Communities that adopts or has adopted the euro as its lawful currency
         in accordance with legislation of the European Community relating to
         Economic and Monetary Union.

         "PARTY" means a party to this Agreement.

                                      -17-
<PAGE>

         "PERMITTED ACQUISITION" means any acquisition comprising the purchase,
         subscription for or other acquisition of shares, other securities or
         interests in a company or a business or undertaking (the "TARGET") or
         any designation of an Unrestricted Company as a member of the Group and
         Grohe Holding Group in accordance with Clause 24.27(b) PROVIDED THAT:

         (i)      the relevant targets or Unrestricted Companies do carry on a
                  similar or complimentary business to the business of the Group
                  and would, after the acquisition or designation, constitute a
                  wholly-owned member of the Group; and

         (ii)     if such acquisition of a target or designation of an
                  Unrestricted Company is completed prior to the date of the
                  Qualifying Public Offering, the amount of the total
                  consideration (both cash and non-cash, including the amount of
                  indebtedness assumed by the purchaser or in the assets
                  acquired or Unrestricted Company designated a member of the
                  Group, the amount of any deferred purchase price and any costs
                  and expenses incurred and including, for the designation of an
                  Unrestricted Company as member of the Group, the Financial
                  Indebtedness of such Unrestricted Company), when aggregated
                  with the aggregate total consideration of any other shares,
                  securities or interests, companies, business or undertaking or
                  Unrestricted Company acquired by members of the Group during
                  that financial year does not exceed the aggregate of the
                  amount of EUR 100,000,000 and the amount allocated in the
                  Budget for that financial year for capital expenditure and
                  which has not been spent or committed, unless the excess
                  amount is financed by cash contributions (whether by way of
                  capital increase or payment into the reserves) made to the
                  Company by its direct or indirect shareholders, or by
                  Shareholder Loans and/or other Financial Indebtedness which
                  constitutes Permitted Indebtedness pursuant to paragraph (m)
                  and (n) of such definition; and

         (iii)    the Company has confirmed to the Agent in writing prior to the
                  date of such acquisition or designation that the target or
                  Unrestricted Company, as the case may be, on a stand alone
                  basis and without any support from any member of the Group, is
                  in a position to meet its due payment obligations, will be
                  able to meet its payment obligations that fall due over the
                  period of 12 Months from the date of the acquisition or
                  designation and will be able to meet its payment obligations
                  resulting from any investment or capital expenditure planned
                  on the date of the acquisition or designation, PROVIDED THAT
                  no such confirmation will be required for (x) the acquisition
                  of an Unrestricted Company or (y) any acquisition(s) and/or
                  redesignation with regard to which the total consideration (as
                  defined in paragraph (ii) above) and when aggregated with the
                  total consideration for all acquisitions and/or designations
                  of

                                      -18-
<PAGE>

                  targets or Unrestricted Companies, as the case may be, which
                  do not meet the criteria of this paragraph (iii) does not from
                  the date of this Agreement exceed EUR 25,000,000, and

         (iv)     at the time of the acquisition or designation, as the case may
                  be, and immediately thereafter there is no Default which is
                  continuing; and

         (v)      for any acquisition or designation which is completed prior to
                  or on the date of the Qualifying Public Offering and if the
                  amount of the total consideration for the acquisition is
                  greater than EUR 25,000,000, the Company has supplied to the
                  Agent a certificate supported by accompanying calculations and
                  signed by the financial officer(s) binding the Company and
                  demonstrating that if the EBITDA of or attributable to those
                  assets, and the debt to be added to the consolidated financial
                  statements of the Grohe Holding Group as a result of the
                  acquisition or designation were included as of the beginning
                  of the Relevant Period, on a PRO FORMA basis, in the
                  calculation of the financial covenants, the financial
                  covenants set out in Clause 23 (FINANCIAL COVENANTS) would be
                  complied with as at the last Quarter Date in respect of which
                  financial statements have been delivered pursuant to Clause
                  22.1 (FINANCIAL STATEMENTS) and as at the four Quarter Dates
                  following such acquisition or designation; and

         (vi)     for any acquisition or designation which is completed
                  following the date of the Qualifying Public Offering, the
                  incurrence test set out in column 3 of Clause 23.1.4 would be
                  complied with as at the last Quarter Date in respect of which
                  Financial Statements have been delivered pursuant to Clause
                  22.1 (FINANCIAL STATEMENTS) and as at the four Quarter Dates
                  following such acquisition or designation, in each case tested
                  on a PRO FORMA basis including as of the beginning of the
                  Relevant Period the EBITDA of or attributable to those assets
                  and the debt to be added to the consolidated financial
                  statements of the Grohe Holding Group as a result of the
                  acquisition or designation, as the case may be, and the
                  Company has supplied a certificate to the Agent, supported by
                  accompanying calculations and signed by financial officer(s)
                  binding the Company demonstrating this.

         "PERMITTED DISPOSAL" means in any financial year disposals of assets
         which are:

         (a)      disposals of stock in trade and machinery by a member of the
                  Group in its ordinary course of trade on arms' length terms
                  for fair market value;

         (b)      disposals of assets on arms' length terms between wholly-owned
                  members of the Group PROVIDED THAT if such a disposal relates
                  to assets

                                      -19-
<PAGE>

                  which immediately prior to such disposal are subject to the
                  Transaction Security the disposal (i) does not adversely
                  affect any Transaction Security or (ii) is permitted pursuant
                  to the terms of the Transaction Security or (iii) like
                  security is provided over such assets;

         (c)      disposal of assets which are substituted within 12 Months
                  prior to or following such disposal with replacement assets of
                  a similar type and quality, PROVIDED THAT prior to the
                  occurrence of the Qualifying Public Offering and upon request
                  of the Agent, the Company provides evidence of such
                  replacement;

         (d)      disposal of any surplus or obsolete assets not required for
                  the efficient operation of the business by any member of the
                  Group;

         (e)      prior to the date of the Qualifying Public Offering, disposals
                  of assets in connection with sale- and- lease back
                  transactions, non-recourse factoring and asset backed
                  securities transactions where the value (price or other
                  consideration or market value) of all such assets disposed of
                  by members of the Group does not exceed the amount of EUR
                  25,000,000 in any one financial year plus such amount
                  available under the basket referred to in paragraph (f) below
                  applicable prior to the date of the Qualifying Public
                  Offering; or

         (f)      disposals of assets other than those referred to under (a) to
                  (e) above or, following the date of the Qualifying Public
                  Offering, other than those referred to under (a) to (d) above,
                  for cash by a member of the Group where the value (price or
                  other consideration or market value) of all such assets
                  disposed of by members of the Group does not exceed EUR
                  5,000,000 or, following the occurrence of the Qualifying
                  Public Offering, EUR 100,000,000 in any one financial year.

         "PERMITTED INDEBTEDNESS" means:

         (a)      any Financial Indebtedness arising under the Finance
                  Documents;

         (b)      any Financial Indebtedness arising under the Refinanced
                  Facilities PROVIDED THAT it will be repaid in full prior to or
                  concurrently with the first Utilisation under the Facilities
                  or, if the Utilisation Request specifies that the proceeds of
                  the proposed Utilisation with regard to the Initial Term Loan
                  are to be paid to the Escrow Account, concurrently with the
                  release of proceeds from the Escrow Account in accordance with
                  the terms of the Escrow Account Agreement;

                                      -20-
<PAGE>

         (c)      any Financial Indebtedness arising under the Senior Notes Loan
                  provided it is subordinated on the terms of the Senior Notes
                  Subordination Agreement,

         (d)      any Financial Indebtedness arising in respect of Shareholder
                  Loans and amounts credited to the shareholder loan account
                  (GESELLSCHAFTERDARLEHENSKONTO) of Grohe Beteiligungs, PROVIDED
                  THAT in each case they are subordinated on terms of a
                  subordination agreement in form and substance satisfactory to
                  the Agent;

         (e)      any Financial Indebtedness (including under interest rate
                  hedging agreements) disclosed in writing to the Agent pursuant
                  to the list to be delivered pursuant to Schedule 2 Part I 5(j)
                  of this Agreement and agreed by the Agent (on behalf of the
                  Majority Lenders) prior to the date of the first Utilisation
                  Request PROVIDED THAT the amount thereof is not increased;

         (f)      any Financial Indebtedness under any other interest rate
                  hedging agreement hedging the interest exposure of any member
                  of the Group in respect of Loans outstanding under this
                  Agreement and Financial Indebtedness permitted under paragraph
                  (e) above;

         (g)      any Financial Indebtedness arising under overnight facilities
                  entered into in connection with cash pooling agreements up to
                  a maximum aggregate amount of EUR 10,000,000 or, after the
                  occurrence of a Qualifying Public Offering, EUR 20,000,000;

         (h)      any Financial Indebtedness arising under a discount line for
                  bill of exchanges PROVIDED THAT the principal amount thereof
                  shall at no time exceed the amount of EUR 10,000,000 or, after
                  the occurrence of the Qualifying Public Offering, EUR
                  25,000,000;

         (i)      any Financial Indebtedness arising under Permitted Intra-Group
                  Loans;

         (j)      any Financial Indebtedness arising under currency hedging
                  exposures in the ordinary course of trade;

         (k)      any Financial Indebtedness arising under Finance Leases which
                  does not exceed an aggregate amount of EUR 25,000,000 at any
                  time;

         (l)      any Financial Indebtedness supported by a Letter of Credit or
                  Bank Guarantee;

         (m)      any Financial Indebtedness not falling within the categories
                  set out in paragraphs (a) to (l) above and not exceeding at
                  any one time in

                                      -21-
<PAGE>

                  aggregate EUR 25,000,000 or, after the occurrence of a
                  Qualifying Public Offering EUR 100,000,000;

         (n)      any Financial Indebtedness incurred by Grohe Beteiligungs or,
                  following the repayment of all Loans made to Grohe
                  Beteiligungs, by any Original Borrower, including for the
                  purpose of financing a Permitted Acquisition, PROVIDED THAT:

                  (i)      no later than at the same time that other financial
                           institutions are invited to bid for such financing,
                           but in any case at least one Month prior to the
                           intended incurrence of such Financial Indebtedness,
                           the Company shall notify the Agent thereof and of its
                           terms and the Majority Lenders (through the Agent)
                           are entitled to notify the Company within two weeks
                           after receipt of the Company's notice by the Agent
                           that they are willing, subject to satisfactory
                           documentation relating to the financing and, where
                           applicable, acquisition documents, finalisation of
                           the capital, lending and tax structure, satisfactory
                           completion of the due diligence and such other
                           conditions which are standard for such type of
                           transaction, to finance such acquisition on such
                           terms whereupon such Financial Indebtedness shall be
                           incurred with some or all of the Lenders only;

                  (ii)     such Financial Indebtedness is incurred with a stated
                           maturity not before the last Termination Date, the
                           Average Life at the time such Financial Indebtedness
                           is incurred equal to or greater than the Average Life
                           of the outstanding Loans and with the financial
                           covenants being not more onerous than those under
                           this Agreement; and

                  (iii)    prior to the date of the Qualifying Public Offering,
                           such Financial Indebtedness is incurred for the
                           purpose of financing a Permitted Acquisition or for
                           refinancing any Financial Indebtedness of any
                           Unrestricted Company outstanding at the date it
                           becomes a member of the Group after it has become a
                           member of the Group and the aggregate total amount of
                           Financial Indebtedness incurred pursuant to this
                           paragraph (n) does not exceed EUR 100,000,000;

         PROVIDED THAT prior to the date of the Qualifying Public Offering the
         amount of Financial Indebtedness incurred under paragraphs (m) and (n)
         for the purpose of financing a Permitted Acquisition must not at any
         time exceed in aggregate the amount of EUR 100,000,000;

                                      -22-
<PAGE>

         (o)      following the occurrence of the Qualifying Public Offering and
                  provided the ratio of Total Net Debt to EBITDA on the last
                  preceding Quarter Date is lower than 2.5:1, any Indebtedness
                  for Borrowed Money incurred by Grohe Beteiligungs to
                  (partially) refinance Financial Indebtedness outstanding under
                  the Senior Notes PROVIDED THAT such Indebtedness for Borrowed
                  Money is incurred with a stated maturity not before the last
                  Termination Date, the Average Life at the time such Financial
                  Indebtedness is incurred is equal to or greater than the
                  Average Life of the outstanding Loans and that the Senior
                  Notes Loan is refinanced at the same time and in the same
                  amount,

         PROVIDED THAT any Financial Indebtedness to be incurred after the date
         of the Qualifying Public Offering falling within paragraphs (m) and (n)
         above may only be incurred upon receipt by the Agent of a certificate
         supported by accompanying calculations and signed by the financial
         officer(s) binding the Company and demonstrating on a PRO FORMA basis
         and assuming such Financial Indebtedness or, if applicable Permitted
         Acquisition, had been incurred or completed on the first day of the
         Relevant Period, that as at the last Quarter Date in respect of which
         financial statements have been delivered pursuant to Clause 22.1
         (FINANCIAL STATEMENTS) and as at the four following Quarter Dates, the
         incurrence test set out in column 3 of Clause 23.1.4 would be complied
         with, PROVIDED FURTHER THAT no such certificate is required for any
         Financial Indebtedness incurred after the date of the Qualifying Public
         Offering falling within paragraphs (m) and (n) amounting up to EUR
         7,500,000 in aggregate from the date of this Agreement.

         "PERMITTED INTRA-GROUP LOANS" means:

         (a)      a trade credit or indemnity granted in the ordinary course of
                  trading and upon terms usual for such trade;

         (b)      all loans entered into between any Obligors; and

         (c)      all loans entered into between wholly-owned members of the
                  Group, PROVIDED THAT the borrower under such intra-group loan
                  is either a member of the Group as of the date of this
                  Agreement or the Relevant Jurisdiction of the borrower under
                  such intra-group loan is a member state of the Organisation
                  for Economic Cooperation of Development or the aggregate
                  amount of any other loans does not at any time exceed the
                  amount of EUR 25,000,000,

         PROVIDED THAT with regard to any loan made to a member of the Group
         which is not an Obligor or to a member of the Group whose shares are
         subject to the Transaction Security, security satisfactory to the
         Majority Lenders over such

                                      -23-
<PAGE>

         loans has been provided to the Finance Parties and PROVIDED FURTHER
         THAT in case of any loan made to an Obligor as borrower, the lender of
         such loan, if its Relevant Jurisdiction is the Federal Republic of
         Germany and it is a 100 % owned Subsidiary, has acceded to the
         Intercreditor Agreement as intra-group lender and that the aggregate
         amount of loans outstanding to any Obligor from Group members who have
         not acceded to the Intercreditor Agreement as intra-group lender must
         not exceed EUR 45,000,000.

         "PERMITTED INVESTMENTS" means:

         (a)      acquisitions comprising the purchase, subscription for or
                  other acquisition of additional shares, other securities or
                  interest of a wholly-owned member of the Group (the "RELEVANT
                  ENTITY"), including by way of capital increase or payment into
                  the capital reserves PROVIDED THAT (i) if Security has been
                  given to the Finance Parties over any of the existing shares,
                  securities or other interest in the Relevant Entity,
                  equivalent Security is provided without undue delay over the
                  new shares, securities or other interest in favour of the
                  Finance Parties and either (ii) the payment of cash or
                  disposal of assets is made between Obligors or (iii) the
                  recipient of the cash or asset is either a member of the Group
                  as at the date of this Agreement or its Relevant Jurisdiction
                  is a member state of the Organisation for Economic Cooperation
                  and Development or the value of the cash payments and/or the
                  disposals does not in aggregate from the date of this
                  Agreement exceed EUR 25,000,000; or

         (b)      acquisitions comprising the purchase, subscription for or
                  other acquisition of shares, other securities or interests in
                  an Unrestricted Company, non wholly-owned Subsidiary or other
                  company which following such acquisition would qualify as a
                  joint venture, in each case carrying on a similar or
                  complementary business to the business of the Group up to,
                  from the date of this Agreement and including any loan made
                  referred to in paragraph (g) of the definition of Permitted
                  Transactions, the aggregate amount of EUR 40,000,000 or,
                  following the Qualifying Public Offering, EUR 65,000,000,
                  PROVIDED THAT the aggregate amount so invested in any
                  Unrestricted Companies (and including any loans made to
                  Unrestricted Companies and referred to in paragraph (g) of the
                  definition of Permitted Transactions) from the date of this
                  Agreement must not exceed EUR 25,000,000 or, following the
                  Qualifying Public Offering, EUR 50,000,000.

         "PERMITTED TRANSACTIONS" means:

         (a)      the payment or declaration of any dividend, return on capital,
                  repayment of capital contributions or other distributions by
                  any member of the

                                      -24-
<PAGE>

                  Group to any other member of the Group or any minority
                  shareholder of a member of the Group;

         (b)      the granting of loans by the Company to Grohe Holding or the
                  making of withdrawals by Grohe Holding from its partner's
                  accounts in the Company for the Shareholder Loan Refinancing;

         (c)      the making of withdrawals by Grohe Holding from its partner's
                  accounts in the Company, the granting of loans or making of
                  other payments from the Company to Grohe Holding for the
                  financing of ongoing administrative costs (including taxes) of
                  Grohe Holding of up to EUR 2,000,000 in any financial year or
                  such higher amount approved by the Agent in writing, PROVIDED
                  THAT such approval shall be granted if and to the extent that
                  the Company has demonstrated to the reasonable satisfaction of
                  the Agent that such ongoing administrative costs (including
                  taxes) have been reasonably incurred;

         (d)      the making of withdrawals by Grohe Holding from its partners'
                  accounts in the Company, the granting of loans or making of
                  other payments from the Company to Grohe Holding for the
                  financing of the cost of the Qualifying Public Offering or
                  Listing up to EUR 4,000,000 (including when the Listing
                  failed), costs incurred in connection with the Shareholder
                  Loan Refinancing up to EUR 13,000,000 and, PROVIDED THAT the
                  ratio of Total Net Debt to EBITDA is lower than 2.0:1 on the
                  last preceding Quarter Date, that no Default has occurred
                  which is continuing and no Listing or public offering of
                  shares has occurred, the payment of cash interest up to the
                  aggregate amount of EUR 5,300,000 in any financial year on the
                  Grohe Holding Shareholder Loans, PROVIDED THAT in each case
                  such withdrawals or loans, as the case may be are reasonable
                  and notified in advance to the Agent;

         (e)      the set-off by Grohe Holding of withdrawal claims arising from
                  its partner's accounts against any loans granted by the
                  Company to Grohe Holding in accordance with paragraph (b)
                  above or VICE VERSA;

         (f)      following the date of the Qualifying Public Offering or
                  Listing, the payment or declaration of any dividend or other
                  distribution or withdrawal from partners' accounts of the
                  Company to Grohe Holding, PROVIDED THAT the Agent has received
                  a certificate supported by calculations and signed by the
                  financial officer(s) binding the Company demonstrating that,
                  on a PRO FORMA basis and assuming the relevant dividend having
                  been paid by Grohe Holding, as at the last Quarter Date in
                  respect of which financial statements have been delivered
                  pursuant to Clause 22.1 (FINANCIAL STATEMENTS) and as at the
                  four Quarter Dates

                                      -25-
<PAGE>

                  following the payment, the incurrence test set out in the
                  penultimate paragraph of Clause 23.1.2 would be complied with;

         (g)      the granting of loans by any member of the Group to any
                  Unrestricted Company, non-wholly-owned Subsidiary or joint
                  venture of up to, in aggregate from the date of this Agreement
                  and including any investments referred to in paragraph (b) of
                  the definitions of Permitted Investment, EUR 40,000,000 or,
                  following the date of the Qualifying Public Offering, EUR
                  65,000,000 PROVIDED THAT the aggregate amount of loans made to
                  Unrestricted Companies or acquisitions of shares, other
                  securities or interests in an Unrestricted Company referred to
                  in paragraph (b) of the definition of Permitted Investments
                  from the date of this Agreement must not exceed EUR 25,000,000
                  or, following the Qualifying Public Offering, EUR 50,000,000;
                  and

         (h)      the granting of any guarantee of Friedrich Grohe and/or, if it
                  is a downstream guarantee, Grohe Beteiligungs to guarantee
                  Financial Indebtedness incurred by an Unrestricted Company to
                  finance the cash purchase price and the indebtedness assumed
                  as part of the total consideration (as defined in paragraph
                  (ii) of the definition of Permitted Acquisition) by the
                  purchaser, the company or business acquired, PROVIDED THAT the
                  maximum contingent liability under such guarantee does not,
                  when aggregated with any other Financial Indebtedness incurred
                  by any member of the Group and permitted (only) pursuant to
                  paragraph (m) of the definition of Permitted Indebtedness,
                  exceed the amount of any Financial Indebtedness that can be
                  incurred pursuant to paragraph (m) of the definition of
                  Permitted Indebtedness and PROVIDED FURTHER THAT, prior to the
                  Qualifying Public Offering and if the total consideration due
                  by an Unrestricted Company and/or its Subsidiaries exceeds EUR
                  100,000,000, any Unrestricted Company which has incurred
                  Financial Indebtedness has guaranteed by way of a guarantee
                  upon first demand to each Finance Party the due and punctual
                  performance by each Borrower of all of that Borrower's
                  obligations under the Finance Documents in form and substance
                  satisfactory to the Majority Lenders.

         "QUALIFYING PUBLIC OFFERING" means the date on which following the
         Listing and the initial public offering of shares in Grohe Holding or
         any company of which Grohe Holding is a wholly-owned Subsidiary the
         primary proceeds from such initial public offering have been received
         by the listed company or the seller of the shares PROVIDED THAT:

         (i)      on such date the Total Debt Leverage (as defined in Clause 23
                  (FINANCIAL COVENANTS)) of the Grohe Holding Group is less than
                  2.50:1, it being

                                      -26-
<PAGE>

                  understood that EBITDA, the aggregate amount of all
                  obligations of any member of the Grohe Holding Group for or in
                  respect of Indebtedness for Borrowed Money and all other
                  calculations except for the Net IPO Proceeds will be based on
                  the latest available quarterly accounts of the Grohe Holding
                  Group delivered for the 12 months period ending on a Quarter
                  Date, while the Net IPO Proceeds will be calculated on an
                  actual basis on the day on which the listed company actually
                  receives such proceeds, and

         (ii)     the Agent has not on or prior to the date which is 2 Business
                  Days before the date on which the offering period begins,
                  notified the Company of a Default which is continuing as at
                  the date which is 2 Business Days before the date on which the
                  offering period begins.

         "QUOTATION DAY" means, in relation to any period for which an interest
         rate is to be determined two Business Days before the first day of that
         period, unless market practice differs in the Relevant Interbank Market
         for a currency, in which case the Quotation Day for that currency will
         be determined by the Agent in accordance with market practice in the
         Relevant Interbank Market (and if quotations would normally be given by
         leading banks in the Relevant Interbank Market on more than one day,
         the Quotation Day will be the last of those days).

         "REFERENCE BANKS" means, in relation to LIBOR the principal London
         offices of Dresdner Bank AG, Bayerische Hypo- und Vereinsbank AG and
         Westdeutsche Landesbank and, in relation to EURIBOR, the principal
         German office of the aforementioned banks, or such other banks as may
         be appointed by the Agent in consultation with the Company.

         "REFINANCED FACILITIES" means the facilities made available by a
         syndicate of lenders to the Original Borrowers under the Existing
         Senior Credit Agreement of which an amount of approximately EUR
         335,400,000 is outstanding at the date of this Agreement.

         "RELEVANT INTERBANK MARKET" means in relation to euro, the European
         interbank market and, in relation to any other currency, the London
         interbank market.

         "RELEVANT JURISDICTION" means the jurisdiction of incorporation of each
         member of the Grohe Holding Group and, if different, where it is
         resident or has its principal place of business.

         "REPAYMENT DATE" means each of the date specified in Clause 9.1
         (REPAYMENT OF FACILITY A1 AND FACILITY A2 LOANS).

                                      -27-
<PAGE>

         "REPAYMENT INSTALMENT" means each instalment for repayment of the Term
         Loans referred to in Clause 9.1 (REPAYMENT OF THE FACILITY A1 AND
         FACILITY A2 LOANS).

         "REPEATING REPRESENTATIONS" means each of the representations set out
         in Clauses 21.1 (Status) to 21.7 (DEDUCTION OF TAX), Clause 21.9 (NO
         DEFAULT), Clause 21.12 (PARI PASSU ranking) to Clause 21.22 (LEGAL AND
         BENEFICIAL OWNER) and Clause 21.24 (INTELLECTUAL PROPERTY) to Clause
         21.26 (OWNERSHIP OF THE OBLIGORS).

         "REPORTS" means each of the due diligence reports listed in Schedule 2
         (CONDITIONS PRECEDENT) Part I.

         "RESIGNATION LETTER" means a letter substantially in the form set out
         in Schedule 7 (FORM OF RESIGNATION LETTER).

         "REVOLVING COMMITMENTS" means:

         (a)      in relation to an Original Lender, the amount in the Base
                  Currency set opposite its name under the heading "REVOLVING
                  COMMITMENT" in Part II of Schedule 1 (THE ORIGINAL PARTIES)
                  and the amount of any other Revolving Commitment transferred
                  to it under this Agreement; and

         (b)      in relation to any other Lender, the amount in the Base
                  Currency of any Revolving Commitment transferred to it under
                  this Agreement,

         to the extent not cancelled, reduced or transferred by it under this
         Agreement.

         "REVOLVING FACILITY" means the EUR 50,000,000 multicurrency revolving
         loan, letter of credit and bank guarantee facility made available under
         this Agreement as described in Clause 2 (THE FACILITIES).

         "REVOLVING LOAN" means a loan made or to be made under the Revolving
         Facility or the principal amount outstanding for the time being of that
         loan.

         "ROLLOVER LOAN" means one or more Revolving Loans:

         (a)      made or to be made on the same day that a maturing Revolving
                  Loan is due to be repaid or any demand by the Agent or
                  Fronting Bank pursuant to a drawing under a Letter of Credit
                  or Bank Guarantee is due to be satisfied;

         (b)      the aggregate amount of which is equal to or less than the
                  maturing Revolving Loan or demand in relation to a Letter of
                  Credit or Bank Guarantee;

                                      -28-
<PAGE>

         (c)      in the same currency as the maturing Revolving Loan (unless it
                  arose as a result of the operation of Clause 7.2
                  (UNAVAILABILITY OF A CURRENCY)) or demand in relation to a
                  Letter of Credit or Bank Guarantee; and

         (d)      made or to be made to the same Borrower for the purpose of
                  refinancing a maturing Revolving Loan or satisfying a demand
                  in relation to a Letter of Credit or Bank Guarantee.

         "SALE" means a sale or disposal (whether in a single transaction or
         series of related transactions) of all or the majority of the assets
         (including shares) of the Group.

         "SCREEN RATE" means:

         (a)      in relation to LIBOR, the British Bankers' Association
                  Interest Settlement Rate for the relevant currency and period;
                  and

         (b)      in relation to EURIBOR, the percentage rate per annum
                  determined by the Banking Federation of the European Union for
                  the relevant period,

         displayed on the appropriate page of the Reuters screen. If the agreed
         page is replaced or service ceases to be available, the Agent may
         specify another page or service displaying the appropriate rate after
         consultation with the Company and the Lenders.

         "SECURITY" means 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 DOCUMENTS" means each of the documents listed as being a
         Security Document in paragraphs 2(a) to (e) of Part I of Schedule 2
         (CONDITIONS PRECEDENT) together with any other document creating or
         expressed to create any Security over all or any part of its assets in
         respect of the obligations of any of the Obligors under any of the
         Finance Documents.

         "SELECTION NOTICE" means a notice substantially in the form set out in
         Part II of Schedule 3 (REQUESTS) given in accordance with Clause 12
         (INTEREST PERIODS) in relation to the Term Facilities.

         "SENIOR NOTES" means the notes in the aggregate principal amount of EUR
         200,000,000 issued by Grohe Holding under the Indenture falling due for
         payment on 15 November 2010 and bearing interest in an amount of 11.5
         per cent. per annum.

         "SENIOR NOTES CONSENT" means the required consent by the holders of the
         Senior Notes as solicited in the Consent Solicitation Statement.

                                      -29-
<PAGE>

         "SENIOR NOTES LOAN" means the loan of the proceeds from the issue of
         the Senior Notes made by Grohe Holding to the Company and which is
         dated 13 November 2000 and that is subordinated pursuant to the terms
         of the Senior Notes Subordination Agreement.

         "SENIOR NOTES SUBORDINATION AGREEMENT" means a subordination agreement
         between the Security Agent (acting for the benefit of the Finance
         Parties), the Company and Grohe Holding by which the Senior Notes Loan
         is subordinated on terms satisfactory to the Security Agent.

         "SHAREHOLDER LOANS" means any loans granted to a member of the Group by
         a (direct or indirect) shareholder of the Company.

         "SHAREHOLDER LOAN REFINANCING" means a loan made to and/or a withdrawal
         made by Grohe Holding from the Company for the purpose of financing the
         partial repayment of certain of the Grohe Holding Shareholders Loans in
         an amount of up to EUR 200,000,000 PROVIDED THAT

         (i)      any such loans and withdrawals are made on terms agreed by and
                  satisfactory to the Agent; and

         (ii)     any such loans and withdrawals are only made after receipt of
                  the Senior Notes Consent in form and substance satisfactory to
                  the Agent.

         "SPECIFIED TIME" means a time determined in accordance with Schedule 10
         (TIMETABLES).

         "SUBSIDIARY" means in relation to any company or corporation, a company
         or corporation:

         (a)      which is controlled, directly or indirectly, by the first
                  mentioned company or corporation;

         (b)      more than half the issued share capital of which is owned,
                  directly or indirectly by the first mentioned company or
                  corporation; or

         (c)      which is a Subsidiary of another Subsidiary of the first
                  mentioned company or corporation,

         and for this purpose, a company or corporation shall be treated as
         being controlled by another if that other company or corporation is
         able to direct its affairs and/or to control the composition of its
         board of directors or equivalent body.

         "SYNDICATION DATE" means the day specified by the Arrangers as the day
         on which primary syndication of the Facilities is completed.

                                      -30-
<PAGE>

         "SYNDICATION LETTER" means a letter from, INTER ALIA, Friedrich Grohe
         to the Arrangers in connection with the syndication of the Facilities.

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

         "TARGET DAY" means any day on which TARGET is open for the settlement
         of payments in euro.

         "TAX" means any tax, levy, impost, duty or other charge or withholding
         of a similar nature (including any penalty or interest payable in
         connection with any failure to pay or any delay in paying any of the
         same).

         "TERM FACILITIES" means Facility A1, Facility A2 and Facility B.

         "TERM LOAN" means a Facility A1 Loan, a Facility A2 Loan or a Facility
         B Loan.

         "TERMINATION DATE" means

         (a)      for Facility A1, Facility A2 and the Revolving Facility 20
                  December 2009; and

         (b)      for Facility B 20 July 2010.

         "TOTAL COMMITMENTS" means the aggregate of the Total Facility A1
         Commitments, the Total Facility A2 Commitments, the Total Facility B
         Commitments and the Total Revolving Commitments, being EUR 600,000,000
         at the date of this Agreement.

         "TOTAL FACILITY A1 COMMITMENTS" means the aggregate of the Facility A1
         Commitments, being EUR 180,000,000 at the date of this Agreement.

         "TOTAL FACILITY A2 COMMITMENTS" means the aggregate of the Facility B
         Commitments, being EUR 270,000,000 at the date of this Agreement.

         "TOTAL FACILITY B COMMITMENTS" means the aggregate of the Facility B
         Commitments, being EUR 100,000,000 at the date of this Agreement.

         "TOTAL REVOLVING COMMITMENTS" means the aggregate of the Revolving
         Commitments being EUR 50,000,000 at the date of this Agreement.

         "TRANSACTION SECURITY" means the Security created or expressed to be
         created in favour of the Security Agent or the Finance Parties, as the
         case may be, pursuant to the Security Documents.

                                      -31-
<PAGE>

         "TRANSFER CERTIFICATE" means a certificate substantially in the form
         set out in Schedule 5 (FORM OF TRANSFER CERTIFICATES) or any other form
         agreed between the Agent and the Company.

         "TRANSFER DATE" means, in relation to a transfer, the later of:

         (a)      the proposed Transfer Date specified in the Transfer
                  Certificate; and

         (b)      the date on which the Agent executes the Transfer Certificate.

         "UNPAID SUM" means any sum due and payable but unpaid by an Obligor
         under the Finance Documents.

         "UNRESTRICTED COMPANY" means:

         (i)      any Subsidiary of the Company that at the time of
                  determination was designated an Unrestricted Company by the
                  Company in accordance with Clause 24.27 (DESIGNATION OF
                  UNRESTRICTED COMPANY); and

         (ii)     any Subsidiary of an Unrestricted Company

         "UTILISATION" means a utilisation of a Facility.

         "UTILISATION DATE" means the date of a Utilisation, being the date on
         which the relevant Loan is to be made or the relevant Letter of Credit
         is to be issued.

         "UTILISATION REQUEST" means a notice substantially in the form set out
         in Part I of Schedule 3 (REQUESTS).

         "VAT" means value added tax and any other tax of a similar nature.

1.2      CONSTRUCTION

         (a)      Unless a contrary indication appears any reference in this
                  Agreement to:

                  (i)      the "AGENT", any "ARRANGER", the "SECURITY AGENT",
                           any "FINANCE PARTY", any "LENDER", any "HEDGE
                           COUNTERPARTY", any "FRONTING BANK", any "ANCILLARY
                           BANK", any "Obligor" or any "PARTY" shall be
                           construed so as to include its successors in title,
                           permitted assigns and permitted transferees;

                  (ii)     "ASSETS" includes present and future properties,
                           revenues and rights of every description;

                  (iii)    a "FINANCE DOCUMENT" or any other agreement or
                           instrument is a reference to that Finance Document or
                           other agreement or instrument as amended;

                                      -32-
<PAGE>

                  (iv)     "INDEBTEDNESS" includes any obligation (whether
                           incurred as principal or as surety) for the payment
                           or repayment of money, whether present or future,
                           actual or contingent;

                  (v)      a "PERSON" includes any person, firm, company,
                           corporation, government, state or agency of a state
                           or any association, trust or partnership (whether or
                           not having separate legal personality) of two or more
                           of the foregoing;

                  (vi)     a "REGULATION" includes any regulation, rule,
                           official directive, request or guideline (whether or
                           not having the force of law) of any governmental,
                           intergovernmental or supranational body, agency,
                           department or regulatory, self-regulatory or other
                           authority or organisation;

                  (vii)    a "WHOLLY-OWNED SUBSIDIARY" of a company or
                           corporation shall be construed as a reference to a
                           company or corporation more than 99% of the voting
                           rights and share capital of which are owned (directly
                           or indirectly) by that other company or corporation;

                  (viii)   a Letter of Credit or, as the case may be, Bank
                           Guarantee, is "REPAID" or "PREPAID" or "REDUCED" if:

                           (1)      a Borrower provides Cash Collateral for that
                                    Letter of Credit or L/C Proportion of a
                                    Letter of Credit or, as the case may be,
                                    that Bank Guarantee or Guarantee Proportion
                                    of a Bank Guarantee;

                           (2)      the maximum amount payable under the Letter
                                    of Credit or, as the case may be, Bank
                                    Guarantee is reduced or, as the case may be,
                                    cancelled in accordance with its terms; or

                           (3)      the relevant Fronting Bank has confirmed in
                                    writing to the Agent that it is satisfied
                                    that it has no further liability under that
                                    Letter of Credit or, as the case may be,
                                    Bank Guarantee,

                           and the amount by which a Letter of Credit or, as the
                           case may be, Bank Guarantee is repaid, prepaid or
                           reduced under sub-paragraphs (1) and (2) is the
                           amount of the relevant Cash Collateral or reduction;

                                      -33-
<PAGE>

                  (ix)     an amount borrowed includes any amount utilised by
                           way of Letter of Credit or Bank Guarantee;

                  (x)      amounts outstanding under this Agreement include the
                           amounts outstanding under any Letter of Credit or any
                           Bank Guarantee;

                  (xi)     an outstanding amount of a Letter of Credit or, as
                           the case may be, Bank Guarantee, at any time is the
                           maximum amount that is or may be payable by the
                           relevant Borrower under or in respect of that Letter
                           of Credit or, as the case may be, Bank Guarantee, at
                           the time taking into account amounts, repaid, prepaid
                           or reduced in accordance with paragraph (viii) above;

                  (xii)    a provision of law is a reference to that provision
                           as amended or re-enacted; and

                  (xiii)   a time of day is a reference to Frankfurt am Main
                           time.

         (b)      Section, Clause and Schedule headings are for ease of
                  reference only.

         (c)      Unless a contrary indication appears, a term used in any other
                  Finance Document or in any notice given under or in connection
                  with any Finance Document has the same meaning in that Finance
                  Document or notice as in this Agreement.

         (d)      A Default (other than an Event of Default) is "CONTINUING" if
                  it has not been remedied or waived and an Event of Default is
                  "CONTINUING" if it has not been waived.

1.3      CURRENCY SYMBOLS AND DEFINITIONS
         "$" and "DOLLARS" denote lawful currency of the United States of
         America, "(POUND)" and "STERLING" denotes lawful currency of the United
         Kingdom and "EUR" and "EURO" means the single currency unit of the
         Participating Member States.

                                      -34-
<PAGE>

                                    SECTION 2
                                 THE FACILITIES

2.       THE FACILITIES

2.1      THE FACILITIES
         Subject to the terms of this Agreement, the Lenders make available:

         (a)      to Friedrich Grohe a multicurrency term loan facility in an
                  aggregate amount equal to the Total Facility A1 Commitments;

         (b)      to Grohe Beteiligungs a term loan facility in an aggregate
                  amount equal to the Total Facility A2 Commitments and the
                  Total Facility B Commitments; and

         (c)      to Friedrich Grohe and any Additional Borrower a multicurrency
                  revolving loan, letter of credit and bank guarantee facility
                  in an aggregate amount equal to the Total Revolving
                  Commitments.

         (d)      The Ancillary Banks may with the prior written consent of the
                  Agent and the Company make available Ancillary Facilities to
                  Friedrich Grohe and any Additional Borrower in accordance with
                  Clause 8 (ANCILLARY FACILITIES).

2.2      FINANCE PARTIES' RIGHTS AND OBLIGATIONS

         (a)      The obligations of each Finance Party under the Finance
                  Documents are several. Failure by a Finance Party to perform
                  its obligations under the Finance Documents does not affect
                  the obligations of any other Party under the Finance
                  Documents. No Finance Party is responsible for the obligations
                  of any other Finance Party under the Finance Documents.

         (b)      The rights of each Finance Party under or in connection with
                  the Finance Documents are separate and independent rights and
                  any debt arising under the Finance Documents to a Finance
                  Party from an Obligor shall be a separate and independent
                  debt.

         (c)      A Finance Party may, except as otherwise stated in the Finance
                  Documents, separately enforce its rights under the Finance
                  Documents.

                                      -35-
<PAGE>

3.       PURPOSE

3.1      PURPOSE

         (a)      Friedrich Grohe shall apply all amounts borrowed by it under
                  Facility A1 towards (i) the refinancing of the Refinanced
                  Facilities and (ii) the payment of transaction costs arising
                  from that refinancing;

         (b)      Grohe Beteiligungs shall apply all amounts borrowed by it
                  under Facility A2 and Facility B towards (i) the Shareholder
                  Loan Refinancing; (ii) the refinancing of the Refinanced
                  Facilities; and (iii) the payment of transaction costs arising
                  from the refinancing of the Refinanced Facilities and the
                  Shareholder Loan Refinancing;

         (c)      Each Borrower shall apply all amounts borrowed by it under the
                  Revolving Facility towards (i) general corporate and working
                  capital purposes (including the financing of Permitted
                  Acquisitions) and (ii) the payment of transaction costs
                  arising from the refinancing of the Refinanced Facilities.

3.2      MONITORING
         No Finance Party is bound to monitor or verify the application of any
         amount borrowed pursuant to this Agreement.

                                      -36-
<PAGE>

4.       CONDITIONS OF UTILISATION

4.1      INITIAL CONDITIONS PRECEDENT
         No Borrower may deliver a Utilisation Request unless the Agent has
         received all of the documents and other evidence listed in Schedule 2
         (CONDITIONS PRECEDENT) Part I and, in addition, in relation to any
         Utilisations made for the purpose of the Shareholder Loan Refinancing
         in Schedule 2 Part II, in each case in form and substance satisfactory
         to the Agent, but excluding with regard to any Utilisation Request made
         after the occurrence of the Qualifying Public Offering, the documents
         and other evidence listed in Schedule 2 Part I 2 (a). Further, no
         Borrower may deliver a Utilisation Request under Facility A2 for any
         purpose other than the refinancing of the Refinanced Facilities,
         Facility B and the Revolving Facility unless in each case the
         Utilisation Date specified in such Utilisation Request is at least
         three Business Days following the date on which all amounts outstanding
         under the Existing Senior Credit Agreement have been repaid. The Agent
         shall notify the Company and the Lenders promptly upon being so
         satisfied.

4.2      FURTHER CONDITIONS PRECEDENT

         (a)      The Lenders and a Fronting Bank will only be obliged to comply
                  with Clause 5.5 (LENDERS' AND FRONTING BANKS' PARTICIPATION)
                  if on the date of the Utilisation Request and on the proposed
                  Utilisation Date:

                  (i)      in the case of a Rollover Loan, no Event of Default
                           is continuing or would result from the proposed Loan,
                           renewal of a Letter of Credit or Bank Guarantee and,
                           in the case of any other Loan, Letter of Credit, or
                           Bank Guarantee no Default is continuing or would
                           result from the proposed Loan, Letter of Credit or
                           Bank Guarantee; and

                  (ii)     the Repeating Representations to be made by each
                           Obligor and the Company are true in all material
                           respects.

         (b)      The Lenders will only be obliged to comply with Clause 32.9
                  (CHANGE OF CURRENCY) if, on the first day of an Interest
                  Period, no Default is continuing or would result from the
                  change of currency and the Repeating Representations to be
                  made by each Obligor and the Company are true in all material
                  respects.

                                      -37-
<PAGE>

4.3      CONDITIONS RELATING TO OPTIONAL CURRENCIES

         (a)      A currency will constitute an Optional Currency in relation to
                  a Revolving Loan, Letter of Credit or Bank Guarantee if:

                  (i)      it is readily available in the amount required and
                           freely convertible into the Base Currency in the
                           Relevant Interbank Market on the Quotation Day and
                           the Utilisation Date for that Loan, Letter of Credit
                           or Bank Guarantee; or

                  (ii)     it is dollars, sterling, Swiss franc or yen or has
                           been approved by the Agent (acting on the
                           instructions of all the Lenders) on or prior to
                           receipt by the Agent of the relevant Utilisation
                           Request for that Revolving Loan, Letter of Credit or
                           Bank Guarantee.

         (b)      If the Agent has received a written request from the Company
                  for a currency to be approved under paragraph (a)(ii) above,
                  the Agent will confirm to the Company by the Specified Time:

                  (i)      whether or not the Lenders have granted their
                           approval; and

                  (ii)     if approval has been granted, the minimum amount
                           (and, if required, integral multiples) for any
                           subsequent Utilisation in that currency.

4.4      MAXIMUM NUMBER OF LOANS

         (a)      A Borrower may not deliver a Utilisation Request if as a
                  result of the proposed Utilisation:

                  (i)      5 or more Facility A1 Loans would be outstanding;

                  (ii)     5 or more Facility A2 Loans would be outstanding;

                  (iii)    2 or more Facility B Loans would be outstanding; or

                  (iv)     7 or more Revolving Loans, Letters of Credit or Bank
                           Guarantees would be outstanding.

         (b)      Any Loan made by a single Lender under Clause 7.2
                  (UNAVAILABILITY OF A CURRENCY) shall not be taken into account
                  in this Clause 4.4.

                                      -38-
<PAGE>

                                    SECTION 3
                                   UTILISATION

5.       UTILISATION

5.1      DELIVERY OF A UTILISATION REQUEST
         A Borrower may utilise a Facility by delivery to the Agent of a duly
         completed Utilisation Request not later than the Specified Time.

5.2      COMPLETION OF A UTILISATION REQUEST

         (a)      Each Utilisation Request is irrevocable and will not be
                  regarded as having been duly completed unless:

                  (i)      it identifies the Facility to be utilised;

                  (ii)     the proposed Utilisation Date is a Business Day
                           within the Availability Period applicable to that
                           Facility;

                  (iii)    the currency and amount of the Utilisation comply
                           with Clause 5.3 (CURRENCY AND AMOUNT);

                  (iv)     the proposed Interest Period complies with Clause 12
                           (INTEREST PERIODS);

                  (v)      in case of the Revolving Facility it states whether
                           the Utilisation is to be made by way of Revolving
                           Loan, Letter of Credit or Bank Guarantee and whether
                           it is drawn to finance a Permitted Acquisition;

                  (vi)     (in respect of a Letter of Credit or Bank Guarantee)
                           the proposed amount of the Letter of Credit or Bank
                           Guarantee when aggregated with the Base Currency
                           Amount of all Letters of Credit and Bank Guarantees
                           issued and not expired at such time does not exceed
                           EUR 25,000,000;

                  (vii)    (in respect of a Letter of Credit or Bank Guarantee)
                           the proposed term of the Letter of Credit or Bank
                           Guarantee is a period not exceeding 364 days, ending
                           on or before the Termination Date; and

                  (viii)   (in respect of a Letter of Credit or Bank Guarantee)
                           the Fronting Bank and the Agent has each approved the
                           terms of the Letter of Credit or Bank Guarantee.

                                      -39-
<PAGE>

         (b)      Only one Loan, Letter of Credit or Bank Guarantee may be
                  requested in each Utilisation Request.

5.3      CURRENCY AND AMOUNT

         (a)      The currency specified in a Utilisation Request must be the
                  Base Currency or, in case of the Revolving Facility, an
                  Optional Currency PROVIDED THAT an amount of up to EUR
                  50,000,000 of the Facility A1 may be drawn in dollars at
                  Friedrich Grohe's request.

         (b)      The amount of the proposed Loan, Letter of Credit or Bank
                  Guarantee must be:

                  (i)      if the currency selected is the Base Currency, a
                           minimum of EUR 2,500,000 for any Term Loan and EUR
                           1,000,000 and an integral multiple of EUR 250,000 for
                           any Revolving Loan or in either case, if less, the
                           Available Facility; or

                  (ii)     if the currency selected is an Optional Currency, the
                           minimum amount (and, if required integral multiple)
                           specified by the Agent and notified to the Company
                           prior to the date of this Agreement or pursuant to
                           paragraph (b) (ii) of Clause 4.3 (CONDITIONS RELATING
                           TO OPTIONAL CURRENCIES) or, if less, the Available
                           Facility; and

                  (iii)    in any event such that its Base Currency Amount is
                           less than or equal to the Available Facility.

5.4      LIMITATION ON UTILISATION

         The Company shall ensure that no Revolving Loan drawn to finance a
         Permitted Acquisition is outstanding for a period of more than 12
         Months, including after taking into account any Rollover Loans(s) made
         for the purpose of refinancing a Revolving Loan drawn to finance such
         Permitted Acquisition.

5.5      LENDERS' AND FRONTING BANK'S PARTICIPATION

         (a)      If the conditions set out in this Agreement have been met,

                  (i)      each Lender shall make its participation in each Loan
                           available by the Utilisation Date through its
                           Facility Office, and

                  (ii)     the relevant Fronting Bank shall issue each Letter of
                           Credit or Bank Guarantee by the Utilisation Date
                           through its Facility Office.

                                      -40-
<PAGE>

         (b)      The amount of each Lender's participation in each Loan, Letter
                  of Credit or Bank Guarantee will be equal to the proportion
                  borne by its relevant Available Commitment to the relevant
                  Available Facility immediately prior to making the Loan or,
                  issuing the Letter of Credit or Bank Guarantee.

         (c)      The Agent shall determine the Base Currency Amount of each
                  Loan, Letter of Credit and Bank Guarantee which is to be made
                  in an Optional Currency and shall notify each Lender of the
                  amount, currency and the Base Currency Amount of each Loan,
                  Letter of Credit and Bank Guarantee and the amount of its
                  participation in that Loan, Letter of Credit or Bank Guarantee
                  in each case by the Specified Time.

6.       LETTERS OF CREDIT AND BANK GUARANTEES

6.1      COMPLETION OF LETTERS OF CREDIT AND BANK GUARANTEE
         A Fronting Bank is authorised to issue any Letter of Credit or Bank
         Guarantee pursuant to Clause 5 (UTILISATION) by:

         (a)      completing the issue date and the proposed Expiry Date of that
                  Letter of Credit or Bank Guarantee; and

         (b)      executing and delivering that Letter of Credit or Bank
                  Guarantee to the relevant recipient on the Utilisation Date.

6.2      RENEWAL OF A LETTER OF CREDIT AND BANK GUARANTEE

         (a)      Not less than three Business Days before the Expiry Date of a
                  Letter of Credit or Bank Guarantee the relevant Borrower may,
                  by written notice to the Agent and the relevant Fronting Bank,
                  request that the term of that Letter of Credit or Bank
                  Guarantee be extended.

         (b)      The Lenders shall treat the request in the same way as a
                  Utilisation Request for a Letter of Credit or Bank Guarantee
                  in the amount, currency and maturity of the Letter of Credit
                  or Bank Guarantee (as to be extended).

         (c)      The terms of each renewed Letter of Credit or Bank Guarantee
                  shall be the same as those of the relevant Letter of Credit or
                  Bank Guarantee immediately prior to its renewal, save that its
                  term shall commence on the date which was the Expiry Date of
                  that Letter of Credit or Bank Guarantee immediately prior to
                  its renewal and shall end on the proposed Expiry Date
                  specified in the request.

                                      -41-
<PAGE>

         (d)      The Fronting Bank is authorised to amend any Letter of Credit
                  or Bank Guarantee pursuant to a request if the conditions set
                  out in this Agreement have been complied with.

6.3      RESTRICTIONS ON PARTICIPATION IN LETTERS OF CREDIT
         If at any time prior to the issue of a Letter of Credit any Lender is
         prohibited by law or pursuant to any request from or requirement of any
         central bank or other fiscal, monetary or other authority from having
         any right or obligation under this Agreement in respect of a Letter of
         Credit, that Lender shall notify the Agent on or before the Business
         Day prior to the proposed Utilisation Date and:

         (a)      the maximum actual and contingent liabilities of the relevant
                  Fronting Bank under that Letter of Credit shall be reduced by
                  an amount equal to an amount which would have been the amount
                  of that Lender's L/C Proportion of that Letter of Credit if
                  the prohibition had not occurred;

         (b)      the L/C Proportion of that Lender in relation to that Letter
                  of Credit shall be nil; and

         (c)      that Lender's relevant Available Commitment shall be reduced
                  by an amount equal to an amount which would have been the
                  amount of that Lender's L/C Proportion of the Letter of Credit
                  if the prohibition had not occurred.

6.4      RESTRICTIONS ON PARTICIPATION IN BANK GUARANTEES
         If at any time prior to the issue of a Bank Guarantee any Lender is
         prohibited by law or pursuant to any request from or requirement of any
         central bank or other fiscal, monetary or other authority from having
         any right or obligation under this Agreement in respect of a Bank
         Guarantee, that Lender shall notify the Agent on or before the Business
         Day prior to the proposed Utilisation Date and:

         (a)      the maximum actual and contingent liabilities of the relevant
                  Fronting Bank under that Bank Guarantee shall be reduced by an
                  amount equal to an amount which would have been the amount of
                  that Lender's Guarantee Proportion of that Bank Guarantee if
                  the prohibition had not occurred;

         (b)      the Guarantee Proportion of that Lender in relation to that
                  Bank Guarantee shall be nil; and

         that Lender's relevant Available Commitment shall be reduced by an
         amount equal to an amount which would have been the amount of that
         Lender's Guarantee Proportion of the Bank Guarantee if the prohibition
         had not occurred.

                                      -42-
<PAGE>

6.5      DEMANDS UNDER LETTERS OF CREDIT AND BANK GUARANTEES
         If a demand is made under a Letter of Credit or Bank Guarantee or a
         Fronting Bank incurs in connection with a Letter of Credit or Bank
         Guarantee any other liability, cost, claim, loss or expense which is to
         be reimbursed pursuant to this Agreement, the Fronting Bank shall
         promptly notify the Agent of the amount of such demand or such
         liability, cost, claim, loss or expense and the Letter of Credit or
         Bank Guarantee to which it relates and the Agent shall promptly make
         demand upon the Company and the relevant Borrower in accordance with
         this Agreement and notify the relevant Lenders.

6.6      BORROWERS' INDEMNITY TO THE FRONTING BANK
         The Company shall procure that, and the relevant Borrower shall
         irrevocably and unconditionally as a primary obligation indemnify (on
         demand of the Agent) the Fronting Bank at its request against:

         (a)      any sum paid or due and payable by the Fronting Bank under the
                  Letter of Credit or Bank Guarantee; and

         (b)      all liabilities, costs (including, without limitation, any
                  costs incurred in funding any amount which falls due from that
                  Fronting Bank under any Letter of Credit or Bank Guarantee or
                  in connection with any such Letter of Credit or Bank
                  Guarantee), claims, losses and expenses which that Fronting
                  Bank may at any time incur or sustain in connection with or
                  arising out of any such Letter of Credit or Bank Guarantee.

6.7      BORROWERS' INDEMNITY TO LENDERS
         The Company shall procure that, and the relevant Borrower shall
         irrevocably and unconditionally as a primary obligation indemnify (on
         demand of the Agent) each Lender against:

         (a)      any sum paid or due and payable by such Lender in connection
                  with that Letter of Credit or Bank Guarantee; and

         (b)      all liabilities, costs (including, without limitation, any
                  costs incurred in funding any amount which falls due from such
                  Lender in connection with that Letter of Credit or Bank
                  Guarantee), claims, losses and expenses which that Lender may
                  at any time incur or sustain in connection with any Letter of
                  Credit or Bank Guarantee.

6.8      PRESERVATION OF RIGHTS
         Neither the obligations of the Borrowers and the Company set out in
         this Clause 6 nor the rights, powers and remedies conferred on the
         Fronting Bank or Lender by this Agreement or by law shall be
         discharged, impaired or otherwise affected by:

                                      -43-
<PAGE>

         (a)      the winding-up, dissolution, administration or re-organisation
                  of a Fronting Bank, any Lender or any other person or any
                  change in its status, function, control or ownership;

         (b)      any of the obligations of a Fronting Bank, any Lender or any
                  other person under this Agreement or under any Letter of
                  Credit or Bank Guarantee or under any other security taken in
                  respect of its obligations under this Agreement or otherwise
                  in connection with a Letter of Credit or Bank Guarantee being
                  or becoming illegal, invalid, unenforceable or ineffective in
                  any respect;

         (c)      time or other indulgence being granted or agreed to be granted
                  to a Fronting Bank, any Lender or any other person in respect
                  of its obligations under this Agreement or under or in
                  connection with a Letter of Credit or Bank Guarantee or under
                  any other security;

         (d)      any amendment to, or any variation, waiver or release of, any
                  obligation of a Fronting Bank, any Lender or any other person
                  under a Letter of Credit or Bank Guarantee or this Agreement;

         (e)      any other act, event or omission which, but for this Clause 6,
                  might operate to discharge, impair or otherwise affect any of
                  the obligations of the Company or Borrowers set out in this
                  Clause 6 or any of the rights, powers or remedies conferred
                  upon a Fronting Bank or any Lender by this Agreement or by
                  law.

         The obligations of the Borrowers and the Company set out in this Clause
         6 shall be in addition to and independent of every other security which
         a Fronting Bank or any Lender may at any time hold in respect of the
         Borrower's obligations under this Agreement.

6.9      SETTLEMENT CONDITIONAL
         Any settlement or discharge between a Borrower and a Fronting Bank or a
         Lender shall be conditional upon no security or payment to a Fronting
         Bank or Lender by the relevant Borrower, or any other person on behalf
         of that Borrower, being avoided or reduced by virtue of any laws
         relating to bankruptcy, insolvency, liquidation or similar laws of
         general application and, if any such security or payment is so avoided
         or reduced, the relevant Fronting Bank or Lender shall be entitled to
         recover the value or amount of such security or payment from the
         relevant Borrower subsequently as if such settlement or discharge had
         not occurred.

6.10     RIGHT TO MAKE PAYMENTS UNDER LETTERS OF CREDIT AND BANK GUARANTEES
         A Fronting Bank shall be entitled to make any payment in accordance
         with the terms of the relevant Letter of Credit or Bank Guarantee
         without any reference

                                      -44-
<PAGE>

         to or further authority from the Company, any Borrower or any other
         investigation or enquiry. The Company and each Borrower irrevocably
         authorise the relevant Fronting Bank to comply with any demand under a
         Letter of Credit or Bank Guarantee which is valid on its face.

7.       OPTIONAL CURRENCIES

7.1      SELECTION OF CURRENCY

         (a)      A Borrower (or the Company on behalf of a Borrower) shall
                  select the currency of a Facility A1 Loan or a Revolving Loan,
                  Letter of Credit or Bank Guarantee in the case of an initial
                  Utilisation in a Utilisation Request and afterwards, in
                  relation to a Facility A1 Loan made to it, in a Selection
                  Notice.

         (b)      If the Borrower fails to select the currency in a Selection
                  Notice in relation to a Facility A1 Loan, such Loan will
                  remain denominated for its next Interest Period in the same
                  currency in which it is then outstanding.

         (c)      If the Borrower issues a Selection Notice requesting a change
                  of currency and the first day of the requested Interest Period
                  is not a Business Day for the new currency, the Agent shall
                  promptly notify the Borrower and the Lenders and the Facility
                  A1 Loan will remain in the existing currency (with Interest
                  Periods running from one Business Day until the next Business
                  Day) until the next day which is a Business Day for both
                  currencies, on which day the requested Interest Period will
                  begin.

7.2      UNAVAILABILITY OF A CURRENCY
         If before the Specified Time on any Quotation Day:

         (a)      a Lender notifies the Agent that the Optional Currency
                  requested is not readily available to it in the amount
                  required; or

         (b)      a Lender notifies the Agent that compliance with its
                  obligation to participate in a Loan, Letter of Credit or Bank
                  Guarantee in the proposed Optional Currency would contravene a
                  law or regulation applicable to it,

         the Agent will give notice to the relevant Borrower to that effect by
         the Specified Time on that day. In this event, any Lender that gives
         notice pursuant to this Clause 7 will be required to participate in the
         Loan, Letter of Credit or Bank Guarantee in the Base Currency (in an
         amount equal to that Lender's proportion of the Base Currency Amount,
         or in respect of a Rollover Loan, an amount equal to that Lender's
         proportion of the Base Currency Amount of the Rollover Loan that is due
         to be made) and its participation will be treated as a

                                      -45-
<PAGE>

         separate Loan, Letter of Credit or Bank Guarantee denominated in the
         Base Currency during that Interest Period.

7.3      CHANGE OF CURRENCY

         (a)      If a Facility A1 Loan is to be denominated in dollars in any
                  succeeding Interest Periods:

                  (i)      the amount of the Facility A1 Loan in dollars will be
                           calculated by the Agent as the amount of dollars
                           equal to the Base Currency Amount of the Facility A1
                           Loan at the Agent's Spot Rate of Exchange at the
                           Specified Time;

                  (ii)     (unless the Agent and the Borrower agree otherwise in
                           accordance with paragraph (b) below) the Borrower
                           shall repay the Facility A1 Loan in Euros on the last
                           day of the preceding Interest Period; and

                  (iii)    (subject to Clause 4.2 (FURTHER CONDITIONS
                           PRECEDENT)) the Lenders shall re-advance the Facility
                           A1 Loan in dollars in accordance with Clause 7.4
                           (AGENT'S CALCULATIONS).

         (b)      If the Agent and the Borrower agree, the Agent shall:

                  (i)      apply the amount paid to it by the Lenders pursuant
                           to paragraph (a)(iii) above (or so much of that
                           amount as is necessary) in or towards purchase of a
                           Euro amount; and

                  (ii)     use the amount it purchases in or towards
                           satisfaction of the Borrower's obligations under
                           paragraph (a)(ii) above,

                  PROVIDED THAT no denomination of Facility A1 Loans in dollars
                  shall become effective unless the parties to this Agreement
                  have agreed such amendments to the repayment schedule in
                  Clause 9.1 (REPAYMENT OF FACILITY A1 AND A2 LOANS) setting out
                  the US dollar amount and euro amount of Facility A1 Loans to
                  be repaid on each Repayment Date which are necessary to grant
                  the Lenders protection comparable to that granted on the date
                  hereof.

         (c)      If the amount purchased by the Agent pursuant to paragraph
                  (b)(i) above is less than the amount required to be repaid by
                  the Borrower, the Agent shall promptly notify the Borrower and
                  the Borrower shall, on the last day of the succeeding Interest
                  Period, pay an amount to the Agent (in Euros) equal to the
                  difference.

                                      -46-
<PAGE>

         (d)      If any part of the amount paid to the Agent by the Lenders
                  pursuant to paragraph (a)(iii) above is not needed to purchase
                  the amount required to be repaid by the Borrower, the Agent
                  shall promptly notify the Borrower and pay the Borrower, on
                  the last day of the first Interest Period that part of that
                  amount (in dollars).

         (e)      A Facility A1 Loan denominated in dollars cannot be
                  re-denominated in euros.

7.4      AGENT'S CALCULATIONS

         (a)      All calculations made by the Agent pursuant to this Clause 7
                  will take into account any repayment, prepayment,
                  consolidation or division of Facility A1 Loans to be made on
                  the last day of the first Interest Period.

         (b)      Each Lender's participation in a Facility A1 Loan will,
                  subject to paragraph (a) above, be determined in accordance
                  with paragraph (b) of Clause 5.5 (LENDERS' AND FRONTING BANK'S
                  PARTICIPATION).

8.       ANCILLARY FACILITIES

8.1      AVAILABLE ANCILLARY FACILITIES
         Ancillary Facilities may comprise:

         (a)      overdraft facilities;

         (b)      guarantee, performance bonds, documentary or stand-by letter
                  of credit facilities;

         (c)      short term loans;

         (d)      foreign exchange facilities; or

         (e)      other facilities or accommodations as may be required in
                  connection with the business of the Group and which are agreed
                  with the relevant Ancillary Bank.

                                      -47-
<PAGE>

8.2      REQUEST FOR ANCILLARY FACILITY
         A Borrower may, at any time from the date hereof to the Termination
         Date, by notice in writing to the Agent, request the establishment of
         an Ancillary Facility by the conversion of all or a portion of a
         Lender's Available Revolving Commitment into an Ancillary Commitment
         (PROVIDED THAT, the aggregate amount of the Ancillary Facilities shall
         not exceed EUR 30,000,000) with effect from the date (the "EFFECTIVE
         DATE") specified in such notice being a date not less than ten Business
         Days after the date such notice is received by the Agent. Any such
         notice shall specify:

         (a)      the proposed Borrower;

         (b)      the proposed commencement and expiry date for the Ancillary
                  Facility concerned (and the expiry date must be a Business Day
                  on or prior to the Termination Date);

         (c)      the type of the proposed Ancillary Facility;

         (d)      the proposed Ancillary Bank;

         (e)      the Ancillary Commitment to apply to the proposed Ancillary
                  Facility; and

         (f)      such other details as to the nature, amount and operation of
                  the proposed Ancillary Facility as the Agent may require,

         and shall contain a confirmation by the relevant Ancillary Bank of the
         details therein specified and the Agent shall promptly notify each
         Lender upon receipt of any such notice, PROVIDED THAT, no Lender shall
         be obliged to make available an Ancillary Facility under this Clause 8
         (ANCILLARY FACILITIES).

8.3      THE ANCILLARY BANK
         Any Lender so nominated in accordance with Clause 8.2 (REQUEST FOR
         ANCILLARY FACILITY) may become an Ancillary Bank authorised to make the
         proposed Ancillary Facility available with effect on and from the
         Effective Date (PROVIDED THAT, it has sufficient Available Revolving
         Commitment) and the Agent shall notify the Company, such Ancillary Bank
         and the Lenders thereof, PROVIDED THAT, there shall at no time be more
         than four Ancillary Banks.

8.4      TERMS OF ANCILLARY FACILITY
         Subject to Clause 8.2 (REQUEST FOR ANCILLARY FACILITY) and Clause 8.3
         (THE ANCILLARY BANK) above, the terms governing any Ancillary Facility
         shall be those determined by agreement between the Ancillary Bank and
         the Borrower concerned, PROVIDED THAT such terms are based upon
         commercial terms standard in the relevant market.

                                      -48-
<PAGE>

8.5      VARIATIONS
         Any material variation in any Ancillary Facility or any proposed
         increase or reduction in the Ancillary Commitment relating thereto
         shall be effected subject to the provisions, MUTATIS MUTANDIS, of this
         Clause 8 (ANCILLARY FACILITIES).

8.6      ACCELERATION
         Save to the extent any Ancillary Commitment is being transferred to a
         Revolving Commitment pursuant to Clause 8.11 (REDUCTION AND INCREASE OF
         REVOLVING COMMITMENT) or Clause 8.12 (CANCELLATION OF ANCILLARY
         FACILITY), no Ancillary Bank may, until notice has been served under
         Clause 25.20 (ACCELERATION), demand repayment of any moneys made
         available by it or withdraw prior to its original maturity any
         Ancillary Facility or the right to make utilisations thereunder, or
         demand cash cover in respect of any guarantees or similar contingent
         liabilities made available by it, under its Ancillary Facility or take
         any action analogous to any of the foregoing under any other type of
         banking arrangements provided by it under its Ancillary Facility.

8.7      TERMINATION
         The Ancillary Commitment of each Ancillary Bank shall terminate no
         later than the Termination Date in relation to the Revolving Facility.

8.8      PREVAILING AGREEMENT
         In the case of inconsistency between any term of an Ancillary Facility
         and of this Agreement, the terms of this Agreement shall prevail.

8.9      ANCILLARY OUTSTANDINGS
         Each Borrower and each Ancillary Bank agree with and for the benefit of
         each Ancillary Bank that the Ancillary Outstandings under any Ancillary
         Facility provided by that Ancillary Bank shall not exceed the Ancillary
         Commitment applicable to that Ancillary Facility.

8.10     NOTIFICATION
         Each Borrower and each Ancillary Bank shall, promptly upon request by
         the Agent, supply the Agent with such information relating to the
         operation of each Ancillary Facility provided by such Ancillary Bank
         (including, without limitation, the Ancillary Outstandings thereunder)
         as the Agent may from time to time request. Each Borrower consents to
         all such information being released to the Agent and each Lender.

8.11     REDUCTION AND INCREASE OF REVOLVING COMMITMENT
         The Revolving Commitment of each Ancillary Bank shall be reduced PRO
         TANTO by the amount of its Ancillary Commitment but shall automatically
         increase upon that Ancillary Facility ceasing to be available to the
         relevant Borrower or

                                      -49-
<PAGE>

         upon the Ancillary Facility being cancelled in accordance with Clause
         8.12 (CANCELLATION OF ANCILLARY FACILITY).

8.12     CANCELLATION OF ANCILLARY FACILITY
         Any Borrower which has established an Ancillary Facility may at any
         time by notice in writing to the Agent and the relevant Ancillary Bank
         cancel such Ancillary Facility, in which event on the date specified in
         the notice, being a date not less than ten Business Days after the date
         such notice is received by the Agent, the Ancillary Commitment of the
         relevant Ancillary Bank shall be converted into a Revolving Commitment.

                                      -50-
<PAGE>

                                    SECTION 4
                     REPAYMENT, PREPAYMENT AND CANCELLATION

9.       REPAYMENT

9.1      REPAYMENT OF FACILITY A1 AND FACILITY A2 LOANS

         (a)      The Borrowers under any Facility A1 Loan and Facility A2 Loan
                  shall repay the Facility A1 Loans and Facility A2 Loans in
                  instalments by repaying on each Repayment Date an amount set
                  out opposite each Repayment Date below, including on every
                  Repayment Date a minimum repayment by Grohe Beteiligungs of
                  Facility A2 Loans (the "MINIMUM FACILITY A2 REPAYMENT AMOUNT")
                  as also set forth below:

                     REPAYMENT DATE                  INSTALMENT

                                              TOTAL       MINIMUM AMOUNT
                                               EUR          FACILITY A2

               20 July 2003                  10,000,000       10,000,000
               20 December 2003              10,000,000       10,000,000
               20 July 2004                  25,000,000       12,000,000
               20 December 2004              25,000,000       21,000,000
               20 July 2005                  25,000,000       14,000,000
               20 December 2005              25,000,000       24,000,000
               20 July 2006                  32,500,000       17,000,000
               20 December 2006              32,500,000       24,000,000
               20 July 2007                  40,000,000       17,000,000
               20 December 2007              40,000,000       26,000,000
               20 July 2008                  45,000,000       19,000,000
               20 December 2008              45,000,000       26,000,000
               20 July 2009                  47,500,000       19,000,000
               20 December 2009              47,500,000       31,000,000

                  PROVIDED THAT with regard to any Repayment Date which falls
                  before the date of the Qualifying Public Offering each Minimum
                  Facility A2 Repayment Amount shall be increased up to the
                  total amount due on such Repayment Date by the amount of
                  Excess Withdrawals, unless pursuant to the last Compliance
                  Certificate delivered prior to the relevant Repayment Date,
                  the Total Debt Leverage is less than 2.5:1. Any such payment
                  in excess of the Minimum Facility A2 Repayment Amount shall be
                  applied against the Minimum Facility A2 Repayment Amount
                  falling due on the next Repayment Date.

                                      -51-
<PAGE>

                  The Company shall, by giving the Agent not less than five
                  Business Days' prior notice, specify which amounts outstanding
                  under Facility A1 Loans and Facility A2 Loans shall be repaid,
                  including the amount of Excess Withdrawals and shall provide
                  to the Agent a revised version of the repayment schedule that
                  would apply as of the next Repayment Date(s).

         "EXCESS WITHDRAWAL" means, for any Withdrawal Period for which it is
         calculated, the maximum amount that can be withdrawn by Grohe
         Beteiligungs from Friedrich Grohe on the last day of the immediately
         preceding Withdrawal Period in accordance with the provisions of the
         partnership agreement for that Withdrawal Period less (i) any amounts
         paid by Grohe Beteiligung to Grohe Holding in such Withdrawal Period,
         if and to the extent that such payment was permitted under the Finance
         Documents, (ii) the amount of any payment obligations due by Grohe
         Beteiligungs during such Withdrawal Period, to the extent not incurred
         in breach of the Finance Documents, as determined by the Company within
         5 Business Days following any Withdrawal Period, and (iii) any amount
         of interest or principal paid (including pursuant to a voluntary or
         mandatory prepayment) by Grohe Beteiligungs on the Loans during such
         Withdrawal Period.

         (b)      If, in relation to a Repayment Date for a Facility A1 Loan or
                  Facility A2 Loan, the aggregate amount of the Facility A1
                  Loans and Facility A2 Loans made to the Borrowers exceeds the
                  Repayment Instalment to be repaid on such Loans or the minimum
                  amount to be repaid in relation to Facility A2, the Company
                  may, if it gives the Agent not less than five Business Days'
                  prior notice, select which of those Facility A1 Loans and/or
                  Facility A2 Loans will be wholly or partially repaid so that
                  the Repayment Instalment is repaid on the relevant Repayment
                  Date in full. The Company may not make a selection if as a
                  result more than one Facility A1 Loan denominated in one
                  currency and/or Facility A2 Loan will be partially repaid.

         (c)      If the Company fails to deliver a notice to the Agent in
                  accordance with paragraph (a) or (b) above, the Agent shall
                  select the relevant Facility A1 Loans and/or Facility A2
                  Loans, as the case may be, to be wholly or partially repaid.

         (d)      Any repayment or prepayment of a Facility A1 Loan denominated
                  in the Optional Currency shall reduce the Facility A1 Loan by
                  the amount of that Optional Currency repaid.

9.2      REPAYMENT OF FACILITY B LOANS
         Grohe Beteiligungs shall repay all Facility B Loans on the Termination
         Date.

                                      -52-
<PAGE>

9.3      REPAYMENT OF REVOLVING LOANS
         Each Borrower which has drawn a Revolving Loan shall repay that
         Revolving Loan on the last day of its Interest Period but no later than
         on the Termination Date.

10.      PREPAYMENT AND CANCELLATION

10.1     ILLEGALITY
         If, at any time, it is or will become unlawful in any applicable
         jurisdiction for a Lender or a Fronting Bank to perform any of its
         obligations as contemplated by this Agreement or to fund, issue or
         maintain its participation in any Loan, Letter of Credit or Bank
         Guarantee:

         (a)      that Lender or Fronting Bank, as the case may be, shall
                  promptly notify the Agent upon becoming aware of that event;

         (b)      upon the Agent notifying the Company, the Commitment of that
                  Lender will be immediately cancelled; and

         (c)      the Borrowers shall, on the last day of the Interest Period
                  for each Loan or term for each Letter of Credit and Bank
                  Guarantee, as the case may be, occurring after the Agent has
                  notified the Company or, if earlier, the date specified by the
                  Lender in the notice delivered to the Agent:

                  (i)      repay that Lender's participation in the Loans made
                           to the Borrowers; and

                  (ii)     ensure that the liabilities of that Lender or
                           Fronting Bank under or in respect of each Letter of
                           Credit and Bank Guarantee are reduced to zero or
                           otherwise secured by providing Cash Collateral in an
                           amount equal to such Lender's L/C Proportion of those
                           Letters of Credit or Guarantee Proportion of those
                           Bank Guarantees or that Fronting Bank's maximum
                           actual and contingent liabilities under that Letter
                           of Credit or Bank Guarantee in the currency or
                           currencies of those Letters of Credit or Bank
                           Guarantees.

10.2     DEFINITIONS
         For the purposes of this Clause 10:

         "NET DISPOSAL PROCEEDS" means the proceeds of any disposal (including
         sale and lease back transactions, non-recourse factoring and asset
         backed securities transaction) of any asset of any Obligor or any
         member of the Group after deducting reasonable out of pocket expenses
         and any VAT or other tax incurred

                                      -53-
<PAGE>

         due to such disposal, PROVIDED THAT the following disposal proceeds
         shall not constitute Net Disposal Proceeds:

         (i)      proceeds received in respect of any disposal referred to in
                  paragraphs (a) to (c) of the definition of Permitted
                  Disposals; and

         (ii)     Net Disposal Proceeds:

                  (1)      which do not arise from sale and lease back
                           transactions, non-recourse factoring or other asset
                           backed securities transactions and, when aggregated
                           with any other such disposal proceeds within the
                           respective financial year, are less than EUR
                           5,000,000; or

                  (2)      which arise from sale and lease back transactions,
                           non-recourse factoring or other asset backed
                           securities transactions and, when aggregated with any
                           other such disposal proceeds within the respective
                           financial year, are less than EUR 25,000,000.

         "NET INSURANCE PROCEEDS" means the proceeds of any insurance claim
         received by any Obligor or any member of the Group (after deducting any
         reasonable out of pocket expenses incurred in relation to such claim)
         other than any proceeds which are:

         (a)      to meet a third party claim and are applied in meeting such
                  claim within twelve months of receipt of such proceeds; or

         (b)      applied to the replacement, reinstatement and/or repair of the
                  assets in respect of which the relevant insurance claim was
                  made within eighteen Months of receipt of such proceeds; or

         (c)      received under a business interruption insurance, to the
                  extent to which they are to be applied to cover any costs
                  incurred during the period of business interruption; or

         (d)      received under a credit insurance; or

         (e)      in relation to a financial year when aggregated with any other
                  such insurance proceeds (not falling under paragraphs (a) to
                  (d)) less than the amount of EUR 2,000,000.

         "NET ACQUISITION RECOVERY PROCEEDS" means the proceeds of any claim (a
         "RECOVERY CLAIM") for breach of contract or warranty by,
         misrepresentation by, indemnity or other claim against any vendor or
         any of its affiliates (or any employee, officer or adviser) in relation
         to Permitted Acquisitions, in each case after deducting, subject to
         Clause 10.7, any amounts required to be applied to

                                      -54-
<PAGE>

         mandatorily prepay Permitted Indebtedness as defined in paragraphs (m)
         and (n) of the definition of Permitted Indebtedness and any reasonable
         out of pocket expenses incurred in relation to such claim other than
         any proceeds which are:

         (a)      applied in the replacement, reinstatement and/or repair of
                  assets of a Group member which have been lost, destroyed or
                  damaged as a result of the events or circumstances giving rise
                  to such Recovery Claim; or

         (b)      are required to be paid to third parties in respect of a
                  liability, charge or claim upon a Group member arising from
                  such Recovery Claim,

         PROVIDED THAT, proceeds referred to in paragraphs (a) and (b) above are
         properly applied in such replacement, reinstatement or repair or
         payment to such third party within eighteen Months of receipt of such
         proceeds.

10.3     MANDATORY PREPAYMENT OF PROCEEDS
         On receipt by any Obligor or any member of the Group of Net Disposal
         Proceeds, Net Insurance Proceeds and/or Net Acquisition Recovery
         Proceeds, the Company and each Borrower shall procure that an amount
         equal to that receipt is promptly used to prepay the Loans. In relation
         to Net Disposal Proceeds and Net Insurance Proceeds this Clause 10.3
         shall only apply if such disposal occurred or insurance claim arose
         prior to the occurrence of the Qualifying Public Offering.

10.4     MANDATORY PREPAYMENT FROM EXCESS CASH
         Within one month after the due date of delivery of the annual
         consolidated financial statements of the Grohe Holding Group under
         Clause 22.1(a)(i) (FINANCIAL STATEMENTS) and starting from the
         financial year beginning 1 January 2003, the Company and Friedrich
         Grohe shall procure that Loans made to Friedrich Grohe or any other
         Borrower (but excluding Grohe Beteiligungs) are prepaid in an amount
         equal to 75% of the Consolidated Operating Excess Cash Flow (as defined
         in Clause 23.2 (FINANCIAL DEFINITIONS)) for the period of twelve Months
         ending on the last day of the relevant financial year.

         No mandatory prepayment obligation will arise under this Clause 10.4
         with respect to any financial year beginning after the occurrence of
         the Qualifying Public Offering or with regard to any financial year if,
         based on the consolidated financial statements of the Grohe Holding
         Group delivered pursuant to Clause 22.1(a)(i) (FINANCIAL STATEMENTS),
         and the accompanying Compliance Certificate, the ratio of Total Net
         Debt to EBITDA for such financial year is less than 2.5:1, PROVIDED
         THAT in the latter case the mandatory prepayment obligation may arise
         for any of the following financial years if for any such financial year
         the ratio of Total Net Debt to EBITDA is equal to or greater than
         2.5:1.

                                      -55-
<PAGE>

10.5     MANDATORY PREPAYMENT ON SALE
         The Facilities are immediately cancelled and the Company and each
         Borrower shall procure that the Loans are immediately prepaid in full
         and the Lenders and/or Fronting Banks are released or Cash Collateral
         is provided in respect of any Letters of Credit or Bank Guarantees upon
         the occurrence of a Sale.

10.6     MANDATORY PREPAYMENT ON CHANGE OF CONTROL
         If there is a Change of Control:

         (a)      the Company shall promptly notify the Agent upon becoming
                  aware of that event; and

         (b)      if such Change of Control occurs prior to the date of the
                  Qualifying Public Offering, the Facilities are immediately
                  cancelled and the Company and each Borrower shall procure that
                  the Loans are immediately prepaid in full and the Lenders
                  and/or Fronting Bank(s) are released or Cash Collateral is
                  provided in respect of any Letters of Credit or Bank
                  Guarantees, and, if such Change of Control occurs on or after
                  the date of the Qualifying Public Offering, if so instructed
                  by the Majority Lenders, the Agent shall, by notice to the
                  Company, cancel the Facilities and the Company and each
                  Borrower shall procure that all Loans shall be repaid and the
                  Lenders and/or Fronting Bank(s) are released or Cash
                  Collateral is provided in respect of any Letters of Credit or
                  Bank Guarantees on the earlier of the last day of the term or
                  the current Interest Period applicable thereto and the date
                  falling 60 days after the relevant Change of Control.

10.7     OTHER MANDATORY PREPAYMENT
         Each Borrower shall, in the event of any voluntary or mandatory
         prepayment to be made under any Financial Indebtedness which
         constitutes Permitted Indebtedness under paragraphs (m), (n) and (o) of
         such definition, promptly notify the Agent upon becoming aware of that
         event and prepay Loans outstanding under this Agreement (including
         Letters of Credit and Bank Guarantees) in a PRO RATA amount at the same
         time as such other prepayment is made.

10.8     APPLICATION OF PREPAYMENTS

         (a)      Any prepayment made under Clause 10.3 and 10.7 shall be
                  applied against repayment of amounts outstanding under the
                  Term Facilities, as specified by the Company to the Agent, and
                  if no such specification is made until the date on which the
                  prepayment falls due, PRO RATA against the Term Facilities
                  and, in relation to Facility A1 and Facility A2, in equal
                  portions against the next Repayment Instalment falling due
                  under

                                      -56-
<PAGE>

                  Clause 9.1 (REPAYMENT OF FACILITY A1 AND A2 LOANS) and the
                  last Repayment Instalment falling due under Clause 9.1.

         (b)      Any prepayment made under Clause 10.4 shall be applied:

                  (i)      first, in repayment of amounts outstanding under
                           Facility A1;

                  (ii)     second, when Facility A1 has been repaid in full, in
                           repayment of the Revolving Loans (and any amounts so
                           repaid may not be reborrowed) and the Revolving
                           Commitments of the Lender will be reduced PRO RATA;

                  (iii)    thirdly, when the Revolving Loans have been repaid in
                           full, as Cash Collateral for any Letters of Credit
                           and Bank Guarantees issued (and the Revolving
                           Commitments of the Lenders will be reduced PRO RATA);
                           and

                  (iv)     thereafter, in repayment of amounts outstanding by
                           any Borrower other than Grohe Beteiligungs under
                           Facility A2,

                  PROVIDED THAT in relation to both Facility A1 and Facility A2
                  and unless otherwise specified by the Company or the relevant
                  Borrower, all amounts shall be applied in equal portions
                  against the next Repayment Instalment and the last Repayment
                  Instalment falling due under Clause 9.1.

         (c)      Until the earlier of (i) the second anniversary of the date of
                  this Agreement and (ii) the occurrence of the Qualifying
                  Public Offering, any Lender under Facility B may elect that
                  any such Facility B Loans shall not be mandatorily prepaid in
                  accordance with this Clause 10.8 PROVIDED THAT at least 50 per
                  cent. of the amount which would have been applied towards that
                  mandatory prepayment will be applied towards the mandatory
                  prepayment of the Facility A2 Loans and, when Facility A2 has
                  been repaid in full, Facility A1 Loans which remain
                  outstanding. Any Lender under Facility B wishing to make such
                  an election shall notify the Agent accordingly.

10.9     MANDATORY PREPAYMENT ACCOUNT

10.9.1   If a prepayment is to be made under Clauses 10.3 to 10.7, the Company
         or the relevant Borrower may give the Agent notice in writing not less
         than 5 Business Days before the date of prepayment specifying that
         prepayment for the specified Loans should be made on the last day of
         the current Interest Period for the relevant Loan (in the case of a
         Term Loan) or on maturity (in the case of a

                                      -57-
<PAGE>

         Revolving Loan); such notice shall include an update of the repayment
         schedule set out in Clause 9.1 (REPAYMENT OF FACILITY A1 AND FACILITY
         A2 LOANS).

         If notice is not given within the required time period, prepayment
         shall be made at the time and in the manner set out in the foregoing
         provisions of this Clause 10.

10.9.2   If pursuant to sub-clause 10.9.1 the Company or relevant Borrower
         requests that prepayment of a Loan is made on the last day of an
         Interest Period or on maturity and:

         (a)      no Default is continuing at the time of such request; and

         (b)      for any prepayment due on the last day of an Interest Period
                  which is prior to the date of the Qualifying Public Offering,
                  the Company or relevant Borrower ensures (if the amount is not
                  already in a Mandatory Prepayment Account) that the amount
                  required to be prepaid is promptly credited to the Grohe
                  Beteiligungs Mandatory Prepayment Account, in the case of a
                  prepayment due by Grohe Beteiligungs, or to the Friedrich
                  Grohe Mandatory Prepayment Account in the case of a prepayment
                  due by any other Borrower,

         the prepayment date shall be delayed in accordance with such request
         until the last day of the current Interest Period (in the case of a
         Term Loan) or on maturity (in the case of a Revolving Loan) for the
         specified Loan provided however payment can be made at any time if an
         Event of Default occurs which is continuing.

10.9.3   The Company and Friedrich Grohe irrevocably authorises the Agent on
         behalf of itself and the other Borrowers to withdraw monies from the
         relevant Mandatory Prepayment Account and apply such monies against
         prepayments which are due to be made hereunder or, upon the occurrence
         of an Event of Default pursuant to Clause 25.1 (NON-PAYMENT) which is
         continuing, against any amounts due and payable under the Finance
         Documents.

         Any Finance Party with which such account is held acknowledges and
         agrees that interest shall accrue at normal commercial rates on amounts
         credited to any Mandatory Prepayment Account and that the account
         holder shall be entitled to receive such interest (which shall be paid
         in accordance with the mandate relating to such account) PROVIDED THAT
         the account holder shall not be entitled to receive such interest while
         a Default is continuing.

                                      -58-
<PAGE>

10.10    OPTIONAL PREPAYMENT OF LOANS

         (a)      A Borrower may, if the Company gives the Agent not less than
                  five Business Days' prior written notice and, if the
                  prepayment does not take place at the end of the Interest
                  Period, subject to the payment of Break Costs, prepay the
                  whole or any part of any Loan (but, if in part, being an
                  amount that reduces the Base Currency Amount of the relevant
                  Loan by a minimum amount of EUR 2,500,000); any prepayment
                  notice shall include an update of the repayment schedule set
                  out in Clause 9.1 (REPAYMENT OF FACILITY A1 AND FACILITY A2
                  LOANS)

         (b)      Any prepayment under this Clause 10.10 shall satisfy the
                  obligations under Clause 9.1 (REPAYMENT OF FACILITY A1 AND A2
                  LOANS) as determined by the Company in the relevant notice,
                  or, if no such determination is made, shall be applied PRO
                  RATA across the Term Facilities and the Repayment Instalments
                  under those Facilities.

         (c)      Clause 10.8(c) shall apply MUTATIS MUTANDIS.

10.11    OPTIONAL CANCELLATION OF FACILITIES

         (a)      The Company may, if it gives the Agent not less than five
                  Business Days' prior written notice, cancel the whole or any
                  part (being a minimum Base Currency Amount of EUR 2,500,000 or
                  if less, the Available Facility) of the Facilities.

         (b)      Amounts cancelled pursuant to (a) above may not be reinstated.

10.12    RIGHT OF REPAYMENT AND CANCELLATION IN RELATION TO A SINGLE LENDER OR A
         FRONTING BANK

         (a)      If:

                  (i)      any sum payable to any Lender or a Fronting Bank by
                           an Obligor is required to be increased under
                           paragraph (c) of Clause 15.2 (TAX GROSS-UP); or

                  (ii)     any Lender or a Fronting Bank claims indemnification
                           from the Company under Clause 15.3 (TAX INDEMNITY) or
                           Clause 16.1 (INCREASED COSTS);

                  the Company may, whilst the circumstance giving rise to the
                  requirement or indemnification continues, give the Agent
                  notice:

                                      -59-
<PAGE>

                  (i)      of cancellation of the Commitment of that Lender and
                           its intention to procure the repayment of that
                           Lender's participation in the Loans; or

                  (ii)     (if such circumstance relates to a Fronting Bank) of
                           cancellation of or of the Borrowers' intention to
                           provide Cash Collateral in respect of that Fronting
                           Bank's Letter of Credit or Bank Guarantee.

         (b)      On receipt of a notice referred to in paragraph (a) above, the
                  Commitment of that Lender shall immediately be reduced to
                  zero.

         (c)      On the last day of each Interest Period or term, as the case
                  may be, which ends after the Company has given notice under
                  paragraph (a) above (or, if earlier, the date specified by the
                  Company in that notice), the Company shall procure and the
                  relevant Borrowers shall repay that Lender's participation in
                  the Loans and shall procure either that such Lender's L/C
                  Proportion of each relevant Letter of Credit or Guarantee
                  Proportion of each relevant Bank Guarantee be reduced to zero
                  (by reduction of the amount of that Letter of Credit or Bank
                  Guarantee in an amount equal to that Lender's L/C Proportion
                  or Guarantee Proportion) or that Cash Collateral be provided
                  to the Agent in an amount equal to such Lender's L/C
                  Proportion of that Letter of Credit or Guarantee Proportion of
                  that Bank Guarantee; and (if the circumstance relates to a
                  Fronting Bank) the relevant Borrowers and the Company shall
                  procure that that Fronting Bank's liability under any Letters
                  of Credit or Bank Guarantee issued by it shall either be
                  reduced to zero or otherwise secured by the relevant Borrowers
                  providing Cash Collateral in an amount equal to that Fronting
                  Bank's maximum actual and contingent liabilities under those
                  Letters of Credit or Bank Guarantee.

10.13    RESTRICTIONS

         (a)      Any notice of cancellation or prepayment given by any Party
                  under this Clause 10 shall be irrevocable and, unless a
                  contrary indication appears in this Agreement, shall specify
                  the date or dates upon which the relevant cancellation or
                  prepayment is to be made and the amount of that cancellation
                  or prepayment.

         (b)      Any prepayment under this Agreement shall be made together
                  with accrued interest on the amount prepaid and, subject to
                  any Break Costs, without premium or penalty.

         (c)      A Borrower shall not repay or prepay all or any part of the
                  Loans, Letters of Credit or Bank Guarantees or cancel all or
                  any part of the

                                      -60-
<PAGE>

                  Commitments except at the times and in the manner expressly
                  provided for in this Agreement.

         (d)      No amount of the Total Commitments cancelled under this
                  Agreement may be subsequently reinstated and no amounts
                  prepaid under this Clause 10 may be re-borrowed save for
                  Revolving Loans.

         (e)      If the Agent receives a notice under this Clause 10 it shall
                  promptly forward a copy of that notice to either the Company
                  or the affected Lender, as appropriate.

                                      -61-
<PAGE>

                                    SECTION 5
                              COSTS OF UTILISATION

11.      INTEREST

11.1     CALCULATION OF INTEREST
         The rate of interest on each Loan for each Interest Period is the
         percentage rate per annum which is the aggregate of:

         (a)      the Applicable Margin;

         (b)      EURIBOR or, in relation to any Loan in an Optional Currency,
                  LIBOR; and

         (c)      Mandatory Cost, if any.

11.2     PAYMENT OF INTEREST
         The Borrower to which a Loan has been made shall pay accrued interest
         on that Loan on the last day of each Interest Period (and, if the
         Interest Period is longer than six Months, on the dates falling at six
         Monthly intervals after the first day of the Interest Period).

11.3     MARGIN RATCHET

11.3.1   Subject to sub-clauses 11.3.2 to 11.3.5, if the ratio of Total Net Debt
         to EBITDA (as defined in Clause 23 (FINANCIAL COVENANTS) (in this
         Clause 11, the "RELEVANT RATIO") in respect of the most recent Relevant
         Period falls within one of the ranges specified in column 1 of the
         margin grid table set out below then the Applicable Margin in respect
         of the Facilities shall be the percentage per annum set opposite the
         range into which that Relevant Ratio falls.

<TABLE>
<CAPTION>
        COLUMN 1                                          COLUMN 2                    COLUMN 3
        RELEVANT RATIO                               APPLICABLE MARGIN            APPLICABLE MARGIN
                                                    FACILITY A1, A2 AND              FACILITY B
                                                     REVOLVING FACILITY
<S>                                                 <C>                           <C>
        Greater than or equal to 3.50:1                    2.25%                        2.75%
        Greater than or equal to 3.00:1                    2.00%                        2.50%
        but less than 3.50:1
        Greater than or equal to 2.50:1                    1.75%                        2.25%
        but less than 3.00:1
        Less than 2.50:1                                   1.25%                        2.25%
</TABLE>

11.3.2   Any reduction or increase to the Applicable Margin provided for in
         sub-clause 11.3.1 shall take effect only in relation to any Loan made
         or Interest

                                      -62-
<PAGE>

         Period commencing at least 5 Business Days after receipt by the Agent
         for the Relevant Period of (a) quarterly accounts of the Grohe Holding
         Group in accordance with Clause 22.1(b) and, in the case of a reduction
         of the Applicable Margin, a Compliance Certificate pursuant to Clause
         22.2 (COMPLIANCE CERTIFICATES).

11.3.3   Where the Applicable Margin has been determined on the basis of
         quarterly accounts of the Grohe Holding Group for the period ending on
         the end of any financial year, if on delivery of the annual audited
         financial statements of the Grohe Holding Group in accordance with
         Clause 22.1(a)(i) and the accompanying Compliance Certificate, such
         accounts or certificates show that the determination should have been
         different, the original determination shall be cancelled with immediate
         effect for each relevant Loan and the relevant Borrowers shall make
         payments to the Agent or, as the case may be the Lenders through the
         Agent shall make payments to the relevant Borrowers at the end of the
         current Interest Period as if such original determination had not
         applied for such period and as if the relevant Applicable Margin
         applied in accordance with the revised determination. Any moneys
         received or recovered as a result of an adjustment pursuant to this
         Clause 11.3.3 shall be applied PRO RATA to the Commitments of the
         Lenders in the relevant Facility as at the date of any such receipt or
         recovery.

11.3.4   If at any time an Event of Default has occurred which is continuing the
         Applicable Margin for Facility A1, Facility A2 and the Revolving
         Facility shall be 3.25% and the Applicable Margin for Facility B 3.75%.

11.3.5   The change to the Applicable Margin set out in sub-clause 11.3.4 shall
         apply from the date certified by the Agent (in writing) as the date on
         which an Event of Default has occurred or come into existence until the
         date certified by the Agent (in writing) as the date by which such
         Event of Default is no longer continuing. The Agent shall give such
         certification promptly upon it becoming aware in its absolute
         discretion that an Event of Default has occurred or exists and promptly
         upon becoming aware it is no longer continuing.

11.4     DEFAULT INTEREST

         (a)      If an Obligor fails to pay any amount payable by it under a
                  Finance Document on its due date, interest shall accrue or,
                  insofar as it relates to unpaid interest, lump sum damages
                  shall accrue on the overdue amount from the due date up to the
                  date of actual payment (both before and after judgment) at a
                  rate which is one per cent. higher than the rate which would
                  have been payable if the overdue amount had, during the period
                  of non-payment, constituted a Loan in the currency of the
                  overdue amount for successive Interest Periods, each of a
                  duration selected by the Agent

                                      -63-
<PAGE>

                  (acting reasonably). In the case of lump sum damages the
                  relevant Obligor shall be free to prove that no damages have
                  arisen or that damages have not arisen in the asserted amount.
                  Any interest or lump sum damages accruing under this Clause
                  11.4 shall be immediately payable by the Obligor on demand by
                  the Agent.

         (b)      If any overdue amount consists of all or part of a Loan which
                  became due on a day which was not the last day of an Interest
                  Period relating to that Loan:

                  (i)      the first Interest Period for that overdue amount
                           shall have a duration equal to the unexpired portion
                           of the current Interest Period relating to that Loan;
                           and

                  (ii)     the rate of interest applying to the overdue amount
                           during that first Interest Period shall be one per
                           cent. higher than the rate which would have applied
                           if the overdue amount had not become due.

         (c)      Each Finance Party shall be entitled to claim from the
                  relevant Borrower further compensation for any further losses
                  (i.e. not compensated for by the operation of Clause 11.4(a)
                  and 11.3.4) incurred and/or damages suffered as a result of
                  that Borrower having failed to pay any amount payable by it
                  under the Finance Documents on the due date for such payment.

11.5     NOTIFICATION OF RATES OF INTEREST
         The Agent shall promptly notify the Lenders and the relevant Borrower
         of the determination of a rate of interest under this Agreement.

12.      INTEREST PERIODS

12.1     SELECTION OF INTEREST PERIODS

         (a)      A Borrower (or the Company on behalf of a Borrower) may select
                  an Interest Period for a Loan and a term for a Letter of
                  Credit or Bank Guarantee in the Utilisation Request for that
                  Loan, Letter of Credit or Bank Guarantee (as the case may be)
                  or (for a Term Loan already been borrowed) in a Selection
                  Notice.

         (b)      Each Selection Notice for a Term Loan is irrevocable and must
                  be delivered to the Agent by the relevant Borrower (or the
                  Company on behalf of a Borrower) not later than the Specified
                  Time.

                                      -64-
<PAGE>

         (c)      If a Borrower (or the Company) fails to deliver a Selection
                  Notice to the Agent in accordance with paragraph (b) above,
                  the relevant Interest Period will, subject to Clause 12.2
                  (CHANGES TO INTEREST PERIODS), be one Month.

         (d)      Subject to this Clause 12, a Borrower (or the Company) may
                  select an Interest Period of one, two, three, five or six
                  Months or any other period agreed between the Company and the
                  Agent (acting on the instructions of the Majority Lenders).

                  In addition, a relevant Borrower (or the Company on its
                  behalf) may select an Interest Period of less than one Month
                  if necessary to ensure that there are sufficient Facility A1
                  Loans and/or Facility A2 Loans, as the case may be (with an
                  aggregate Base Currency Amount equal to or greater than the
                  relevant Repayment Instalment) which have an Interest Period
                  ending on a Repayment Date, for the relevant Borrower to make
                  the Repayment Instalment due on that date.

         (e)      An Interest Period for a Loan and a term for a Letter of
                  Credit or Bank Guarantee shall not extend beyond the
                  Termination Date applicable to its Facility.

         (f)      Each Interest Period for a Term Loan shall start on the
                  Utilisation Date or (if already made) on the last day of its
                  preceding Interest Period.

         (g)      A Revolving Loan has one Interest Period term only.

         (h)      Prior to the Syndication Date, Interest Periods shall be one
                  Month or such other period as the Agent and the relevant
                  Borrower may agree and any Interest Period which would
                  otherwise end during the month preceding or extend beyond the
                  Syndication Date shall end on the Syndication Date.

12.2     CHANGES TO INTEREST PERIODS

         (a)      Prior to determining the interest rate for a Term Loan, the
                  Agent may shorten an Interest Period for any Term Loan to
                  ensure there are sufficient Term Loans (with an aggregate Base
                  Currency Amount equal to or greater than the Repayment
                  Instalment) which have an Interest Period ending on a date for
                  the Borrowers to make the Repayment Instalment due on that
                  date.

         (b)      If the Agent makes any of the changes to an Interest Period
                  referred to in this Clause 12.2, it shall promptly notify the
                  Company and the Lenders.

                                      -65-
<PAGE>

12.3     NON-BUSINESS DAYS
         If an Interest Period would otherwise end on a day which is not a
         Business Day, that Interest Period will instead end on the next
         Business Day in that calendar month (if there is one) or the preceding
         Business Day (if there is not).

12.4     CONSOLIDATION AND DIVISION OF TERM LOANS

         (a)      Subject to paragraph (b) below and in relation to each Term
                  Facility if two or more Interest Periods:

                  (i)      relate to Term Loans in the same currency; and

                  (ii)     end on the same date; and

                  (iii)    are made to the same Borrower

                  those Term Loans will, unless that Borrower (or the Company on
                  its behalf) specifies to the contrary in the Selection Notice
                  for the next Interest Period, be consolidated into, and
                  treated as, a single Term Loan on the last day of the Interest
                  Period.

         (b)      Subject to Clause 4.4 (MAXIMUM NUMBER OF LOANS) and Clause 5.3
                  (CURRENCY AND AMOUNT), if a Borrower (or the Company on its
                  behalf) requests in a Selection Notice that a Term Loan be
                  divided into two or more Term Loans, that Term Loan will, on
                  the last day of its Interest Period, be so divided with Base
                  Currency Amounts specified in that Selection Notice, being an
                  aggregate Base Currency Amount equal to the Base Currency
                  Amount of the Term Loan immediately before its division.

13.      CHANGES TO THE CALCULATION OF INTEREST

13.1     ABSENCE OF QUOTATIONS
         Subject to Clause 13.2 (MARKET DISRUPTION), if EURIBOR or, if
         applicable, LIBOR is to be determined by reference to the Reference
         Banks but a Reference Bank does not supply a quotation by the Specified
         Time on the Quotation Day, the applicable EURIBOR or LIBOR shall be
         determined on the basis of the quotations of the remaining Reference
         Banks.

13.2     MARKET DISRUPTION

         (a)      If a Market Disruption Event occurs in relation to a Loan for
                  any Interest Period, then the rate of interest on each
                  Lender's share of that Loan for the Interest Period shall be
                  the rate per annum which is the sum of:

                  (i)      the Applicable Margin;

                                      -66-
<PAGE>

                  (ii)     the rate notified to the Agent by that Lender as soon
                           as practicable and in any event before interest is
                           due to be paid in respect of that Interest Period, to
                           be that which expresses as a percentage rate per
                           annum the cost to that Lender of funding its
                           participation in that Loan from whatever source it
                           may reasonably select; and

                  (iii)    the Mandatory Cost, if any, applicable to that
                           Lender's participation in the Loan.

         (b)      In this Agreement "Market Disruption Event" means:

                  (i)      at or about noon on the Quotation Day for the
                           relevant Interest Period the Screen Rate is not
                           available and none or only one of the Reference Banks
                           supplies a rate to the Agent to determine EURIBOR or,
                           if applicable, LIBOR for the relevant currency and
                           Interest Period; or

                  (ii)     before close of business in Frankfurt on the
                           Quotation Day for the relevant Interest Period, the
                           Agent receives notifications from a Lender or Lenders
                           (whose participations in a Loan exceed 35 per cent.
                           of that Loan) that the cost to it of obtaining
                           matching deposits in the Relevant Interbank Market
                           would be in excess of EURIBOR or, if applicable,
                           LIBOR.

13.3     ALTERNATIVE BASIS OF INTEREST OR FUNDING

         (a)      If a Market Disruption Event occurs and the Agent or the
                  Company so requires, the Agent and the Company shall enter
                  into negotiations (for a period of not more than thirty days)
                  with a view to agreeing a substitute basis for determining the
                  rate of interest.

         (b)      Any alternative basis agreed pursuant to paragraph (a) above
                  shall, with the prior consent of all the Lenders and the
                  Company, be binding on all Parties.

13.4     BREAK COSTS

         (a)      Each Borrower shall, within three Business Days of demand by a
                  Finance Party, pay to that Finance Party its Break Costs
                  attributable to all or any part of a Loan or Unpaid Sum being
                  paid by that Borrower on a day other than the last day of an
                  Interest Period for that Loan or Unpaid Sum.

                                      -67-
<PAGE>

         (b)      Each Lender shall, as soon as reasonably practicable after a
                  demand by the Agent, provide a certificate confirming the
                  amount of its Break Costs for any Interest Period in which
                  they accrue.

14.      FEES

14.1     COMMITMENT FEE

         (a)      The Company shall pay to the Agent (for the account of each
                  Lender and in relation to each Facility) a fee in the Base
                  Currency computed at a rate equal to half of the Applicable
                  Margin for the Facilities, in each case on that Lender's
                  Available Commitment under the Facilities for the Availability
                  Period applicable to the relevant Facility, PROVIDED THAT the
                  commitment fee on the Term Facility will be reimbursed if and
                  to the extent that the Term Facilities are drawn within thirty
                  days from the date of this Agreement and PROVIDED FURTHER THAT
                  the commitment fee on any Commitment shall at no time be
                  higher than 0.625%.

         (b)      The accrued commitment fee is payable on the last day of each
                  successive period of three Months which ends during the
                  relevant Availability Period, on the last day of the
                  Availability Period and, if cancelled in full, on the
                  cancelled amount of the relevant Lender's Commitment at the
                  time the cancellation is effective.

14.2     ARRANGEMENT FEE
         The Company and/or Friedrich Grohe shall pay to the Arrangers an
         arrangement fee in the amount and at the times agreed in a Fee Letter.

14.3     AGENCY AND SECURITY TRUSTEE FEE
         The Company or Friedrich Grohe, as the case may be, shall pay to the
         Agent and Security Agent (for its own account) an agency and security
         trustee fee in the amount and at the times agreed in the Fee Letter(s).

14.4     LETTER OF CREDIT AND BANK GUARANTEE COMMISSION

         (a)      A Borrower shall, in respect of all Letters of Credit or Bank
                  Guarantees which it requests, pay to the Agent (for the
                  account of each Lender) (for distribution in proportion to
                  each Lender's L/C Proportion of those Letters of Credit or
                  Guarantee Proportion of those Bank Guarantees, as the case may
                  be,) a letter of credit or bank guarantee commission in the
                  Base Currency at the L/C Commission Rate or the Guarantee
                  Commission Rate, as the case may be, on the maximum actual and
                  contingent liabilities of a Fronting Bank under such Letters
                  of Credit or Bank Guarantees.

                                      -68-
<PAGE>

         (b)      The accrued letter of credit and bank guarantee commission is
                  payable on the last day of each successive period of three
                  Months starting from the date of this Agreement and in each
                  case on all Letters of Credit and Bank Guarantees drawn and
                  not expired as of such dates.

14.5     FRONTING BANK FEE
         The Company shall, in respect of each Letter of Credit and Bank
         Guarantee, pay to the relevant Fronting Bank a fee in the amounts and
         at the times agreed between the relevant Fronting Bank and the Company.

                                      -69-
<PAGE>

                                    SECTION 6
                         ADDITIONAL PAYMENT OBLIGATIONS

15.      TAX GROSS UP AND INDEMNITIES

15.1     DEFINITIONS
         In this Agreement:

         "TAX CREDIT" means a credit against, relief or remission for, or
         repayment of any Tax.

         "TAX DEDUCTION" means a deduction or withholding for or on account of
         Tax from a payment under a Finance Document.

         "TAX PAYMENT" means either the increase in a payment made by an Obligor
         to a Finance Party under Clause 15.2 (TAX GROSS-UP) or a payment under
         Clause 15.3 (TAX INDEMNITY).

15.2     TAX GROSS-UP

         (a)      Each Obligor shall make all payments to be made by it without
                  any Tax Deduction, unless a Tax Deduction is required by law.

         (b)      The Company shall promptly upon becoming aware that an Obligor
                  must make a Tax Deduction (or that there is any change in the
                  rate or the basis of a Tax Deduction) notify the Agent
                  accordingly. Similarly, a Lender or Fronting Bank shall notify
                  the Agent on becoming so aware in respect of a payment payable
                  to that Lender or Fronting Bank. If the Agent receives such
                  notification from a Lender or Fronting Bank it shall notify
                  the Company and that Obligor.

         (c)      If a Tax Deduction is required by law to be made by an
                  Obligor, the amount of the payment due from that Obligor shall
                  be increased to an amount which (after making any Tax
                  Deduction) leaves an amount equal to the payment which would
                  have been due if no Tax Deduction had been required.

         (d)      If an Obligor is required to make a Tax Deduction, that
                  Obligor shall make that Tax Deduction and any payment required
                  in connection with that Tax Deduction within the time allowed
                  and in the minimum amount required by law.

         (e)      Within thirty days of making either a Tax Deduction or any
                  payment required in connection with that Tax Deduction, the
                  Obligor making that Tax Deduction shall deliver to the Agent
                  for the Finance Party entitled to the payment evidence
                  reasonably satisfactory to that Finance Party that

                                      -70-
<PAGE>

                  the Tax Deduction has been made or (as applicable) any
                  appropriate payment paid to the relevant taxing authority.

15.3     TAX INDEMNITY

         (a)      The Company shall (within three Business Days of demand by the
                  Agent) pay to a Finance Party an amount equal to the loss,
                  liability or cost which that Finance Party reasonably
                  determines will be or has been (directly or indirectly)
                  suffered for or on account of Tax by that Finance Party in
                  respect of a Finance Document.

         (b)      Paragraph (a) above shall not apply with respect to any Tax
                  assessed on a Finance Party:

                           (1)      under the law of the jurisdiction in which
                                    that Finance Party is incorporated or, if
                                    different, the jurisdiction (or
                                    jurisdictions) in which that Finance Party
                                    is treated as resident for tax purposes; or

                           (2)      under the law of the jurisdiction in which
                                    that Finance Party's Facility Office is
                                    located in respect of amounts received or
                                    receivable in that jurisdiction,

                  if that Tax is imposed on or calculated by reference to the
                  net income received or receivable (but not any sum deemed to
                  be received or receivable) by that Finance Party or to the
                  extent a loss, liability or cost is compensated for by an
                  increased payment under Clause 15.2 (TAX GROSS-UP).

         (c)      A Finance Party making, or intending to make a claim under
                  paragraph (a) above shall promptly notify the Agent of the
                  event which will give, or has given, rise to the claim,
                  following which the Agent shall notify the Company.

         (d)      A Finance Party shall, on receiving a payment from an Obligor
                  under this Clause 15.3, notify the Agent.

15.4     TAX CREDIT
         If an Obligor makes a Tax Payment and the relevant Finance Party
         reasonably determines that:

         (a)      a Tax Credit is attributable either to an increased payment of
                  which that Tax Payment forms part, or to that Tax Payment; and

         (b)      that Finance Party has obtained, utilised and retained that
                  Tax Credit,

                                      -71-
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         the Finance Party shall pay an amount to the Obligor which that Finance
         Party reasonably determines will leave it (after that payment) in the
         same after-Tax position as it would have been in had the Tax Payment
         not been required to be made by the Obligor.

15.5     STAMP TAXES
         The Company shall pay and, within three Business Days of demand,
         indemnify each Finance Party against any cost, loss or liability that
         Finance Party incurs in relation to all stamp duty, registration and
         other similar Taxes payable in respect of any Finance Document.

15.6     VALUE ADDED TAX

         (a)      All consideration expressed to be payable under a Finance
                  Document by any Party to a Finance Party shall be deemed to be
                  exclusive of any VAT. If VAT is chargeable on any supply made
                  by any Finance Party to any Party in connection with a Finance
                  Document, that Party shall pay to the Finance Party (in
                  addition to and at the same time as paying the consideration)
                  an amount equal to the amount of the VAT.

         (b)      Where a Finance Document requires any Party to reimburse a
                  Finance Party for any costs or expenses, that Party shall also
                  at the same time pay and indemnify the Finance Party against
                  all VAT incurred by the Finance Party in respect of the costs
                  or expenses to the extent that the Finance Party reasonably
                  determines that it is not entitled to credit or repayment of
                  the VAT.

16.      INCREASED COSTS

16.1     INCREASED COSTS

         (a)      Subject to Clause 16.3 (EXCEPTIONS) the Company shall, within
                  three Business Days of a demand by the Agent, pay for the
                  account of a Finance Party the amount of any Increased Costs
                  incurred by that Finance Party or any of its Affiliates as a
                  result of the imposition of, or any change in the
                  interpretation, administration or application, of any law or
                  regulation (including but not limited to capital ratio or
                  reserve requirements).

         (b)      In this Agreement "Increased Costs" means:

                  (i)      a reduction in the rate of return from the Facility
                           or on a Finance Party's (or its Affiliate's) overall
                           capital;

                  (ii)     an additional or increased cost; or

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                  (iii)    a reduction of any amount due and payable under any
                           Finance Document,

         which is incurred or suffered by a Finance Party or any of its
         Affiliates to the extent that it is attributable to that Finance Party
         having entered into its Commitment or funding or performing its
         obligations under any Finance Document.

16.2     INCREASED COST CLAIMS

         (a)      A Finance Party intending to make a claim pursuant to Clause
                  16.1 (INCREASED COSTS) shall notify the Agent of the event
                  giving rise to the claim and provide sufficient detail for the
                  calculations to be checked for plausibility by the Company,
                  following which the Agent shall promptly notify the Company.

         (b)      Each Finance Party shall, as soon as practicable after a
                  demand by the Agent, provide a certificate confirming the
                  amount of its Increased Costs.

16.3     EXCEPTIONS

         (a)      Clause 16.1 (INCREASED COSTS) does not apply to the extent any
                  Increased Cost is:

                  (i)      attributable to a Tax Deduction required by law to be
                           made by an Obligor;

                  (ii)     compensated for by Clause 15.3 (TAX INDEMNITY) (or
                           would have been compensated for under Clause 15.3
                           (TAX INDEMNITY) but was not so compensated solely
                           because any of the exclusions in paragraph (b) of
                           Clause 15.3 (TAX INDEMNITY) applied);

                  (iii)    compensated for by the payment of the Mandatory Cost;
                           or

                  (iv)     attributable to the gross negligence or the wilful
                           breach by the relevant Finance Party or its
                           Affiliates of any law or regulation.

         (b)      In this Clause 16.3, a reference to a "Tax Deduction" has the
                  same meaning given to the term in Clause 15.1 (DEFINITIONS).

17.      OTHER INDEMNITIES

17.1     CURRENCY INDEMNITY

         (a)      If any sum due from an Obligor under the Finance Documents (a
                  "SUM"), or any order, judgment or award given or made in
                  relation to a Sum, has to be converted from the currency (the
                  "FIRST CURRENCY") in

                                      -73-
<PAGE>

                  which that Sum is payable into another currency (the "SECOND
                  CURRENCY") for the purpose of:

                  (i)      making or filing a claim or proof against that
                           Obligor;

                  (ii)     obtaining or enforcing an order, judgment or award in
                           relation to any litigation or arbitration
                           proceedings,

                  that Obligor shall as an independent obligation, within five
                  Business Days of demand, indemnify each Finance Party to whom
                  that Sum is due against any cost, loss or liability arising
                  out of or as a result of the conversion including any
                  discrepancy between (A) the rate of exchange used to convert
                  that Sum from the First Currency into the Second Currency and
                  (B) the rate or rates of exchange available to that person at
                  the time of its receipt of that Sum.

         (b)      Each Obligor waives any right it may have in any jurisdiction
                  to pay any amount under the Finance Documents in a currency or
                  currency unit other than that in which it is expressed to be
                  payable.

17.2     OTHER INDEMNITIES
         The Company shall (or shall procure that an Obligor will), within five
         Business Days of demand, indemnify each Finance Party against any cost,
         loss or liability incurred by that Finance Party as a result of:

         (a)      the occurrence of any Event of Default;

         (b)      a failure by an Obligor to pay any amount due under a Finance
                  Document on its due date, including without limitation, any
                  cost, loss or liability arising as a result of Clause 31
                  (SHARING AMONG THE FINANCE PARTIES);

         (c)      funding, or making arrangements to fund, its participation in
                  a Loan requested by a Borrower in a Utilisation Request but
                  not made by reason of the operation of any one or more of the
                  provisions of this Agreement (other than by reason of wilful
                  misconduct or gross negligence by that Finance Party alone);

         (d)      issuing or making arrangements to issue a Letter of Credit or
                  Bank Guarantee requested by a Borrower in a Utilisation
                  Request but not issued by reason of the operation of any one
                  or more of the provisions of this Agreement (other than by
                  reason of wilful misconduct or gross negligence of that
                  Finance Party alone); or

                                      -74-
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         (e)      a Loan (or part of a Loan) not being prepaid or Cash
                  Collateral for any Letter of Credit or Bank Guarantee not
                  bring provided in accordance with a notice of prepayment given
                  by a Borrower or the Company.

17.3     INDEMNITY TO THE AGENT
         The Company shall promptly indemnify the Agent against any cost, loss
         or liability incurred by the Agent (acting reasonably) as a result of:

         (a)      investigating any event which it reasonably believes is a
                  Default; or

         (b)      acting or relying on any notice, request or instruction
                  received by it from any Finance Party or other party to a
                  Finance Document in connection with or pursuant to any Finance
                  Document which it reasonably believes to be genuine, correct
                  and appropriately authorised.

18.      MITIGATION BY THE LENDERS

18.1     MITIGATION

         (a)      Each Finance Party shall, in consultation with the Company,
                  take all reasonable steps to mitigate any circumstances which
                  arise and which would result in any amount becoming payable
                  under or pursuant to, or cancelled pursuant to, any of Clause
                  10.1 (Illegality), Clause 15 (TAX GROSS-UP AND INDEMNITIES),
                  Clause 16 (INCREASED COSTS), Clause 17.2 (OTHER INDEMNITIES),
                  Clause 17.3 (INDEMNITY TO THE AGENT) or paragraph 3 of
                  Schedule 4 (MANDATORY COST FORMULAE) including (but not
                  limited to) transferring its rights and obligations under the
                  Finance Documents to another Affiliate or Facility Office.

         (b)      Paragraph (a) above does not in any way limit the obligations
                  of any Obligor under the Finance Documents.

18.2     LIMITATION OF LIABILITY

         (a)      The Company shall indemnify each Finance Party for all costs
                  and expenses reasonably incurred by that Finance Party as a
                  result of steps taken by it under Clause 18.1 (MITIGATION).

         (b)      A Finance Party is not obliged to take any steps under Clause
                  18.1 (MITIGATION) if, in the opinion of that Finance Party
                  (acting reasonably), to do so might be prejudicial to it.

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19.      COSTS AND EXPENSES

19.1     TRANSACTION EXPENSES
         The Company shall promptly on demand pay the Agent and the Arrangers
         the amount of all costs and expenses (including legal fees) reasonably
         incurred by any of them in connection with the negotiation,
         preparation, printing, execution and syndication of:

         (a)      this Agreement and any other documents referred to in this
                  Agreement; and

         (b)      any other Finance Documents executed after the date of this
                  Agreement.

19.2     AMENDMENT COSTS
         If (a) an Obligor requests an amendment, waiver or consent with regard
         to any Finance Document or (b) an amendment is required pursuant to
         Clause 32.9 (CHANGE OF CURRENCY), the Company shall, within three
         Business Days of demand, reimburse the Agent for the amount of all
         costs and expenses (including legal fees) reasonably incurred by the
         Agent in responding to, evaluating, negotiating or complying with that
         request or requirement.

19.3     ENFORCEMENT COSTS
         The Company shall, within three Business Days of demand, pay to each
         Finance Party the amount of all costs and expenses (including legal
         fees) incurred by that Finance Party in connection with the enforcement
         of, or the preservation of any rights under, any Finance Document.

                                      -76-
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                                    SECTION 7
                                    GUARANTEE

20.      GUARANTEE ON FIRST DEMAND (GARANTIE AUF ERSTES ANFORDERN)

20.1     GUARANTEE ON FIRST DEMAND (GARANTIE AUF ERSTES ANFORDERN)
         Each Guarantor irrevocably and unconditionally jointly and severally:

         (a)      guarantees to each Finance Party punctual performance by each
                  Borrower of all that Borrower's obligations under the Finance
                  Documents;

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

         (c)      indemnifies each Finance Party immediately on first demand
                  against any cost, loss or liability suffered by that Finance
                  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
                  Finance Party would otherwise have been entitled to recover,

         PROVIDED THAT with regard to the guarantee by Friedrich Grohe
         Geschaftsfuhrung AG under this Clause 20, this guarantee shall not
         extend to any obligations of Grohe Beteiligungs under the Finance
         Document.

20.2     CONTINUING GUARANTEE
         This guarantee is a continuing guarantee and will extend to the
         ultimate balance of sums payable by any Borrower under the Finance
         Documents (including, for clarification purposes, any Facility A2 Loans
         outstanding by Friedrich Grohe following the Borrower Exit Date),
         regardless of any intermediate payment or discharge in whole or in
         part.

20.3     REINSTATEMENT
         If any payment by an Obligor or any discharge given by a Finance 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

                                      -77-
<PAGE>

         (b)      each Finance 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.

20.4     WAIVER OF DEFENCES
         The obligations of each Guarantor under this Clause 20 will not be
         affected by an act, omission, matter or thing which, but for this
         Clause, would reduce, release or prejudice any of its obligations under
         this Clause 20 (without limitation and whether or not known to it or
         any Finance 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 member of the Group;

         (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 realise 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;

         (g)      any insolvency or similar proceedings; or

         (h)      the transfer of Facility A2 Loans from Grohe Beteiligungs to
                  Friedrich Grohe.

20.5     IMMEDIATE RECOURSE
         Each Guarantor waives any right it may have of first requiring any
         Finance Party (or any agent 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 Clause 20. This waiver
         applies irrespective of any law or any provision of a Finance Document
         to the contrary.

                                      -78-
<PAGE>

20.6     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 Finance Party (or any agent on its behalf) may:

         (a)      refrain from applying or enforcing any other moneys, security
                  or rights held or received by that Finance Party (or any agent
                  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 Clause 20.

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

20.8     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 Finance
         Party.

                                      -79-
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                                    SECTION 8
               REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

21.      REPRESENTATIONS

         Each Obligor makes the representations and warranties set out in this
         Clause 21 to each Finance Party on its own behalf and in addition, the
         Company makes the representations set out therein on behalf of each
         member of the Group on the date of this Agreement.

21.1     STATUS

         (a)      It is a corporation or partnership, duly incorporated and
                  validly existing under the law of its jurisdiction of
                  incorporation.

         (b)      It and each of its Subsidiaries has the power to own its
                  assets and carry on its business as it is being conducted.

21.2     BINDING OBLIGATIONS
         The obligations expressed to be assumed by it in each Finance Document
         are legal, valid, binding and enforceable obligations.

21.3     NON-CONFLICT WITH OTHER OBLIGATIONS
         The entry into and performance by it of, and the transactions
         contemplated by, the Finance Documents do not and will not conflict:

         (a)      in any material way with any law or regulation applicable to
                  it;

         (b)      with its or any of its Subsidiaries' constitutional documents;

         (c)      in any material way with any material agreement or instrument
                  binding upon it or any of its Subsidiaries or any of its or
                  any of its Subsidiaries' assets other than the Existing Senior
                  Credit Agreement and any other agreement entered into with any
                  of the lenders under the Existing Senior Credit Agreement in
                  connection therewith; or

         (d)      with the Note Documents, except for the Shareholder Loan
                  Refinancing, which will not conflict following the Senior
                  Notes Consent.

21.4     POWER AND AUTHORITY
         It has the power to enter into, perform and deliver, and has taken all
         necessary action to authorise its entry into, performance and delivery
         of, the Finance Documents to which it is a party and the transactions
         contemplated by those Finance Documents.

                                      -80-
<PAGE>

21.5     VALIDITY AND ADMISSIBILITY IN EVIDENCE
         All Authorisations required:

         (a)      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; and

         (b)      to make the Finance Documents to which it is a party
                  admissible in evidence in each Relevant Jurisdiction,

         have been obtained or effected and are in full force and effect.

21.6     GOVERNING LAW AND ENFORCEMENT

         (a)      The choice of governing law of each of the Finance Documents
                  will be recognised and enforced in each Relevant Jurisdiction
                  of a party to a Finance Document.

         (b)      Any judgment obtained in the Federal Republic of Germany in
                  relation to a Finance Document will be recognised and enforced
                  in each Relevant Jurisdiction of a party to a Finance
                  Document.

21.7     DEDUCTION OF TAX
         Subject to any changes in applicable tax laws that may take place after
         the date of the Agreement, it is not required under the law of each
         Relevant Jurisdiction to make any deduction for or on account of Tax
         from any payment it may make under any Finance Document.

21.8     NO FILING OR STAMP TAXES
         Under the law of each Relevant Jurisdiction of a party to a Finance
         Document it is not necessary that the Finance Documents be filed,
         recorded or enrolled with any court or other authority in that
         jurisdiction or that any stamp, registration or similar tax be paid on
         or in relation to the Finance Documents or the transactions
         contemplated by the Finance Documents.

21.9     NO DEFAULT

         (a)      No Event of Default is continuing or might reasonably be
                  expected to result from the making of any Utilisation.

         (b)      No other event or circumstance is outstanding which
                  constitutes a default under any other agreement or instrument
                  which is binding on it or any of its Subsidiaries or to which
                  its (or its Subsidiaries') assets are subject which might have
                  a Material Adverse Effect.

                                      -81-
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21.10    NO MISLEADING INFORMATION

         (a)      Any factual information provided by any member of the Group
                  for the purposes of the Information Memorandum, the Budget,
                  the Business Plan or any Report was true and accurate in all
                  material respects as at the date it was provided or as at the
                  date (if any) at which it is stated.

         (b)      The financial projections contained in the Information
                  Memorandum and the Business Plan have been prepared on the
                  basis of recent historical information and on the basis of
                  reasonable assumptions.

         (c)      Nothing has occurred or been omitted from the Information
                  Memorandum, the Budget, the Business Plan or the Reports and
                  no information has been given or withheld that results in the
                  information contained in the Information Memorandum, the
                  Budget, the Business Plan or the Reports being untrue or
                  misleading in any material respect.

         (d)      All written information supplied to any Finance Party by Grohe
                  Beteiligungs, Friedrich Grohe or, if required to be supplied
                  pursuant to any Finance Document, any other party to such
                  Finance Document is true, complete and accurate in all
                  material respects as at the date it was given and is not
                  misleading in any material respect.

21.11    FINANCIAL STATEMENTS

         (a)      The Original Financial Statements were prepared in accordance
                  with GAAP consistently applied.

         (b)      The Original Financial Statements fairly represent its
                  financial condition and operations (consolidated in the case
                  of Grohe Holding) during the relevant financial year.

         (c)      There has been no material adverse change in its business or
                  financial condition (or the business or consolidated financial
                  condition of the Grohe Holding Group, in the case of Grohe
                  Holding) since 31 December 2001.

21.12    PARI PASSU RANKING
         Its payment obligations under the Finance Documents rank at least PARI
         PASSU with the claims of all its other unsecured and unsubordinated
         creditors, except for obligations mandatorily preferred by law applying
         to companies generally.

21.13    NO PROCEEDINGS PENDING OR THREATENED
         No litigation, arbitration or administrative proceedings of or before
         any court, arbitral body or agency which, if adversely determined,
         might reasonably be

                                      -82-
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         expected to have a Material Adverse Effect have been started or (to the
         best of its knowledge and belief) threatened against it or any of its
         Subsidiaries.

21.14    ENVIRONMENTAL COMPLIANCE
         Each member of the Group has performed and observed in all material
         respects all Environmental Law, Environmental Permits and all other
         material covenants, conditions, restrictions or agreements directly or
         indirectly concerned with any contamination, pollution or waste or the
         release or discharge of any toxic or hazardous substance in connection
         with any real property which is or was at any time owned, leased or
         occupied by any member of the Group or on which any member of the Group
         has conducted any activity where failure to do so might reasonably be
         expected to have a Material Adverse Effect.

21.15    ENVIRONMENTAL CLAIMS
         No Environmental Claim has been commenced or (to the best of its
         knowledge and belief) is threatened against any member of the Group
         where that claim would be reasonably likely, if determined against that
         member of the Group to have a Material Adverse Effect.

21.16    TAXATION

         (a)      It and each member of the Group has duly and punctually paid
                  and discharged all material Taxes imposed upon it or its
                  assets within the time period allowed without incurring
                  penalties (save to the extent that (i) payment is being
                  contested in good faith, (ii) it has maintained adequate
                  reserves for those Taxes and (iii) payment can be lawfully
                  withheld).

         (b)      It and each member of the Group is not materially overdue in
                  the filing of any Tax returns.

         (c)      No claims are being or are reasonably likely to be asserted
                  against it or any member of the Group with respect to Taxes
                  which might reasonably be expected to have a Material Adverse
                  Effect.

21.17    SECURITY
         No Security exists over all or any of the present or future assets of
         any Obligor or other member of the Group other than any Security
         permitted under Clause 24.3 (NEGATIVE PLEDGE).

21.18    FINANCIAL INDEBTEDNESS
         It has no Financial Indebtedness other than Permitted Indebtedness.

                                      -83-
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21.19    RANKING
         The Transaction Security has or upon release of the Security permitted
         under paragraph (c) (i) of Clause 24.3 (NEGATIVE PLEDGE) will have
         first ranking priority and it is not subject to any prior ranking or
         PARI PASSU ranking Security, except for certain of the land charges
         granted by GROHEDAL Sanitarsysteme GmbH & Co. KG, DAL
         Sanitartechnologie GmbH and AQUA Butzke GmbH to the Security Agent over
         the pieces of land set out in Part II of Schedule 9 (EXISTING
         SECURITY), which will rank behind the land charges or, until their
         subordination in accordance with Clause 24.25(b), owner's land charges,
         as the case may be, granted by the relevant chargors and listed in Part
         II of Schedule 9 (EXISTING SECURITY).

21.20    TRANSACTION SECURITY
         Each Security Document to which it is a party validly creates the
         Security which is expressed to be created by that Security Document and
         evidences the Security it is expressed to evidence.

21.21    GOOD TITLE TO ASSETS
         It has good, valid and marketable title to, or valid material leases or
         licences of, and all appropriate material Authorisations to use, the
         material assets necessary to carry on its business as presently
         conducted.

21.22    LEGAL AND BENEFICIAL OWNER
         It is the legal and, where applicable, beneficial owner of the assets
         subject to the Transaction Security.

21.23    SHARES
         The shares which are subject to the Transaction Security are fully paid
         and not subject to any option to purchase or similar rights. The
         constitutional documents of companies whose shares are subject to the
         Transaction Security do not and could not restrict or inhibit any
         transfer of those shares on creation or on enforcement of the
         Transaction Security.

21.24    INTELLECTUAL PROPERTY
         It is not aware of any adverse circumstance relating to validity,
         subsistence or use of any of its material Intellectual Property which
         could reasonably be expected to have a Material Adverse Effect.

21.25    GROUP STRUCTURE
         The Group Structure Chart delivered to the Agent pursuant to Schedule 2
         (CONDITIONS Precedent) is true, complete and accurate.

21.26    OWNERSHIP OF THE OBLIGORS
         Each Obligor (other than the Company) is a wholly-owned Subsidiary of
         the Company.

                                      -84-
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21.27    REPETITION
         The Repeating Representations shall be made by each Obligor and the
         Company (by reference to the facts and circumstances then existing) on:

         (a)      the date of each Utilisation Request and the first day of each
                  Interest Period; and

         (b)      in the case of an Additional Obligor, the day on which the
                  company becomes (or it is proposed that the company becomes)
                  an Additional Obligor.

         In relation to the Information Memorandum only, the Representations
         contained in Clause 21.10(a) to (c) shall be made by each Obligor and
         the Company on the date that the Information Memorandum is approved by
         the Company and on the Syndication Date.

22.      INFORMATION UNDERTAKINGS

         The undertakings in this Clause remain in force from the date of this
         Agreement for so long as any amount is outstanding under the Finance
         Documents or any Commitment is in force.

22.1     FINANCIAL STATEMENTS
         The Company shall supply to the Agent in sufficient copies for all the
         Lenders:

         (a)      as soon as the same become available, but in any event within
                  120 days after the end of each of its financial years:

                  (i)      the audited consolidated financial statements for the
                           Grohe Holding Group for that financial year; and

                  (ii)     the financial statements of each Obligor for that
                           financial year, audited, if such company is required
                           by law to prepare audited financial statements; and

         (b)      as soon as the same become available, but in any event within
                  45 days after the end of each Financial Quarter ending on any
                  of the first three Quarter Dates of any financial year and
                  within 75 days after the end of each Financial Quarter ending
                  on the last Quarter Date of any financial year, the
                  consolidated interim financial statements for the Grohe
                  Holding Group for that period (in case the relevant financial
                  statements of a financial year are not yet available in
                  audited form the aforementioned reports relevant for the
                  fourth Financial Quarter of a financial year will be based on
                  unaudited numbers). Such interim financial statements shall be
                  on a quarter-to-quarter and cumulative basis and in a form
                  reasonably

                                      -85-
<PAGE>

                  acceptable to the Agent and shall include a balance sheet,
                  profit and loss account and cash-flow statements and a written
                  discussion and analysis of the relevant balance sheet and cash
                  flow statements with regard to variances between actual and
                  projected numbers; such aforementioned consolidated interim
                  financial statements shall also contain a comparison of actual
                  performance by the Grohe Holding Group with the performance in
                  the corresponding period in the previous financial year and,
                  prior to a Qualifying Public Offering, the performance
                  projected by the Budget for such period;

         (c)      prior to the occurrence of the Qualifying Public Offering, as
                  soon as the same become available, but in any event within 45
                  days after the end of each calendar Month the consolidated
                  unaudited management accounts for the Grohe Holding Group for
                  that period. Such management accounts shall be on a
                  month-to-month and cumulative basis and in a form reasonably
                  acceptable to the Agent and shall include a pre-tax profit and
                  loss account and provide a management commentary thereon; such
                  aforementioned pre-tax profit and loss account shall contain a
                  comparison of actual performance by the Grohe Holding Group
                  with the performance in the corresponding period in the
                  previous financial year and, prior to a Qualifying Public
                  Offering, the performance projected by the Budget for such
                  period, and shall further contain a list of orders in hand and
                  orders received, a list of inventory, capital expenditure,
                  claims/receivables and liabilities, a statement of cash
                  balances including cash at bank and statement of liabilities
                  to banks, each as per the end of the relevant month;

         (d)      after the occurrence of the Qualifying Public Offering as soon
                  as the same become available, but in any event within a time
                  frame appropriate for a public company listed on a recognised
                  investment or securities exchange in any country, after the
                  end of each half of each of the financial years the
                  consolidated financial statements for the Grohe Holding Group
                  for that financial half year, or, if required pursuant to the
                  applicable stock exchange rules, after the end of each
                  Financial Quarter of the financial years, the consolidated
                  financial statements for that Financial Quarter; and

         (e)      quarterly reports as soon, to the extent and in the form the
                  same are submitted under the Senior Notes.

22.2     COMPLIANCE CERTIFICATE

         (a)      The Company shall supply to the Agent, with each set of
                  quarterly consolidated interim financial statements for the
                  Grohe Holding Group

                                      -86-
<PAGE>

                  delivered pursuant to Clause 22.1(b) or quarterly or
                  half-yearly consolidated interim financial statements for the
                  Grohe Holding Group delivered pursuant to Clause 22.1(d) and
                  each set of financial statements delivered pursuant to Clause
                  22.1(a)(i), a Compliance Certificate setting out (in
                  reasonable detail) computations as to compliance with Clause
                  23 (FINANCIAL COVENANTS) as at the date as at which the
                  consolidated financial statements of the Grohe Holding Group
                  were drawn up.

         (b)      Each Compliance Certificate shall be signed by the financial
                  officer(s) of the Company authorised to bind the Company and,
                  if required to be delivered with the financial statements
                  delivered pursuant to paragraph (a)(i) of Clause 22.1
                  (FINANCIAL statements), by the Company's auditors.

22.3     REQUIREMENTS AS TO FINANCIAL STATEMENTS

         (a)      Each set of financial statements delivered by the Company
                  pursuant to Clause 22.1 (FINANCIAL STATEMENTS) shall be
                  certified by a director of the relevant company as fairly
                  representing its financial condition (or, in the case of
                  audited consolidated financial statements to be delivered by
                  the Company, the consolidated financial condition of the Grohe
                  Holding Group) as at the date as at which those financial
                  statements were drawn up.

         (b)      The Company shall procure that each set of financial
                  statements delivered pursuant to Clause 22.1 (FINANCIAL
                  STATEMENTS) is prepared using GAAP, except with regard to the
                  monthly management accounts delivered pursuant to Clause
                  22.1(c), in so far as the application of budget exchange rates
                  and the presentation of specific profit and loss lines are
                  concerned.

22.4     ACCOUNTING POLICIES
         Each Obligor shall ensure that each set of financial statements
         delivered pursuant to this Clause 22, but excluding the monthly
         management accounts delivered pursuant to Clause 22.1(c), is prepared
         using accounting policies, practices, procedures and reference period
         consistent with those applied in the preparation of the Original
         Financial Statements (with normal period end adjustments for quarterly
         accounts) unless, in relation to any such set of financial statements,
         the relevant Obligor notifies the Agent that there have been one or
         more material changes in any such accounting policies, practices,
         procedures or reference period and it or, after consultation with it
         and if reasonably requested by the Agent, the auditors of such Obligor
         provide:

                                      -87-
<PAGE>

22.4.1   a description of such changes and the adjustments which would be
         required to be made to those financial statements in order to cause
         them to use the accounting policies, practices, procedures and
         reference period upon which the Original Financial Statements were
         prepared; and

22.4.2   sufficient information, in such detail and format as may be reasonably
         required by the Agent, to enable the Lenders to make an accurate
         comparison between the financial position indicated by those financial
         statements and the Original Financial Statements.

         If there has been a material change in accounting policies, practices,
         procedures or reference period and the description and information
         required by this Clause 22.4 have been provided by the relevant Obligor
         or the auditors, as the case may be, in connection with such change and
         any amendments have been agreed pursuant to Clause 22.5 (CHANGE IN
         ACCOUNTING POLICY) in connection with such change, then such change
         shall become part of the normal accounting policies, practices,
         procedures and reference period as if it were used in the preparation
         of the Original Financial Statements.

22.5     CHANGE IN ACCOUNTING POLICIES
         If there has been one or more such material changes in any accounting
         policies, practices or procedures or reference period:

22.5.1   the Agent and the Company shall (in consultation with the auditors of
         the Company), at the Agent's request, negotiate in good faith with a
         view to agreeing such amendments to the financial covenants in Clause
         23 (FINANCIAL COVENANTS), the margin ratchet in Clause 11.3 (MARGIN
         RATCHET), and the mandatory prepayment from excess cash in Clause 10.4
         (MANDATORY PREPAYMENT FROM EXCESS CASH) and/or in each case, the
         definitions used therein as may be necessary to grant to the Lenders
         protection comparable to that granted on the date hereof, and any
         amendments as agreed will have effect on the date agreed between the
         Agent and the Company; and

22.5.2   if no such agreement is reached within 30 days of the Agent's request,
         the Agent shall (if so requested by the Majority Lenders) instruct the
         auditors of the Company or independent accountants (approved by the
         Company or, in the absence of such approval within 5 days of request by
         the Agent therefore, a firm with recognised expertise) to determine any
         amendment to Clause 23 (FINANCIAL COVENANTS), Clause 11.3 (MARGIN
         RATCHET), and Clause 10.4 (MANDATORY PREPAYMENT FROM EXCESS CASH) which
         those auditors or, as the case may be, accountants (acting as experts
         and not arbitrators) consider appropriate to grant to the Lenders
         protection comparable to that granted on the date hereof, which
         amendments shall take effect when so determined by those auditors, or
         as the case may be, accountants. Where such auditors or accountants are
         instructed

                                      -88-
<PAGE>

         hereunder, the cost and expense of those auditors or accountants shall
         be for the account of the Company.

22.6     BUDGET
         Prior to the occurrence of the Qualifying Public Offering, the Company
         shall supply to the Agent in sufficient copies for all Lenders no later
         than ten days before the end of any financial year an annual Budget,
         and, no later than sixty days following the beginning of any financial
         year an annual Budget prepared by reference to each Financial Quarter,
         in respect of such financial year of the Grohe Holding Group including:

         (a)      projected annual profit and loss accounts and projected
                  balance sheet and cash flow statements on a quarterly basis
                  for such financial year on a consolidated basis for the Grohe
                  Holding Group;

         (b)      projected capital expenditure to be incurred on a quarterly
                  basis for such financial year on a consolidated basis for the
                  Grohe Holding Group;

         (c)      projected EBITDA/EBITA at the end of each Financial Quarter in
                  such financial year; and

         (d)      a written analysis concerning the basic assumptions of such
                  projected financial statements.

22.7     INFORMATION: MISCELLANEOUS
         The Company shall supply to the Agent (in sufficient copies for all the
         Lenders, if the Agent so requests):

         (a)      all documents publicly available dispatched by the Company or
                  Grohe Holding or, following a Listing, by the relevant listed
                  company, to its shareholders (or any class of them) and all
                  documents dispatched by Grohe Holding to its creditors under
                  the Senior Notes or under any other Financial Indebtedness at
                  the same time as they are dispatched;

         (b)      promptly upon becoming aware of them, the details of any
                  litigation, arbitration or administrative proceedings which
                  are current, threatened or pending against any member of the
                  Group, and which might, if adversely determined, have a
                  Material Adverse Effect; and

         (c)      promptly, such further information regarding the financial
                  condition, business and operations of Grohe Holding or any
                  member of the Group as any Finance Party (through the Agent)
                  may reasonably request.

                                      -89-
<PAGE>

22.8     NOTIFICATION OF DEFAULT

         (a)      Each Obligor shall notify the 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).

         (b)      Promptly upon a request by the Agent, the Company shall supply
                  to the 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).

22.9     OTHER INFORMATION

22.9.1   Each Borrower and the Company in respect of the affairs of any member
         of the Group will undertake the following measures only after having
         notified the Agent in writing in advance thereof on a timely basis, and
         shall procure that all members of the Group so notify the Agent in
         writing in advance:

         (a)      any change of circumstances relevant for the contents of the
                  Commercial Register extracts (other than, with regard to
                  Friedrich Grohe, a change in the person holding such limited
                  partnership interests which at the date of this Agreement are
                  not held by a member of the Group) and Articles of Association
                  of the Company, any Obligor and any Material Company to the
                  extent that such change relates to the shareholders, the share
                  capital, the registered office, the management and the legal
                  form of the respective entity; and

         (b)      any disposal of assets by the Company, any Obligor and any
                  Material Company which is not a Permitted Disposal.

22.9.2   In all notifications pursuant to this Clause 22.9, the Company shall
         explain in writing whether and to what extent the circumstances
         disclosed pursuant to this Clause 22.9 may affect the financial
         situation of the Obligors and each of the relevant members of the
         Group. The Agent (on behalf of the Majority Lenders) will determine on
         a case-by-case basis in their own discretion (acting reasonably),
         following a written request by the Company, within fifteen Business
         Days after submission of the relevant documents and information whether
         the relevant circumstances may have a Material Adverse Effect. The
         Lenders shall be entitled to determine the scope of documents and
         information relevant for their decision.

                                      -90-
<PAGE>

22.10    ANNUAL PRESENTATION
         Once in every financial year of the Company prior to the occurrence of
         the Qualifying Public Offering, at least two executive directors of the
         Company will give a presentation to the Lenders, at a time and venue
         agreed with the Agent, about the business and financial performance of
         the Grohe Holding Group and any such other related matters as any of
         the Lenders may reasonably request.

22.11    USE OF WEBSITES

         (a)      The Company may satisfy its obligation under this Agreement to
                  deliver any information in relation to those Lenders (the
                  "WEBSITE LENDERS") who accept this method of communication by
                  posting this information onto an electronic website designated
                  by the Company and the Agent (the "DESIGNATED WEBSITE") if:

                  (i)      the Agent expressly agrees (after consultation with
                           each of the Lenders) that it will accept
                           communication of the information by this method;

                  (ii)     both the Company and the Agent are aware of the
                           address of and any relevant password specifications
                           for the Designated Website; and

                  (iii)    the information is in a format previously agreed
                           between the Company and the Agent.

                  If any Lender (a "PAPER FORM LENDER") does not agree to the
                  delivery of information electronically then the Agent shall
                  notify the Company accordingly and the Company shall supply
                  the information to the Agent (in sufficient copies for each
                  Paper Form Lender) in paper form. In any event the Company
                  shall supply the Agent with at least one copy in paper form of
                  any information required to be provided by it.

         (b)      The Agent shall supply each Website Lender with the address of
                  and any relevant password specifications for the Designated
                  Website following designation of that website by the Company
                  and the Agent.

         (c)      The Company shall promptly upon becoming aware of its
                  occurrence notify the Agent if:

                  (i)      the Designated Website cannot be accessed due to
                           technical failure;

                  (ii)     the password specifications for the Designated
                           Website change;

                                      -91-
<PAGE>

                  (iii)    any new information which is required to be provided
                           under this Agreement is posted onto the Designated
                           Website;

                  (iv)     any existing information which has been provided
                           under this Agreement and posted onto the Designated
                           Website is amended; or

                  (v)      the Company becomes aware that the Designated Website
                           or any information posted onto the Designated Website
                           is or has been infected by any electronic virus or
                           similar software.

                  If the Company notifies the Agent under paragraph (c)(i) or
                  paragraph (c)(v) above, all information to be provided by the
                  Company under this Agreement after the date of that notice
                  shall be supplied in paper form unless and until the Agent and
                  each Website Lender is satisfied that the circumstances giving
                  rise to the notification are no longer continuing.

         (d)      Any Website Lender may request, through the Agent, one paper
                  copy of any information required to be provided under this
                  Agreement which is posted onto the Designated Website. The
                  Company shall comply with any such request within ten Business
                  Days.

23.      FINANCIAL COVENANTS

23.1     FINANCIAL COVENANTS AND INCURRENCE TEST

23.1.1   FIXED CHARGE COVER: Fixed Charge Cover for each Relevant Period ending
         on a Quarter Date prior to the occurrence of the Qualifying Public
         Offering shall not be less than 1.0:1

         "FIXED CHARGE COVER" means, in relation to any Relevant Period, the
         ratio of Consolidated Operating Cash Flow to Net Debt Service for such
         Relevant Period.

23.1.2   TOTAL NET INTEREST COVER: Total Net Interest Cover for each Relevant
         Period specified in column 1 below which is before the occurrence of
         the Qualifying Public Offering shall not be less than the ratio set out
         in column 2 below opposite such Relevant Period

                                      -92-
<PAGE>

         COLUMN 1                         COLUMN 2
         RELEVANT PERIOD                  RATIO
         (ENDING ON)

         30 June 2003                     2.60:1
         30 September 2003                2.60:1
         31 December 2003                 2.60:1
         31 March 2004                    2.70:1
         30 June 2004                     2.70:1
         30 September 2004                2.75:1
         31 December 2004                 2.75:1
         31 March 2005                    2.95:1
         30 June 2005                     3.10:1
         30 September 2005                3.25:1
         31 December 2005                 3.40:1
         31 March 2006                    3.55:1
         30 June 2006                     3.65:1
         30 September 2006                3.80:1
         31 December 2006                 3.90:1
         31 March 2007                    4.00:1
         30 June 2007                     4.10:1
         30 September 2007                4.20:1
         31 December 2007                 4.25:1
         and any Quarter Date
         thereafter

         PROVIDED THAT for each Relevant Period ending on a Quarter Date after
         the occurrence of the Qualifying Public Offering the ratios shall be
         not less than 2.50:1 or, for the purpose of the incurrence test
         referred to in paragraph (f) of the definition of Permitted Transaction
         3.00:1.

         "TOTAL NET INTEREST COVER" means, in relation to any Relevant Period,
         the ratio of EBITDA to Consolidated Net Finance Charges for such
         Relevant Period.

23.1.3   SENIOR DEBT LEVERAGE: Senior Debt Leverage in respect of each Quarter
         Date prior to the occurrence of the Qualifying Public Offering
         specified in column 1 below shall not be more than the ratio set out in
         column 2 below opposite such Quarter Date.

        COLUMN 1                                 COLUMN 2
        QUARTER DATE                             RATIO

        30 June 2003                             3.20:1

                                      -93-
<PAGE>

        30 September 2003                        3.20:1
        31 December 2003                         3.00:1
        31 March 2004                            3.00:1
        30 June 2004                             2.90:1
        30 September 2004                        2.85:1
        31 December 2004                         2.75:1
        31 March 2005                            2.75:1
        30 June 2005                             2.50:1
        30 September 2005                        2.40:1
        31 December 2005                         2.25:1
        31 March 2006                            2.25:1
        30 June 2006                             2.00:1
        30 September 2006                        1.90:1
        31 December 2006                         1.75:1
        31 March 2007                            1.75:1
        30 June 2007                             1.65:1
        30 September 2007                        1.60:1
        31 December 2007 and any                 1.50:1
        Quarter Date thereafter

         "SENIOR DEBT LEVERAGE" means, in respect of any Quarter Date, the ratio
         of Total Net Senior Debt to EBITDA for the Relevant Period ending on
         that Quarter Date.

23.1.4   TOTAL DEBT LEVERAGE: Total Debt Leverage in respect of each Quarter
         Date specified in column 1 below shall not be more than the ratio set
         out in column 2 below opposite such Quarter Date

        COLUMN 1                                 COLUMN 2
        QUARTER DATE                             RATIO
        30 June 2003                             4.50:1
        30 September 2003                        4.50:1
        31 December 2003                         4.30:1
        31 March 2004                            4.30:1
        30 June 2004                             4.20:1
        30 September 2004                        4.15:1
        31 December 2004                         4.10:1
        31 March 2005                            4.10:1
        30 June 2005                             3.85:1
        30 September 2005                        3.75:1
        31 December 2005                         3.60:1
        31 March 2006                            3.60:1

                                      -94-
<PAGE>

        30 June 2006                             3.30:1
        30 September 2006                        3.15:1
        31 December 2006                         3.00:1
        31 March 2007                            3.00:1
        30 June 2007                             2.75:1
        30 September 2007                        2.65:1
        31 December 2007 and any Quarter         2.50:1
        thereafter

        PROVIDED THAT for each Relevant Period ending after the occurrence of
        the Qualifying Public Offering the ratios shall be as set out in column
        2 below

        COLUMN 1                         COLUMN 2              COLUMN 3
        QUARTER DATE                     RATIO                 RATIO
        30 June 2003                     4.00:1                3.00:1
        30 September 2003                4.00:1                3.00:1
        31 December 2003                 4.00:1                3.00:1
        31 March 2004                    4.00:1                3.00:1
        30 June 2004                     4.00:1                3.00:1
        30 September 2004                4.00:1                3.00:1
        31 December 2004                 4.00:1                3.00:1
        31 March 2005                    4.00:1                3.00:1
        30 June 2005                     4.00:1                3.00:1
        30 September 2005                4.00:1                3.00:1
        31 December 2005                 4.00:1                3.00:1
        31 March 2006                    4.00:1                3.00:1
        30 June 2006                     4.00:1                3.00:1
        30 September 2006                4.00:1                3.00:1
        31 December 2006                 4.00:1                3.00:1
        31 March 2007                    3.00:1                3.00:1
        30 June 2007                     3.00:1                3.00:1
        30 September 2007                3.00:1                3.00:1
        31   December   2007   and  any  3.00:1                3.00:1
        Quarter thereafter

        "TOTAL DEBT LEVERAGE" means, in respect of any Quarter Date, the ratio
        of Total Net Debt to EBITDA for the Relevant Period ending on that
        Quarter Date.

23.2    FINANCIAL DEFINITIONS
        In Clause 23 (FINANCIAL COVENANTS) the following terms have the
        following meanings and shall relate, in each case, to the Grohe Holding
        Group on a consolidated basis.

        "CASH EQUIVALENTS" means;

                                      -95-
<PAGE>

         (a)      debt securities denominated in euro or any currency the
                  exchange rate of which has been irrevocably fixed to euro
                  issued by the Federal Republic of Germany or any of its
                  federal states (BUNDESLANDER), any other Participating Member
                  State or a member state of the European Union of which such
                  currency is the lawful currency having not more than 6 months
                  to final maturity which are not convertible into any other
                  form of security; and

         (b)      debt securities (denominated in euro) or any other currency
                  the exchange rate of which has been irrevocably fixed to euro,
                  or in an Optional Currency which have not more than 90 days to
                  final maturity, are not convertible into any other form of
                  security, are rated not less than P1 (Moody's) or A-1
                  (Standard and Poor's), and are not issued or guaranteed by any
                  member of the Grohe Holding Group; and

         (c)      such other securities (if any) as are approved as such in
                  writing by the Agent.

         "CONSOLIDATED NET FINANCE CHARGES" means, in respect of any Relevant
         Period, the aggregate amount of the consolidated interest, commission,
         fees, discounts, other finance payments and dividends payable or made
         by any member of the Grohe Holding Group INCLUDING any commission,
         fees, discounts and other finance payments payable by any member of the
         Grohe Holding Group under any interest rate hedging arrangement and
         excluding any capitalised interest BUT DEDUCTING (a) any commission,
         fees, discounts and other finance payments receivable by any member of
         the Grohe Holding Group under any interest rate hedging instrument
         permitted by this Agreement, (b) any interest receivable by any member
         of the Grohe Holding Group on any deposit (including from time deposit
         investments) or bank account from any member outside the Grohe Holding
         Group and (c) all fees and other finance payments incurred by any
         member of the Grohe Holding Group in connection with this Agreement,
         the purchase of Friedrich Grohe by Grohe Holding or any Permitted
         Acquisition.

         "CONSOLIDATED NET INTEREST EXPENSE" means Consolidated Net Finance
         Charges plus capitalised interest payable by any member of the Grohe
         Holding Group to any person which is not a member of the Grohe Holding
         Group.

         "CONSOLIDATED OPERATING CASH FLOW" means, in respect of the Grohe
         Holding Group in relation to any period (and on the basis that there is
         no double counting), EBITDA for that period:

         (a)      plus any increase or minus any decrease in provisions for
                  liabilities other than Short-Term Liabilities and charges made
                  in respect of that period;

                                      -96-
<PAGE>

         (b)      plus any decrease, or minus any increase, in Short-Term Assets
                  at the end of such period compared against the Short-Term
                  Assets at the beginning of such period;

         (c)      plus any increase, or minus any decrease, in Short-Term
                  Liabilities at the end of such period compared against the
                  Short-Term Liabilities at the beginning of such period;

         (d)      plus, to the extent not already taken into account of in
                  EBITDA, the net proceeds of assets other than Short Term
                  Assets disposed of during that period;

         (e)      minus any investment in fixed assets, i.e. any expenditure or
                  obligations in respect of expenditure for the acquisition of
                  real property, plants, equipment and other assets which in
                  accordance with GAAP is treated as capital expenditure and
                  including the capital element of any expenditure or obligation
                  incurred in connection with a Finance Lease;

         (f)      plus any increase, or minus any decrease in special fixed
                  assets items, i.e. items pursuant to Section 6b of the German
                  Income Tax Law and Section 4 German Assisted Areas Law and
                  items for investment grants and premiums to fixed assets;

         (g)      plus any receipts by way of extraordinary or exceptional items
                  and minus any payments by way of extraordinary or exceptional
                  items, in each case, received or made during that period;

         (h)      minus any dividends actually paid in cash or cash dividends
                  declared by any member of the Grohe Holding Group to any
                  person who is not a member of the Grohe Holding Group for that
                  period;

         (i)      plus any non-cash items charged or amortised and minus any
                  non-cash items credited against the Grohe Holding Group's
                  consolidated profit and loss account in such period (but
                  excluding the items referred to in the definition of EBITDA);

         (j)      plus, to the extent not already taken account of in EBITDA,
                  (i) all payments by any vendor to a member of the Grohe
                  Holding Group under any acquisition agreement relating to
                  Permitted Acquisitions received in cash, in such period to the
                  extent not applied in prepaying the Term Facilities and (ii)
                  all payments received in cash in such period from any such
                  vendor in respect of purchase price adjustments in respect of
                  working capital, capital expenditure and other items set out
                  in the acquisition agreement;

                                      -97-
<PAGE>

         (k)      plus, to the extent not already taken account of in EBITDA,
                  income from participating interests in associated undertakings
                  to the extent received in cash and minus any payment made to
                  associated undertakings during that period;

         (l)      plus realised exchange gains and minus realised exchange
                  losses charged during that period to the extent not already
                  taken account of in EBITDA for that period;

         (m)      minus the aggregate of all corporation or other similar taxes
                  paid during that period;

         (n)      plus any amounts to the extent funded from Permitted
                  Indebtedness incurred pursuant to paragraphs (n) or, if and to
                  the extent used to finance a Permitted Acquisition, (m) of the
                  definition of Permitted Indebtedness, cash contributions (by
                  the way of a capital increase or payment into the reserves in
                  cash or in kind) made to the Company by its direct or indirect
                  shareholders or by Shareholder Loans;

         (o)      plus any transaction costs paid in connection with the
                  refinancing of the Existing Senior Credit Agreement and the
                  Shareholder Loan Refinancing, to the extent funded out of
                  Financial Indebtedness incurred by any member of the Group or
                  additional equity provided to any member of the Group.

         "DEPRECIATION" has the meaning given to that term by GAAP.

         "EBITA" means, in respect of any Relevant Period, (and on the basis
         that there is no double counting) EBITDA minus Depreciation;

         "EBITDA" means, for any Relevant Period, (and on the basis that there
         is no double counting) the aggregate of:

         (a)      the consolidated net income of the Grohe Holding Group for
                  that period after taking into account profit attributable to
                  minority interests, before deducting

                  (i)      any provision on account of taxation;

                  (ii)     Consolidated Net Interest Expenses;

                  (iii)    Depreciation;

                  (iv)     amounts of the value attributed to goodwill or step
                           up written-off during such period or charged to the
                           profit and loss account of the Grohe Holding Group
                           during such period;

                                      -98-
<PAGE>

                  (v)      amounts amortized against, or charged to, the profit
                           and loss account of the Grohe Holding Group during
                           such period in respect of fees, out-of-pocket costs
                           and expenses and taxes incurred by any member of the
                           Grohe Holding Group in connection with this
                           Agreement, the purchase of Friedrich Grohe by Grohe
                           Holding or any Permitted Acquisition; and

         (b)      any items treated as exceptional or extraordinary items.

         "FINANCIAL QUARTER" means the period commencing on the day after one
         Quarter Date and ending on the next Quarter Date.

         "NET DEBT SERVICE" means, in respect of any Relevant Period, the
         aggregate of:

         (a)      Consolidated Net Finance Charges; and

         (b)      the aggregate of scheduled and mandatory payments (except for
                  mandatory prepayments pursuant to Clause 10.4 (MANDATORY
                  PREPAYMENT FROM EXCESS CASH) of any Indebtedness for Borrowed
                  Money falling due but excluding any amounts falling due under
                  any Indebtedness for Borrowed Money referred to in paragraph
                  (e) of the definition of Permitted Indebtedness or under the
                  Revolving Facility other than any payments required to be made
                  in permanent reduction of the Revolving Facility and excluding
                  the amount of any payment falling due under Finance Leases.

         "NET IPO PROCEEDS" means with respect to any issuance of new shares,
         the cash proceeds of such issuance net of attorneys' fees,
         underwriters' or placement agents' fees, discounts or commissions and
         brokerage, consultant and other fees actually incurred in connection
         with such issuance and net of taxes paid or payable as a result
         thereof.

         "OPERATING EXCESS CASH FLOW" means, for any period for which it is
         being calculated, Consolidated Operating Cash Flow for that period of
         Friedrich Grohe and its Subsidiaries LESS

         (a)      (to the extent incurred by Friedrich Grohe and its
                  Subsidiaries) Net Debt Service (without double counting
                  Consolidated Net Finance Charges) for such period;

         (b)      the amount of distributions made by Friedrich Grohe to Grohe
                  Beteiligungs (including by way of withdrawals from the
                  partners' accounts) in such period up to the amount necessary
                  for Grohe Beteiligungs (i) to meet its scheduled payment
                  obligations falling due in such period under this Agreement,
                  (ii) to make payments to Grohe

                                      -99-
<PAGE>

                  Holding during such period, if such payments are permitted
                  under this Agreement, and (iii) to finance payments due by
                  Grohe Beteiligungs during such period, to the extent such
                  payment obligation was not incurred in breach of the Finance
                  Documents; and

         (c)      the amount of distributions made to minority shareholders of
                  Friedrich Grohe or any of its Subsidiaries (including by way
                  of withdrawals from the partners' accounts) in such period
                  PROVIDED THAT with regard to distributions to minority
                  shareholders of Friedrich Grohe, Friedrich Grohe is obliged by
                  law to make such distributions and allow such withdrawals.

         "QUARTER DATE" means each of 31 March, 30 June, 30 September and 31
         December.

         "RELEVANT PERIOD" means each period of twelve months ending on the last
         day of each Financial Quarter of the Company's financial year.

         "SHORT-TERM ASSETS" means the aggregate of inventory, trade and other
         receivables (including, for clarification purposes, receivables from
         unconsolidated associated companies and prepaid expenses) of each
         member of the Grohe Holding Group including sundry debtors (but
         excluding cash and Cash Equivalents) maturing within twelve months from
         the date of computation and excluding amounts due from any vendor in
         connection with a Permitted Acquisition and further excluding
         intra-group items.

         "SHORT-TERM LIABILITIES" means the aggregate of all liabilities
         (including trade creditors, accruals and provisions and prepayments and
         including further, for clarification purposes, liabilities to
         unconsolidated associated companies and prepaid expenses) of each
         member of the Grohe Holding Group falling due within twelve months from
         the date of computation but excluding consolidated aggregate Financial
         Indebtedness of the Grohe Holding Group falling due within such period
         and any interest accruing on such Financial Indebtedness due in such
         period and excluding amounts due to any vendors in connection with a
         Permitted Acquisition and further excluding intra-group items.

         "TOTAL NET DEBT" means, at any time (without double counting), the
         aggregate amount of all obligations of any member of the Grohe Holding
         Group for or in respect of Indebtedness for Borrowed Money (including
         under this Agreement and under the Senior Notes Loan) but excluding any
         such obligation to any other member of the Grohe Holding Group and
         excluding further any such obligation in respect of Shareholder Loans
         to the extent they constitute Permitted Indebtedness pursuant to
         paragraph (d) of such definition, Grohe Holding Shareholder Loans
         subordinated pursuant to the Grohe Holding Subordination

                                     -100-
<PAGE>

         Agreement and Indebtedness for Borrowed Money to the extent incurred by
         Grohe Holding on terms set out in Clause 24.14(i) to repay Grohe
         Holding Shareholder Loans in accordance with Clause 24.14 (SUBORDINATED
         DEBT) and applied against such repayment, minus cash and Cash
         Equivalents held by any member of the Group and only for the purpose of
         determining whether a Qualifying Public Offering has occurred the Net
         IPO Proceeds (and so that no amount shall be included or excluded more
         than once).

         "TOTAL NET SENIOR DEBT" means, at any time (without double counting),
         the aggregate amount of all obligations of any Grohe Holding Group
         member under the Finance Documents and the Existing Senior Credit
         Agreement minus cash and Cash Equivalents held by any member of the
         Group, including cash on the Escrow Account (and so that no amount
         shall be included or excluded more than once).

         "WITHDRAWAL PERIOD" means in relation to each calendar year each of the
         periods commencing on 1 July and ending 30 November and commencing 1
         December and ending 30 June, respectively.

23.3     FINANCIAL TESTING
         The financial covenants set out in Clause 23 (FINANCIAL COVENANTS)
         shall be tested by reference to each of the financial statements and/or
         each Compliance Certificate delivered pursuant to Clause 22
         (INFORMATION UNDERTAKINGS), however, for the first time by reference to
         the statements for the first Quarter Date falling after the date of
         this Agreement. For the purpose of the testing of the financial
         covenants set out in Clause 23 any Subsidiary acquired by a member of
         the Grohe Holding Group in the course of a Financial Quarter including
         any Unrestricted Company designated a member of the Grohe Holding Group
         in accordance with Clause 24.27 (DESIGNATION OF UNRESTRICTED COMPANY)
         shall be deemed to have been acquired by that member of the Grohe
         Holding Group (or designated a member of the Grohe Holding Group) on
         the first day of that Financial Quarter.

23.4     ADJUSTMENTS
         Notwithstanding any other provision of this Agreement, for the purpose
         of calculating the ratio of Consolidated Operating Cash Flow to Net
         Debt Service and EBITDA to Consolidated Net Finance Charges in relation
         to any Relevant Period ending on any Quarter Date before 31 March 2004,
         Consolidated Net Finance Charges and Net Debt Service shall be equal to
         an amount of Consolidated Net Finance Charges or Net Debt Service, as
         the case may be,

                  (i)      in relation to the Relevant Period ending on 30 June
                           2003, equal to the respective amount for the
                           Financial Quarter ending on June 2003 multiplied by
                           four;

                                     -101-
<PAGE>

                  (ii)     in relation to the Relevant Period ending on 30
                           September 2003, equal to the respective amount for
                           the period ending on 30 September 2003 divided by two
                           and multiplied by four; and

                  (iii)    in relation to the Relevant Period ending on 31
                           December 2003, equal to the respective amount for the
                           period ending on 31 December 2003 divided by three
                           and multiplied by four, PROVIDED THAT for the purpose
                           of calculating Net Debt Service the scheduled
                           payments for Indebtedness for Borrowed Money incurred
                           under this Agreement shall not be higher than the
                           total repayment amount scheduled for the calendar
                           year 2003 as set out in Clause 9.1 (REPAYMENT OF
                           FACILITY A1 AND FACILITY A2 LOANS).

23.5     AUDITOR'S VERIFICATION
         The Agent may, at any time and after consultation with the Company, if
         it demonstrates that it has grounds for believing that the figures
         prepared by the Company are materially incorrect, inaccurate or
         in-complete at the Company's expense require the auditors of the Grohe
         Holding Group to verify the figures supplied by the Company in
         connection with:

         (a)      the financial covenants set out in Clause 23.1 (FINANCIAL
                  COVENANTS), or the financial covenants to be satisfied in
                  order to permit a reduction in margin in accordance with
                  Clause 11.3 (MARGIN RATCHET) or the ratio of Total Net Debt to
                  EBITDA referred to elsewhere in this Agreement or any other
                  Finance Document; or

         (b)      the financial covenants to be satisfied in order to permit a
                  reduction in L/C Commission Rate or Guarantee Commission Rate
                  in accordance with the definition thereof.

         The Agent may, in accordance with this Clause 23.5, request
         verification of any figure or calculation made in a Compliance
         Certificate delivered under Clause 22.2 (COMPLIANCE CERTIFICATES)
         and/or any figure contained in the financial statements delivered under
         Clause 22 (INFORMATION UNDERTAKINGS) which is relevant to the
         calculation of the financial covenants referred to above.

         If such auditors fail to verify such figures to the satisfaction of the
         Agent after being requested to do so, the Agent may appoint an
         independent firm of accountants to carry out an appropriate
         investigation and give a certificate in a form and content satisfactory
         to the Agent certifying or verifying the relevant figures and
         satisfaction of the above financial covenants shall be determined by
         reference to the figures so verified or certified even if the audited
         or management accounts for the same date or period have not yet been
         published.

                                     -102-
<PAGE>

23.6     ACCOUNTING TERMS
         All accounting expressions to the extent that not otherwise defined
         herein shall be construed in accordance with generally accepted
         accounting principles in the Federal Republic of Germany.

24.      GENERAL UNDERTAKINGS

         The undertakings in this Clause 24 remain in force from the date of
         this Agreement for so long as any amount is outstanding under the
         Finance Documents or any Commitment is in force.

24.1     AUTHORISATIONS
         Each Obligor shall and the Company shall ensure that each member of the
         Group shall promptly:

         (a)      obtain, comply with and do all that is necessary to maintain
                  in full force and effect; and

         (b)      supply certified copies to the Agent of,

         any Authorisation required under any law or regulation of the Relevant
         Jurisdictions to enable it to perform its obligations under the Finance
         Documents and to ensure the legality, validity, enforceability or
         admissibility in evidence in each Relevant Jurisdiction of any Finance
         Document.

24.2     COMPLIANCE WITH LAWS
         Each Obligor shall and the Company shall ensure that each member of the
         Group shall 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.

24.3     NEGATIVE PLEDGE

         (a)      No Obligor shall (and the Company shall ensure that no other
                  member of the Group will) prior to the occurrence of a
                  Qualifying Public Offering create or permit to subsist any
                  Security over any of its assets.

         (b)      Prior to a Qualifying Public Offering, no Obligor shall (and
                  the Company shall procure that no other member of the Group
                  will):

                  (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 an Obligor or any other member of
                           the Group;

                                     -103-
<PAGE>

                  (ii)     sell, transfer or otherwise dispose of any of its
                           receivables on recourse terms except to the extent
                           this constitutes Permitted Indebtedness;

                  (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;

                  (iv)     enter into any other preferential arrangement having
                           a similar effect,

                  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.

         (c)      Paragraphs (a) and (b) above do not apply to:

                  (i)      any Security securing the Refinanced Facilities
                           listed in Part I of Schedule 9 (EXISTING SECURITY)
                           PROVIDED THAT that Security is released in accordance
                           with Clause 24.25 (CONDITIONS SUBSEQUENT);

                  (ii)     any Security listed in Part II of Schedule 9
                           (EXISTING SECURITY) except to the extent the
                           principal amount secured by that Security exceeds the
                           amount stated in that Schedule;

                  (iii)    any netting or set-off arrangement entered into by
                           any member of the Group in the ordinary course of its
                           banking arrangements for the purpose of netting debit
                           and credit balances;

                  (iv)     any lien arising by operation of law and in the
                           ordinary course of trading other than as a result of
                           a default;

                  (v)      any Security created in relation to the netting of
                           Group bank account balances;

                  (vi)     any Security arising pursuant to an order of
                           attachment or injunction restraining disposed of
                           assets or similar legal process arising in connection
                           with court proceedings being contested by the
                           relevant Obligor or other member of the Group in good
                           faith with a reasonable prospect of success where the
                           amount of any claims being contested does not exceed
                           EUR 3,000,000 in aggregate in respect of all Obligors
                           and other member of the Group;

                                     -104-
<PAGE>

                  (vii)    any retention of title of goods supplied to the
                           relevant Obligor or other member of the Group where
                           such retention is agreed in the ordinary course of
                           its trading activities and on customary terms;

                  (viii)   any customary Security in favour of shippers and
                           forwarders agreed in the ordinary course of trading
                           activities and on customary terms;

                  (ix)     any Security constituted by a Finance Lease, hire
                           purchase or conditional sale agreement where the
                           Financial Indebtedness arising under such arrangement
                           constitutes Permitted Indebtedness;

                  (x)      any Security arising under the general business
                           conditions of German banks or similar provisions of
                           other banks with whom any Obligor or other member of
                           the Group maintains a banking relationship in the
                           ordinary course of business;

                  (xi)     any Security over or affecting any asset acquired by
                           an Obligor or other member of the Group after the
                           date hereof and subject to which such asset is
                           acquired PROVIDED THAT in any case;

                           (1)      such Security was not created in
                                    contemplation of the acquisition of such
                                    asset by the Obligor or other member of the
                                    Group;

                           (2)      the amount thereby secured has not been
                                    increased in contemplation of, or since the
                                    date of, the acquisition of such asset by
                                    the Obligor or other member of the Group;
                                    and

                           (3)      such Security is removed or discharged
                                    within three months of the date of
                                    acquisition of such asset;

                  (xii)    until the occurrence of the Qualifying Public
                           Offering any Security over assets acquired pursuant
                           to a Permitted Acquisition that secures Financial
                           Indebtedness incurred to finance such acquisition
                           constituting Permitted Indebtedness under paragraph
                           (m) or (n) of such definition;

                  (xiii)   the Transaction Security; or

                  (xiv)    any Security securing indebtedness the principal
                           amount of which (when aggregated with the principal
                           amount of any other indebtedness which has the
                           benefit of Security given by any

                                     -105-
<PAGE>

                           Obligor or other member of the Group other than any
                           Security permitted under paragraphs (i) to (xiii)
                           above) does not exceed EUR 25,000,000.

         (d)      After the occurrence of the Qualifying Public Offering, no
                  Obligor shall (and the Company shall ensure that no other
                  member of the Group will) create or permit to subsist any
                  Security over any of its assets unless equivalent Security is
                  simultaneously granted to the Security Agent for the benefit
                  of the Finance Parties.

                  This does not apply to the Security listed in Clause 24.3(c)
                  of this Agreement, but excluding the Security listed in Clause
                  24.3(c)(xii).

24.4     MERGER
         Prior to the occurrence of the Qualifying Public Offering, no Obligor
         shall (and the Company shall ensure that no other member of the Group
         will) enter into any amalgamation, demerger, merger or corporate
         reconstruction other than between members of the Group but excluding
         Obligors, unless such Obligor is merged with a Group member existing as
         of the date of this Agreement and which is not a member of the Group
         referred to in the last paragraph of Clause 25.7 (INSOLVENCY) and the
         Obligor is the surviving entity and in each case PROVIDED that such
         transactions do not adversely affect the Transaction Security.

24.5     CHANGE OF BUSINESS
         The Company shall procure that no substantial change is made to the
         general nature of the business of the Company or the Group from that
         carried on at the date of this Agreement.

24.6     INSURANCE
         Each Obligor shall (and the Company shall ensure that each member of
         the Group will) maintain insurances on and in relation to its business
         and assets with reputable underwriters or insurance companies against
         those risks and to the extent as is usual for companies carrying on the
         same or substantially similar business (including against loss of
         earnings).

24.7     ENVIRONMENTAL COMPLIANCE
         Each Obligor shall (and the Company shall ensure that each member of
         the Group will) comply in all material respects with all Environmental
         Law and obtain and maintain any Environmental Permits and take all
         reasonable steps in anticipation of known or expected future changes to
         or obligations under the same where failure to do so might reasonably
         be expected to have a Material Adverse Effect.

                                     -106-
<PAGE>

24.8     ENVIRONMENTAL CLAIMS
         The Company shall inform the Agent in writing as soon as reasonably
         practicable upon becoming aware of the same:

         (a)      if any Environmental Claim has been commenced or (to the best
                  of the Company's knowledge and belief) is threatened against
                  any member of the Group; or

         (b)      of any facts or circumstances which will or are reasonably
                  likely to result in any Environmental Claim being commenced or
                  threatened against any member of the Group,

         where the claim would be reasonably likely, if determined against that
         member of the Group, to have a Material Adverse Effect.

24.9     TAXATION
         Each Obligor shall (and the Company shall ensure that each member of
         the Group will) duly and punctually pay and discharge all material
         Taxes imposed upon it or its assets within the time period allowed
         without incurring penalties (expect to the extent that (a) such payment
         is being contested in good faith, (b) adequate reserves are being
         maintained for those Taxes and (c) where such payment can be lawfully
         withheld).

24.10    ACQUISITIONS
         Other than Permitted Acquisitions and Permitted Investments, no Obligor
         shall (and the Company shall ensure that no other member of the Group
         will) acquire, subscribe for or otherwise acquire any shares or other
         securities or interest or any company, business or undertaking or
         incorporate any company.

24.11    LOANS AND GUARANTEES
         No Obligor shall (and the Company shall ensure that no member of the
         Group will) make any loans, grant any credit (save in the ordinary
         course of business) or give any guarantee or indemnity (except as
         required under any of the Finance Documents) 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 other
         than pursuant to Permitted Intra-Group Loans or the Permitted
         Transactions.

24.12    DISTRIBUTIONS
         No Obligor shall (and the Company shall ensure that no member of the
         Group will) pay, make or declare any dividend or other distribution
         (whether in cash or in kind), allow any withdrawal from its partners'
         accounts, or make any payment whatsoever in respect of share capital or
         partners' interests other than pursuant to the Permitted Transactions.

                                     -107-
<PAGE>

24.13    SHARE CAPITAL
         No Obligor shall (and the Company shall ensure that no member of the
         Group nor Grohe Holding will) redeem or repurchase, defease or retire
         any shares in Grohe Holding or Grohe Beteiligungs, PROVIDED THAT
         following the Qualifying Public Offering this shall not apply to the
         redemption, repurchase or retirement of shares in Grohe Holding in
         accordance with the German Stock Corporation Act.

24.14    SUBORDINATED DEBT
         No Obligor shall (and the Company shall ensure that no member of the
         Group will) pay, prepay or repay or defease, exchange or repurchase any
         amount under:

         (a)      any Shareholder Loan or Grohe Holding Shareholder Loan save as
                  permitted under the relevant subordination agreement or, in
                  the case of a Shareholder Loan made by Grohe Holding to Grohe
                  Beteiligungs, by way of set-off against amounts owing by Grohe
                  Holding to Grohe Beteiligungs under any loan made pursuant to
                  the Shareholder Loan Refinancing; or

         (b)      the Senior Notes Loan save (i) as permitted under the Senior
                  Notes Subordination Agreement or, (ii) following the
                  occurrence of a Qualifying Public Offering and PROVIDED THAT
                  no Default has occurred which is continuing; or

         (c)      the Senior Notes save following the occurrence of a Qualifying
                  Public Offering and PROVIDED THAT no Default has occurred
                  which is continuing,

         unless:

                  (i)      with respect to the Grohe Holding Shareholder Loans
                           and the Senior Notes these are refinanced through
                           Indebtedness for Borrowed Money incurred by Grohe
                           Holding in accordance with the provisions of the
                           Finance Documents on terms no more restrictive than
                           their current terms in respect of repayment,
                           prepayment and termination rights and PROVIDED THAT
                           the refinancing indebtedness (x) to the extent it
                           refinances Grohe Holding Shareholder Loans, does not
                           require the payment of cash interest and is
                           subordinated to the Facilities pursuant to a
                           subordination agreement identical to the Grohe
                           Holding Subordination Agreement and, (y) to the
                           extent it refinances Senior Notes, bears interest (or
                           any similar finance charge) at a rate which is not
                           higher than the interest rate of the Senior Notes and
                           is subordinated to at least the same extent as the
                           the Senior Notes; or

                                     -108-
<PAGE>

                  (ii)     with respect to the Grohe Holding Shareholder Loans,
                           the Senior Notes Loan and the Senior Notes, these are
                           refinanced out of (x) the proceeds of any Shareholder
                           Loan which constitutes Permitted Indebtedness
                           pursuant to paragraph (d) of such definition or (y)
                           the investment from any share capital increase (other
                           than a share capital increase effected with assets of
                           a member of the Group) of Grohe Holding or any member
                           of the Group which has been taking place after the
                           date of this Agreement or, up to the aggregate amount
                           of EUR 2,000,000, after 15 November 2000 and before
                           the date of this Agreement.

24.15    SYNDICATION
         The Company shall provide reasonable assistance to the Arrangers in the
         preparation of the Information Memorandum and the primary syndication
         of the Facility (including, without limitation, by making senior
         management available for the purpose of making presentations to, or
         meeting, potential lending institutions) and will comply with all
         reasonable requests for information from potential syndicate members
         prior to completion of syndication.

24.16    INDEBTEDNESS
         No Obligor shall and the Company shall ensure that no member of the
         Group will incur, create or permit to subsist or have outstanding any
         Financial Indebtedness or enter into any agreement or arrangement
         whereby it is entitled to incur, create or permit to subsist any
         Financial Indebtedness other than Permitted Indebtedness.

24.17    PRESERVATION OF ASSETS
         Each Obligor shall, and the Company shall ensure that each member of
         the Group shall, maintain and preserve all of its assets that are
         necessary for the conduct of its business, as conducted at the date of
         this Agreement, in good working order and condition, ordinary wear and
         tear excepted.

24.18    ACCESS
         Each Obligor shall, and the Company shall ensure that each member of
         the Group whose shares are the subject of the Transaction Security
         shall:

         (a)      on request of the Agent, provide the Agent and Security Agent
                  with any information the Agent or Security Agent may
                  reasonably require about that company's business and affairs,
                  the Charged Property and its compliance with the terms of the
                  Security Documents; and

         (b)      permit the Security Agent, its representatives, delegates,
                  professional advisers and contractors, free access at all
                  reasonable times and on reasonable notice at the cost of the
                  Obligors, (a) to inspect and take

                                     -109-
<PAGE>

                  copies and extracts from the books, accounts and records of
                  that company and (b) to view the Charged Property (without
                  becoming liable as mortgagee in possession).

24.19    INTELLECTUAL PROPERTY
         Prior to the occurrence of the Qualifying Public Offering, each Obligor
         shall, and the Company shall ensure that each member of the Group will:

         (a)      do all acts as are reasonably practicable (including, without
                  limitation, the institution of legal proceedings) to maintain,
                  protect and safeguard the material Intellectual Property
                  necessary for the business of the relevant member of the Group
                  and not terminate or discontinue the use of any such material
                  Intellectual Property nor terminate any material contract
                  relating thereto;

         (b)      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 material Intellectual
                  Property or any part thereof is subject;

         (c)      pay all fees necessary to maintain, protect and safeguard the
                  material Intellectual Property (as it is owned or licensed by
                  a member of the Group) which is necessary for the business of
                  the relevant member of the Group and the registrations
                  reasonably necessary or desirable to be made in connection
                  therewith before the latest time provided for payment thereof
                  and not permit any registration of such property to terminate,
                  be abandoned, cancelled, lapse or be liable to any claim of
                  abandonment; and

         (d)      not to enter into or change the terms of any material contract
                  relating to material Intellectual Property.

24.20    ARM'S LENGTH BASIS
         No Obligor shall, and the Company shall ensure that no member of the
         Group will, enter into any arrangement or contract other than on arm's
         length commercial terms.

24.21    JOINT VENTURES AND UNRESTRICTED COMPANIES
         No Obligor shall, and the Company shall procure that no member of the
         Group will, enter into or acquire or subscribe (or agree to enter into
         or acquire or subscribe) for any shares, stocks, securities or other
         interest in or transfer of any assets to or lend to or guarantee or
         give security for the obligations of any joint venture or Unrestricted
         Company except for any Permitted Investment under paragraph (b) of the
         definition of Permitted Investment or any loans permitted pursuant to
         paragraph (g) of the definition of Permitted Transaction.

                                     -110-
<PAGE>

24.22    HEDGING
         The Company shall ensure that at all times prior to the occurrence of a
         Qualifying Public Offering the member(s) of the Group approved by the
         Agent shall, within 90 days of the first Utilisation Date enter into
         hedging arrangements satisfactory to the Agent with a Lender or Lenders
         or any affiliate thereof or Dresdner Bank AG in order to cap its total
         interest cost in respect of at least 50 per cent. of Term Loans
         outstanding under this Agreement from time to time for a minimum period
         being not less than 18 months from the date of this Agreement.

24.23    WITHDRAWALS BY GROHE BETEILIGUNGS
         At all times prior to the date of the Qualifying Public Offering and as
         long as Loans under this Agreement are outstanding to Grohe
         Beteiligungs, Grohe Beteiligungs undertakes (i) not to allow for any
         changes to be made to the provisions in the partnership agreement of
         Friedrich Grohe which changes would restrict its ability to make
         withdrawals from its partner's account with Friedrich Grohe and (ii)
         unless the Total Debt Leverage pursuant to the latest available
         Compliance Certificate is less than 2.5:1, to withdraw at any time the
         maximum amount that it is permitted to withdraw from such accounts and
         pay all amounts so withdrawn into an account of Grohe Beteiligungs held
         with Dresdner Bank AG and which is pledged in favour of the Finance
         Parties and from which no withdrawals may be made by Grohe Beteiligungs
         unless agreed otherwise in the relevant account pledge agreement.

24.24    QUALIFYING PUBLIC OFFERING
         The Company undertakes:

         (a)      to inform the Agent without undue delay of any steps it is
                  taking in preparation of a Listing of Grohe Holding or any
                  company of which Grohe Holding is a wholly-owned subsidiary;

         (b)      no later than 5 Business Days prior to the date on which the
                  offering memorandum is filed with the admission office of any
                  German stock exchange or equivalent authority for any Listing
                  in any other country to inform the Agent in detail of the
                  intended application of Net IPO Proceeds and, to the extent
                  legally permissible, make available to the Agent the latest
                  available draft of the offering memorandum prepared for such
                  Listing;

         (c)      to represent to each Finance Party in writing on the day which
                  is 5 Business Days prior to the date on which the offering
                  period begins that:

                  (i)      as of such date no Default has occurred which is
                           continuing;

                                     -111-
<PAGE>

                  (ii)     it is not aware of any circumstances that could
                           reasonably be expected to give rise to a Default on
                           the date of the Qualifying Public Offering; and

                  (iii)    on the assumption that the Net IPO Proceeds are at
                           least equal to the minimum offer price of the
                           book-building margin multiplied by the maximum number
                           of newly issued shares to be offered, that the Total
                           Debt Leverage of the Grohe Holding Group calculated
                           as set out in the definition of Qualifying Public
                           Offering is less that 2.50:1;

         (d)      following the last Quarter Date as of which quarterly accounts
                  were available prior to the Qualifying Public Offering, it
                  will not, nor will any other member of the Group or Grohe
                  Holding, incur any additional Indebtedness for Borrowed Money
                  unless the Company has satisfied itself that the Total Debt
                  Leverage of the Grohe Holding Group calculated as set out in
                  the definition of Qualifying Public Offering would, on the
                  assumption set out in the Clause 24.24(c)(iii) above, continue
                  to be less that 2.50:1 if such additional Indebtedness for
                  Borrowed Money had been included in the calculations;

         (e)      to make available to the Agent the offering memorandum
                  prepared for the listing of Grohe Holding or its parent
                  company, as the case may be, no later than on the day of its
                  publication;

         (f)      to apply all Net IPO Proceeds without undue delay (only)
                  towards a (full or partial) repayment of Grohe Holding
                  Shareholder Loans, Shareholder Loans, the Senior Notes
                  (including through repaying the Senior Notes Loan), any
                  Permitted Indebtedness incurred by Grohe Beteiligungs, any
                  Financial Indebtedness incurred by Grohe Holding and Loans
                  outstanding under this Agreement, it being understood that as
                  long as the relevant Net IPO Proceeds are made available to a
                  member of the Group this shall not require any repayment
                  otherwise than at the end of an interest period if this would
                  trigger a prepayment penalty (VORFALLIGKEITSENTSCHADIGUNG) and
                  to confirm to the Agent without undue delay that the Net IPO
                  Proceeds have been so applied; and

         (g)      if it claims that a Qualifying Public Offering has occurred,
                  to represent to each Finance Party in writing on the day of
                  receipt of the proceeds from the initial public offering and
                  by setting out the computations in reasonable detail that,
                  based on the actual Net IPO Proceeds received and including
                  any additional Indebtedness for Borrowed Money incurred since
                  the last Quarter Date for which quarterly accounts were
                  available prior to the date of the Qualifying Public Offering,
                  the Listing and initial

                                     -112-
<PAGE>

                  public offering constitutes, as of the day of receipt of such
                  proceeds, a Qualifying Public Offering.

24.25    CONDITIONS SUBSEQUENT

         (a)      Each Obligor shall, and the Company shall procure that each
                  member of the Group will, use its best efforts to obtain all
                  releases and perform all other acts required to discharge in
                  full any Security which secures the Financial Indebtedness
                  arising under the Refinanced Facilities (except for the land
                  charges set out in Part II of Schedule 9 (EXISTING SECURITY)
                  and in any event shall ensure that all such releases and
                  assignments, as the case may be, are obtained and shall
                  perform all such other acts within 45 days from the first
                  Utilisation Date and, if such Security is governed by any law
                  other than German law, within 60 days from the first
                  Utilisation Date.

         (b)      The Company shall ensure that a registration for the
                  subordination of the owner's land charges
                  (EIGENTUMERGRUNDSCHULDEN) referred to in Part II of Schedule 9
                  (EXISTING SECURITY) behind the land charges granted by the
                  relevant Group member and which constitute Transaction
                  Security will be filed with the competent land registry within
                  30 days from the first Utilisation Date.

         (c)      The Company shall within 30 days from the first Utilisation
                  Date deliver to the Agent a legal opinion with regard to the
                  Grohe Holding Subordination Agreement in respect of BC
                  European Capital V, BC European Capital VI, Teabar Capital
                  Corporation and Capital d'Amerique by the Agent's local
                  counsel, or, except for BC European Capital V and BC European
                  Capital VI, its in-house legal counsel, in each case in form
                  and substance satisfactory to the Agent.

24.26    PERMITTED DISPOSALS
         With regard to any disposal of assets which (i) is not referred to in
         paragraphs (a) to (c) of the definition of Permitted Disposals, (ii)
         has a value (price or other consideration or market value) in excess of
         EUR 30,000,000 (aggregated with all other assets disposed of in a
         related transaction) or where the asset is a Material Company (whether
         through a disposal of shares or assets) and (iii) is completed after
         the date of the Qualifying Public Offering, the Obligor undertakes not
         to, and the Company shall procure that each member of the Group will
         not, complete such disposal until the Agent has received a certificate
         supported by accompanying calculations and signed by the financial
         officer(s) binding the Company demonstrating on a PRO FORMA basis and
         assuming such disposal had been completed on the first day of the
         Relevant Period, that as at the last Quarter Date in respect of which
         financial statements

                                     -113-
<PAGE>

         have been delivered pursuant to Clause 22.1 (FINANCIAL STATEMENTS) and
         as at the four following Quarter Dates, the incurrence test set out in
         column 3 of Clause 23.1.4 would be complied with.

24.27    DESIGNATION OF UNRESTRICTED COMPANY

         (a)      The Company shall determine by written notice to the Agent
                  whether any new member of the Group (including any newly
                  acquired or newly formed member of the Group) is an
                  Unrestricted Company, PROVIDED THAT a company may only be
                  designated an Unrestricted Company if no Default would occur
                  immediately following such determination, it being understood
                  that no member of the Group as of the date of this Agreement
                  and, unless designated an Unrestricted Company before becoming
                  a member of the Group, no new Group member may become an
                  Unrestricted Company.

         (b)      The Company may at any time and from time to time by written
                  notice to the Agent designate any Unrestricted Company to
                  become a member of the Group and Grohe Holding Group, PROVIDED
                  THAT the requirements for a Permitted Acquisition are complied
                  with.

         (c)      Any notice by the Company to the Agent pursuant to paragraph
                  (a) must be received by the Agent no later than 5 Business
                  Days prior to the date on which such company were to become a
                  member of the Group; if no such timely notice is received, the
                  company will become a member of the Group and cannot
                  thereafter be designated as an Unrestricted Company. Any
                  notice by the Company to the Agent pursuant to paragraph (b)
                  above shall specify the date as of which the relevant
                  Unrestricted Company shall become a member of the Group and
                  Grohe Holding Group, PROVIDED THAT such date must be no
                  earlier than 5 Business Days after receipt by the Agent of
                  such notice.

25.      EVENTS OF DEFAULT

         Each of the events or circumstances set out in this Clause 25 is an
         Event of Default.

25.1     NON-PAYMENT
         An Obligor does not pay on the due date any amount payable pursuant to
         a Finance Document at the place at and in the currency in which it is
         expressed to be payable unless:

         (a)      its failure to pay is caused by administrative or technical
                  error; and

                                     -114-
<PAGE>

         (b)      payment is made within three Business Days, or, following the
                  occurrence of the Qualifying Public Offering, five Business
                  Days of its due date.

25.2     FINANCIAL COVENANTS
         Any requirement of Clause 23 (FINANCIAL COVENANTS) is not satisfied.

25.3     OTHER OBLIGATIONS

         (a)      An Obligor does not comply with any provision of the Finance
                  Documents (other than those referred to in Clause 25.1
                  (NON-PAYMENT) and Clause 25.2 (FINANCIAL COVENANTS)).

         (b)      No Event of Default under paragraph (a) above will occur if
                  the failure to comply is capable of remedy and is remedied
                  within 21 Business Days of the earlier of the Agent giving
                  notice to the Company or the Company or relevant Obligor
                  becoming aware of the failure to comply.

25.4     MISREPRESENTATION
         Any representation or statement made or deemed to be made by any member
         of the Group in the Finance Documents or any other document delivered
         by or on behalf of any member of the Group 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.

25.5     PARTNERSHIP AGREEMENT
         The partnership agreements of Friedrich Grohe or of Grohe Beteiligungs
         are modified in a way which adversely affects the interests of the
         Finance Parties, including, but not limited, to the partnership
         agreement of Friedrich Grohe being modified in respect of the time at
         which and amounts or manners in which withdrawals from the partnership
         accounts can be made.

25.6     CROSS DEFAULT

         (a)      Any Financial Indebtedness of any member of the Group or Grohe
                  Holding is not paid when due nor within any originally
                  applicable grace period.

         (b)      Any Financial Indebtedness of any member of the Group or Grohe
                  Holding 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).

         (c)      Any commitment for any Financial Indebtedness of any member of
                  the Group or Grohe Holding is cancelled or suspended by a
                  creditor of any

                                     -115-
<PAGE>

                  member of the Group or Grohe Holding as a result of an event
                  of default (however described).

         (d)      Any creditor of any member of the Group or Grohe Holding
                  becomes entitled to declare any Financial Indebtedness of any
                  member of the Group or Grohe Holding due and payable prior to
                  its specified maturity as a result of an event of default
                  (however described).

         (e)      No Event of Default will occur under this Clause 25.6 if the
                  aggregate amount of Financial Indebtedness or commitment for
                  Financial Indebtedness falling within paragraphs (a) to (d)
                  above is, if it relates to payment of principal or interest or
                  if the circumstances described in paragraph (b) above arise,
                  less than EUR 5,000,000 or, in any other case, less than EUR
                  10,000,000.

         (f)      No Event of Default will occur under this Clause 25.6 if it
                  arises due to a default under the Existing Senior Credit
                  Agreement as a result of the execution of the Finance
                  Documents or a default under the Indenture as a result of the
                  Transaction Security being provided before the Security
                  securing the Existing Senior Credit Agreement is released, but
                  only for as long as it is permitted pursuant to paragraph (i)
                  of Clause 24.3 (NEGATIVE PLEDGE).

25.7     INSOLVENCY

         (a)      A member of the Group or Grohe Holding 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.

         (b)      Grohe Holding or a member of the Group whose Relevant
                  Jurisdiction is Germany is overindebted within the meaning of
                  Section 19 of the German Insolvency Code or the value of the
                  assets of any other member of the Group is less than its
                  liabilities.

         (c)      A moratorium is declared in respect of any indebtedness of any
                  member of the Group or Grohe Holding.

         No Event of Default will occur under this Clause 25.7 if (i) the higher
         of the net book value or market value (VERKEHRSWERT) of all assets of
         the relevant member of the Group (taken together with the assets of its
         Subsidiaries, if any) other than Grohe Holding, any Obligor, any other
         party to a Finance Document or any member of the Group whose shares are
         subject to the Transaction Security does not exceed EUR 2,500,000 and
         (ii) the average annual turnover of such relevant

                                     -116-
<PAGE>

         member of the Group (taken together with the turnover of its
         Subsidiaries, if any) in the preceding two years was less than EUR
         7,500,000, PROVIDED THAT from the date of this Agreement neither the
         aggregate net book value nor the market value of all such insolvent
         members of the Group (including its Subsidiaries) whose insolvency
         would, but for this paragraph, lead to an Event of Default exceeds EUR
         5,000,000 and that the aggregate average annual turnover must not
         exceed EUR 10,000,000.

25.8     INSOLVENCY PROCEEDINGS
         Any corporate action, legal proceedings or other procedure or step is
         taken in relation to:

         (a)      the opening of insolvency proceedings, suspension of payments,
                  a moratorium of any indebtedness, winding-up, dissolution,
                  administration or reorganisation (by way of voluntary
                  arrangement, scheme of arrangement or otherwise) of any member
                  of the Group or Grohe Holding other than a solvent liquidation
                  or reorganisation of any member of the Group or Grohe Holding
                  which is not an Obligor and which is dormant;

         (b)      a composition, assignment or arrangement with any creditor of
                  any member of the Group or Grohe Holding;

         (c)      the appointment of an insolvency administrator, a liquidator
                  (other than in respect of a solvent liquidation of a member of
                  the Group or Grohe Holding which is not an Obligor and which
                  is dormant), receiver, administrator, administrative receiver,
                  compulsory manager or other similar officer in respect of any
                  member of the Group or Grohe Holding or any of its assets; or

         (d)      enforcement of any Security over any assets of any member of
                  the Group or Grohe Holding, or any analogous procedure or step
                  is taken in any jurisdiction.

         No Event of Default will occur under this Clause 25.8 if (i) any
         corporate action, legal proceedings or other procedure or step is taken
         in relation to a member of the Group other than Grohe Holding, any
         Obligor, any other party to a Finance Document or any member of the
         Group whose shares are subject to the Transaction Security (x) where
         the higher of the net book value or market value (VERKEHRSWERT) of all
         assets (taken together with the assets of its Subsidiaries, if any)
         does not exceed EUR 2,500,000 and (y) the average annual turnover in
         the preceding two years (taken together with the turnover of its
         Subsidiaries, if any) was less than EUR 7,500,000, PROVIDED THAT from
         the date of this Agreement neither the aggregate net book value nor the
         market value of all such members of

                                     -117-
<PAGE>

         the Group (including their Subsidiaries) with regard to which corporate
         actions, legal proceedings or other procedures or steps as described in
         this Clause 25.8 have been taken and which, but for this paragraph,
         would lead to an Event of Default exceeds EUR 5,000,000 and that the
         aggregate average annual turnover must not exceed EUR 10,000,000, or
         (ii) the Majority Lenders (acting reasonably) are satisfied that the
         Company or relevant member of the Group is contesting in good faith and
         by appropriate proceedings the relevant procedures or steps and that it
         is reasonably likely that such proceedings or steps will be discharged
         within 60 days of their commencement.

25.9     CREDITORS' PROCESS
         Any expropriation, attachment, sequestration, distress or execution
         affects any asset or assets of a member of the Group or Grohe Holding
         having an aggregate value of EUR 3,000,000 and is not discharged within
         60 days.

25.10    UNLAWFULNESS
         It is or becomes unlawful for any member of the Group to perform any of
         its obligations under the Finance Documents or any Transaction Security
         created or expressed to be created or evidenced by the Security
         Documents ceases to be effective.

25.11    REPUDIATION
         A member of the Group repudiates a Finance Document or any of the
         Transaction Security to which it is a party or evidences an intention
         to repudiate a Finance Document or any of the Transaction Security.

25.12    TRANSACTION SECURITY

         (a)      Any member of the Group fails to perform or comply with any of
                  the obligations assumed by it in the Security Documents in any
                  material way, PROVIDED THAT no Event of Default under this
                  paragraph (a) will occur if the failure to comply is capable
                  of remedy and is remedied within 21 Business Days of the
                  earlier of the Agent giving notice to the Company or the
                  Company or relevant member of the Group becoming aware of the
                  failure to so comply.

         (b)      At any time any of the Transaction Security is or becomes
                  unlawful or is not, or ceases to be legal, valid, binding or
                  enforceable or otherwise ceases to be effective.

         (c)      At any time and except as provided for in Clause 24.25
                  (CONDITION SUBSEQUENT), any of the Transaction Security fails
                  to have first ranking priority or is subject to any prior
                  ranking Security.

                                     -118-
<PAGE>

25.13    OWNERSHIP OF THE OBLIGORS
         The Company ceases to hold all shares in the general partner of
         Friedrich Grohe or at least 99.5% of the limited partners' interests in
         Friedrich Grohe.

25.14    OWNERSHIP OF THE COMPANY
         Grohe Holding ceases to be the sole general partner of the Company or
         ceases to hold all shares in Grohe Consult GmbH as the limited partner
         of the Company.

25.15    THE GROUP'S BUSINESS
         Any Obligor or any other member of the Group ceases to carry on the
         business or to carry on the business in the character it is carried on
         at the date of this Agreement or enters into any unrelated business to
         a material extent.

25.16    AUDITOR'S QUALIFICATIONS
         Any Obligor's auditor's or the auditor's of Grohe Holding qualify their
         annual audited report to the consolidated or unconsolidated accounts of
         any Obligor or Grohe Holding in a manner which is, in the reasonable
         opinion of the Majority Lenders, material and adverse in the context of
         the Facilities.

25.17    FAILURE TO COMPLY WITH FINAL JUDGEMENT
         Any member(s) of the Group other than a member of the Group described
         in the last paragraph of Clause 25.7 (INSOLVENCY) or Grohe Holding fail
         to comply with or pay any sum due from it or them under any final
         judgement or any final order made or given by any court or competent
         jurisdiction when such sum exceeds EUR 3,000,000 in aggregate at any
         time.

25.18    ENVIRONMENTAL
         Any member of the Group breaches any Environmental Law or any
         Environmental Claim is made or threatened against any member of the
         Group which, in either case, could reasonably be expected to have a
         Material Adverse Effect.

25.19    MATERIAL ADVERSE CHANGE
         Any event or circumstance occurs which could reasonably be expected to
         have a Material Adverse Effect.

25.20    ACCELERATION
         On and at any time after the occurrence of an Event of Default which is
         continuing the Agent may, and shall if so directed by the Majority
         Lenders, by notice to the Company:

         (a)      cancel the Total Commitments (including without limitation the
                  Ancillary Commitments) whereupon they shall immediately be
                  cancelled;

                                     -119-
<PAGE>

         (b)      declare that all or part of the Loans (including without
                  limitation the Ancillary Outstandings), together with accrued
                  interest, and all other amounts accrued or outstanding under
                  the Finance Documents be immediately due and payable,
                  whereupon they shall become immediately due and payable;
                  and/or

         (c)      declare that all or part of the Loans (including without
                  limitation the Ancillary Outstandings) be payable on demand,
                  whereupon they shall immediately become payable on demand by
                  the Agent on the instructions of the Majority Lenders; and/or

         (d)      exercise, or direct the Security Agent to exercise, any or all
                  of its rights, remedies and powers under any of the Finance
                  Documents; and/or

         (e)      require the Company and the relevant Borrower to procure that
                  the liabilities of each of the Lenders and the Fronting Banks
                  under each Letter of Credit and Bank Guarantee are promptly
                  reduced to zero; and/or to provide Cash Collateral for each
                  Letter of Credit and Bank Guarantee in an amount specified by
                  the Agent and in the currency of that Letter of Credit and
                  Bank Guarantee .

                                     -120-
<PAGE>

                                    SECTION 9
                               CHANGES TO PARTIES

26.      CHANGES TO THE LENDERS

26.1     ASSIGNMENTS AND TRANSFERS BY THE LENDERS
         Subject to this Clause 26, a Lender (the "EXISTING LENDER") may:

         (a)      assign any of its rights; or

         (b)      transfer any of its rights and obligations,

         to another bank or financial institution or to a trust, fund or other
         entity which is regularly engaged in or established for the purpose of
         making, purchasing or investing in loans, securities or other financial
         assets (the "NEW LENDER").

26.2     CONDITIONS OF ASSIGNMENT OR TRANSFER

         (a)      The consent of the relevant Fronting Bank is required for an
                  assignment or transfer by a Lender in relation to a Bank
                  Guarantee or Letter of Credit, such consent not to be
                  unreasonably withheld or delayed.

         (b)      The consent of the Company is required for an assignment or
                  transfer by a Lender, unless the assignment or transfer is to
                  another Lender or an Affiliate of a Lender or following an
                  Event of Default.

         (c)      The consent of the Company to an assignment or transfer must
                  not be unreasonably withheld or delayed. The Company will be
                  deemed to have given its consent five Business Days after the
                  Lender has requested it unless such consent is expressly
                  refused by the Company within that time.

         (d)      The consent of the Company to an assignment or transfer must
                  not be withheld solely because the assignment or transfer may
                  result in an increase to the Mandatory Cost.

         (e)      An assignment will only be effective on receipt by the Agent
                  of written confirmation from the New Lender (in form and
                  substance satisfactory to the Agent) that the New Lender will
                  assume the same obligations to the other Finance Parties as it
                  would have been under if it was an Original Lender.

         (f)      Any assignment or transfer shall be in a minimum amount of EUR
                  7,500,000 except in the case of an assignment or transfer
                  which has the effect of reducing the participation of the
                  relevant Lender to zero in any of the Facilities.

                                     -121-
<PAGE>

         (g)      A transfer will only be effective if the procedure set out in
                  Clause 26.5 (PROCEDURE FOR TRANSFER) is complied with.

         (h)      If:

                  (i)      a Lender assigns or transfers any of its rights or
                           obligations under the Finance Documents or changes
                           its Facility Office; and

                  (ii)     as a result of circumstances existing at the date the
                           assignment, transfer or change occurs, an Obligor
                           would be obliged to make a payment to the New Lender
                           or Lender acting through its new Facility Office
                           under Clause 15 (TAX GROSS-UP AND INDEMNITIES) or
                           Clause 16 (INCREASED COSTS),

                  then the New Lender or Lender acting through its new Facility
                  Office is only entitled to receive payment under those Clauses
                  to the same extent as the Existing Lender or Lender acting
                  through its previous Facility Office would have been if the
                  assignment, transfer or change had not occurred.

26.3     ASSIGNMENT OR TRANSFER FEE
         The New Lender shall, on the date upon which an assignment or transfer
         takes effect, pay to the Agent (for its own account) a fee of EUR
         1,500, other than in the case of an assignment or transfer which takes
         effect prior to the Syndication Date.

26.4     LIMITATION OF RESPONSIBILITY OF EXISTING LENDERS

         (a)      Unless expressly agreed to the contrary, an Existing Lender
                  makes no representation or warranty and assumes no
                  responsibility to a New Lender for:

                  (i)      the legality, validity, effectiveness, adequacy or
                           enforceability of the Finance Documents, the
                           Transaction Security or any other documents;

                  (ii)     the financial condition of any Obligor;

                  (iii)    the performance and observance by any Obligor of its
                           obligations under the Finance Documents or any other
                           documents; or

                  (iv)     the accuracy of any statements (whether written or
                           oral) made in or in connection with any Finance
                           Document or any other document,

                  and any representations or warranties implied by law are
                  excluded.

                                     -122-
<PAGE>

         (b)      Each New Lender confirms to the Existing Lender and the other
                  Finance Parties that it:

                  (i)      has made (and shall continue to make) its own
                           independent investigation and assessment of the
                           financial condition and affairs of each Obligor and
                           its related entities in connection with its
                           participation in this Agreement and has not relied
                           exclusively on any information provided to it by the
                           Existing Lender in connection with any Finance
                           Document; and

                  (ii)     will continue to make its own independent appraisal
                           of the creditworthiness of each Obligor and its
                           related entities whilst any amount is or may be
                           outstanding under the Finance Documents or any
                           Commitment is in force.

         (c)      Nothing in any Finance Document obliges an Existing Lender to:

                  (i)      accept a re-transfer from a New Lender of any of the
                           rights and obligations assigned or transferred under
                           this Clause 26; or

                  (ii)     support any losses directly or indirectly incurred by
                           the New Lender by reason of the non-performance by
                           any Obligor of its obligations under the Finance
                           Documents or otherwise.

26.5     PROCEDURE FOR TRANSFER

         (a)      Subject to the conditions set out in Clause 26.2 (CONDITIONS
                  OF ASSIGNMENT OR TRANSFER) a transfer (VERTRAGSUBERNAHME) is
                  effected in accordance with paragraph (b) below when the Agent
                  executes an otherwise duly completed Transfer Certificate
                  delivered to it by the Existing Lender and the New Lender. The
                  Agent shall, as soon as reasonably practicable after receipt
                  by it of a duly completed Transfer Certificate appearing on
                  its face to comply with the terms of this Agreement and
                  delivered in accordance with the terms of this Agreement,
                  execute that Transfer Certificate.

         (b)      On the Transfer Date:

                  (i)      to the extent that in the Transfer Certificate the
                           Existing Lender seeks to transfer its rights and
                           obligations under the Finance Documents and in
                           respect of the Transaction Security each of the
                           Obligors and the Existing Lender shall be released
                           from further obligations towards one another under
                           the Finance Documents and in respect of the
                           Transaction Security and their respective

                                     -123-
<PAGE>

                           rights against one another shall be cancelled (being
                           the "DISCHARGED RIGHTS AND OBLIGATIONS");

                  (ii)     each of the Obligors and the New Lender shall assume
                           obligations towards one another and/or acquire rights
                           against one another which differ from the Discharged
                           Rights and Obligations only insofar as that Obligor
                           and the New Lender have assumed and/or acquired the
                           same in place of that Obligor and the Existing
                           Lender;

                  (iii)    the Agent, the Arrangers, the Security Agent, the New
                           Lender and other Lenders shall acquire the same
                           rights and assume the same obligations between
                           themselves and in respect of the Transaction Security
                           as they would have acquired and assumed had the New
                           Lender been an Original Lender with the rights and/or
                           obligations acquired or assumed by it as a result of
                           the transfer and to that extent the Agent, the
                           Arrangers, the Security Agent and the Existing Lender
                           shall each be released from further obligations to
                           each other under the Finance Documents; and

                  (iv)     the New Lender shall become a Party as a "LENDER".

26.6     DISCLOSURE OF INFORMATION
         Any Lender may disclose to any of its Affiliates and any other person:

         (a)      to (or through) whom that Lender assigns or transfers (or may
                  potentially assign or transfer) all or any of its rights and
                  obligations under this Agreement;

         (b)      with (or through) whom that Lender enters into (or may
                  potentially enter into) any sub-participation in relation to,
                  or any other transaction under which payments are to be made
                  by reference to, this Agreement or any Obligor; or

         (c)      to whom, and to the extent that, information is required to be
                  disclosed by any applicable law or regulation,

         any information about any Obligor, the Group and the Finance Documents
         as that Lender shall consider appropriate, if, in relation to
         paragraphs (a) and (b) above, the person to whom the information is to
         be given has entered into a Confidentiality Undertaking.

                                     -124-
<PAGE>

27.      CHANGES TO THE OBLIGORS

27.1     ASSIGNMENT AND TRANSFERS BY OBLIGORS
         No Obligor may assign any of its rights or transfer any of its rights
         or obligations under the Finance Documents.

27.2     ADDITIONAL BORROWERS

         (a)      Friedrich Grohe may request that any of its wholly owned
                  Subsidiaries becomes an Additional Borrower. That Subsidiary
                  shall become an Additional Borrower if:

                  (i)      the Majority Lenders approve the addition of that
                           Subsidiary;

                  (ii)     Friedrich Grohe delivers to the Agent a duly
                           completed and executed Accession Letter;

                  (iii)    Friedrich Grohe accedes to this Agreement as
                           Additional Guarantor to secure the obligations of
                           such Additional Borrower under the Finance Documents;

                  (iv)     Friedrich Grohe confirms that no Default is
                           continuing or would occur as a result of that
                           Subsidiary becoming an Additional Borrower; and

                  (v)      the Agent has received all of the documents and other
                           evidence listed in Part III of Schedule 2 (CONDITIONS
                           PRECEDENT) in relation to that Additional Borrower,
                           each in form and substance satisfactory to the Agent.

         (b)      The Agent shall notify Friedrich Grohe 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 Part III of Schedule 2 (CONDITIONS
                  PRECEDENT).

27.3     RESIGNATION OF A BORROWER

         (a)      The Company may request that a Borrower (other than the
                  Company) ceases to be a Borrower by delivering to the Agent a
                  Resignation Letter.

         (b)      The Agent shall accept a Resignation Letter and notify the
                  Company and the Lenders of its acceptance if:

                  (i)      no Default is continuing or would result from the
                           acceptance of the Resignation Letter (and the Company
                           has confirmed this is the case); and

                                     -125-
<PAGE>

                  (ii)     the Borrower is under no actual or contingent
                           obligations as a Borrower under any Finance
                           Documents,

                  whereupon that company shall cease to be a Borrower and shall
                  have no further rights or obligations under the Finance
                  Documents.

27.4     TRANSFER ON BORROWER EXIT DATE
         The parties hereto agree that on the Borrower Exit Date the rights and
         obligations of Grohe Beteiligungs as a borrower under a Facility A2
         Loan in respect of such Facility A2 Loans shall automatically be
         transferred to Friedrich Grohe and in the amounts specified in the
         Borrower Exit Transfer Certificate PROVIDED THAT the provisions of
         Clause 12.4 (CONSOLIDATION AND DIVISION OF TERM LOANS) are complied
         with so that on the Borrower Exit Date:

27.4.1   Grohe Beteiligungs shall be released from its obligations as a Borrower
         under the Finance Documents in the amounts specified in the Borrower
         Exit Transfer Certificate (being the "BORROWER DISCHARGED RIGHTS AND
         OBLIGATIONS"); and

27.4.2   Friedrich Grohe shall assume obligations and acquire rights under the
         Finance Documents in relation to each Facility A2 Loan or portion of
         such Facility A2 Loan identified as being transferred to it in the
         Borrower Exit Transfer Certificate which differ from the Borrower
         Discharged Rights and Obligations in respect of each such Facility A2
         Loan, or, as the case may be, each such portion of a Facility A2 Loan
         only insofar as Friedrich Grohe has assumed the same in place of Grohe
         Beteiligungs ((partial) assumption of contract/(TEILWEISE)
         VERTRAGSUBERNAHME).

         Waiving section 418 of the German Civil Code, the parties agree that
         any Security created by any party to a Finance Document prior to the
         Borrower Exit Date shall not be affected by any transfer or assumption
         of the obligations secured by that Security to Friedrich Grohe.

27.5     ADDITIONAL GUARANTORS

         (a)      The Company may request that any of its Subsidiaries become an
                  Additional Guarantor. That Subsidiary shall become an
                  Additional Guarantor if:

                  (i)      the Company delivers to the Agent a duly completed
                           and executed Accession Letter; and

                  (ii)     the Agent has received all of the documents and other
                           evidence listed in Part III of Schedule 2 (CONDITIONS
                           PRECEDENT) in relation to that Additional Guarantor,
                           each in form and substance satisfactory to the Agent.

                                     -126-
<PAGE>

         (b)      The Agent shall notify the Company 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 Part III of Schedule 2 (CONDITIONS
                  PRECEDENT).

                                     -127-
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                                   SECTION 10
                               THE FINANCE PARTIES

28.      ROLE OF THE AGENT AND THE ARRANGERS

28.1     APPOINTMENT OF THE AGENT

         (a)      Each other Finance Party (other than the Security Agent)
                  appoints the Agent to act as its agent under and in connection
                  with the Finance Documents.

         (b)      Each other Finance Party authorises the Agent to exercise the
                  rights, powers, authorities and discretions specifically given
                  to the Agent under or in connection with the Finance Documents
                  together with any other incidental rights, powers, authorities
                  and discretions.

         (c)      The Agent shall be released from the restrictions set out in
                  Section 181 of the German Civil Code.

28.2     DUTIES OF THE AGENT

         (a)      The Agent shall without undue delay forward to a Party the
                  original or a copy of any document which is delivered to the
                  Agent for that Party by any other Party.

         (b)      Except where a Finance Document specifically provides
                  otherwise, the Agent is not obliged to review or check the
                  adequacy, accuracy or completeness of any document it forwards
                  to another Party.

         (c)      If the Agent receives notice from a Party referring to this
                  Agreement, describing a Default and stating that the
                  circumstance described is a Default, it shall without undue
                  delay notify the other Finance Parties.

         (d)      If the Agent is aware of the non-payment of any principal,
                  interest, commitment fee or other fee payable to a Finance
                  Party (other than the Agent, the Arrangers or the Security
                  Agent) under this Agreement it shall without undue delay
                  notify the other Finance Parties.

         (e)      The Agent's duties under the Finance Documents are solely
                  mechanical and administrative in nature.

28.3     ROLE OF THE ARRANGERS
         Except as specifically provided in the Finance Documents, the Arrangers
         have no obligations of any kind to any other Party under or in
         connection with any Finance Document.

                                     -128-
<PAGE>

28.4     NO FIDUCIARY DUTIES

         (a)      Nothing in this Agreement constitutes the Agent or the
                  Arrangers as a fiduciary of any other person.

         (b)      Neither the Agent nor the Arrangers shall be bound to account
                  to any Lender for any sum or the profit element of any sum
                  received by it for its own account.

28.5     BUSINESS WITH THE GROHE HOLDING GROUP
         The Agent and the Arrangers may accept deposits from, lend money to and
         generally engage in any kind of banking or other business with any
         member of the Grohe Holding Group.

28.6     RIGHTS AND DISCRETIONS OF THE AGENT

         (a)      The Agent may rely on:

                  (i)      any representation, notice or document believed by it
                           to be genuine, correct and appropriately authorised;
                           and

                  (ii)     any statement made by a director, authorised
                           signatory or employee of any person regarding any
                           matters which may reasonably be assumed to be within
                           his knowledge or within his power to verify.

         (b)      The Agent may assume (unless it has received notice to the
                  contrary in its capacity as agent for the Lenders) that:

                  (i)      no Default has occurred (unless it has actual
                           knowledge of a Default arising under Clause 25.1
                           (NON-PAYMENT));

                  (ii)     any right, power, authority or discretion vested in
                           any Party or the Majority Lenders has not been
                           exercised; and

                  (iii)    any notice or request made by the Company (other than
                           a Utilisation Request or Selection Notice) is made on
                           behalf of and with the consent and knowledge of all
                           the Obligors.

         (c)      The Agent may engage, pay for and rely on the advice or
                  services of any lawyers, accountants, surveyors or other
                  experts.

         (d)      The Agent may act in relation to the Finance Documents through
                  its personnel and agents.

         (e)      The Agent may disclose to any other Party any information it
                  reasonably believes it has received as agent under this
                  Agreement.

                                     -129-
<PAGE>

         (f)      Notwithstanding any other provision of any Finance Document to
                  the contrary, neither the Agent nor any Arranger is obliged to
                  do or omit to do anything if it would or might in its
                  reasonable opinion constitute a breach of any law or
                  regulation or a breach of a fiduciary duty or duty of
                  confidentiality.

28.7     MAJORITY LENDERS' INSTRUCTIONS

         (a)      Unless a contrary indication appears in a Finance Document,
                  the Agent shall (i) exercise any right, power, authority or
                  discretion vested in it as Agent in accordance with any
                  instructions given to it by the Majority Lenders (or, if so
                  instructed by the Majority Lenders, refrain from exercising
                  any right, power, authority or discretion vested in it as
                  Agent) and (ii) not be liable for any act (or omission) if it
                  acts (or refrains from taking any action) in accordance with
                  an instruction of the Majority Lenders.

         (b)      Unless a contrary indication appears in a Finance Document,
                  any instructions given by the Majority Lenders will be binding
                  on all the Finance Parties other than the Security Agent.

         (c)      The Agent may refrain from acting in accordance with the
                  instructions of the Majority Lenders (or, if appropriate, the
                  Lenders) until it has received such security as it may require
                  for any cost, loss or liability (together with any associated
                  VAT) which it may incur in complying with the instructions.

         (d)      In the absence of instructions from the Majority Lenders, (or,
                  if appropriate, the Lenders) the Agent may act (or refrain
                  from taking action) as it considers to be in the best interest
                  of the Lenders.

         (e)      The Agent is not authorised to act on behalf of a Lender
                  (without first obtaining that Lender's consent) in any legal
                  or arbitration proceedings relating to any Finance Document.

28.8     RESPONSIBILITY FOR DOCUMENTATION
         None of the Agent, the Arrangers and the Security Agent:

         (a)      is responsible for the adequacy, accuracy and/or completeness
                  of any information (whether oral or written) supplied by the
                  Agent, the Arrangers, the Security Agent, an Obligor or any
                  other person given in or in connection with any Finance
                  Document or the Information Memorandum or the transactions
                  contemplated in the Finance Documents; or

                                     -130-
<PAGE>

         (b)      is responsible for the legality, validity, effectiveness,
                  adequacy or enforceability of any Finance Document or the
                  Transaction Security or any other agreement, arrangement or
                  document entered into, made or executed in anticipation of or
                  in connection with any Finance Document or the Transaction
                  Security.

28.9     EXCLUSION OF LIABILITY

         (a)      Without limiting paragraph (b) below, the Agent will not be
                  liable for any action taken by it under or in connection with
                  any Finance Document, unless directly caused by its gross
                  negligence or wilful misconduct.

         (b)      No Party (other than the Agent or, as the case may be, the
                  Security Agent) may take any proceedings against any officer,
                  employee or agent of the Agent or the Security Agent in
                  respect of any claim it might have against the Agent or
                  Security Agent or in respect of any act or omission of any
                  kind by that officer, employee or agent in relation to any
                  Finance Document and any officer, employee or agent of the
                  Agent or of the Security Agent may rely on this Clause.

         (c)      The Agent will not be liable for any delay (or any related
                  consequences) in crediting an account with an amount required
                  under the Finance Documents to be paid by the Agent if the
                  Agent has taken all necessary steps as soon as reasonably
                  practicable to comply with the regulations or operating
                  procedures of any recognised clearing or settlement system
                  used by the Agent for that purpose.

28.10    LENDERS' INDEMNITY TO THE AGENT AND SECURITY AGENT
         Each Lender shall (in proportion to its share of the Total Commitments
         or, if the Total Commitments are then zero, to its share of the Total
         Commitments immediately prior to their reduction to zero) indemnify
         each of the Agent and the Security Agent, within five Business Days of
         demand, against any cost, loss or liability incurred by the Agent or
         the Security Agent (otherwise than by reason of the Agent's or the
         Security Agent's gross negligence or wilful misconduct) in acting as
         Agent or as Security Agent under the Finance Documents (unless the
         Agent or the Security Agent has been reimbursed by an Obligor pursuant
         to a Finance Document).

28.11    RESIGNATION OF THE AGENT

         (a)      The Agent may resign and appoint one of its Affiliates as
                  successor by giving notice to the other Finance Parties and
                  the Company.

                                     -131-
<PAGE>

         (b)      Alternatively the Agent may resign by giving notice to the
                  other Finance Parties and the Company, in which case the
                  Majority Lenders (after consultation with the Company) may
                  appoint a successor Agent.

         (c)      If the Majority Lenders have not appointed a successor Agent
                  in accordance with paragraph (b) above within 30 days after
                  notice of resignation was given, the Agent (after consultation
                  with the Company) may appoint a successor Agent.

         (d)      The retiring Agent shall, at its own cost, make available to
                  the successor Agent such documents and records and provide
                  such assistance as the successor Agent may reasonably request
                  for the purposes of performing its functions as Agent under
                  the Finance Documents.

         (e)      The Agent's resignation notice shall only take effect upon the
                  appointment of a successor.

         (f)      Upon the appointment of a successor, the retiring Agent shall
                  be discharged from any further obligation in respect of the
                  Finance Documents but shall remain entitled to the benefit of
                  this Clause 28. Its successor and each of the other Parties
                  shall have the same rights and obligations amongst themselves
                  as they would have had if such successor had been an original
                  Party.

         (g)      After consultation with the Company, the Majority Lenders may,
                  by notice to the Agent, require it to resign in accordance
                  with paragraph (b) above. In this event, the Agent shall
                  resign in accordance with paragraph (b) above.

28.12    CONFIDENTIALITY

         (a)      In acting as agent for the Finance Parties or, as the case may
                  be, for the Finance Parties, each of the Agent and the
                  Security Agent shall be regarded as acting through its agency
                  division, which shall be treated as a separate entity from any
                  other of its divisions or departments.

         (b)      If information is received by another division or department
                  of the Agent or the Security Agent, it may be treated as
                  confidential to that division or department and neither the
                  Agent nor the Security Agent shall be deemed to have notice of
                  it.

28.13    RELATIONSHIP WITH THE LENDERS

         (a)      The Agent may treat each Lender as a Lender, entitled to
                  payments under this Agreement and acting through its Facility
                  Office unless it has

                                     -132-
<PAGE>

                  received not less than five Business Days prior notice from
                  that Lender to the contrary in accordance with the terms of
                  this Agreement.

         (b)      Each Lender shall supply the Agent with any information
                  required by the Agent in order to calculate the Mandatory Cost
                  in accordance with Schedule 4 (MANDATORY COST FORMULAE).

         (c)      Each Finance Party shall supply the Agent with any information
                  that the Security Agent may reasonably specify (through the
                  Agent) as being necessary or desirable to enable the Security
                  Agent to perform its functions as Security Agent. Each Lender
                  shall deal with the Security Agent exclusively through the
                  Agent and shall not deal directly with the Security Agent.

28.14    CREDIT APPRAISAL BY THE FINANCE PARTIES
         Without affecting the responsibility of any Obligor for information
         supplied by it or on its behalf in connection with any Finance
         Document, each Finance Party confirms to the Agent, the Arrangers and
         the Security Agent that it has been, and will continue to be, solely
         responsible for making its own independent appraisal and investigation
         of all risks arising under or in connection with any Finance Document
         including but not limited to:

         (a)      the financial condition, status and nature of each member of
                  the Grohe Holding Group;

         (b)      the legality, validity, effectiveness, adequacy or
                  enforceability of any Finance Document and the Transaction
                  Security and any other agreement, arrangement or document
                  entered into, made or executed in anticipation of, under or in
                  connection with any Finance Document or the Transaction
                  Security;

         (c)      whether that Finance Party has recourse, and the nature and
                  extent of that recourse, against any Party or any of its
                  respective assets under or in connection with any Finance
                  Document, the Transaction Security, the transactions
                  contemplated by the Finance Documents or any other agreement,
                  arrangement or document entered into, made or executed in
                  anticipation of, under or in connection with any Finance
                  Document;

         (d)      the adequacy, accuracy and/or completeness of the Information
                  Memorandum and any other information provided by the Agent,
                  the Security Agent, any Party or by any other person under or
                  in connection with any Finance Document, the transactions
                  contemplated by the Finance Documents or any other agreement,
                  arrangement or document entered into, made or executed in
                  anticipation of, under or in connection with any Finance
                  Document; and

                                     -133-
<PAGE>

         (e)      the right or title of any person in or to, or the value or
                  sufficiency of any part of the Charged Property, the priority
                  of any of the Transaction Security or the existence of any
                  Security affecting the Charged Property.

28.15    REFERENCE BANKS
         If a Reference Bank (or, if a Reference Bank is not a Lender, the
         Lender of which it is an Affiliate) ceases to be a Lender, the Agent
         shall (in consultation with the Company) appoint another Lender or an
         Affiliate of a Lender to replace that Reference Bank.

28.16    DEDUCTION FROM AMOUNTS PAYABLE BY THE AGENT
         If any Party owes an amount to the Agent under the Finance Documents
         the Agent may, after giving notice to that Party, deduct an amount not
         exceeding that amount from any payment to that Party which the Agent
         would otherwise be obliged to make under the Finance Documents and
         apply the amount deducted in or towards satisfaction of the amount
         owed. For the purposes of the Finance Documents that Party shall be
         regarded as having received any amount so deducted.

29.      THE LENDERS AND THE FRONTING BANK

29.1     LENDERS' INDEMNITY
         If any Borrower fails to comply with its obligations under Clause 6.6
         (BORROWERS' INDEMNITY TO THE FRONTING BANK) the Agent shall make demand
         on each Lender for its share of that L/C Amount or Guarantee Amount
         and, subject to Clause 29.2 (DIRECT PARTICIPATION), each Lender shall
         indemnify each Fronting Bank for that Lender's L/C Proportion of each
         L/C Amount and Guarantee Proportion of each Guarantee Amount.

29.2     DIRECT PARTICIPATION
         If any Lender is not permitted (by its constitutional documents or any
         applicable law) to comply with Clause 29.1 then that Lender will not be
         obliged to comply with Clause 29.1 and shall instead be deemed to have
         taken, on the date the Letter of Credit is issued (or if later, on the
         date that L/C Proportion is transferred or assigned to such Lender in
         accordance with the terms of this Agreement) or, in the case of a Bank
         Guarantee, on the date the Bank Guarantee is issued (or, if later, on
         the date that Guarantee Proportion is transferred or assigned to such
         Lender in accordance with the terms of this Agreement), an undivided
         interest and participation in that Letter of Credit or Bank Guarantee
         in an amount equal to that Lender's L/C Proportion of that Letter of
         Credit or Guarantee Proportion of that Bank Guarantee, as the case may
         be. On receipt of demand by the Agent in accordance with Clause 29.1,
         each such Lender shall pay to the Agent (for the account of the
         Fronting Bank) its L/C Proportion of any L/C Amount or Guarantee
         Proportion of any Guarantee Amount.

                                     -134-
<PAGE>

29.3     OBLIGATIONS NOT DISCHARGED
         Neither the obligations of a Lender in this Clause 29 nor the rights,
         powers and remedies conferred upon a Fronting Bank by this Agreement or
         by law shall be discharged, impaired or otherwise affected by:

         (a)      the winding-up, dissolution, administration or re-organisation
                  of a Fronting Bank, a Borrower or any other person or any
                  change in its status, function, control or ownership;

         (b)      any of the obligations of a Fronting Bank, a Borrower or any
                  other person under this Agreement, under a Letter of Credit or
                  Bank Guarantee or under any other security taken in respect of
                  its obligations under this Agreement or under a Letter of
                  Credit or Bank Guarantee being or becoming illegal, invalid,
                  unenforceable or ineffective in any respect;

         (c)      time or other indulgence being granted or agreed to be granted
                  to a Fronting Bank, a Borrower or any other person in respect
                  of its obligations under this Agreement, under a Letter of
                  Credit or Bank Guarantee or under any other security;

         (d)      any amendment to, or any variation, waiver or release of, any
                  obligation of a Fronting Bank, a Borrower or any other person
                  under this Agreement, under a Letter of Credit or Bank
                  Guarantee or under any other security; and

         (e)      any other act, event or omission which, but for this Clause
                  29.3, might operate to discharge, impair or otherwise affect
                  any of the obligations of a Lender in this Agreement contained
                  or any of the rights, powers or remedies conferred upon a
                  Fronting Bank by this Agreement or by law.

         The obligations of each Lender contained in any Finance Document shall
         be in addition to and independent of every other security which a
         Fronting Bank may at any time hold in respect of any Letter of Credit
         or Bank Guarantee.

29.4     SETTLEMENT CONDITIONAL
         Any settlement or discharge between a Lender and a Fronting Bank shall
         be conditional upon no security or payment to that Fronting Bank by a
         Lender or any other person on behalf of a Lender being avoided or
         reduced by virtue of any laws relating to bankruptcy, insolvency,
         liquidation or similar laws of general application and, if any such
         security or payment is so avoided or reduced, the Fronting Bank shall
         be entitled to recover the value or amount of such security or payment
         from such Lender subsequently as if such settlement or discharge had
         not occurred.

                                     -135-
<PAGE>

29.5     EXERCISE OF RIGHTS
         A Fronting Bank shall not be obliged before exercising any of the
         rights, powers or remedies conferred upon it in respect of any Lender
         by this Agreement or by law:

         (a)      to take any action or obtain judgment in any court against the
                  Borrower;

         (b)      to make or file any claim or proof in a winding-up or
                  dissolution of any Borrower; or

         (c)      to enforce or seek to enforce any other security taken in
                  respect of any of the obligations of any Borrower under this
                  Agreement.

30.      CONDUCT OF BUSINESS BY THE FINANCE PARTIES

         No provision of this Agreement will:

         (a)      interfere with the right of any Finance Party to arrange its
                  affairs (tax or otherwise) in whatever manner it thinks fit;

         (b)      oblige any Finance Party to investigate or claim any credit,
                  relief, remission or repayment available to it or the extent,
                  order and manner of any claim; or

         (c)      oblige any Finance Party to disclose any information relating
                  to its affairs (tax or otherwise) or any computations in
                  respect of Tax.

31.      SHARING AMONG THE FINANCE PARTIES

31.1     PAYMENTS TO FINANCE PARTIES
         If a Finance Party (a "RECOVERING FINANCE PARTY") receives or recovers
         any amount from an Obligor other than in accordance with Clause 32
         (PAYMENT MECHANICS) or Clause 8 (APPLICATION OF PROCEEDS AND CAPITAL
         MAINTENANCE) of the Intercreditor Agreement and applies that amount to
         a payment due under the Finance Documents then:

         (a)      the Recovering Finance Party shall, within three Business
                  Days, notify details of the receipt or recovery, to the Agent;

         (b)      the Agent shall determine whether the receipt or recovery is
                  in excess of the amount the Recovering Finance Party would
                  have been paid had the receipt or recovery been received or
                  made by the Agent and distributed in accordance with Clause 32
                  (PAYMENT MECHANICS), without taking account of any Tax which
                  would be imposed on the Agent in relation to the receipt,
                  recovery or distribution; and

                                     -136-
<PAGE>

         (c)      the Recovering Finance Party shall, within three Business Days
                  of demand by the Agent, pay to the Agent an amount (the
                  "SHARING PAYMENT") equal to such receipt or recovery less any
                  amount which the Agent determines may be retained by the
                  Recovering Finance Party as its share of any payment to be
                  made, in accordance with Clause 32.5 (PARTIAL PAYMENTS).

31.2     REDISTRIBUTION OF PAYMENTS

31.2.1   Subject to Clause 31.2.2, the Agent shall treat the Sharing Payment as
         if it had been paid by the relevant Obligor and distribute it between
         the Finance Parties (other than the Recovering Finance Party) in
         accordance with Clause 32.5 (PARTIAL PAYMENTS).

31.2.2   If a notice is served under Clause 25.20 (ACCELERATION) each Lender
         (and each Ancillary Bank) shall adjust by corresponding transfers (to
         the extent necessary) their claims in respect of amounts outstanding to
         them under the Revolving Facility and the Ancillary Facilities so that
         after such transfers each Lender shall have the same amount of
         outstandings under the Revolving Facility and the Ancillary Facilities
         PRO RATA corresponding to the proportion of each Lender's Revolving
         Commitment to the aggregate Revolving Commitments of all Lenders, each
         as at the date the relevant notice is served.

31.3     RECOVERING FINANCE PARTY'S RIGHTS

         (a)      On a distribution by the Agent under Clause 31.2
                  (REDISTRIBUTION OF PAYMENTS), each Finance Party will assign
                  to the Recovering Finance Party the claims (or the proof
                  thereof) to which the Sharing Payment is allocated and the
                  relevant Obligor shall be liable to the Recovering Finance
                  Party in an amount equal to that Sharing Payment.

         (b)      If and to the extent that the Recovering Finance Party is not
                  able to rely on its rights under paragraph (a) above, the
                  relevant Obligor shall be liable to the Recovering Finance
                  Party for a debt equal to the Sharing Payment which is
                  immediately due and payable.

31.4     REVERSAL OF REDISTRIBUTION
         If any part of the Sharing Payment received or recovered by a
         Recovering Finance Party becomes repayable and is repaid by that
         Recovering Finance Party, then:

         (a)      each Finance Party which has received a share of the relevant
                  Sharing Payment pursuant to Clause 31.2 (REDISTRIBUTION OF
                  PAYMENTS) shall, upon request of the Agent, pay to the Agent
                  for account of that Recovering Finance Party an amount equal
                  to the appropriate part of its

                                     -137-
<PAGE>

                  share of the Sharing Payment (together with an amount as is
                  necessary to reimburse that Recovering Finance Party for its
                  proportion of any interest on the Sharing Payment which that
                  Recovering Finance Party is required to pay); and

         (b)      that Recovering Finance Party's rights of assignment in
                  respect of any reimbursement shall be cancelled, the relevant
                  Obligor will be liable to the reimbursing Finance Party for
                  the amount so reimbursed and the Recovering Finance Party
                  shall re-assign any claims assigned to it pursuant to Clause
                  31.3(b).

31.5     EXCEPTIONS

         (a)      This Clause 31 shall not apply to the extent that the
                  Recovering Finance Party would not, after making any payment
                  pursuant to this Clause, have a valid and enforceable claim
                  against the relevant Obligor.

         (b)      A Recovering Finance Party is not obliged to share with any
                  other Finance Party any amount which the Recovering Finance
                  Party has received or recovered as a result of taking legal
                  proceedings, if:

                  (i)      it notified that other Finance Party of the legal
                           proceedings; and

                  (ii)     that other Finance Party had an opportunity to
                           participate in those legal proceedings but did not do
                           so as soon as reasonably practicable having received
                           notice and did not take separate legal proceedings.

                                     -138-
<PAGE>

                                   SECTION 11
                                 ADMINISTRATION

32.      PAYMENT MECHANICS

32.1     PAYMENTS TO THE AGENT

         (a)      On each date on which an Obligor or a Lender is required to
                  make a payment under a Finance Document, that Obligor or
                  Lender shall make the same available to the Agent (unless a
                  contrary indication appears in a Finance Document) for value
                  on the due date at the time and in such funds specified by the
                  Agent as being customary at the time for settlement of
                  transactions in the relevant currency in the place of payment.

         (b)      Payment shall be made to such account in the principal
                  financial centre of the country of that currency (or, in
                  relation to euro, in a principal financial centre in a
                  Participating Member State or London) with such bank as the
                  Agent specifies.

32.2     DISTRIBUTIONS BY THE AGENT
         Each payment received by the Agent under the Finance Documents for
         another Party shall, subject to Clause 32.3 (DISTRIBUTIONS TO AN
         OBLIGOR), Clause 32.4 (CLAWBACK) and Clause 28.16 (DEDUCTION FROM
         AMOUNTS PAYABLE BY THE AGENT) be made available by the Agent as soon as
         practicable after receipt to the Party entitled to receive payment in
         accordance with this Agreement (in the case of a Lender, for the
         account of its Facility Office), to such account as that Party may
         notify to the Agent by not less than five Business Days' notice with a
         bank in the principal financial centre of the country of that currency
         (or, in relation to euro, in the principal financial centre of a
         Participating Member State or London).

32.3     DISTRIBUTIONS TO AN OBLIGOR
         The Agent may (with the consent of the Obligor or in accordance with
         Clause 33 (SET-OFF)) apply any amount received by it for that Obligor
         in or towards payment (on the date and in the currency and funds of
         receipt) of any amount due from that Obligor under the Finance
         Documents or in or towards purchase of any amount of any currency to be
         so applied.

32.4     CLAWBACK

         (a)      Where a sum is to be paid to the Agent under the Finance
                  Documents for another Party, the Agent is not obliged to pay
                  that sum to that other Party (or to enter into or perform any
                  related exchange contract) until it has been able to establish
                  to its satisfaction that it has actually received that sum.

                                     -139-
<PAGE>

         (b)      If the Agent pays an amount to another Party and it proves to
                  be the case that the Agent had not actually received that
                  amount, then the Party to whom that amount (or the proceeds of
                  any related exchange contract) was paid by the Agent shall on
                  demand refund the same to the Agent together with interest on
                  that amount from the date of payment to the date of receipt by
                  the Agent, calculated by the Agent to reflect its cost of
                  funds.

32.5     PARTIAL PAYMENTS

         (a)      If the Agent receives a payment that is insufficient to
                  discharge all the amounts then due and payable by an Obligor
                  under the Finance Documents, the Agent shall apply that
                  payment towards the obligations of that Obligor under the
                  Finance Documents in the following order:

                  (i)      first, in or towards payment PRO RATA of any unpaid
                           fees, costs and expenses of the Agent, the Security
                           Agent and the Arrangers under the Finance Documents;

                  (ii)     secondly, in or towards payment of any demand made by
                           a Fronting Bank in respect of a payment made or to be
                           made by it under a Letter of Credit or Bank Guarantee
                           due but unpaid;

                  (iii)    thirdly, in or towards payment PRO RATA of any
                           accrued interest, fee or commission due but unpaid
                           under this Agreement;

                  (iv)     fourthly, in or towards payment PRO RATA of any
                           principal or cash cover due but unpaid under this
                           Agreement; and

                  (v)      fifthly, in or towards payment PRO RATA of any other
                           sum due but unpaid under the Finance Documents.

         (b)      The Agent shall, if so directed by the Majority Lenders, vary
                  the order set out in paragraphs (a)(iii) to (v) above.

         (c)      Paragraphs (a) and (b) above will override any appropriation
                  made by an Obligor.

         (d)      Following the service of a notice in accordance with Clause
                  25.20 (ACCELERATION) any monies standing to the credit of any
                  account of any Obligor held by any Ancillary Bank as part of
                  the Ancillary Facilities shall be applied by that Ancillary
                  Bank against any amounts then due to it in respect of the
                  Ancillary Facilities and any amounts, after that application,
                  standing to the credit of any account of any Obligor held by

                                     -140-
<PAGE>

                  any Ancillary Bank shall be immediately paid to the Agent for
                  application in accordance with Clause 32.5 (PARTIAL PAYMENTS).

32.6     NO SET-OFF BY OBLIGORS
         All payments to be made by an Obligor under the Finance Documents shall
         be calculated and be made without (and free and clear of any deduction
         for) set-off or counterclaim.

32.7     BUSINESS DAYS

         (a)      Any payment which is due to be made on a day that is not a
                  Business Day shall be made on the next Business Day in the
                  same calendar month (if there is one) or the preceding
                  Business Day (if there is not).

         (b)      During any extension of the due date for payment of any
                  principal or Unpaid Sum under this Agreement interest is
                  payable on the principal or Unpaid Sum at the rate payable on
                  the original due date.

32.8     CURRENCY OF ACCOUNT

         (a)      Subject to paragraphs (b) to (f) below, the Base Currency is
                  the currency of account and payment for any sum due from an
                  Obligor under any Finance Document.

         (b)      A repayment of a Loan or Unpaid Sum or a part of a Loan or
                  Unpaid Sum shall be made in the currency in which that Loan or
                  Unpaid Sum is denominated on its due date.

         (c)      Each payment in respect of a Letter of Credit or Bank
                  Guarantee (including any Cash Collateral in respect of a
                  Letter of Credit or Bank Guarantee) shall be made in the
                  currency in which that Letter of Credit or Bank Guarantee is
                  denominated.

         (d)      Each payment of interest shall be made in the currency in
                  which the sum in respect of which the interest is payable was
                  denominated when that interest accrued.

         (e)      Each payment in respect of costs, expenses or Taxes shall be
                  made in the currency in which the costs, expenses or Taxes are
                  incurred.

         (f)      Any amount expressed to be payable in a currency other than
                  the Base Currency shall be paid in that other currency.

                                     -141-
<PAGE>

32.9     CHANGE OF CURRENCY

         (a)      Unless otherwise prohibited by law, if more than one currency
                  or currency unit are at the same time recognised by the
                  central bank of any country as the lawful currency of that
                  country, then:

                  (i)      any reference in the Finance Documents to, and any
                           obligations arising under the Finance Documents in,
                           the currency of that country shall be translated
                           into, or paid in, the currency or currency unit of
                           that country designated by the Agent (after
                           consultation with the Company); and

                  (ii)     any translation from one currency or currency unit to
                           another shall be at the official rate of exchange
                           recognised by the central bank for the conversion of
                           that currency or currency unit into the other,
                           rounded up or down by the Agent (acting reasonably).

         (b)      If a change in any currency of a country occurs, this
                  Agreement will, to the extent the Agent (acting reasonably and
                  after consultation with the Company) specifies to be
                  necessary, be amended to comply with any generally accepted
                  conventions and market practice in the Relevant Interbank
                  Market and otherwise to reflect the change in currency.

33.      SET-OFF

         A Finance Party may set off any matured obligation due from an Obligor
         under the Finance Documents (to the extent owned by that Finance Party)
         against any obligation (whether matured or not) owed by that Finance
         Party to that Obligor, regardless of the place of payment, booking
         branch or currency of either obligation. If the obligations are in
         different currencies, the Finance Party may convert either obligation
         at a market rate of exchange in its usual course of business for the
         purpose of the set-off.

34.      NOTICES

34.1     COMMUNICATIONS IN WRITING
         Any communication to be made under or in connection with the Finance
         Documents shall be made in writing and, unless otherwise stated, may be
         made by fax or letter.

34.2     ADDRESSES
         The address and fax number (and the department or officer, if any, for
         whose attention the communication is to be made) of each Party for any
         communication or document to be made or delivered under or in
         connection with the Finance Documents is:

                                     -142-
<PAGE>

         (a)      in the case of the Company and any Original Obligor, that
                  identified with its name below;

         (b)      in the case of each Lender or any Obligor, that notified in
                  writing to the Agent on or prior to the date on which it
                  becomes a Party; and

         (c)      in the case of the Agent and Security Agent, that identified
                  with its name below,

         or any substitute address, fax number or department or officer as the
         Party may notify to the Agent (or the Agent may notify to the other
         Parties, if a change is made by the Agent) by not less than five
         Business Days' notice.

34.3     DELIVERY

         (a)      Any communication or document made or delivered by one person
                  to another under or in connection with the Finance Documents
                  will only be effective:

                  (i)      if by way of fax, when received in legible form; or

                  (ii)     if by way of letter, when it has been left at the
                           relevant address or five Business Days after being
                           deposited in the post postage prepaid in an envelope
                           addressed to it at that address;

                  and, if a particular department or officer is specified as
                  part of its address details provided under Clause 34.2
                  (ADDRESSES), if addressed to that department or officer.

         (b)      Any communication or document to be made or delivered to the
                  Agent or to the Security Agent will be effective only when
                  actually received by the Agent or the Security Agent and then
                  only if it is expressly marked for the attention of the
                  department or officer identified with the Agent's or the
                  Security Agent's signature below (or any substitute department
                  or officer as the Agent shall specify for this purpose).

         (c)      All notices from or to an Obligor shall be sent through the
                  Agent.

         (d)      Any communication or document made or delivered to the Company
                  in accordance with this Clause will be deemed to have been
                  made or delivered to each of the Obligors.

         (e)      All notices to a Lender from the Security Agent shall be sent
                  through the Agent.

                                     -143-
<PAGE>

34.4     NOTIFICATION OF ADDRESS AND FAX NUMBER
         Promptly upon receipt of notification of an address and fax number or
         change of address or fax number pursuant to Clause 34.2 (ADDRESSES) or
         changing its own address or fax number, the Agent shall notify the
         other Parties.

34.5     ELECTRONIC COMMUNICATION

         (a)      Any communication to be made between the Agent or the Security
                  Agent and a Lender under or in connection with the Finance
                  Documents may be made by electronic mail or other electronic
                  means, if the Agent, the Security Agent and the relevant
                  Lender:

                  (i)      agree that, unless and until notified to the
                           contrary, this is to be an accepted form of
                           communication;

                  (ii)     notify each other in writing of their electronic mail
                           address and/or any other information required to
                           enable the sending and receipt of information by that
                           means; and

                  (iii)    notify each other of any change to their address or
                           any other such information supplied by them.

         (b)      Any electronic communication made between the Agent and a
                  Lender or the Security Agent will be effective only when
                  actually received in readable form and in the case of any
                  electronic communication made by a Lender to the Agent or the
                  Security Agent only if it is addressed in such a manner as the
                  Agent or Security Agent shall specify for this purpose.

34.6     ENGLISH LANGUAGE

         (a)      Any notice given under or in connection with any Finance
                  Document must be in English.

         (b)      All other documents provided under or in connection with any
                  Finance Document must be:

                  (i)      in English; or

                  (ii)     if not in English, and if so required by the Agent,
                           accompanied by a certified English translation and,
                           in this case, the English translation will prevail
                           unless the document is a constitutional, statutory or
                           other official document.

                                     -144-
<PAGE>

35.      CALCULATIONS AND CERTIFICATES

35.1     ACCOUNTS
         In any litigation or arbitration proceedings arising out of or in
         connection with a Finance Document, the entries made in the accounts
         maintained by a Finance Party are prima facie evidence of the matters
         to which they relate.

35.2     CERTIFICATES AND DETERMINATIONS
         Any certification or determination by a Finance Party of a rate or
         amount under any Finance Document is, in the absence of manifest error,
         conclusive evidence of the matters to which it relates.

35.3     DAY COUNT CONVENTION
         Any interest, commission or fee accruing under a Finance Document will
         accrue from day to day and is calculated on the basis of the actual
         number of days elapsed and a year of 360 days or, in any case where the
         practice in the Relevant Interbank Market differs, in accordance with
         that market practice.

36.      PARTIAL INVALIDITY

         If, at any time, any provision of the Finance Documents is or becomes
         illegal, invalid or unenforceable in any respect under any law of any
         jurisdiction, neither the legality, validity or enforceability of the
         remaining provisions nor the legality, validity or enforceability of
         such provision under the law of any other jurisdiction will in any way
         be affected or impaired and the relevant provision shall be deemed
         replaced with a provision which comes as close as possible to the
         purpose of the replaced provision. This also applies in the event of
         gaps (VERTRAGSLUCKEN).

37.      REMEDIES AND WAIVERS

         No failure to exercise, nor any delay in exercising, on the part of any
         Finance Party or the Arrangers, any right or remedy under the Finance
         Documents shall operate as a waiver, nor shall any single or partial
         exercise of any right or remedy prevent any further or other exercise
         or the exercise of any other right or remedy. The rights and remedies
         provided in this Agreement are cumulative and not exclusive of any
         rights or remedies provided by law.

38.      AMENDMENTS AND WAIVERS

38.1     REQUIRED CONSENTS

         (a)      Subject to Clause 38.2 (EXCEPTIONS), any term of the Finance
                  Documents may be amended or waived only with the consent of
                  the Majority Lenders and the Obligors and any such amendment
                  or waiver will be binding on all Parties.

                                     -145-
<PAGE>

         (b)      The Agent, or in respect of the Security Documents the
                  Security Agent, may effect, on behalf of any Finance Party,
                  any amendment or waiver permitted by this Clause.

38.2     EXCEPTIONS

         (a)      An amendment or waiver that has the effect of changing or
                  which relates to:

                  (i)      an extension of the Availability Period;

                  (ii)     the definition of "MAJORITY LENDERS" in Clause 1.1
                           (DEFINITIONS);

                  (iii)    an extension to the date of payment of any amount
                           under the Finance Documents or Clause 9 (REPAYMENT);

                  (iv)     a reduction in the Applicable Margin or a reduction
                           in the amount of any payment of principal, interest
                           or commitment fees payable;

                  (v)      an increase in or an extension of any Commitment;

                  (vi)     a change to the Borrowers or Guarantors other than in
                           accordance with Clause 27 (CHANGES TO THE OBLIGORS);

                  (vii)    any provision which expressly requires the consent of
                           all the Lenders;

                  (viii)   Clause 2.2 (FINANCE PARTIES' RIGHTS AND OBLIGATIONS),
                           Clause 26 (CHANGES TO THE LENDERS) or this Clause 38;

                  (ix)     subject to the provisions of the Intercreditor
                           Agreement, the nature or scope of the Charged
                           Property or the manner in which the proceeds of
                           enforcement of the Transaction Security are
                           distributed;

                  shall not be made without the prior consent of all the
                  Lenders.

         (b)      An amendment or waiver which has the effect of changing or
                  relates to the definition of "QUALIFYING PUBLIC OFFERING" in
                  Clause 1.1 (DEFINITIONS) shall not be made without the consent
                  of a group of Lenders whose participation in the Loans,
                  Letters of Credit and Bank Guarantees then outstanding (or, if
                  there are no Loans, Letters of Credit or Bank Guarantees then
                  outstanding, whose Commitments) aggregate more than 90 per
                  cent. of all the Loans, Letters of Credit and Bank Guarantees
                  then outstanding (or, as the case may be, the Total
                  Commitments).

                                     -146-
<PAGE>

         (c)      An amendment or waiver which relates to the rights or
                  obligations of the Agent, the Security Agent or the Arrangers
                  may not be effected without the consent of the Agent, the
                  Security Agent or the Arrangers.

38.3     AMENDMENT BY COMPANY
         The Company (acting on behalf of each of the Obligors) may agree any
         amendment to or modification to the provisions of any of the Finance
         Documents or any schedule thereto, or grant any waiver or consent in
         relation thereto and each Obligor hereby authorises the Company to
         agree any such amendment, modification, waiver or consent on its
         behalf. The Company shall be released from the restrictions set out in
         Section 181 of the German Civil Code. Nothing in this Clause 38.3 shall
         prejudice the right of the Agent to require all Obligors to agree any
         such amendment, modification, waiver or consent.

38.4     AMENDMENT TO CORRECT MANIFEST ERROR
         The Agent may agree with the Company (acting on behalf of each of the
         Obligors) any amendment to or the modification of the provisions of any
         of the Finance Documents or any schedule thereto, which is necessary to
         correct a manifest error.

39.      COUNTERPARTS

         Each Finance Document may be executed in any number of counterparts,
         and this has the same effect as if the signatures on the counterparts
         were on a single copy of the Finance Document.

                                     -147-
<PAGE>

                                   SECTION 12
                          GOVERNING LAW AND ENFORCEMENT

40.      GOVERNING LAW

         This Agreement is governed by German law.

41.      ENFORCEMENT

41.1     JURISDICTION OF GERMAN COURTS

         (a)      The courts of Frankfurt am Main have exclusive jurisdiction to
                  settle any dispute arising out of or in connection with this
                  Agreement (including a dispute regarding the existence,
                  validity or termination of this Agreement) (a "DISPUTE").

         (b)      The Parties agree that the courts of Frankfurt am Main are the
                  most appropriate and convenient courts to settle Disputes and
                  accordingly no Party will argue to the contrary.

         (c)      This Clause 41.1 is for the benefit of the Finance Parties
                  only. As a result, no Finance Party shall be prevented from
                  taking proceedings relating to a Dispute in any other courts
                  with jurisdiction. To the extent allowed by law, the Finance
                  Parties may take concurrent proceedings in any number of
                  jurisdictions.

41.2     SERVICE OF PROCESS
         Without prejudice to any other mode of service allowed under any
         relevant law, each Obligor (other than an Obligor incorporated in the
         Federal Republic of Germany):

         (a)      irrevocably appoints the Company as its agent for service of
                  process in relation to any proceedings before the German
                  courts in connection with any Finance Document; and

         (b)      agrees that failure by a process agent to notify the relevant
                  Obligor of the process will not invalidate the proceedings
                  concerned.

41.3     Confirmation pursuant to Section 8 Money Laundering Act

         Each Borrower expressly confirms to the Finance Parties that all funds
         made available to it under this Agreement have been drawn for its own
         account and that it is the economic beneficiary within the meaning of
         Section 8 Money Laundering Act (GELDWASCHEGESETZ)

                                     -148-
<PAGE>

This Agreement has been entered into on the date stated at the beginning of this
Agreement.

                                     -149-
<PAGE>

                                   SCHEDULE 1
                              THE ORIGINAL PARTIES

                                     PART I
                              THE ORIGINAL OBLIGORS

Name of Original Borrower                 Registration number (or equivalent, if
                                          any)

Grohe Beteiligungs GmbH & Co. KG          Local court of Iserlohn, HRA 2093

Friedrich Grohe AG & Co. KG               Local court of Iserlohn, HRA 2031

Name of Original Guarantor                Registration number (or equivalent, if
                                          any)

Grohe Beteiligungs GmbH & Co. KG          Local court of Iserlohn, HRB 2093

Friedrich Grohe Geschaftsfuhrung AG       Local court of Iserlohn, HRB 2352

                                     -150-
<PAGE>

                                     PART II
                              THE ORIGINAL LENDERS

<TABLE>
<CAPTION>
   Name of Original         Facility A1          Facility A2           Facility B            Revolving
        Lender              Commitment           Commitment            Commitment           Commitment

<S>                         <C>                  <C>                   <C>                  <C>
 Credit Suisse First        90,000,000           135,000,000           50,000,000           25,000,000
 Boston International

Merrill Lynch Capital       90,000,000           135,000,000           50,000,000           25,000,000
     Corporation

        TOTAL               180,000,000          270,000,000          100,000,000           50,000,000
</TABLE>

                                     -151-
<PAGE>

                                   SCHEDULE 2
                              CONDITIONS PRECEDENT

                                     PART I
                   CONDITIONS PRECEDENT TO INITIAL UTILISATION

1.       ORIGINAL OBLIGORS: CORPORATE DOCUMENTS

         (a)      A certified copy of the constitutional documents of each
                  Original Obligor, Grohe Holding, Grohe Consult GmbH, AQUA
                  Butzke GmbH, Eggemann Armaturenfabrik GmbH & Co. KG, Grohe
                  International GmbH, Grohe Deutschland Vertriebs GmbH, DAL GmbH
                  & Co. KG, Schmole GmbH & Co. KG, H.D. Eichelberg & Co. GmbH,
                  GROHEDAL Sanitarsysteme GmbH & Co. KG, DAL Sanitartechnologie
                  GmbH, AQERO Vertriebs-GmbH, Grohe Verwaltungsgesellschaft mbH
                  and each company the shares of which are pledged as part of
                  the Transaction Security.

         (b)      A copy of a resolution of the shareholders or partners of each
                  Original Obligor (other than Friedrich Grohe, Friedrich Grohe
                  Geschaftsfuhrungs AG and AQUA Butzke GmbH), Grohe Holding,
                  Grohe Consult GmbH, AQUA Butzke GmbH, Eggemann Armaturenfabrik
                  GmbH & Co. KG, Grohe International GmbH, Grohe Deutschland
                  Vertriebs GmbH, DAL GmbH & Co. KG, Schmole GmbH & Co. KG, H.D.
                  Eichelberg & Co. GmbH, GROHEDAL Sanitarsysteme GmbH & Co. KG,
                  DAL Sanitartechnologie GmbH, AQERO Vertriebs-GmbH and Grohe
                  Verwaltungsgesellschaft mbH and approving the terms of, and
                  the transactions contemplated by, the Finance Documents to
                  which it is a party and resolving that it execute the Finance
                  Documents to which it is a party.

         (c)      A specimen of the signature of each person authorised to sign
                  the Finance Documents on behalf of an Original Obligor, Grohe
                  Holding, Grohe Consult GmbH, AQUA Butzke GmbH, Eggemann
                  Armaturenfabrik GmbH & Co. KG, Grohe International GmbH, Grohe
                  Deutschland Vertriebs GmbH, DAL GmbH & Co. KG, Schmole GmbH &
                  Co. KG, H.D. Eichelberg & Co. GmbH, GROHEDAL Sanitarsysteme
                  GmbH & Co. KG, DAL Sanitartechnologie GmbH, AQERO
                  Vertriebs-GmbH and Grohe Verwaltungsgesellschaft mbH.

         (d)      A certificate of an authorised signatory of the relevant
                  Original Obligor, Grohe Holding, Grohe Consult GmbH, AQUA
                  Butzke GmbH, Eggemann Armaturenfabrik GmbH & Co. KG, Grohe
                  International GmbH, Grohe Deutschland Vertriebs GmbH, DAL GmbH
                  & Co. KG,

                                     -152-
<PAGE>

                  Schmole GmbH & Co. KG, H.D. Eichelberg & Co. GmbH, GROHEDAL
                  Sanitarsysteme GmbH & Co. KG, DAL Sanitartechnologie GmbH,
                  AQERO Vertriebs-GmbH and Grohe Verwaltungsgesellschaft mbH and
                  certifying that each copy document relating to it specified in
                  Part I of this Schedule 2 is correct, complete and in full
                  force and effect as at a date no earlier than the date of this
                  Agreement.

         (e)      The Group Structure Chart certified by the Company as being
                  true at the date of this Agreement.

2.       SECURITY DOCUMENTS

         (a)      The following Security Documents duly executed by the relevant
                  parties and in each case granting a first ranking security
                  interest, except for security permitted under Clause 24.25
                  (CONDITIONS SUBSEQUENT):

                  (i)      pledge by Grohe Beteiligungs over the shares in
                           Friedrich Grohe Geschaftsfuhrungs AG;

                  (ii)     pledge by Grohe Beteiligungs and Friedrich Grohe
                           Geschaftsfuhrungs AG over their partnership interests
                           in Friedrich Grohe;

                  (iii)    pledge by Friedrich Grohe over the shares or
                           partnership interests, as the case may be, in Grohe
                           Deutschland Vertriebs GmbH, Grohe
                           Verwaltungsgesellschaft mbH, Grohe International
                           GmbH, Schmole GmbH & Co. KG, H.D. Eichelberg & Co.
                           GmbH and, together with Grohe Verwaltungsgesellschaft
                           mbH, DAL GmbH & Co. KG;

                  (iv)     pledge by Grohe Beteiligungs of its escrow account;

                  (v)      a bank account pledge by Friedrich Grohe relating to
                           the Friedrich Grohe Mandatory Prepayment Account;

                  (vi)     a bank account pledge by Grohe Beteiligungs relating
                           to the Grohe Beteiligungs Mandatory Prepayment
                           Account;

                  (vii)    assignment by way of security of receivables
                           (including intercompany loans) by Friedrich Grohe and
                           Grohe Deutschland Vertriebs GmbH;

                  (viii)   assignment by way of security of intercompany loans
                           by Grohe International GmbH and DAL GmbH & Co. KG;

                                     -153-
<PAGE>

                  (ix)     transfer by way of security of fixed and current
                           assets by Friedrich Grohe;

                  (x)      assignment or pledges of the Grohe brands;

                  (xi)     security over the shares in Grohe Nederland B.V.;

                  (xii)    security over the shares in Grohe America Inc.;

                  (xiii)   security over the shares in Grohe Gesellschaft mbH,
                           Wien;

                  (xiv)    security over the shares in Grohe Sar.1. (France);

                  (xv)     security over the shares in Grohe SpA (Italy);

                  (xvi)    security over the shares in Grohe N.V. (Belgium),

                  (xvii)   security propose agreement relating to the existing
                           land charges registered in the name of Dresdner Bank
                           AG to be entered into by each relevant chargor with
                           the Security Agent,

                  it being understood that the security granted by Grohe
                  Beteiligungs and Friedrich Grohe Geschaftsfuhrungs AG shall
                  secure any and all obligations (present and future, actual and
                  contingent) which are (or are expressed to be) or became owing
                  by the Obligors (or any of them) (excluding, in the case of
                  Friedrich Grohe Geschaftsfuhrungs AG, Grohe Beteiligungs) to
                  the Finance Parties or any of them under the Finance
                  Documents, while, the security granted by Friedrich Grohe and
                  any of its Subsidiaries shall secure any and all obligations
                  (present and future, actual and contingent) which are (or are
                  expressed to be) or become owing by any Obligor other than
                  Grohe Beteiligungs and Friedrich Grohe Geschaftsfuhrungs AG to
                  the Finance Parties or any of them under the Finance
                  Documents.

         (b)      The Intercreditor Agreement.

         (c)      The Grohe Holding Subordination Agreement and the Grohe
                  Holding Shareholder Loans.

         (d)      The Senior Notes Subordination Agreement and the Senior Notes
                  Loan.

         (e)      Copy of any Shareholder Loan, if any, and the Subordination
                  Agreement relating thereto.

         (f)      Evidence of the discharge of any Security or guarantees
                  granted by any member of the Group which is not permitted by
                  Clause 24.3 (NEGATIVE PLEDGE) and evidence that the Refinanced
                  Facilities will be refinanced on

                                     -154-
<PAGE>

                  or immediately prior to the first Utilisation Date, or, if the
                  Utilisation Request specifies that the proceeds of the
                  proposed Utilisation with regard to the Initial Term Loan are
                  to be paid to the Escrow Account, concurrently with the
                  release of proceeds from the Escrow Account in accordance with
                  the terms of the Escrow Account Agreement.

         (g)      A copy of the corporate agreement between Grohe Holding, Grohe
                  Consult GmbH and Grohe Beteiligungs GmbH & Co. KG.

3.       LEGAL OPINIONS

         (a)      A legal opinion of Clifford Chance Punder, legal advisers to
                  the Arrangers and the Agent in the Federal Republic of Germany
                  in form and substance satisfactory to the Agent.

         (b)      A legal opinion of the Agent's local counsel in each
                  jurisdiction in which an Obligor, a party to a Finance
                  Document other than the Grohe Holding Subordination Agreement
                  or a company to be pledged is incorporated.

4.       NOTE DOCUMENTS

         (a)      A copy of all Note Documents.

         (b)      A copy of the Senior Notes Loan and the Senior Notes
                  Subordination Agreement.

5.       OTHER DOCUMENTS AND EVIDENCE

         (a)      Evidence that any process agent referred to in Clause 41.2
                  (SERVICE OF PROCESS), if not an Original Obligor, has accepted
                  its appointment.

         (b)      A copy of any other Authorisation or other document, opinion
                  or assurance which the Agent considers to be necessary or
                  desirable (if it has notified the Company accordingly) in
                  connection with the entry into and performance of the
                  transactions contemplated by any Finance Document or for the
                  validity or enforceability of any Finance Document or of the
                  Transaction Security.

         (c)      The Original Financial Statements of each Original Obligor and
                  Grohe Holding.

         (d)      The Budget for the financial year 2003.

         (e)      The Business Plan.

         (f)      Evidence that the fees, costs and expenses then due pursuant
                  to Clause 14 (FEES), Clause 19 (COSTS AND EXPENSES) and Clause
                  15.5

                                     -155-
<PAGE>

                  (STAMP TAXES) have been paid or will be paid by the first
                  Utilisation Date.

         (g)      The executed Fee Letters.

         (h)      The following reports:

                  (i)      an up-date of the legal review report dated 13 March
                           2003 and relating to the Group and Grohe Holding by
                           CMS Hasche Sigle Eschenlohr Peltzer;

                  (ii)     an up-date of the market report dated 7 March 2003
                           and relating to the Group by Boston Consulting Group;

                  (iii)    an up-date of the financial and tax report dated 29
                           January 2003 and relating to the Group and Grohe
                           Holding by Ernst & Young;

                  in each case addressed to the Agent on behalf of the Finance
                  Parties; and

                  (iv)     the environmental report dated August 2000 and
                           relating to the Group and Grohe Holding by ERM
                           Laymeyer.

         (h)      The executed Escrow Account Agreement, if any.

         (i)      The Funds Flow Statement.

         (j)      A list of Financial Indebtedness (including interest rate
                  hedging), setting out the name of the debtor, the name of the
                  creditor, the outstanding amount, the undrawn commitment, the
                  purpose, the repayment dates and the final maturity date or,
                  in the case of interest rate hedging agreements, the name of
                  the debtor and the creditor, the mark-to-market valuation and
                  the termination date.

         (k)      A copy of the Existing Senior Credit Agreement and all other
                  documents entered into in connection therewith, including in
                  particular all security documents.

         (l)      Copy of the Syndication Letter.

                                     -156-
<PAGE>

                                     PART II
              CONDITIONS PRECEDENT TO SHAREHOLDER LOAN REFINANCING

1.       Evidence that the Senior Notes Consent has been granted.

2.       Evidence that any loans made by Grohe Beteiligungs to Grohe Holding and
         any withdrawals made from Grohe Beteiligungs will be made in form and
         substance satisfactory to the Agent.

3.       A copy of the loan agreement and the subordination agreement relating
         to the loan from Grohe Beteiligungs to Grohe Holding with respect to
         the Shareholder Loan Refinancing.

                                     -157-
<PAGE>

                                    PART III
     CONDITIONS PRECEDENT REQUIRED TO BE DELIVERED BY AN ADDITIONAL OBLIGOR

1.       An Accession Letter, duly executed by the Additional Obligor and the
         Company.

2.       A copy of the constitutional documents of the Additional Obligor.

3.       A copy of a resolution of the shareholders or partners of the
         Additional Obligor approving the terms of, and the transactions
         contemplated by, the Accession Letter and the Finance Documents and
         resolving that it execute the Accession Letter and any other Finance
         Document to which it is a party.

4.       A specimen of the signature of each person authorised to execute the
         Accession Letter and the Finance Documents on behalf of the Additional
         Obligor.

5.       A certificate of an authorised signatory of the Additional Obligor
         certifying that each copy document listed in this Part II of Schedule 2
         is correct, complete and in full force and effect as at a date no
         earlier than the date of the Accession Letter.

6.       If available, the latest audited financial statements of the Additional
         Obligor.

7.       Each Security Document which the Agent may require to be given by that
         Additional Obligor, duly executed by that Additional Obligor and, if
         required, the Security Agent.

8.       Any notices or documents required to be given or executed or made under
         the terms of the Security Documents entered into by the Additional
         Obligor.

9.       A copy of any other Authorisation or other document, opinion or
         assurance which the Agent considers to be necessary or desirable in
         connection with the entry into and performance of the transactions
         contemplated by the Accession Letter and each Finance Document to which
         the Additional Obligor is a party or for the validity and
         enforceability of any Finance Document or of any Transaction Security
         created or intended to be created by the Additional Obligor.

10.      A legal opinion of Clifford Chance Punder, legal advisers to the
         Arrangers and the Agent in the Federal Republic of Germany.

11.      If the Additional Obligor is incorporated in a jurisdiction other than
         the Federal Republic of Germany, a legal opinion of the legal advisers
         to the Arranger and the Agent in the jurisdiction in which the
         Additional Obligor is incorporated.

12.      If the proposed Additional Obligor is incorporated in a jurisdiction
         other than the Federal Republic of Germany, evidence that the process
         agent specified in

                                     -158-
<PAGE>

         Clause 41.2 (SERVICE OF PROCESS) has accepted its appointment in
         relation to the proposed Additional Obligor.

                                     -159-
<PAGE>

                                   SCHEDULE 3
                                    REQUESTS

                                     PART I
                               UTILISATION REQUEST

From:      [BORROWER]

To:        [AGENT]

Dated:

Dear Sirs
                       [COMPANY] - [O] FACILITY AGREEMENT
                           DATED [O] (THE "AGREEMENT")

1.       We refer to the Agreement. This is a Utilisation Request. Terms defined
         in the Agreement have the same meaning in this Utilisation Request
         unless given a different meaning in this Utilisation Request.

2.       We wish to borrow a Loan on the following terms:/We wish [o] as
         Fronting Bank to issue a Letter of Credit as follows:

<TABLE>
<CAPTION>
<S>                                                         <C>
         Proposed Utilisation Date:                         [o]  (or,  if  that is not a  Business  Day,
                                                            the next Business Day)

         Facility to be utilised:                           [Facility     A1]/[Facility     A2/[Facility
                                                            B]/[Revolving Facility]]*

         Currency of Loan/Letter of Credit/
         Bank Guarantee:                                    [o]

         Amount:                                            [o] or, if less, the Available Facility

         Interest Period/Term:                              [o]
</TABLE>

3.       We confirm that each condition specified in Clause 4.2 (FURTHER
         CONDITIONS PRECEDENT) is satisfied on the date of this Utilisation
         Request, in particular that no [Default/ for Rollover Loan: Event of
         Default/ Certain Funds Event of Default] is continuing and that the
         [Repeating Representations/ Certain Funds Repeating Representations]
         continue to be true and correct.

4.       The proceeds of this Loan should be credited to [ACCOUNT]/The Letter of
         Credit/Bank Guarantee should be issued in favour of [o] in the form
         attached and delivered to the recipient at [o]. The purpose of its
         issue is [o].

                                     -160-
<PAGE>

5.       This Utilisation Request is irrevocable.

                                Yours faithfully

                    .......................................
                            authorised signatory for
                           [NAME OF RELEVANT BORROWER]
* delete as appropriate

                                     -161-
<PAGE>

                                     PART II
                                SELECTION NOTICE
                            APPLICABLE TO A TERM LOAN

From:      [BORROWER]

To:        [AGENT]

Dated:

Dear Sirs

                       [COMPANY] - [O] FACILITY AGREEMENT
                           DATED [O] (THE "AGREEMENT")

1.       We refer to the Agreement. This is a Selection Notice. Terms defined in
         the Agreement have the same meaning in this Selection Notice unless
         given a different meaning in this Selection Notice.

2.       We refer to the following Term Loan[s] in [EUR/dollars] with an
         Interest Period ending on [o].

3.       [We request that the above Term Loan[s] be divided into [o] Term Loans
         with the following Base Currency Amounts and Interest Periods:]

         OR

         [We request that the next Interest Period for the above Term Loan[s] is
         [o]].

4.       [We request that the above Facility A1 Loan[s] [is]/[are] [denominated
         in the same currency for the next Interest Period]/[denominated in the
         following currencies: [o]. As this results in a change of currency we
         confirm that each condition specified in Clause 4.2 (FURTHER CONDITIONS
         PRECEDENT) is satisfied on the date of this Selection Notice. The
         proceeds of any change in currency should be credited to [ACCOUNT].].

5.       We confirm that no Default is continuing and that the Repeating
         Representations continue to be true and correct.

                                     -162-
<PAGE>

6.       This Selection Notice is irrevocable.

                                Yours faithfully

                      .....................................

                            authorised signatory for
                           [THE COMPANY ON BEHALF OF]
                           [NAME OF RELEVANT BORROWER]

                                     -163-
<PAGE>

                                   SCHEDULE 4
                             MANDATORY COST FORMULAE

1.       The Mandatory Cost is an addition to the interest rate to compensate
         Lenders for the cost of compliance with (a) the requirements of the
         Bank of England and/or the Financial Services Authority (or, in either
         case, any other authority which replaces all or any of its functions)
         or (b) the requirements of the European Central Bank.

2.       On the first day of each Interest Period (or as soon as possible
         thereafter) the Agent shall calculate, as a percentage rate, a rate
         (the "ADDITIONAL COST RATE") for each Lender, in accordance with the
         paragraphs set out below. The Mandatory Cost will be calculated by the
         Agent as a weighted average of the Lenders' Additional Cost Rates
         (weighted in proportion to the percentage participation of each Lender
         in the relevant Loan) and will be expressed as a percentage rate per
         annum.

3.       The Additional Cost Rate for any Lender lending from a Facility Office
         in a Participating Member State will be the percentage notified by that
         Lender to the Agent. This percentage will be certified by that Lender
         in its notice to the Agent to be its reasonable determination of the
         cost (expressed as a percentage of that Lender's participation in all
         Loans made from that Facility Office) of complying with the minimum
         reserve requirements of the European Central Bank in respect of loans
         made from that Facility Office.

4.       The Additional Cost Rate for any Lender lending from a Facility Office
         in the United Kingdom will be calculated by the Agent as follows:

         (a)      in relation to a sterling Loan:

                  AB + C (B-D) + E x 0.01
                  ----------------------- per cent. per annum
                       100 - (A + C)

         (b)      in relation to a Loan in any currency other than sterling:

                  E x 0.01
                  -------- per cent. per annum.
                    300

         Where:

(A)      is the percentage of Eligible Liabilities (assuming these to be in
         excess of any stated minimum) which that Lender is from time to time
         required to maintain as an interest free cash ratio deposit with the
         Bank of England to comply with cash ratio requirements.

                                     -164-
<PAGE>

(B)      is the percentage rate of interest (excluding the Margin and the
         Mandatory Cost and, if the Loan is an Unpaid Sum, the additional rate
         of interest specified in paragraph (a) of Clause 11.4 (DEFAULT
         INTEREST)) payable for the relevant Interest Period on the Loan.

(C)      is the percentage (if any) of Eligible Liabilities which that Lender is
         required from time to time to maintain as interest bearing Special
         Deposits with the Bank of England.

(D)      is the percentage rate per annum payable by the Bank of England to the
         Agent on interest bearing Special Deposits.

(E)      is designed to compensate Lenders for amounts payable under the Fees
         Rules and is calculated by the Agent as being the average of the most
         recent rates of charge supplied by the Reference Banks to the Agent
         pursuant to paragraph 7 below and expressed in pounds per
         (pound)1,000,000.

5.       For the purposes of this Schedule:

         (a)      "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the
                  meanings given to them from time to time under or pursuant to
                  the Bank of England Act 1998 or (as may be appropriate) by the
                  Bank of England;

         (b)      "FEES RULES" means the rules on periodic fees contained in the
                  FSA Supervision Manual or such other law or regulation as may
                  be in force from time to time in respect of the payment of
                  fees for the acceptance of deposits;

         (c)      "FEE TARIFFS" means the fee tariffs specified in the Fees
                  Rules under the activity group A.1 Deposit acceptors (ignoring
                  any minimum fee or zero rated fee required pursuant to the
                  Fees Rules but taking into account any applicable discount
                  rate); and

         (d)      "TARIFF BASE" has the meaning given to it in, and will be
                  calculated in accordance with, the Fees Rules.

6.       In application of the above formulae, A, B, C and D will be included in
         the formulae as percentages (i.e. 5 per cent. will be included in the
         formula as 5 and not as 0.05). A negative result obtained by
         subtracting D from B shall be taken as zero. The resulting figures
         shall be rounded to four decimal places.

7.       If requested by the Agent, each Reference Bank shall, as soon as
         practicable after publication by the Financial Services Authority,
         supply to the Agent, the rate of charge payable by that Reference Bank
         to the Financial Services Authority pursuant to the Fees Rules in
         respect of the relevant financial year of

                                     -165-
<PAGE>

         the Financial Services Authority (calculated for this purpose by that
         Reference Bank as being the average of the Fee Tariffs applicable to
         that Reference Bank for that financial year) and expressed in pounds
         per (pound)1,000,000 oF THe Tariff Base of that Reference Bank.

8.       Each Lender shall supply any information required by the Agent for the
         purpose of calculating its Additional Cost Rate. In particular, but
         without limitation, each Lender shall supply the following information
         on or prior to the date on which it becomes a Lender:

         (a)      the jurisdiction of its Facility Office; and

         (b)      any other information that the Agent may reasonably require
                  for such purpose.

         Each Lender shall promptly notify the Agent of any change to the
         information provided by it pursuant to this paragraph.

9.       The percentages of each Lender for the purpose of A and C above and the
         rates of charge of each Reference Bank for the purpose of E above shall
         be determined by the Agent based upon the information supplied to it
         pursuant to paragraphs 7 and 8 above and on the assumption that, unless
         a Lender notifies the Agent to the contrary, each Lender's obligations
         in relation to cash ratio deposits and Special Deposits are the same as
         those of a typical bank from its jurisdiction of incorporation with a
         Facility Office in the same jurisdiction as its Facility Office.

10.      The Agent shall have no liability to any person if such determination
         results in an Additional Cost Rate which over or under compensates any
         Lender and shall be entitled to assume that the information provided by
         any Lender or Reference Bank pursuant to paragraphs 3, 7 and 8 above is
         true and correct in all respects.

11.      The Agent shall distribute the additional amounts received as a result
         of the Mandatory Cost to the Lenders on the basis of the Additional
         Cost Rate for each Lender based on the information provided by each
         Lender and each Reference Bank pursuant to paragraphs 3, 7 and 8 above.

12.      Any determination by the Agent pursuant to this Schedule in relation to
         a formula, the Mandatory Cost, an Additional Cost Rate or any amount
         payable to a Lender shall, in the absence of manifest error, be
         conclusive and binding on all Parties.

13.      The Agent may from time to time, after consultation with the Company
         and the Lenders, determine and notify to all Parties any amendments
         which are required to be made to this Schedule in order to comply with
         any change in law,

                                     -166-
<PAGE>

         regulation or any requirements from time to time imposed by the Bank of
         England, the Financial Services Authority or the European Central Bank
         (or, in any case, any other authority which replaces all or any of its
         functions) and any such determination shall, in the absence of manifest
         error, be conclusive and binding on all Parties.

                                     -167-
<PAGE>

                                   SCHEDULE 5
                          FORM OF TRANSFER CERTIFICATES

To:      Dresdner Bank Luxembourg S. A. as Agent and Security Agent

From:    [THE EXISTING LENDER] (the "EXISTING LENDER") and [THE NEW LENDER] (the
         "NEW LENDER")

Dated:

                       [COMPANY] - [O] FACILITY AGREEMENT
                           DATED [O] (THE "AGREEMENT")

1.       We refer to the Agreement. This is a Transfer Certificate. Terms
         defined in the Agreement have the same meaning in this Transfer
         Certificate unless given a different meaning in this Transfer
         Certificate.

2.       We refer to Clause 26.5 (PROCEDURE FOR TRANSFER):

         (a)      The Existing Lender and the New Lender agree to the Existing
                  Lender transferring to the New Lender all or part of the
                  Existing Lender's Commitment, rights and obligations referred
                  to in the Schedule in accordance with Clause 26.5 (PROCEDURE
                  FOR TRANSFER).

         (b)      The proposed Transfer Date is [o].

         (c)      The Facility Office and address, fax number and attention
                  details for notices of the New Lender for the purposes of
                  Clause 34.2 (ADDRESSES) are set out in the Schedule.

3.       The New Lender expressly acknowledges the limitations on the Existing
         Lender's obligations set out in paragraph (c) of Clause 26.4
         (LIMITATION OF RESPONSIBILITY OF EXISTING LENDERS).

4.       The New Lender confirms that it has received a copy of each of the
         Security Documents which are governed by German law and are pledges, is
         aware of their contents and hereby expressly consents to the
         declarations of the Security Agent made on behalf of the New Lender as
         future pledgee in those Security Documents.

5.       This Transfer Certificate may be executed in any number of counterparts
         and this has the same effect as if the signatures on the counterparts
         were on a single copy of this Transfer Certificate.

6.       This Transfer Certificate is governed by German law.

                                     -168-
<PAGE>

                                  THE SCHEDULE

               COMMITMENT/RIGHTS AND OBLIGATIONS TO BE TRANSFERRED

                            [INSERT RELEVANT DETAILS]
                      [FACILITY OFFICE ADDRESS, FAX NUMBER
                 AND ATTENTION DETAILS FOR NOTICES AND ACCOUNT
                             DETAILS FOR PAYMENTS,]

[Existing Lender]                                    [New Lender]

By:                                                  By:

This Transfer Certificate is accepted by the Agent and the Transfer Date is
confirmed as [o].

[Agent]

By:

                                     -169-
<PAGE>

                                   SCHEDULE 6
                            FORM OF ACCESSION LETTER

To:      [o] as Agent

From:    [SUBSIDIARY] and [Company]

Dated:

Dear Sirs

                       [COMPANY] - [O] FACILITY AGREEMENT
                           DATED [O] (THE "AGREEMENT")

1.       We refer to the Agreement. This is an Accession Letter. Terms defined
         in the Agreement have the same meaning in this Accession Letter unless
         given a different meaning in this Accession Letter.

2.       [Subsidiary] agrees to become an Additional [Borrower]/[Guarantor] and
         to be bound by the terms of the Agreement as an Additional
         [Borrower]/[Guarantor] pursuant to Clause [27.2 (ADDITIONAL
         BORROWERS)]/[Clause 27.5 (ADDITIONAL GUARANTORS)] of the Agreement.
         [SUBSIDIARY] is a company duly incorporated under the laws of [NAME OF
         RELEVANT JURISDICTION].

3.       [SUBSIDIARY'S] administrative details are as follows:

         Address:

         Fax No:

         Attention:

4.       We hereby confirm that

         (a)      no Default is continuing or would occurs as a result of the
                  accession;

         (b)      the Repeating Representations are true and correct in relation
                  to [Subsidiary] as at the date of delivery of this Accession
                  Letter.

5.       This Accession Letter is governed by German law.

         [Company]                                            [Subsidiary]

                                     -170-
<PAGE>

                                   SCHEDULE 7
                           FORM OF RESIGNATION LETTER

To:      [o] as Agent

From:    [RESIGNING OBLIGOR] and [Company]

Dated:

Dear Sirs

                       [COMPANY] - [O] FACILITY AGREEMENT
                           DATED [O] (THE "AGREEMENT")

1.       We refer to the Agreement. This is a Resignation Letter. Terms defined
         in the Agreement have the same meaning in this Resignation Letter
         unless given a different meaning in this Resignation Letter.

2.       Pursuant to Clause 27.3 (RESIGNATION OF A BORROWER), we request that
         [resigning Obligor] be released from its obligations as a [Borrower]
         under the Agreement.

3.       We confirm that:

         (a)      no Default is continuing or would result from the acceptance
                  of this request; and

         (b)      the Repeating Representations are true and correct as at the
                  date of delivery of this Resignation Letter.

4.       This Resignation Letter is governed by German law.

        [Company]                                          [Subsidiary]

        By:                                                By:

                                     -171-
<PAGE>

                                   SCHEDULE 8
                         FORM OF COMPLIANCE CERTIFICATE

To:      [o] as Agent

From:    [COMPANY]

Dated:

Dear Sirs

                       [COMPANY] - [O] FACILITY AGREEMENT
                           DATED [O] (THE "AGREEMENT")

1.       We refer to the Agreement. This is a Compliance Certificate. Terms
         defined in the Agreement have the same meaning when used in this
         Compliance Certificate unless given a different meaning in this
         Compliance Certificate.

2.       We confirm that:

         [INSERT DETAILS OF FINANCIAL COVENANTS AND WHETHER THE GROUP IS IN
         COMPLIANCE WITH THOSE COVENANTS]

3.       We confirm that no Default is continuing and that the Repeating
         Representations continue to be true and correct.

Signed:    ..............................         ..............................
           Director of                            Director of
           [COMPANY]                              [COMPANY]

[INSERT APPLICABLE CERTIFICATION LANGUAGE]

......................
for and on behalf of
[NAME OF AUDITORS OF THE COMPANY]

                                     -172-
<PAGE>

                                   SCHEDULE 9
                                EXISTING SECURITY

                                     PART I

1.       the pledge of the partnership interest in Friedrich Grohe under a
         partnership interest pledge agreement dated 29 May and 15/19 June 2000,
         amended on 26 October 2000, and entered into between, among others,
         Grohe Holding as pledgor and Dresdner Bank AG as pledgee;

2.       the pledge of one share in the nominal value of DM 500.00 of Rost & Co.
         GmbH (which was later transformed into DAL GmbH & Co. KG) and one share
         in the nominal value of DM 24,500.00 in Grohe Thermostat GmbH (which
         was later transformed into Grohe Thermostat GmbH & Co. KG and
         subsequently merged into Friedrich Grohe AG & Co. KG) under a share
         pledge agreement dated 27 March 2000 and entered into, among others, BC
         European Capital VI-1 as pledgor and Dresdner Bank Luxembourg S. A. as
         pledgee;

3.       the pledge of the shares of Friedrich Grohe Geschaftsfuhrungs AG dated
         under a share pledge agreement dated 19/20 June 2000, amended on 26
         October 2000, and entered into between, among others, Grohe Holding as
         pledgor and Dresdner Bank AG as pledgee;

4.       the pledge of the limited partnership interest in Schmohle GmbH & Co.
         created under an interest pledge agreement dated 21 June 2000 and
         entered into between, among others, Friedrich Grohe as pledgor and
         Dresdner Bank AG as pledgee;

5.       the pledges of the shares of Rost & Co. GmbH (which was later
         transformed into DAL GmbH & Co. KG), Grohe Thermostat GmbH (which was
         later transformed into Grohe Thermostat GmbH & Co. KG and subsequently
         merged into Friedrich Grohe AG & Co. KG), Grohe VerwaltungsGmbH, H. D.
         Eichelberg & Co. Gesellschaft mit beschrankter Haftung, Herzberger
         Armaturen GmbH (which was later transformed into Herzberger Armaturen
         GmbH & Co. KG and subsequently merged into Friedrich Grohe AG & Co. KG)
         and Grohe International created under a share pledge agreement dated 19
         June 2000 and entered into between, among others, Friedrich Grohe as
         pledgor and Dresdner Bank AG as pledgee;

6.       the pledge of the shares of Grohe Gesellschaft m.b.H., Vienna, Grohe
         S.A.R.L., Grohe S.p.A., Grohe N.V., Grohe Japan K.K., Grohe A/S, Grohe
         Pacific Pte. Ltd., Tempress Ltd., Grohe Polska Sp.zo.o., Grohe
         Nederland B.V., Grohe America Inc. and Grohe Espana S.A. created under
         an umbrella share pledge

                                     -173-
<PAGE>

         agreement dated 28 December 2000 and entered into between, among
         others, Grohe International as pledgor and Dresdner Bank AG as pledgee;

7.       the pledge of the shares in Grohe Gesellschaft m.b.H., Vienna created
         under a share pledge agreement dated 28 December 2000 and entered into
         between, among others, Grohe International as pledgor and Dresdner Bank
         AG as pledgee;

8.       the pledge of the shares of Grohe N. V. created under a share pledge
         agreement dated 28 December 2000 and entered into between, among
         others, Grohe International as pledgor and Dresdner Bank AG as pledgee;

9.       the pledge of the share capital of Grohe Japan K. K. created under a
         share pledge agreement dated 28 December 2000 and entered into between,
         among others, Grohe International as pledgor and Dresdner Bank AG as
         pledgee;

10.      the pledge of shares in Grohe Pacific Pte. Ltd. created under a share
         pledge agreement dated 28 December 2000 and entered into between, among
         others, Grohe International as pledgor and Dresdner Bank AG as pledgee;

11.      the pledge of 75 % of the share capital of Grohe A/S created under a
         share pledge agreement dated 28 December 2000 and entered into between,
         among others, Grohe International as pledgor and Dresdner Bank AG as
         pledgee;

12.      the first ranking pledge of 25 % of the share capital in Grohe A/S
         created under a share pledge agreement dated 6 October 1999, amended on
         24 March/6 April 2000 and amended on 26 October 2000 and entered into
         between, among others, Grohe Holding as pledgor and Dresdner Bank AG as
         pledgee;

13.      the second ranking pledge of 25 % of the share capital in Grohe A/S
         created under a share pledge agreement dated 26 October 2000 and
         entered into between, among others, Grohe Beteiligungs as pledgor and
         Dresdner Bank AG as pledgee;

14.      the second ranking pledge of 25 % of the share capital in Grohe A/S
         created under a share pledge agreement dated 6 October 1999 and amended
         on 24 March/6 April 2000 and entered into between, among others, Grohe
         Holding as pledgor and Dresdner Bank AG as pledgee;

15.      the third ranking pledge of 25 % of the share capital in Grohe A/S
         created under a share pledge agreement dated 6 October 1999 and amended
         on 24 March/6 April 2000 and entered into between, among others, Grohe
         Holding as pledgor and Dresdner Bank AG as pledgee;

                                     -174-
<PAGE>

16.      the pledge of the shares of Grohe America Inc. created under a share
         pledge agreement dated 28 December 2000 and entered into, among others,
         between Grohe International as pledgor and Dresdner Bank AG as pledgee;

17.      the pledge of the shares of Grohe S.A.R.L. created under a share pledge
         agreement (ACTE DE NANTISSEMENT DE PARTS SOCIALES) dated 28 December
         2000 and entered into between, among others, Grohe International as
         pledgor and Dresdner Bank AG as pledgee and registered with the French
         tax authorities on 8 February 2001 and notified upon Grohe S.A.R.L. by
         bailiff (SIGNIFICATION PAR HUISSIER) on 26 February 2001;

18.      the pledge of 99.9 % of the ordinary shares of Grohe S.p.A. created
         under a share pledge agreement dated 28 December 2000 and entered into
         between, among others, Grohe International as pledgor and Dresdner Bank
         AG as pledgee;

19.      the pledge of shares of Grohe Espana, S. A. created under a share
         pledge agreement dated 28 December 2000 and entered into between, among
         others, Grohe International as pledgor and Dresdner Bank AG as pledgee;

20.      the security interest in the shares of Tempress Ltd. (Ontario) created
         under a share pledge agreement dated 28 December 2000 and entered into
         between, among others, Grohe International as pledgor and Dresdner Bank
         AG as pledgee;

21.      the pledge of the shares of Grohe Deutschland Vertriebs GmbH created
         under a share pledge agreement dated 7 November 2000 and entered into
         between, among others, Friedrich Grohe as pledgor and Dresdner Bank AG
         as pledgee;

22.      the security assignment agreement dated 26 October 2000 regarding all
         existing and future claims arising out of or in connection with the
         Share Purchase Agreement and the Danish Share Purchase Agreement and
         entered into between Grohe Holding and Grohe Beteiligungs as assignors
         and the security agent as assignee;

23.      the hedging security assignment agreement dated 26 October 2000
         regarding all present and future claims of the assignors out of (i)
         agreements for interest rate swaps, interest rate options, interest
         rate swap options, (ii) transactions with third parties in which
         obligations of Grohe Beteiligungs are directly or indirectly affected
         by the level of interest rates, and (iii) all other transactions with
         third parties a primary purpose of which is to hedge against the
         financial risks resulting from interest rate fluctuations and entered
         into between Grohe Holding and Grohe Beteiligungs as assignors and the
         security agent as assignee;

                                     -175-
<PAGE>

24.      the hedging security assignment agreement dated 19/21 June 2000
         regarding all present and future claims of the assignors out of (i)
         agreements for interest rate swaps, interest rate options, interest
         rate swap options, (ii) all of the transactions with third parties in
         which the obligations of the assignor and/or of his business partners
         are directly or indirectly determined or affected by the level of
         interest rates or their development and (iii) all other transactions
         with third parties the primary purpose of which is to hedge against the
         financial risks resulting from interest fluctuations and entered into
         between Friedrich Grohe as assignor and the Security Agent as assignee;

25.      the assignment agreement dated 19 June 2000 regarding all present and
         future receivables and other monetary claims against all of its debtors
         and entered into between Friedrich Grohe as assignor and the Security
         Agent as assignee. All rights and claims assigned to the Security Agent
         under this agreement are hereby reassigned to Friedrich Grohe;

26.      the assignment agreement dated 2/8 November 2000 regarding all present
         and future receivables and other monetary claims against all of the
         assignor's debtors and entered into between Grohe Deutschland Vertriebs
         GmbH as assignor and Dresdner Bank AG as assignee;

27.      the IP assignment agreement dated 2 October 2002 regarding patents,
         trade-marks and other intellectual property rights and entered into
         between Friedrich Grohe as assignor and Dresdner Bank AG as assignee;

28.      the first ranking pledge of all present and future claims of Grohe
         Holding GmbH out of (i) agreements for interest rate swaps, interest
         rate options, interest rate swap options, (ii) all other transactions
         with the security agent in which the obligations of the borrower and/or
         his business partners are directly or indirectly determined or affected
         by the level of interest rates or their development and (iii) all other
         transactions with the security agent the primary purpose of which is to
         hedge against the financial risks resulting from interest rate
         fluctuations, created under a pledge agreement dated 6 October 1999,
         amended 26 October 2000 and entered into between, among others, Grohe
         Holding as pledgor and Dresdner Bank AG as pledgee;

29.      the second ranking pledge of all present and future claims of Grohe
         Beteiligungs out of (i) agreements for interest rate swaps, interest
         rate options, interest rate swap options, (ii) transactions with third
         parties in which obligations of Grohe Beteiligungs are directly or
         indirectly effected by the level of interest rates, and (iii) all other
         transactions with third parties the primary purpose of which is to
         hedge against the financial risks resulting from interest rate
         fluctuations, created under a pledge agreement dated 26 October 2000
         and entered into between,

                                     -176-
<PAGE>

         among others, Grohe Beteiligungs as pledgor and Dresdner Bank AG as
         pledgee;

30.      the pledge over all present and future claims of Friedrich Grohe
         against Dresdner Bank AG arising out of (i) interest rate swaps,
         interest rate options, interest rate swaps options, (ii) all other
         transactions with the security agent in which obligations of Friedrich
         Grohe are directly or indirectly determined or affected by the level of
         interest rates or their development, and (iii) all other transactions
         with the security agent the primary purpose of which is to hedge
         against the financial risks from interest rate fluctuation, created
         under a pledge agreement dated 19/20 June 2000 and entered into
         between, among others, Friedrich Grohe as pledgor and Dresdner Bank AG
         as pledgee;

31.      the pledge of the escrow account (no. 103-243/0/002/090) at Dresdner
         Bank Luxembourg S.A. created under a share pledge agreement dated 26
         October 2000 and the pledge of the escrow account (no. 103
         922/0/002/090) at Dresdner Bank Luxembourg S.A. created under a share
         pledge agreement dated 8 November 2000, both entered into between,
         among others, Grohe Beteiligungs as pledgor and Dresdner Bank AG as
         pledgee;

32.      the security transfer of current assets (SICHERUNGSUBEREIGNUNG VON
         UMLAUFVERMOGEN) dated 19 June 2000 and entered into between Friedrich
         Grohe as as-signor and Dresdner Bank AG as assignee;

33.      the security transfer of fixed assets (SICHERUNGSUBEREIGNUNG VON
         ANLAGEVERMOGEN) dated 19 June 2000 and entered into between Friedrich
         Grohe as assignor and Dresdner Bank AG as assignee.

                                     -177-
<PAGE>

                                     PART II

<TABLE>
<CAPTION>
          Name of Company                         Security                   Total Principal Amount of
                                                                                Indebtedness Secured
<S>                                   <C>                                    <C>
GROHEDAL                              land charge over DM 8,000,000 in              EUR 639,115
SANITARSYSTEME                        favour of IkB, Dusseldorf over          (as of 31 December 2002)
GmbH & Co. KG                         land registered with the land
                                      registry Haldensleben, leaf 6245

                                      owner's land charge over                           0
                                      DM 7,000,000 over land
                                      registered with the land
                                      registry in Minden/Lerbeck, leaf
                                      448A

DAL                                   owner's land charge over                           0
Sanitartechnologie                    DM 5,000,000 over land
GmbH                                  registered with the land
                                      registry in Eilenburg/Zwochau,
                                      leaf 412

AQUA Butzke GmbH                      land charge over DM 15,000,000               EUR 5,752,034
                                      in favour of WestLB, Dusseldorf
                                      over land registered with the           (as of 31 December 2002)
                                      land registry in Zossen, leaf
                                      2588

Rolto GmbH & Co. KG                   land charge over DM 5,000,000 in             EUR 1,214,818
                                      favour of Berliner Bank, Berlin
                                      over land registered with the           (as of 31 December 2002)
                                      land registry in Wittenau, leaf
                                      9940

                                     -178-
<PAGE>

          Name of Company                         Security                   Total Principal Amount of
                                                                                Indebtedness Secured

Schmole GmbH & Co. KG                 land charge over DM 9,000,000 in              EUR 176,986
                                      favour of Commerzbank AG,
                                      Iserlohn over heredity building         (as of 31 December 2002)
                                      right registered with the land
                                      registry in Iserlohn/Becke, leaf
                                      0509
</TABLE>

                                     -179-
<PAGE>

                                   SCHEDULE 10
                                   TIMETABLES

<TABLE>
<CAPTION>
                                                     LOANS IN EURO       LOANS IN OTHER CURRENCIES
<S>                                                  <C>                 <C>
Agent notifies the Company if a currency is                -                           U-4
approved as an Optional Currency in
accordance with Clause 4.3 (CONDITIONS
RELATING TO OPTIONAL CURRENCIES)

Delivery of a duly completed Utilisation                  U-3                          U-3
Request (Clause 5.1 (DELIVERY OF A
UTILISATION REQUEST) or a Selection Notice              9.30am                       9.30am
(Clause 12.1 (SELECTION OF INTEREST PERIODS))

Agent determines (in relation to a                         -                           U-3
Utilisation) the Base Currency Amount of the
Loan, Letter of Credit or Bank Guarantee, if                                          noon
required under Clause 5.4 (LENDERS'
PARTICIPATION)

Agent notifies the Lenders of the Loan,                   U-3                          U-3
Letter of Credit or Bank Guarantee in
accordance with Clause 5.4 (LENDERS'                    3.00pm                       3.00pm
PARTICIPATION) or the interest period
selected in accordance with Clause 12.1
(SELECTION OF INTEREST PERIODS)

Agent receives a notification from a Lender                                            U-3
under Clause 7.2 (UNAVAILABILITY OF A
currency)                                                                            5.00pm

Agent gives notice in accordance with                                                  U-2
Clause 7.2 (UNAVAILABILITY OF A CURRENCY)
                                                                                     9.30am

LIBOR or EURIBOR is fixed                       Quotation Day as of      Quotation Day as of 11:00 a.m.
                                                11:00 a.m. Frankfurt     London time
                                                time

                                     -180-
<PAGE>

                                                     LOANS IN EURO       LOANS IN OTHER CURRENCIES

"U" = date of utilisation
</TABLE>

                                     -181-
<PAGE>

                                   SCHEDULE 11
                            FORM OF LETTER OF CREDIT

To:      [beneficiary]

Date:

Dear Sirs

IRREVOCABLE STANDBY LETTER OF CREDIT NO. [O]

This Letter of Credit is issued by [o], (the "ISSUER") at the request of [o] in
your favour on the following terms:

34.      The Issuer shall not be obliged to make payments hereunder exceeding in
         aggregate the maximum amount of [o]. Any payment hereunder shall be
         made in [CURRENCY] and shall reduce the Issuer's liability to make
         payment hereunder accordingly.

35.      This Letter of Credit shall expire at [o] a.m./p.m., London time on [o]
         200[o] (the "EXPIRY DATE"). The Issuer will have no liability in
         respect of any demand delivered after such time [and a demand not
         accompanied by the information mentioned in paragraph 3(b) below shall
         not be validly delivered].

36.      Subject to paragraph 2 above, within [four] business days of receiving
         your demand on the Issuer in the form set out in the Appendix hereto
         specifying the amount claimed under this Letter of Credit and bearing
         an endorsement of the above Letter of Credit number [1TOGETHER WITH
         VERIFICATION BY YOUR BANKERS CONFIRMING THAT THE SIGNATORIES ON SUCH
         DEMAND ARE AUTHORISED TO SIGN AND DELIVER SUCH DEMAND ON YOUR BEHALF]
         AT [DETAILS OF ISSUER'S OFFICE TO BE INSERTED] the Issuer hereby agrees
         to pay to you in the currency specified in paragraph 1 above, subject
         to the maximum amount referred to in paragraph 1 above.

37.      Your rights and the rights of the Issuer under this Letter of Credit
         may not be assigned or transferred.

38.      This Letter of Credit is subject to Uniform Customs and Practice for
         Documentary Credits (International Chamber of Commerce, Publication No.
         500-1993).

----------
1 Delete if beneficiary is a bank.

                                     -182-
<PAGE>

39.      This Letter of Credit is governed by [INSERT LAW OF THE ISSUER] law
         and, for the benefit of the Issuer only, the courts of the [o] shall
         have exclusive jurisdiction.

Yours faithfully

.........................................
for and on behalf of
[name of Fronting Bank]

                                     -183-
<PAGE>

                          APPENDIX TO LETTER OF CREDIT
                                 FORM OF DEMAND

To:      [o]

From:    [The beneficiary]

                                                        [Date]

Dear Sirs

IRREVOCABLE STANDBY LETTER OF CREDIT NO. [O] (THE "LETTER OF CREDIT")

We refer to the Letter of Credit. Terms defined in the Letter of Credit and not
otherwise defined herein bear the same meaning herein.

We are writing to inform you that we are entitled to make demand on you under
the Letter of Credit in the amount of [o], being the amount which has become due
and payable by the [o] but which has not been paid and we hereby demand payment
of such amount.

Yours faithfully

.....................................
for and on behalf of beneficiary]

                                     -184-
<PAGE>

                                   SCHEDULE 12
                             FORM OF BANK GUARANTEE

To:      [beneficiary]

Date:

Dear Sirs,

As security for a credit which you will grant to [o] we, [o] hereby irrevocably
undertake to pay you on first demand, irrespective of the validity and the
effects of the abovementioned credit relationship and waiving all rights of
objection and defence arising therefrom, any amount up to a maximum of [o]
(words [o]) (principal, interest and all other charges included) upon receipt of
your duly signed written request for payment, or your duly encoded SWIFT or
telex, stating that the amount claimed has become due to you by [o] and remained
unpaid. Your claim will be considered as having been made once we are in
possession of your written request for payment, or your telex/SWIFT to this
effect, at our above address.

The total amount of this guarantee will be reduced by any payment effected
hereunder.

This guarantee is valid until close of business in [o] on [o] and expires in
full and automatically if your claim has not been made on or before that date,
regardless of such date being a banking day or not.

This guarantee shall be governed by and construed in accordance with [INSERT LAW
OF ISSUER] law and, for our benefit only, the courts of [o] shall have exclusive
jurisdiction.

                                     -185-
<PAGE>

                                   SCHEDULE 13
                       FORM OF CONFIDENTIALITY UNDERTAKING

From: [Existing Lender]

To: [New Lender]

                                                      [  ] 2003

                     CONFIDENTIALITY AGREEMENT RELATING TO A

                 FACILITY AGREEMENT DATED [ ] (THE "AGREEMENT")

You are considering acquiring an interest in the facilities made available
pursuant to the Agreement (the "FACILITIES"). In connection with such
acquisition, you or any of your representatives, including but not limited to,
lawyers, accountants, consultants and financial advisors (together with
employees, officers and directors "REPRESENTATIVES") will receive certain
financial and other information about Grohe Holding GmbH, the ultimate parent
company of the Grohe group, Friedrich Grohe and / or Grohe Beteiligung or
companies in which Friedrich Grohe holds a direct or indirect interest or which
are affiliated with Friedrich Grohe (together the "GROUP") which is either not
public, confidential or proprietary in nature and which may be disclosed either
in written form, electronically, orally, or otherwise. Any such information
furnished to you or your Representatives, together with any copies, analyses,
compilations, forecasts, studies or other documents prepared by you or your
Representatives which contain or otherwise reflect such information or your
review of, or interest in, the Group is hereinafter referred to as the
"INFORMATION".

In considering of us furnishing you with the Information, you agree that:

1.       The Information will be kept confidential and shall not, expect as
         provided in this paragraph and in paragraph 6 below, without our prior
         written consent, be disclosed either directly or indirectly by you or
         by your Representatives, in any manner whatsoever, in whole or in part,
         and shall not be used by you or by your Representatives, for any
         purpose whatsoever other than for the purpose of the evaluating whether
         to acquire any interest in the Facilities. You shall keep the

                                     -186-
<PAGE>

         Information secure and in such a way to prevent unauthorised access by
         any third party. You shall have no rights over the Information beyond
         those expressly contained in this Agreement. Moreover, you agree to
         reveal the Information only to such of your Representatives who need to
         know the Information for the purpose of evaluating your acquisition
         described above. You shall procure that all of your Representatives to
         whom such disclosure is made will act in accordance with the terms of
         this Agreement as if each of them were a party hereto, and you agree
         that you shall be fully responsible to us for any breach of this
         Agreement by you or by any of your Representatives.

2.       Without our prior written consent, except as provided for in paragraphs
         1 and 6, you and your Representatives will not, directly or indirectly,
         disclose to any person or entity the fact that the Information has been
         made available or that discussions or negotiations are taking place or
         have taken place in connection with the Facilities.

3.       All copies of the Information, including analyses, compilations,
         forecasts, studies or other documents prepared by you or by your
         Representatives will be returned to us or destroyed immediately upon
         our request and no copy thereof will be retained by you. On request,
         you will provide a written certificate signed by a director to the
         effect that all Information has either been returned or destroyed in
         accordance with this paragraph. Notwithstanding the foregoing, you may
         retain such copies of the Information as may be required for your
         compliance with internal and external regulatory or legal purposes.

4.       The term Information shall not include such portions of the Information
         which you can show (i) are generally available to the public other than
         as a result of any failure to comply with the terms of this Agreement
         by you or by your Representatives or (ii) are or become available to
         you from a source which is not prohibited from disclosing such
         information to you by any legal, contractual or fiduciary obligation to
         us.

5.       In the event that you become compelled (pursuant to any law or
         regulation or the requirements of any stock exchange or other
         regulatory organisation, with whose rules you are required to comply)
         to disclose any part of the Information, you shall promptly (to the
         extent permitted by law) before complying with any such requirement
         notify us in writing of the same and of the action which is proposed to
         be taken in response.

6.       The obligations in this letter are continuing and, in particular, shall
         survive the termination of any discussions or negotiations between you
         and us. Notwithstanding the previous sentence, the obligations, in this
         letter shall cease (a) if you become a party to or otherwise acquire
         (by assignment or sub participation) an interest, direct or indirect in
         the Facilities or (b) twelve months

                                     -187-
<PAGE>

         after you have returned all Information supplied to you by us and
         destroyed or permanently erased all copies of Information made by you
         (other than any such Information or copies which have been disclosed
         under paragraph 1 or 6 above or which are not required to be returned
         or destroyed.

7.       You acknowledge and agree that:

         (a)      Neither we or any of our officers, employees or advisers (each
                  a "RELEVANT PERSON" (i) make any representation or warranty,
                  express or implied, as to, or assume any responsibility for,
                  the accuracy, reliability or completeness of any of the
                  Information or any other information supplied by us or any
                  member of the Group or the assumptions on which it is based or
                  (ii) shall be under any obligation to update or correct any
                  inaccuracy in the Information or any other information
                  supplied by us or any member of the Group or be otherwise
                  liable to you or any other person in respect to the
                  Information or any such information; and

         (b)      we or members of the Group may be irreparably harmed by the
                  breach of the terms of this letter and damages may not be an
                  adequate remedy; each Relevant Person or member of the Group
                  may be granted an injunction or specific performance for any
                  threatened or actual breach of the provisions of this letter
                  by you.

8.       No failure or delay by us in exercising any right under this Agreement
         shall operate as a waiver thereof, and no variation shall be effective,
         and less in writing and signed by us.

9.       The provisions contained herein shall be governed by and construed in
         accordance with German law. Exclusive forum for all disputes arising
         out of or in connection with this Agreement shall be the court of
         Frankfurt.

10.      If any term or provision of this Agreement shall be held invalid or
         unenforceable, in whole or in part, such invalidity or unenforceability
         shall not affect the validity of the remainder of this Agreement.

Yours sincerely,

[Existing Lender]                   [Existing Lender]

_________________________           _______________________________

                                     -188-
<PAGE>

Accepted:

By: [New Lender]

                                     -189-
<PAGE>

                                   SCHEDULE 14
                       BORROWER EXIT TRANSFER CERTIFICATE

To:      [o] as Agent

From:    Grohe Beteiligungs GmbH & Co. KG ("EXITING BORROWER") and Friedrich
Grohe AG & Co. KG (the "NEW BORROWER")

Dated:

1.       We refer to an agreement (the "CREDIT AGREEMENT") dated [o] and made,
         amongst others between Grohe Beteiligungs GmbH & Co. KG as Company, [o]
         as Agent and Security Agent, the financial institutions defined therein
         as Lenders and others.

2.       Terms defined in the Credit Agreement shall bear the same meaning
         herein.

3.       This is to record that transfers referred to in Clause [o] (TRANSFERS
         ON BORROWER EXIT DATE) which are to take effect in accordance with such
         Clause on the Borrower Exit Date in respect of the following Facility
         A2 Loans are to be transferred from the Exiting Borrower to the New
         Borrower(s) as follows:

<TABLE>
<CAPTION>
        Advance                       Amount of Facility     Current Interest     Amount transferred
<S>                                   <C>                    <C>                  <C>
                                           A2 Loan                Period
</TABLE>

4.       This certificate is governed by German law.

         Grohe Beteiligungs GmbH & Co. KG            Friedrich Grohe AG & Co. KG

         By:                                         By:

         Accepted by the Agent

         [Agent]

         By:

         Date:

                                     -190-
<PAGE>

                                   SCHEDULE 15
                            LIST OF CURRENT INVESTORS

<TABLE>
<CAPTION>
                             Gesellschafter/                             Geschaftsanteil/

                               SHAREHOLDER                                     SHARE

<S>                                                                  <C>
       1    BC European Capital VI-1

            mit Geschaftsanteilen im Nennbetrag von /                (euro)       1.837.550,00

            with shares with a nominal value of

       2    BC European Capital VI-2

            mit Geschaftsanteilen im Nennbetrag von /                (euro)       1.837.550,00

            with shares with a nominal value of

       3    BC European Capital VI-3

            mit Geschaftsanteilen im Nennbetrag von /                (euro)       1.837.550,00

            with shares with a nominal value of

       4    BC European Capital VI-4

            mit Geschaftsanteilen im Nennbetrag von /                (euro)       1.804.250,00

            with shares with a nominal value of

       5    BC European Capital VI-5

            mit Geschaftsanteilen im Nennbetrag von /                (euro)       1.790.850,00

            with shares with a nominal value of

                                     -191-
<PAGE>

       6    BC European Capital VI-6

            mit Geschaftsanteilen im Nennbetrag von /                (euro)       1.789.150,00

            with shares with a nominal value of

       7    BC European Capital VI-7

            mit Geschaftsanteilen im Nennbetrag von /                (euro)       1.780.800,00

            with shares with a nominal value of

       8    BC European Capital VI-8

            mit Geschaftsanteilen im Nennbetrag von /                (euro)       1.779.300,00

            with shares with a nominal value of

       9    BC European Capital VI-9

            mit Geschaftsanteilen im Nennbetrag von /                (euro)       1.812.550,00

            with shares with a nominal value of

      10    BC European Capital VI-10

            mit Geschaftsanteilen im Nennbetrag von /                (euro)       1.787.500,00

            with shares with a nominal value of

      11    BC European Capital VI-11

            mit Geschaftsanteilen im Nennbetrag von /                (euro)         133.700,00

            with shares with a nominal value of

      12    BC European Capital VI-12

            mit Geschaftsanteilen im Nennbetrag von /                (euro)         367.650,00

            with shares with a nominal value of

                                     -192-
<PAGE>

      13    BC European Capital VI-14

            mit Geschaftsanteilen im Nennbetrag von /                (euro)          16.650,00

            with shares with a nominal value of

      14    Teabar Capital Corporation

            mit Geschaftsanteilen im Nennbetrag von /                (euro)      10.722.950,00

            with shares with a nominal value of

      15    Michel Guillet

            mit Geschaftsanteilen im Nennbetrag von /                (euro)          33.450,00

            with shares with a nominal value of

      16    Celia Guillet

            mit Geschaftsanteilen im Nennbetrag von /                (euro)             800,00

            with shares with a nominal value of

      17    Edouard Guillet

            mit Geschaftsanteilen im Nennbetrag von /                (euro)             800,00

            with shares with a nominal value of

      18    Patrice Hoppenot

            mit Geschaftsanteilen im Nennbetrag von /                (euro)          16.650,00

            with shares with a nominal value of

      19    Raymond Svider

            mit Geschaftsanteilen im Nennbetrag von /                (euro)          16.650,00

            with shares with a nominal value of

                                     -193-
<PAGE>

      20    Vincent Fesquet

            mit Geschaftsanteilen im Nennbetrag von /                (euro)             350,00

            with shares with a nominal value of

      21    Remi Terrail                                             (euro)             350,00

            mit Geschaftsanteilen im Nennbetrag von /

            with shares with a nominal value of

      22    Capital d'Amerique CDPQ Inc.

            mit Geschaftsanteilen im Nennbetrag von /                (euro)       8.223.750,00

            with shares with a nominal value of

      23    Peter Korfer-Schun

            mit Geschaftsanteilen im Nennbetrag von /                (euro)         297.700,00

            with shares with a nominal value of                      (euro)          54.800,00

      24    Dr. Rainer Simon

            mit Geschaftsanteilen im Nennbetrag von /                (euro)         297.700,00

            with shares with a nominal value of                      (euro)          54.800,00

      25    BdW Beteiligungsgesellschaft fur die deutsche
            Wirtschaft mbH & Co. KG
                                                                     (euro)       2.824.850,00
            mit Geschaftsanteilen im Nennbetrag von /

            with a share with a nominal value of

                                     -194-
<PAGE>

      26    HVB Offene Unternehmensbeteiligungs AG

            mit Geschaftsanteilen im Nennbetrag von /                (euro)       2.824.850,00

            with shares with a nominal value of

      27    Crescat Equity 1 Beteiligungsgesellschaft mbH &
            Co. KG
                                                                     (euro)         657.900,00
            mit Geschaftsanteilen im Nennbetrag von /

            with shares with a nominal value of

      28    South Light Investment Pte Limited

            mit Geschaftsanteilen im Nennbetrag von /                (euro)       2.824.850,00

            with shares with a nominal value of

      29    HarbourVest International Private Equity
            Partners III-Direct Fund L.P.
                                                                     (euro)       1.694.850,00
            mit Geschaftsanteilen im Nennbetrag von /

            with shares with a nominal value of

      30    Laranjedo Servicios e Gestao Lda

            mit Geschaftsanteilen im Nennbetrag von /                (euro)         564.950,00

            with shares with a nominal value of

      31    BC European Capital V-1

            mit Geschaftsanteilen im Nennbetrag von /                (euro)         163.850,00

            with shares with a nominal value of

                                     -195-
<PAGE>

      32    BC European Capital V-2

            mit Geschaftsanteilen im Nennbetrag von /                (euro)         163.850,00

            with shares with a nominal value of

      33    BC European Capital V-3

            mit Geschaftsanteilen im Nennbetrag von /                (euro)         179.400,00

            with shares with a nominal value of

      34    BC European Capital V-4

            mit Geschaftsanteilen im Nennbetrag von /                (euro)         175.950,00

            with shares with a nominal value of

      35    BC European Capital V-5

            mit Geschaftsanteilen im Nennbetrag von /                (euro)         178.050,00

            with shares with a nominal value of

      36    BC European Capital V-6

            mit Geschaftsanteilen im Nennbetrag von /                (euro)         155.850,00

            with shares with a nominal value of

      37    Detlef Spigiel

            mit Geschaftsanteilen im Nennbetrag von /                (euro)         228.050,00

            with shares with a nominal value of

      38    Dr. Hellmut K. Albrecht

            mit Geschaftsanteilen im Nennbetrag von /                (euro)          59.900,00

            with shares with a nominal value of

                                     -196-
<PAGE>

      39    Cornelius Geber

            mit Geschaftsanteilen im Nennbetrag von /                (euro)           9.750,00

            with shares with a nominal value of                      (euro)             400,00

      40    Stephan M. Heck

            mit Geschaftsanteilen im Nennbetrag von /                (euro)         185.600,00

            with shares with a nominal value of

      41    Michael Grimm

            mit Geschaftsanteilen im Nennbetrag von /                (euro)         185.600,00

            with shares with a nominal value of
</TABLE>

                                     -197-
<PAGE>

                                   SIGNATURES

THE COMPANY

Grohe Beteiligungs GmbH & Co. KG

By:

Address:          c/o Friedrich Grohe AG & Co. KG
                  Hauptstrasse 137
                  58675 Hemer
                  Germany

Fax:              0049 (0) 2372 93 1313

Attention:        Sabine Hanfgarn

THE ORIGINAL BORROWERS

Grohe Beteiligungs GmbH & Co. KG

By:

Address:          c/o Friedrich Grohe AG & Co. KG
                  Hauptstrasse 137
                  58675 Hemer
                  Germany

Fax:              0049 (0) 2372 93 1313

Attention:        Sabine Hanfgarn

Friedrich Grohe AG & Co. KG

By:

Address:          Hauptstrasse 137
                  58675 Hemer
                  Germany

Fax:              0049 (0) 2372 93 1313

Attention:        Sabine Hanfgarn

                                     -198-
<PAGE>

THE ORIGINAL GUARANTORS

Grohe Beteiligungs GmbH & Co. KG

By:

Address:          c/o Friedrich Grohe AG & Co. KG
                  Hauptstrasse 137
                  58675 Hemer
                  Germany

Fax:              0049 (0) 2372 93 1313

Attention:        Sabine Hanfgarn

Friedrich Grohe Geschaftsfuhrungs AG

By:

Address:          c/o Friedrich Grohe AG & Co. KG
                  Hauptstrasse 137
                  58675 Hemer
                  Germany

Fax:              0049 (0) 2372 93 1313

Attention:        Sabine Hanfgarn

THE ARRANGERS

Credit Suisse First Boston International

By:

Address:          One Cabot Square
                  London E14 4QJ, UK

Fax:              0044 207 883 5078

Attention:        David Slade

                                     -199-
<PAGE>

Merrill Lynch International

By:

Address:          Merrill Lynch Financial Centre
                  2 King Edward Street
                  London EC1A 1HQ, UK

Fax:              00 44 207 995 8601

Attention:        Rob Pulford

THE AGENT

Dresdner Bank Luxembourg S.A.

By:

Address:          26, Rue du Marche-aux-Herbes
                  L-2097 Luxembourg

Fax:              For Agency Matters:                00352 4760 3222
                  For Credit Administration Matters: 00352 4760 565

Attention:        For Agency Matters:                Albertine Prellwitz
                  For Credit Administration Matters: Andrea Stockemer

THE SECURITY AGENT

Dresdner Bank Luxembourg S.A.

By:

Address:          26, Rue du Marche-aux-Herbes
                  L-2097 Luxembourg

Fax:              00352 4760 3222

Attention:        Albertine Prellwitz

                                     -200-
<PAGE>

THE ORIGINAL LENDERS

Credit Suisse First Boston International

By:

Address:          One Cabot Square
                  London E14 4QJ, UK

Fax:              For Administrative Matters:        0044 207 888 8398
                  For Credit Matters:                0044 207 888 8386

Attention:        For Administrative Matters: Irina Borisova
                  For Credit Matters: Sergio Di-Lieto

Merrill Lynch Capital Corporation

By:

Address:          4 World Financial Centre
                  250 Vesey Street
                  New York, New York 10080, USA

Fax:              001 212 738 1957

Attention:        Stephen Paras

                                     -201-

<PAGE>

                                  Exhibit 4.1

CLIFFORD
CHANCE
PUNDER

                                                                  EXECUTION COPY

                          DRESDNER BANK LUXEMBOURG S.A.
                                as Security Agent

                               GROHE HOLDING GMBH
                                   as Creditor

                        GROHE BETEILIGUNGS GMBH & CO. KG
                                   as Borrower

                                       and

                               GROHE CONSULT GMBH

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                      SENIOR NOTES SUBORDINATION AGREEMENT
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<PAGE>

                                    CONTENTS

CLAUSE                                                                    PAGE

1.       Interpretation......................................................2

2.       Subordination.......................................................3

3.       Undertakings........................................................4

4.       Enforcement by the Creditor; Event Of Default.......................6

5.       Distribution of Proceeds............................................7

6.       Insolvency..........................................................8

7.       Undertakings and Covenants..........................................9

8.       Relative Rights....................................................10

9.       Transfer and Assignment............................................11

10.      Notices, Amendments, Waiver........................................11

11.      Partial Invalidity; Waiver.........................................11

12.      Law................................................................12

13.      Jurisdiction.......................................................12

<PAGE>

THIS SUBORDINATION AGREEMENT is made the 17th day of March 2003

BETWEEN:

(1)      GROHE HOLDING GMBH, a limited liability company organised under the
         laws of the Federal Republic of Germany, which is registered in the
         commercial register (HANDELSREGISTER) of the local court (AMTSGERICHT)
         of Iserlohn under HRB 2316 (the "CREDITOR");

(2)      GROHE CONSULT GMBH, a limited liability company organised under the
         laws of the Federal Republic of Germany, which is registered in the
         commercial register (HANDELSREGISTER) of the local court of Iserlohn
         under HRB 2366 ("GROHE CONSULT");

(3)      GROHE BETEILIGUNGS GMBH & CO. KG, a limited partnership organised under
         the laws of the Federal Republic of Germany, which is registered in the
         commercial register of the local court of Iserlohn under HRB 2093
         ("GROHE BETEILIGUNGS"); and

(4)      DRESDNER BANK LUXEMBOURG S.A. in its capacity as trustee and
         administrator of security for the Finance Parties (the "SECURITY
         AGENT").

WHEREAS:

(A)      Pursuant to a EUR 600,000,000 multicurrency term and revolving
         facilities agreement dated 17 March 2003 between, INTER ALIOS,
         Friedrich Grohe AG & Co. KG and Grohe Beteiligungs GmbH & Co. KG as
         original borrowers (the "ORIGINAL BORROWERS"), Grohe Beteiligungs GmbH
         & Co. KG and Friedrich Grohe Geschaftsfuhrungs AG as original
         guarantors (the "ORIGINAL GUARANTORS"), Merrill Lynch International and
         Credit Suisse First Boston International as arrangers, Dresdner Bank
         Luxembourg S.A. as agent and security agent and others (as amended,
         varied, novated, supplemented, superseded or extended from time to
         time, the "FACILITIES AGREEMENT"), certain lenders have agreed to grant
         certain facilities to the original borrowers and certain other entities
         which may accede to the Facilities Agreement as additional borrowers.

(B)      The Creditor has constituted an aggregate principal amount of EUR
         200,000,000 of senior notes falling due for payment on 15 November 2010
         and bearing interest in an amount of 11.5 per cent. per annum (the
         "HYB"), the terms of which (the "HYB TERMS") are set out in an
         indenture (the "INDENTURE") dated 13 November 2000 and the net proceeds
         of which are lent to Grohe Beteiligungs pursuant to the HYB Proceeds
         Intercompany Loan Agreement (as defined below).

                                      -1-
<PAGE>

(C)      The Creditor has entered into a loan agreement dated 13 November 2000
         with Grohe Beteiligungs (as amended, novated, supplemented, superseded
         or extended from time to time the "HYB PROCEEDS INTERCOMPANY LOAN
         AGREEMENT") and, in relation to the subordination of the loans made
         under the HYB Proceeds Intercompany Loan Agreement to, among others,
         the claims of certain financial institutions under the Existing Senior
         Credit Agreement (as defined in the Facilities Agreement), into a
         subordination agreement dated 26 October 2000 with, among others,
         Dresdner Bank Luxembourg S.A. as agent under the Existing Senior Credit
         Agreement.

(D)      The facilities made available under the Existing Senior Credit
         Agreement will be refinanced on or about the first Utilisation Date (as
         defined in the Facilities Agreement) under the Facilities Agreement.

(E)      The parties to this Agreement are aware that the Agent and the Security
         Agent, or any of them, may resign from their respective position as
         Agent or Security Agent under the Finance Documents and that a
         successor may be appointed by the Majority Lenders or the Agent or the
         Security Agent, as the case may be, in accordance with the respective
         provisions of the Facilities Agreement and the Intercreditor Agreement.

(F)      It has been agreed between the parties hereto that any payment claims
         of the Creditor and Grohe Consult against Grohe Beteiligungs in
         relation to the Creditors' Claims (as defined below) shall be regulated
         and/or subordinated in the manner set out herein.

NOW IT IS HEREBY AGREED as follows:

1.       INTERPRETATION

1.1      In this Agreement:

         "BANKS" has the meaning ascribed thereto in Clause 2.1.

         "BANKS' CLAIMS" has the meaning ascribed thereto in Clause 2.1.

         "CREDITORS' CLAIMS" has the meaning ascribed thereto in Clause 2.1.

         "HYB PROCEEDS INTERCOMPANY LOAN" means the loans made available by the
         Creditor to Grohe Beteiligungs under the HYB Proceeds Intercompany Loan
         Agreement.

         "SECURED LOANS" means all liabilities and obligations owing by any
         Obligor to any of the Finance Parties under or in connection with the
         Finance Documents (each as defined in the Facilities Agreement).

                                      -2-
<PAGE>

         "SECURED LOANS DISCHARGE DATE" means the date on which all Secured
         Loans have been satisfied in full to the satisfaction of the Security
         Agent.

         "TRUSTEE" means the Bank of New York acting in its capacity as trustee
         under the Indenture.

1.2      Unless the context or the express provisions of this Agreement
         otherwise require, all references to a party include references to its
         permitted assignees and transferees and its successors in title and
         (where applicable) to any replacement or additional agent or security
         agent.

1.3      This Agreement is made in the English language. For the avoidance of
         doubt, the English language version of this Agreement shall prevail
         over any translation of this Agreement. However, where a German
         translation of a word or phrase appears in the text of this Agreement,
         the German translation of such word or phrase shall prevail.

1.4      Terms and expressions defined in the Facilities Agreement shall have
         the same meaning in this Agreement except as otherwise defined herein
         or unless the context requires.

2.       SUBORDINATION

2.1      The Creditor and Grohe Consult hereby agree that the HYB Proceeds
         Intercompany Loan and any other claims for payment that they may have
         against Grohe Beteiligungs, both present and future, arising out of the
         HYB Proceeds Intercompany Loan Agreement, in relation to withdrawals
         from their partnership accounts with Grohe Beteiligungs or otherwise
         (the "CREDITORS' CLAIMS") shall rank behind all present and future,
         unconditional and conditional claims of the Finance Parties (hereafter
         together with any other parties having acquired a participation, and
         the related claims and rights, under the Facilities Agreement, the
         "Banks", and each a "BANK" and such claims referred to collectively as
         the "BANKS' CLAIMS") against Grohe Beteiligungs and/or Friedrich Grohe
         arising out of or in connection with the Facilities Agreement, except
         as otherwise provided in this Agreement.

2.2      The order of priority agreed in Clause 2.1 shall apply irrespective of
         any change in the legal form of Grohe Beteiligungs, Friedrich Grohe,
         Grohe Consult or the Creditor.

2.3      The Creditor, Grohe Consult and Grohe Beteiligungs hereby agree that
         any present or future Creditors' Claims must not be assigned, save to
         any of the Banks, and that the prohibitions contained in Clause 3.1
         below shall also apply as between the Creditor and Grohe Beteiligungs.

                                      -3-
<PAGE>

3.       UNDERTAKINGS

3.1      Until such time as the Banks' Claims have been satisfied in full and,
         save as permitted under Clause 3.3 and Clause 4, or required under
         Clause 6, the Creditor and Grohe Consult shall not

3.1.1    demand or receive payment, prepayment or repayment for, or any
         distribution in respect of, the Creditors' Claims, whether in cash or
         in kind;

3.1.2    discharge any of the Creditors' Claims by set-off, any right of
         combination of accounts or by any other voluntary action; or

3.1.3    permit to subsist or receive any Security or any guarantee, indemnity
         or other assurance against loss, or the making of deposits for, in
         respect of any of the Creditors' Claims, unless the person or entity
         providing such Security, guarantee, indemnity or other assurances, or
         providing deposits is not a member of the Group and any claim
         (including rights of recourse) of such person or entity against Grohe
         Beteiligungs in connection therewith is subordinated to the Banks'
         Claims in accordance with the provisions of this Agreement.

3.2      Nothing in this Agreement prohibits:

3.2.1    the making of withdrawals by the Creditor from its partner's accounts
         in Grohe Beteiligungs to the extent that such withdrawals fall under
         paragraphs (b), (c), (d) or (f) of the definition of Permitted
         Transactions under the Facilities Agreeement and are permitted under
         Clause 24.12 (DISTRIBUTIONS) of the Facilities Agreement; or

3.2.2    a set-off of withdrawal claims of the Creditor arising from its
         partners' accounts against any loans granted by Grohe Beteiligungs to
         the Creditor for the Shareholder Loan Refinancing; or

3.2.3    a refinancing of the HYB Proceeds Intercompany Loan to the extent that
         such refinancing is permitted pursuant to Clause 24.14 (SUBORDINATED
         DEBT) of the Facilities Agreement.

3.3      Subject to Clause 3.4, the Creditor shall be entitled to demand and
         receive any amount payable to the Creditor under the HYB Proceeds
         Intercompany Loan Agreement (and Grohe Beteiligungs shall be entitled
         to make such payments) unless at that time, before the Secured Loans
         Discharge Date,

3.3.1    Grohe Beteiligungs is in default (without regard to any grace period)
         with any payments due in respect of any of the Secured Loans (a
         "SECURED LOANS DEFAULT"), or

                                      -4-
<PAGE>

3.3.2    any other event or circumstance (other than a Secured Loans Default)
         which entitles the Banks to accelerate the Facilities has occurred, and
         the Security Agent has served written notice (the "BLOCKING NOTICE") on
         the Creditor and Grohe Beteiligungs suspending such payments for a
         period (the "BLOCKING PERIOD (A)") commencing upon receipt of such
         Blocking Notice and ending on the earliest of

         (a)      120 days after the date of the Blocking Notice or if a
                  Blocking Period (B) (as defined in Clause 4.1) is in effect,
                  the date, if earlier, on which the Blocking Period (B)
                  expires,

         (b)      the date on which the Security Agent determines that the
                  relevant event or circumstance has ceased or has been cured or
                  waived (and the Security Agent will notify the Creditor and
                  Grohe Beteiligungs accordingly without undue delay),

         (c)      the date on which the Security Agent notifies the Creditor and
                  Grohe Beteiligungs that the Blocking Notice is cancelled or
                  all Secured Loans have been fully repaid, or

         (d)      the date on which all Secured Loans have been fully repaid.

         In any consecutive 360-day period, only one Blocking Period (A) can be
         declared. In addition, only one Blocking Period (A) can be declared in
         respect of the same event or circumstance under the Facilities
         Agreement (unless cured for more than 180 days).

3.4      Nothing in Clause 3.3 permits any prepayment or repayment of principal
         under the HYB Proceeds Intercompany Loan Agreement prior to, whichever
         is earlier, (i) the Secured Loans Discharge Date or (ii) the final
         maturity date of the HYB pursuant to the HYB Terms ("HYB FINAL
         Maturity") without the consent of the Banks. After the Secured Loans
         Discharge Date or the HYB Final Maturity, whichever is earlier, any
         such payments to the Creditor may be made and received without
         restriction. If, however, upon the occurrence of a HYB Final Maturity,
         a Secured Loans Default has occurred and is continuing or the Security
         Agent has served a Blocking Notice pursuant to Clause 3.3.2 and such
         Blocking Period A has not expired, Clauses 3.6, 3.7 and 3.8 shall
         apply.

3.5      For as long as a Secured Loans Default is continuing and during any
         Blocking Period (A), Grohe Beteiligungs shall make any payments due
         under the HYB Proceeds Intercompany Loan Agreement exclusively to the
         Security Agent (for and on behalf of the Banks) into an account
         designated by the Security Agent. The Security Agent shall hold any
         such amounts in trust for the Banks on such bank account which shall
         carry interest at the Security Agent's then current overnight rate for
         the period from receipt by the Security Agent of the relevant

                                      -5-
<PAGE>

         funds until application thereof pursuant to Clause 3.7 or payment
         thereof to the Creditor pursuant to Clause 3.8. The Security Agent
         shall promptly notify the Creditor and Grohe Beteiligungs of the
         cessation, cure or waiver of any Secured Loans Default or the end of
         any Blocking Period (A).

3.6      The suspension of payments pursuant to this Clause 3 shall not be
         construed as a waiver by the Creditor of the relevant Creditors'
         Claims, but shall mean that

3.6.1    except as otherwise permitted by this Agreement, the Creditor shall not
         be entitled to demand or receive such payments and any such payments
         shall be deferred (EINREDE DER STUNDUNG) until the first date
         thereafter on which payment is permitted under this Agreement; and

3.6.2    any payments received by the Creditor in breach of this Clause 3 shall
         be remitted promptly to the Security Agent for application in
         accordance with Clauses 3.5, 5 or 6.2, as the case may be, and
         otherwise in trust for the Creditor.

3.7      The Security Agent shall be entitled to use any funds owing under the
         Creditors' Claims and received from the Creditor or Grohe Beteiligungs
         in accordance with Clause 3.5, Clause 3.6, Clause 4 or Clause 5 to
         satisfy any of the Banks' Claims which have become due under the
         Facilities Agreement in accordance with the applicable contractual
         provisions between the parties concerned, PROVIDED THAT in each such
         case, the relevant Banks shall assign their corresponding rights and
         claims against the Borrower to the Creditor, provided (for the
         avoidance of doubt) that any rights and claims so assigned to the
         Creditor shall always be deemed Creditors' Claims and shall rank behind
         all other Banks' Claims in accordance with the terms of this Agreement.

3.8      Following the expiry of a Secured Loan Default or a Blocking Period
         (A), as the case may be, the Security Agent shall pay to the Creditor
         any amounts held in trust by the Security Agent for the Creditor
         pursuant to Clause 3.5, plus any interest accrued thereon, to the
         extent such amounts have not been used to satisfy any of the Banks'
         Claims in accordance with Clause 3.7.

4.       ENFORCEMENT BY THE CREDITOR; EVENT OF DEFAULT

4.1      If at any time before the Secured Loans Discharge Date, there occurs
         any event giving the Creditor the right to terminate the HYB Proceeds
         Intercompany Loan Agreement or to accelerate any payments thereunder,
         the Creditor shall promptly notify the Security Agent of such event but
         shall not, without the prior written consent of the Security Agent (for
         and on behalf of the Banks), and subject to Clause 4.3, prior to the
         expiry of 120 days after such notification to the Security Agent (the
         "BLOCKING PERIOD (B)"),

                                      -6-
<PAGE>

4.1.1    accelerate any of the Creditors' Claims or otherwise declare any of the
         Creditors' Claims prematurely payable or due on an event of default or
         otherwise,

4.1.2    take any action for enforcing the Creditors' Claims, including, but not
         limited to, by way of attachment, execution or by initiating or
         supporting any insolvency proceedings, or

4.1.3    take any other legally permissible action to enforce the Creditors'
         Claims.

4.2      After the lapse of the Blocking Period (B), the Creditor may demand and
         pursue payment as set out in Clause 4.1 above, but for any time prior
         to the Secured Loans Discharge Date, payment shall be made only to the
         Security Agent (for and on behalf of the Banks) into an account
         designated by the Security Agent (PROVIDED, HOWEVER, THAT the payments
         referred to in Clause 3.2 or Clause 3.4 may be made to the Creditor
         unless prohibited pursuant to Clause 3). The Banks agree to equitably
         consider any request by the Creditor during the Blocking Period (B) to
         the taking of actions described under Clause 4.1 following the
         occurrence of any of the events referred to in Clause 4.1, and shall in
         each case not unreasonably withhold their consent.

4.3      Subject to the provisions of Clause 6, the Creditor is permitted to
         take any action described in Clause 4.1 if

4.3.1    the Banks have given to the Creditor their prior consent in writing in
         accordance with Clause 4.2;

4.3.2    the Security Agent or a Bank is taking the same or equivalent action in
         respect of the Banks' Claims; or

4.3.3    insolvency proceedings against Grohe Beteiligungs have been applied for
         and it has not been demonstrated without delay that the application is
         without merit or have been commenced.

4.4      Save as otherwise provided herein, the Creditor shall not be restricted
         in enforcing the Creditors' Claims.

5.       DISTRIBUTION OF PROCEEDS

         If at any time prior to the Secured Loans Discharge Date

         (a)      the Creditor or Grohe Consult receive or recover a payment or
                  distribution in cash or in kind of, or on account of, any of
                  the Creditors' Claims in violation of a prohibition under this
                  Agreement or which arises from an action permitted under
                  Clause 4.3;

                                      -7-
<PAGE>

         (b)      the Creditor or Grohe Consult receive or recover the proceeds
                  of any enforcement of any Security;

         (c)      Grohe Beteiligungs makes a payment or distribution in cash or
                  in kind to the Creditor or Grohe Consult on account of the
                  purchase or other acquisition of any of the Creditors' Claims
                  in violation of a prohibition under this Agreement;

         (d)      any of the Creditors' Claims is discharged by set-off,
                  combination of accounts or any other voluntary action by the
                  Creditor or Grohe Consult other than as permitted under Clause
                  3.2.2;

         the Creditor (or, as the case may be, Grohe Consult) shall pay to the
         Security Agent (for distribution to the Banks) on demand an amount
         equal to the lesser of (i) the aggregate outstanding unrecovered
         balance of the Banks' Claims and (ii) the amount of such payment,
         distribution, recovered proceeds, set-off, combination of accounts or
         other discharge after deducting therefrom (except to the extent the
         Creditor (or, as the case may be, Grohe Consult) has acted in breach of
         its obligations hereunder) the costs, liabilities and expenses (if any)
         reasonably incurred by the Creditor (or, as the case may be, Grohe
         Consult) in recovering such payment, distribution, recovered proceeds,
         set-off or other discharge or effecting such combination of accounts,
         less any amounts due by the Security Agent to the Creditor (or, as the
         case may be, Grohe Consult) pursuant to Clauses 3.7 and 3.8.

6.       INSOLVENCY

6.1      If prior to the Secured Loans Discharge Date insolvency proceedings are
         commenced against Grohe Beteiligungs,

         (a)      the Creditor's (and Grohe Consult's) rights in respect of the
                  Creditors' Claims will be subordinated in right of payment to
                  the Banks' rights in respect of the Banks' Claims;

         (b)      the Creditor (or, as the case may be, Grohe Consult) shall
                  promptly lodge a claim and shall take all reasonable action
                  necessary to preserve the Creditors' Claims for the purposes
                  of such proceedings, and

         (c)      the Creditor (or, as the case may be, Grohe Consult) shall
                  instruct the insolvency administrator to pay to the Security
                  Agent for distribution to the Banks any amounts to which the
                  Creditor (or, as the case may be, Grohe Consult) is entitled
                  in such insolvency proceedings;

         in each case until the Banks' Claims are discharged in full.

                                      -8-
<PAGE>

6.2      The Security Agent shall apply any amounts received pursuant to Clause
         6.1 as follows:

6.2.1    first, in payment to the Banks in the proportion of their respective
         claims under and in connection with the Facilities Agreement in
         accordance with the applicable contractual provisions between the
         parties concerned until satisfaction of the Banks' Claims in full;

6.2.2    second, in payment to the Creditor (or, as the case may be, Grohe
         Consult).

6.3      If amounts are distributed to the Creditor (or, as the case may be,
         Grohe Consult) not in compliance with the provisions of this Agreement,
         the Creditor (or, as the case may be, Grohe Consult) shall pay such
         amounts to the Security Agent promptly upon receipt thereof; in such
         case, the provisions of Clause 3.6 shall apply accordingly.

7.       UNDERTAKINGS AND COVENANTS

7.1      The Creditor, Grohe Consult and Grohe Beteiligungs, except with the
         prior written consent of the Banks, shall not

7.1.1    grant any loan to Grohe Beteiligungs in excess of the commitments under
         the HYB Proceeds Intercompany Loan Agreement;

7.1.2    increase interest, margin or any fees, or make or accept any other
         changes to the terms of the HYB Proceeds Intercompany Loan Agreement or
         to the payments made thereunder;

7.1.3    make or agree to any material changes other than changes of a technical
         or administrative nature only of the HYB Terms, the HYB Proceeds
         Intercompany Loan Agreement and any other agreements made between the
         Creditor, Grohe Beteiligungs and/or Grohe Consult, and to always comply
         with the terms of such agreements and to perform all obligations
         thereunder.

7.2      The Creditor undertakes

         (a)      to immediately inform the Security Agent about any events or
                  circumstances which may give rise, whether with the lapse of
                  time or otherwise, to an acceleration of payments under the
                  HYB, and to provide the Security Agent with all information
                  relevant therefore;

         (b)      not to incur any financial indebtedness other than under
                  shareholder loans which are fully subordinated to the Banks'
                  Claims, in a form acceptable to the Banks or any other
                  financial indebtedness upon receipt by the Security Agent of a
                  certificate supported by accompanying calculations and signed
                  by the financial officer(s) binding the Creditor

                                      -9-
<PAGE>

                  and demonstrating on a PRO FORMA basis and assuming such
                  financial indebtedness had been incurred on the first day of
                  the Relevant Period that as at the last Quarter Date in
                  respect of which financial statements have been delivered
                  pursuant to Clause 22.1 (FINANCIAL STATEMENTS) of the
                  Facilities Agreement and as at the four following such Quarter
                  Dates, the financial covenants set out in Clause 23 (FINANCIAL
                  COVENANTS) or, for any financial indebtedness to be incurred
                  following the date of the Qualifying Public Offering, the
                  incurrence test set out in column 4 of Clause 23.1.4 of the
                  Facilities Agreement would be complied with;

         (c)      not to cause or allow Grohe Consult to incur any financial
                  indebtedness other than under shareholder loans which are
                  fully subordinated to the Banks' Claims, in a form acceptable
                  to the Banks;

         (d)      to provide the Security Agent, in respect of its own company,
                  with the financial statements and information referred to in
                  Clause 22.1 (a) (ii) of the Facilities Agreement, within the
                  timeframe set out in such provision;

         (e)      to not enter into merger agreements or consolidation
                  agreements with other entities without the prior written
                  consent of the Banks which shall not be unreasonably withheld;

         (f)      to not acquire any interest in other companies unless such
                  other companies do carry on a similar or complimentary
                  business to the business of the Group;

         (g)      not to sell any of its shares in Grohe Beteiligungs and Grohe
                  Consult without the prior written consent of the Security
                  Agent which shall not be unreasonably withheld;

         (h)      to immediately provide the Security Agent with all information
                  received by the Creditor from the Trustee, any noteholder or
                  otherwise in connection with any event of default or any
                  potential event of default under the HYB Terms or other
                  financial indebtedness incurred or relating to a material
                  change or potential change of the HYB Terms; and

         (i)      to ensure that Grohe Beteiligungs always complies with its
                  obligations pursuant to Clause 24.23 (WITHDRAWALS BY GROHE
                  BETEILIGUNGS) of the Facilities Agreement.

8.       RELATIVE RIGHTS

         This Agreement defines the relative rights of the Banks, the Creditor
         and Grohe Consult. Nothing in this Agreement shall impair, as between
         Grohe Beteiligungs and the Creditor, the obligation of Grohe
         Beteiligungs, which is

                                      -10-
<PAGE>

         absolute and unconditional, to pay amounts owing from time to time
         under the HYB Proceeds Intercompany Loan Agreement or the HYB Proceeds
         Intercompany Loan in accordance with their terms.

9.       TRANSFER AND ASSIGNMENT

9.1      This Agreement is a contract for the benefit of the Finance Parties
         (VERTRAG MIT SCHUTZWIRKUNG FUR DRITTE). The Creditor, Grohe Consult and
         Grohe Beteiligungs agree with the Security Agent that upon an
         assignment and/or transfer of any rights and benefits of any Finance
         Party under the Finance Documents the relevant assignee or transferee
         shall become a beneficiary under this Agreement.

9.2      The Creditor, Grohe Consult and Grohe Beteiligungs agree to the
         Security Agent transferring its rights and obligations under this
         Agreement to a new security agent by way of a transfer agreement
         between the Security Agent and such new security agent and confirm that
         upon execution of such transfer agreement by the new security agent and
         the Security Agent, the new security agent shall become a party to this
         Agreement and shall have the same rights and obligations hereunder as
         if it had been the original Security Agent under this Agreement and the
         original Security Agent shall cease to be a party to this Agreement and
         any reference to the Security Agent shall be construed to include the
         new security agent.

10.      NOTICES, AMENDMENTS, WAIVER

10.1     Each communication to be made hereunder shall be made in writing but,
         unless otherwise stated, may be made by facsimile or letter. Each
         communication shall be in English or, if in any other language, shall
         be accompanied by a translation into English.

10.2     Any communication or document to be made or delivered by one person to
         another pursuant to this Agreement shall (unless that other person has
         by written notice to the other parties hereto specified another
         address) be made or delivered to that other person at the addresses as
         set out on the execution pages hereof.

10.3     All amendments or supplements to this Agreement or any waiver with
         regard to this Agreement (including this Clause 10.3) shall be made in
         writing.

11.      PARTIAL INVALIDITY; WAIVER

11.1     If at any time, one or more of the provisions hereof is or becomes
         invalid, illegal or unenforceable in any respect under the law of any
         jurisdiction, such provision shall as to such jurisdiction, be
         ineffective to the extent necessary without affecting or impairing the
         validity, legality and enforceability of the remaining provisions
         hereof or of such provisions in any other jurisdiction. The invalid or

                                      -11-
<PAGE>

         unenforceable provision shall be deemed replaced by such provision
         which comes as close as possible to the original intent of the parties
         and the invalid, illegal or unenforceable provision. This applies
         analogously in the event of gaps (VERTRAGSLUCKEN).

11.2     No failure to exercise, nor any delay in exercising, on the part of the
         Security Agent, any right or remedy hereunder shall operate as a waiver
         thereof, nor shall any single or partial exercise of any right or
         remedy prevent any further or other exercise thereof or the exercise of
         any other right or remedy. The rights and remedies provided hereunder
         are cumulative and not exclusive of any rights or remedies provided by
         law.

12.      LAW

         This Agreement shall be governed by and construed in accordance with
German law.

13.      JURISDICTION

13.1     The Creditor, Grohe Consult and Grohe Beteiligungs irrevocably agree
         for the benefit of the Security Agent and the Finance Parties that the
         place of jurisdiction for any and all disputes arising under or in
         connection with this Agreement shall be Frankfurt am Main and, for such
         purposes, irrevocably submit to the jurisdiction of such courts.

13.2     The submission to the jurisdiction of the courts referred to in Clause
         13.1 shall not (and shall not be construed so as to) limit the right of
         the Security Agent or the Finance Parties to take proceedings in any
         other court of competent jurisdiction nor shall the taking of
         proceedings in any one or more jurisdictions preclude the taking of
         proceedings in any other jurisdiction, whether concurrently or not.

                                      -12-
<PAGE>

THIS AGREEMENT has been executed by the parties the day and year first above
written.

GROHE HOLDING GMBH

By: /s/ M. Grimm
    -------------------------------
    M. Grimm

GROHE CONSULT GMBH

By: /s/ Jacob Siebert
    -------------------------------
    Jacog Siebert

GROHE BETEILIGUNGS GMBH & CO. KG

By: /s/ M. Grimm
    -------------------------------
    M. Grimm

By: /s/ Simmat
    -------------------------------
    Simmat

DRESDNER BANK LUXEMBOURG S.A.

By: /s/ A. Prellwitz
    -------------------------------
    A. Prellwitz

                                      -13-

<PAGE>

                                   Exhibit 4.1

                                  LOAN FACILITY

                                     between

1.   Grohe Beteiligungs GmbH & Co. KG

                                                                - the "LENDER" -

                                       and

2.   Grohe Holding GmbH

                                                              - the "BORROWER" -

PREAMBLE
--------

1.    The Borrower is the sole general partner of the Lender.

2.    The Borrower has issued notes in the principal amount of EUR
      200,000,000.00 under an indenture dated November 13, 2000 (the
      "INDENTURE") falling due for payment on 15.11.2010 and bearing interest in
      an amount of 11.5 % p. a. (the "SENIOR NOTES"). The Borrower has issued a
      consent solicitation statement (the "CONSENT SOLICITATION STATEMENT") to
      the holders of the Senior Notes in order to receive consent to certain
      waivers and amendments to the Indenture. In the event that such consent of
      the holders is received and the amendments to the Indenture are made, the
      consenting holders will receive a consent payment (the "CONSENT PAYMENT"),
      subject to the provisions of the Consent Solicitation Statement.

3.    The Borrower has received loans from its shareholders in the total
      principal amount of approx. EUR 259,600,000.00 (the "SHAREHOLDER LOANS").
      The Borrower is willing to repay part of the principal and interest of the
      Shareholder Loans.

4.    The Consent Payment, the partial repayment of the Shareholder Loans and
      the payment of certain transaction costs shall be financed, inter alia, by
      a Loan (as defined below) granted by the Lender to the Borrower.

Based on the foregoing, the Lender and the Borrower agree the following

<PAGE>

                                                                         Seite 2
--------------------------------------------------------------------------------

                                  LOAN FACILITY

                                    SECTION 1

LOAN
----

(1)   The Lender grants the Borrower a loan of EUR 125,000,000.00 (the "LOAN").

(2)   The Loan shall be paid out to the Borrower promptly upon request by the
      Borrower, however, the Lender shall not be obliged to pay out any amount
      of the Loan before it has obtained advances under a senior secured credit
      facility dated 17.03.2003.

                                    SECTION 2

PURPOSE
-------

(1)   The Borrower shall apply part of the Loan in the amount of EUR
      112,000,000.00 towards the partial repayment of principal and interest on
      the Shareholder Loans in accordance with the Shareholder Loan prepayment
      schedule attached to this Loan Facility as an APPENDIX.

(2)   The Borrower shall apply the remaining amount of EUR 13,000,000.00 towards
      Consent Payments due in accordance with the Consent Solicitation Statement
      and towards paying transaction costs.

                                    SECTION 3

INTEREST
--------

(1)   The Loan shall bear interest of

      a)   12 % p. a. from the date of payment of the Loan pursuant toss.1 (2)
           until 31.07.2006;

      b)   14 % p. a. from 01.08.2006 until 31.07.2009;

      c)   16 % p. a. from 01.08.2009 until the repayment date as set forth
           underss. 4 (1).

(2)   Interest shall be paid by the Borrower only in accordance with ss. 4.

<PAGE>

                                                                         Seite 3
--------------------------------------------------------------------------------

(3)   If the Borrower fails to pay any amount payable by it under ss. 4 (1) on
      the due date specified in ss. 4 (1), interest shall accrue or, insofar as
      it relates to unpaid interest, lump sum damages shall accrue on the
      overdue amount from the due date up to the date of actual payment (both
      before and after judgement) at a rate which is 1 % higher than the rate
      which would have been payable in accordance with ss. 3 (1) c) if the
      overdue amount had, during the period of non-payment, constituted a Loan.
      In the case of lump sum damages the Borrower shall be free to prove that
      no damages have arisen or that damages have not arisen in the accrued
      amount. Any interest or lump sum damages accruing under this ss. 3 (3)
      shall be immediately payable by the Borrower on demand by the Lender.

                                    SECTION 4

REPAYMENT
---------

(1)   The Loan together with all interest accrued and not prepaid in accordance
      with (2) below shall be repaid by the Borrower on the earlier of (i)
      30.11.2011 or (ii) the date on which all amounts payable under or in
      respect of the Senior Notes have been fully paid in accordance with the
      Indenture.

(2)   The Borrower shall be entitled to prepay the Loan and interest in whole or
      in part at any time by way of set-off against any claims the Borrower has
      from time to time to withdraw profits from the Lender.

                                    SECTION 5

FINAL PROVISIONS
----------------

(1)   Amendments and additions to this Loan Facility shall be in writing to be
      valid. This shall also apply to any amendment or addition to the written
      form requirement.

(2)   Should any provision of this Loan Facility, including any provision added
      at a later date, be or become ineffective or invalid in whole or in part,
      this shall have no effect on the validity of the remaining provisions. In
      such an event the parties are obliged jointly to establish legally
      effective provisions which as closely as possible reflect the legal and
      economic intent of the legally ineffective or invalid provisions.

(3)   Should the Loan Facility contain a lacuna, (2) shall apply accordingly.

<PAGE>

                                                                         Seite 4
--------------------------------------------------------------------------------

(4)   This Loan Facility shall be subject solely to German law excluding to the
      greatest extent permitted by law any rule of law that would cause the
      application of the laws of any jurisdiction other than the Federal
      Republic of Germany.

Hemer, 28.03.03                             /s/ Holger Bierstedt
------------------------------------        ------------------------------------
          (place/date)                        Grohe Beteiligungs GmbH & Co. KG

Hemer, 28.03.03                             /s/ Heiner Henke
------------------------------------        ------------------------------------
          (place/date)                                Grohe Holding GmbH

<PAGE>

                                                                         Seite 5
--------------------------------------------------------------------------------

                                    APPENDIX
                      SHAREHOLDER LOAN PREPAYMENT SCHEDULE

<TABLE>
<CAPTION>
     SHAREHOLDER          TOTAL AMOUNT OF     AMOUNT OF PRINCIPAL   AMOUNT OF INTEREST    TOTAL AMOUNT TO BE
                           PRINCIPAL AND         TO BE REPAID          TO BE REPAID             REPAID
                       INTEREST OUTSTANDING
<S>                    <C>                    <C>                   <C>                   <C>
BC EC VI-1                 11.182.289,93          5.685.704,66          1.655.312,35         7.341.017,01
BC EC VI-2                 11.182.433,26          5.685.777,53          1.655.333,58         7.341.111,10
BC EC VI-3                 11.182.433,26          5.685.777,53          1.655.333,58         7.341.111,11
BC EC VI-4                 10.979.084,27          5.582.383,47          1.625.231,87         7.207.615,34
BC EC VI-5                 10.897.783,80          5.541.045,75          1.613.196,96         7.154.242,71
BC EC VI-6                 10.887.606,56          5.535.871,07          1.611.690,43         7.147.561,50
BC EC VI-7                 10.836.798,68          5.510.037,49          1.604.169,35         7.114.206,84
BC EC VI-8                 10.826.621,44          5.504.862,80          1.602.662,82         7.107.525,62
BC EC VI-9                 11.029.931,28          5.608.236,96          1.632.758,73         7.240.995,69
BC EC VI-10                10.877.468,47          5.530.716,30          1.610.189,69         7.140.905,99
BC EC VI-11                   813.278,55            413.516,52            120.389,48           533.906,00
BC EC VI-12                 2.236.486,65          1.137.155,50            331.066,72         1.468.222,22
BC EC VI-14                   101.654,91             51.687,07             15.047,95            66.735,02
Michel Guillet                203.309,83            103.374,15             30.095,91           133.470,06
Celia Guillet                   5.000,66              2.542,62                740,24             3.282,86
Edouard Guillet                 5.000,66              2.542,62                740,24             3.282,86
Patrice Hoppenot              101.654,92             51.687,07             15.047,96            66.735,03
Raymond Svider                101.654,92             51.687,07             15.047,96            66.735,03
Vincent Fesquent                1.804,17                917,35                267,06             1.184,40
Remi Terrail                    1.804,17                917,35                267,06             1.184,40
BC EC V-1                     997.076,61            506.969,79            147.597,07           654.566,85
BC EC V-2                     997.076,61            506.969,79            147.597,07           654.566,85
BC EC V-3                   1.091.703,25            555.083,29            161.604,63           716.687,92
BC EC V-4                   1.070.708,74            544.408,50            158.496,81           702.905,32
BC EC V-5                   1.083.487,90            550.906,13            160.388,53           711.294,66
BC EC V-6                     948.394,18            482.216,91            140.390,61           622.607,52
Teabar                     65.252.273,94         33.177.923,32          9.659.282,30        42.837.205,62
Caisse de Depot            50.043.482,39         25.444.918,96          7.407.927,62        32.852.846,58
BDW                        17.190.395,68          8.740.563,27          2.544.691,18        11.285.254,45
HVB                        17.190.395,68          8.740.563,27          2.544.691,18        11.285.254,45
Crescat                     4.003.728,54          2.035.720,60            592.671,21         2.628.391,81
Herr Dr. Albrecht             333.167,27            184.938,32             23.284,27           208.222,59

<PAGE>

                                                                         Seite 5
--------------------------------------------------------------------------------

Herr Geber                     73.332,25             40.685,08              5.160,25            45.845,33
GIC                        17.190.395,65          8.740.563,27          2.544.691,16        11.285.254,42
Harbour Vest               10.314.078,92          5.244.257,38          1.526.791,25         6.771.048,63
Laranjedo Servicios         3.438.026,27          1.748.085,77            508.930,41         2.257.016,18
</TABLE>

<PAGE>

                                  Exhibit 4.1

                             SUBORDINATION AGREEMENT

                                      among

                               GROHE HOLDING GMBH

                                   as Borrower

                                       and

                        GROHE BETEILIGUNGS GMBH & CO. KG

                                    as Lender

                                       and

                              THE BANK OF NEW YORK

                                   as Trustee

<PAGE>

                                TABLE OF CONTENTS

                                                                         Page

1.       Priorities.........................................................5

2.       Obligations of the Borrower and the Lender.........................5

3.       Permitted Payments.................................................5

4.       Turnover of receipts...............................................6

5.       Repayment..........................................................6

6.       Insolvency.........................................................6

7.       Miscellaneous......................................................6

                                       2
<PAGE>

THIS SUBORDINATION AGREEMENT (this "AGREEMENT") is made on28 MARCH 2003 AMONG:

1        GROHE HOLDING GMBH, a company organized under the laws of the Federal
         Republic of Germany, registered in the commercial register
         (HANDELSREGISTER) of the local court (AMTSGERICHT) of Iserlohn under
         HRB 2316, having its business address at Hauptstra(beta)e 137, 58675
         Hemer, Federal Republic of Germany (the "BORROWER");

2.       GROHE BETEILIGUNGS GMBH & CO. KG, a company organized under the laws of
         the Federal Republic of Germany, registered in the commercial register
         of the local court of Iserlohn under HRB 2093, having its business
         address at Hauptstrasse 137, 58675 Hemer, Federal Republic of Germany
         (the "LENDER");

         and

3.       THE BANK OF NEW YORK, LONDON BRANCH a credit institution organized
         under the laws of the State of New York, USA having its business
         address at 48th Floor, One Canada Square, London E14 5AL, United
         Kingdom as trustee under the Indenture (as defined below) (the
         "TRUSTEE").

                                       3
<PAGE>

WHEREAS

(A)      The Borrower and the Trustee have entered into an indenture dated
         November 13, 2000 (the "Indenture") under which the Borrower has issued
         11.5% senior notes due November 15, 2010 (the "Notes"). The date on
         which all amounts payable under or in respect of the Notes have been
         fully paid in accordance with the Indenture is referred to herein as
         the "NOTES REPAYMENT DATE".

(B)      Pursuant to a loan facility dated 28 March 2003 (the "INTER-COMPANY
         LOAN AGREEMENT") the Lender has agreed to grant a loan in the aggregate
         amount of EUR 125,000,000.00 to the Borrower (the "INTER-COMPANY
         LOAN").

(C)      Pursuant to a consent solicitation statement dated 6 March 2003 (the
         "CONSENT SOLICITATION Statement") the Borrower has proposed to the
         holders of the Notes (the "NOTEHOLDERS") to amend and waive certain
         provisions of the Indenture in order to allow partial repayment of
         loans granted by shareholders of the Borrower to the Borrower (the
         "SHAREHOLDER LOANS") and has given notice of certain amendments to the
         Indenture under the terms of which the Borrower is obliged to
         subordinate the Inter-Company Loan to the Senior Claims (as defined
         below).

(D)      Purpose of the Inter-Company Loan is to finance the partial repayment
         of the Shareholder Loans, consent payments due to the Noteholders in
         accordance with the Consent Solicitation Statement and the payment of
         certain transaction costs.

                                       4
<PAGE>

NOW IT IS HEREBY AGREED as follows:

1.                PRIORITIES

1.1     The Lender hereby agrees for the benefit of the Noteholders and the
        Trustee that the Inter-Company Loan and the Lender's claims for payment
        against the Borrower, both present or future, arising out of the
        Inter-Company Loan Agreement (including any accrued but unpaid
        interest), shall rank behind all present, future and conditional claims
        by the Noteholders, and the Trustee on their behalf, against the
        Borrower (collectively the "SENIOR CLAIMS").

1.2     The order of priority agreed in Section 1.1 shall apply irrespective of
        any change in the legal form of the Borrower or the Lender.

1.3     The Lender and the Borrower hereby agree that any present or future
        claims the Lender may have against the Borrower under the Inter-Company
        Loan are not assignable, and that the prohibitions contained in Section
        2.1 below shall also apply as between the Lender and the Borrower,
        respectively.

2.      OBLIGATIONS OF THE BORROWER AND THE LENDER

2.1     Until the Notes Repayment Date, the Lender undertakes not to exercise or
        deal in (VERFUGEN UBER) any of its claims as described in Section 1.1
        against the Borrower, including by terminating the Inter-Company Loan
        Agreement or accelerating its claims thereunder, by accepting or
        demanding payment of such claims other than payments permitted by
        Section 3, by allowing security to be taken for such claims, by
        accepting any guarantee in respect of such claims, by assigning such
        claims, by pledging such claims, by setting-off such claims, other than
        set-offs permitted by Section 3, by mobilization of drawings under bills
        of exchange or by agreeing that such claims should rank behind any
        claims of any other creditor of the Borrower. The Borrower hereby agrees
        not to terminate the Inter-Company Loan except with the prior written
        consent of the Trustee acting on behalf of the Noteholders.

2.2     The Borrower may not make any interest payment in cash under the
        Inter-Company Loan and the Lender may not accept such interest payment
        prior to the Notes Repayment Date.

3.      PERMITTED PAYMENTS

        The Borrower shall be entitled to prepay the Inter-Company Loan and
        interest in whole or in part at any time by way of set-off against any
        claims the Borrower has from time to time to withdraw profits from the
        Lender.

                                       5
<PAGE>

4.       TURNOVER OF RECEIPTS

4.1     If at any time on or before the Notes Repayment Date a payment or
        distribution of any kind whatsoever (including, without limitation, by
        way of discharge by set-off, combination of accounts or otherwise) in
        respect or on account of the Inter-Company Loan is made which is not
        permitted by Section 3, the recipient or beneficiary of that payment,
        distribution, set-off or combination will promptly pay or hand over all
        amounts and/or property received to the Trustee and, pending such
        payment or handing over, will hold those amounts or such property on
        trust for the Trustee.

4.2     No Senior Claim shall be deemed to have been reduced or discharged in
        any way or to any extent by any payment or distribution to the Trustee
        in accordance with Section 4.1.

4.3     All monies received by the Trustee shall, until used or applied as
        provided in the Indenture, be held in trust for the purposes for which
        they were received, but need not be segregated from other funds except
        to the extent required by mandatory provisions of law.

5.      REPAYMENT

        The Borrower is not obliged to repay the Inter-Company Loan prior to the
        earlier of (i) 30 November 2011 or (ii) the Notes Repayment Date.

6.      INSOLVENCY

        If prior to the Notes Repayment Date insolvency, liquidation or other
        similar proceedings are commenced against the Borrower, the claims
        against the Borrower

        (a)     in respect of the Inter-Company Loan will be subordinate in
                right of payment to all Senior Claims;

        (b)     the Lender shall promptly lodge a claim and shall take all
                reasonable action necessary to preserve the Lender's claims for
                the purposes of such proceedings; and

        (c)     the Lender shall instruct the insolvency administrator to pay to
                the Trustee any amounts to which the Lender is entitled in such
                insolvency proceedings;

        in each case until all Senior Claims are repaid in full.

7.      MISCELLANEOUS

7.1     This Agreement is entered into by the Trustee as trustee under the
        Indenture and for the benefit of each Noteholder from time to time. The
        Trustee holds the benefit of the covenants, agreements and undertakings
        of the Lender and Borrower under this Agreement and all other monies and
        assets paid to, or held by the Trustee or received or recovered by the
        Trustee pursuant to or in connection with this Agreement with effect
        from the date of this Agreement on trust for the Noteholders.

7.2     This Agreement shall remain in force until

        (a)     all the Senior Claims have been discharged in full; or

        (b)     this Agreement is terminated by written consent of all the
                parties hereto.

                                       6
<PAGE>

7.3     Any notice or communication under or in connection with this Agreement
        shall be in writing and shall be delivered personally or by registered
        letter, courier or telefax to the following addresses (or such other
        address notified in writing by the recipient to the other parties in
        accordance herewith) set out below:

        Borrower:          Grohe Holding GmbH
                           Attn.: Michael Grimm
                           Hauptstrasse 137
                           58675 Hemer
                           Germany
                           Fax: +49 23 72 93 13 04

        Lender:            Grohe Beteiligungs GmbH & Co.KG
                           Attn.: Michael Grimm
                           Hauptstrasse 137
                           58675 Hemer
                           Germany
                           Fax: +49 23 72 93 13 04

        Trustee:           The Bank of New York, London Branch
                           Attn.: Corporate Trust Administration
                           One Canada Square
                           London E14 5AL
                           United Kingdom
                           Fax: +44 20 7964 6399

7.4     All amendments and supplements to this Agreement must be in writing and
        signed by each of the parties hereto. This requirement shall also apply
        to any amendment, release or waiver of the requirement for such written
        form.

7.5     Should any provision of this Agreement be legally invalid or
        unenforceable, the validity of the remaining contents of this Agreement
        shall remain unaffected. The invalid or unenforceable provision shall be
        replaced by such valid provision as comes as close as possible to the
        economic purpose of the invalid or unenforceable provision. The
        foregoing shall apply accordingly if this Agreement should contain any
        omission.

7.6     Unless the context otherwise requires:

        (a)     a term has the meaning assigned to it;

        (b)     "including" means including without limitation; and

        (c)     words in the singular include the plural and words in the plural
                include the singular.

                                       7
<PAGE>

7.7     This Agreement shall be governed by the laws of the Federal Republic of
        Germany.

7.8     Place of performance shall be Frankfurt am Main, Federal Republic of
        Germany. Venue for the Borrower, the Lender, and the Trustee shall be
        the courts of Frankfurt am Main, Federal Republic of Germany. This shall
        not affect the right of the Trustee to commence any action against the
        Borrower and/or Lender in any other court of competent jurisdiction,
        including the courts of England.

7.9     The parties hereby submit to the jurisdiction of the courts of England,
        and waive any obligations they may have now or hereafter to the courts
        of England being nominated as the forum to hear and determine any suit,
        action or proceedings and to settle any disputes and have agreed not to
        claim that any such court is not a convenient or appropriate forum.

                                       8
<PAGE>

        IN WITNESS WHEREOF the parties hereto have executed this Agreement on
        the day and year first above written.

                                             Grohe Holding GmbH,

                                             by /s/ Heiner Henke
                                             ------------------------------
                                             Name:  Heiner Henke
                                             Title: Principal Accounting Officer

                                             and by /s/ Holger Bierstedt
                                             ------------------------------
                                             Name:  Holger Bierstedt
                                             Title: Head of Finance Department

                                             Grohe Beteiligungs GmbH & Co. KG

                                             by Grohe Holding GmbH

                                             by /s/ Heiner Henke
                                             ------------------------------
                                             Name:  Heiner Henke
                                             Title: Principal Accounting Officer

                                             and by /s/ Holger Bierstedt
                                             ------------------------------
                                             Name:  Holger Bierstedt
                                             Title: Head of Finance Department

                                             The Bank of New York

                                             by /s/ Paul Pereira
                                             ------------------------------
                                             Name:  Paul Pereira
                                             Title: Assistant Vice President

                                       9

<PAGE>

                                   Exhibit 4.1

                    TRANSLATION FOR INFORMATION PURPOSES ONLY

                               CORPORATE AGREEMENT

                                     between

Grohe Holding GmbH, entered in the Commercial Register of Iserlohn Local Court
under HRB 2316, Hauptstrasse 137, 58675 Hemer

                                  - hereinafter referred to as "Grohe Holding" -

Grohe Consult GmbH, entered in the Commercial Register of Iserlohn Local Court
under HRB 2366, Hauptstrasse 137, 58675 Hemer

                                  - hereinafter referred to as "Grohe Consult" -

                                       and

Grohe Beteiligungs GmbH & Co. KG, entered in the Commercial Register of Iserlohn
Local Court under HRA 2093, Hauptstrasse 137, 58675 Hemer

                          - hereinafter referred to as "Grohe Beteiligungs KG" -

PREAMBLE

Grohe Holding and Grohe Consult formed Grohe Beteiligungs KG in order to create
a group structure for the Grohe group for the issue of a high yield bond which
establishes a ranking between various debt instruments of the Grohe group by
means of placing these debt instruments in companies independent of one another
at the different levels within the group.

<PAGE>

                                                                         Seite 2
--------------------------------------------------------------------------------

Such a ranking is necessary to achieve as favourable as possible a debt
structure for the group.

One of the measures undertaken to this end was the conclusion of an agreement
issuing a shareholders' loan from Grohe Holding to Grohe Beteiligungs KG
("Intercompany Loan Agreement") and an agreement relating to the conditions of
the issue of the aforementioned bond between Grohe Holding and the purchasers of
the bond ("Trust Indenture"). Both agreements contain provisions relating to
payment default and other events of default. In accordance therewith, if these
events of default take place the loans issued under these agreements become due
for payment. In some cases notice of the impending occurrence or the assertion
of the event of default must precede the due date, this is linked with a
deadline by which the avoidance or remedy of the event of default has been
achieved.

AGREEMENT

1.   The parties regard it as their joint aim to achieve the aforementioned
     corporate structure also in the event that

     -  an event of default occurs pursuant to the Intercompany Loan Agreement
        or the Trust Indenture,

     -  a notice is submitted pursuant to the Intercompany Loan Agreement or the
        Trust Indenture or

     -  the occurrence of one of the events of default or the submission of a
        notice pursuant to the Intercompany Loan Agreement or the Trust
        Indenture is imminent.

2.   The parties undertake to pursue the above aim jointly and to employ their
     best efforts to ensure that in particular all information relating to an
     impending event of default, the submission of a notice and the associated
     occurrence of events indicating an impending event of default is forwarded
     without undue delay.

<PAGE>

                                                                         Seite 3
--------------------------------------------------------------------------------

3.   Furthermore, Grohe Consult shall not leave Grohe Beteiligungs KG under any
     circumstances.

4.   None of the provisions in this Agreement prevent the partners in Grohe
     Beteiligungs KG from dissolving or liquidating Grohe Beteiligungs KG in
     such a way that all creditors of Grohe Beteiligungs KG can be satisfied
     from the assets of Grohe Beteiligungs KG pursuant to the ranking in
     existence before the distribution of the liquidation proceeds, if such a
     liquidation is undertaken in compliance with the Senior Notes Subordination
     Agreement of 17.03.2003 between Grohe Holding, Grohe Consult, Grohe
     Beteiligungs KG, Friedrich Grohe AG & Co. KG and the banks named therein.

5.   None of the provisions in this Agreement and none of the agreements
     following this Agreement shall prevent the partners in Grohe Beteiligungs
     KG from selling their interest in Grohe Beteiligungs KG, provided that the
     purchasers enter into this Agreement and the Senior Notes Subordination
     Agreement of 17.03.2003.

6.   The parties agree within the meaning of an agreement in favour of the
     financing banks (VERTRAG ZUGUNSTEN DER FINANZIERENDEN BANKEN) which are
     named in the Multicurrency Term and Revolving Facilities Agreement between
     Grohe Beteiligungs KG and Friedrich Grohe AG & Co. KG and these banks of
     17.03.2003 that they will only amend the partnership agreement of Grohe
     Beteiligungs KG after prior consent of the Dresdner Bank Luxembourg S.A. as
     agent of these financing banks.

7.   The parties agree that this Agreement shall only become valid after the
     mutual termination of the Corporate Agreement of 26.10.2000, in particular
     after issuing the consent of Dresdner Bank Luxembourg S.A.

Frankfurt, 17.03.2003

Grohe Holding GmbH                                         Grohe Consult GmbH

____________________                                       ____________________

<PAGE>

                                                                         Seite 4
--------------------------------------------------------------------------------

Grohe Beteiligungs GmbH & Co. KG

____________________

On behalf of the financing banks named under 6. we hereby acknowledge this
Agreement and the partnership agreement of Grohe Beteiligungs KG and declare:

       After the expiry of the blocking period set out in 4.1. of the Senior
       Notes Subordination Agreement between Grohe Holding, Grohe Consult and
       the financing banks we shall grant our consent to an amendment to the
       partnership agreement pursuant to ss. 15 (2) of the partnership agreement
       of Grohe Beteiligungs KG if Grohe Holding can exercise its rights
       pursuant to the Senior Notes Subordination Agreement vis-a-vis Grohe
       Beteiligungs KG.

Dresdner Bank Luxembourg S.A.

____________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00051-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00051-of-00352.parquet"}]]