Document:

Prepared by R.R. Donnelley Financial -- Employment Agreement-Peter J. Quinn

  
 Exhibit 10.2 
  
 EMPLOYMENT AGREEMENT 
  
 This Employment Agreement (“Agreement”) is made and
entered into as of April 22, 2002 by and between SmartDisk Corporation, a Delaware corporation (the “Company”), and Peter J. Quinn (the “Executive”). 
  
 Recitals 
  
 A.    The Company desires to ensure the Executive’s
continued employment with the Company and to compensate him therefor. 
  
 B.    The Board has determined that
this Agreement will reinforce and encourage the Executive’s attention and dedication to the Company. 
  
 C.    The Executive is willing to make his services available to the Company on the terms and conditions hereinafter set forth. 
  
 Agreement 
  
 NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows: 
  
 1.    Employment. 
  
 1.1    General.    The Company hereby agrees to employ the Executive, and the Executive
hereby agrees to serve the Company on the terms and conditions set forth herein. 
  
 1.2    Duties of Executive.    During the term of this Agreement, the Executive shall serve as a senior executive of the Company, shall diligently perform all services as may be assigned to him
by or under the direction of the Chief Executive Officer of the Company and shall exercise such power and authority as may from time to time be delegated to him by the Company’s Board of Directors. The Executive shall devote substantially all
of his business time and attention to the business and affairs of the Company, render such services to the best of his ability, and use his best efforts to promote the interests of the Company. 
  

2.    Term. 
  
 2.1    Initial Term.    The initial term of this Agreement, and the employment of the Executive hereunder, shall be for the three-year period commencing on the date hereof (the “Initial
Term”). 
  
 2.2    Renewal Terms.    The Initial Term of this
Agreement, and the employment of the Executive hereunder shall automatically be renewed for successive one year periods, unless the Company or the Executive provides written notice to the other at least 30 days prior to the expiration of the
applicable term. The terms and conditions of any renewal term shall be the same as those contained herein unless otherwise mutually agreed upon by the Company and the Executive in a written supplement to this Agreement signed by the Executive and
the Company’s President (the “Written Supplement”). In the event that the Company delivers a notice of non-renewal, the Executive shall be entitled to the compensation and benefits as if terminated pursuant to Section 5.4 and shall be
subject to Section 6.1 as if terminated pursuant to Section 5.4. 
  
 3.    Compensation.

  
 3.1    Base Salary.    The
Executive shall receive a base salary at the annual rate of $210,000 (the “Base Salary”) during the Initial Term of this Agreement, with such Base Salary payable in installments consistent with the Company’s normal payroll
schedule, subject to applicable withholding and other taxes. The Base Salary may, by action and in the sole discretion of the CEO or the Board, be increased at any time or from time to time. On January 1 of each year of this Agreement, the CEO or
the Board shall consider the performance of the Executive for a possible merit increase in Base Salary which in no event shall be less than three percent of such Base Salary; provided that any such increase shall be in the sole discretion of the CEO
or the Board. 
  
 3.2    Bonus Compensation.    In addition to the
Base Salary, the Executive shall be entitled to receive bonus compensation (the “Bonus Compensation”) during the Initial Term. The CEO or the Board shall establish a performance bonus formula with respect to Bonus Compensation pursuant to
which the Executive will be able to receive a target bonus of $100,000 per annum if the Company achieves the specified level of financial results. This target bonus amount may be increased during the initial term. 
  
 3.3    Signing Bonus.    The Executive shall be entitled to receive a signing bonus of
$25,000, less all applicable withholdings and deductions, on the first payroll period following the date the Executive joins SmartDisk. 
  
 3.4    Stock Options.    Contemporaneously herewith, SmartDisk is granting the Executive a non-qualified stock option to purchase 150,000 shares of SmartDisk’s
common stock, the exercise price of which shall be established in accordance with the SmartDisk option pricing policy in effect on the date hereof. The option will be granted pursuant to the Company’s 1999 Incentive Compensation Policy (the
“Incentive Plan”) and will be in customary form; provided that the option will vest (i.e., become exercisable) with respect to twenty-five percent (25%) of the shares issuable upon exercise of such option on the first anniversary date of
this Agreement and thereafter vest as to six and one-quarter (6.25%) of the subject shares on each subsequent quarter. For example, such option will be exercisable with respect to 37.5% of the subject shares on the 18-month anniversary of this
Agreement. In the event of a “Change of Control” (as defined in the Incentive Plan), fifty percent of the unvested shares underlying the option shall vest on the effective date of a Change of Control. 
  
 3.5    Stock.    The Executive shall receive 15,625 shares of SmartDisk stock as a
signing bonus. 
  
 4.    Expense Reimbursement and Other Benefits. 
  
 4.1    Reimbursable Expenses.    During the term of the Executive’s employment
hereunder, the Company, upon the submission of proper substantiation by the Executive, shall reimburse the Executive for all reasonable expenses actually and necessarily paid or incurred by the Executive in the course of and pursuant to the business
of the Company. 
  
 4.2    Other Benefits.    The Executive shall
be entitled to participate in all medical, dental and hospitalization, group life insurance, and any and all other plans as are presently and hereinafter provided by the Company to its executives. The Executive shall be entitled to vacations in
accordance with the Company’s prevailing policy for its executives. 
  
 4.3    Working Facilities.    The Company shall furnish the Executive with an office, secretarial help and such other facilities and services suitable to his position and adequate for the
performance of his duties hereunder. 
  
 4.4    Relocations and Other
Assistance.    The Executive shall be reimbursed by Company for expenses incurred with relocation from Atlanta, Georgia to Naples, Florida in accordance with existing relocation reimbursement policy, as revised by the offer
letter, dated March 19, 2002. The 

 Executive agrees to reimburse the Company for all relocation expenses if he voluntarily resigns within one (1) year of
employment. 
  
 4.5    Use of Company Car.    The Executive will
also have the use of a company car through the end of 2002. The Company will be responsible for the insurance and routine maintenance of the vehicle. The Executive will be responsible for normal operating expenses (i.e., fuel, oil, etc.) as well as
any personal income tax liability arising from the Executive’s use of the automobile. 
  
 5.    Termination. 
  
 5.1    Termination for
Cause.    The Company shall at all times have the right, upon written notice to the Executive, to terminate the Executive’s employment hereunder for “Cause” (as hereinafter defined). For purposes of this
Agreement, the term “Cause” shall mean (i) the failure or refusal of the Executive to perform the duties or render the services reasonably assigned to him from time to time by or under direction of the Chief Executive Officer of the
Company (except during reasonable vacation periods or sick leave), which failure or refusal is not cured within 15 days of written notice by the Company; (ii) gross negligence or willful misconduct by the Executive in the performance of his duties
as an employee of the Company, (iii) the conviction of the Executive of a felony; (iv) the material breach by the Executive of any of the provisions of Section 6.1, 6.2, 6.3 or 6.4 hereof; (v) the breach by the Executive of his fiduciary duty or
duty of trust to the Company, including the commission by the Executive of an act of fraud or embezzlement against the Company, (vi) substance abuse, or (vii) any other material breach by the Executive of any of the material terms or provisions of
this Agreement or any other agreement between the Company and the Executive related to the Executive’s employment, which other material breach is not cured within ten (10) business days of written notice by the Company. Upon any termination
pursuant to this Section 5.1, the Executive shall be entitled to receive any salary (other than Bonus Compensation) and employment benefits which shall have accrued prior to the date of termination, but shall not be entitled to any bonus or
severance payments, salary or employment benefits relating to periods subsequent to the date of termination, subject to Executive’s rights to continue medical and dental coverage under the Company’s group policy, at Executive’s
expense, as may be provided by law. 
  
 5.2    Disability.    The
Company shall at all times have the right, upon written notice to the Executive, to terminate the Executive’s employment hereunder, if the Executive shall, as the result of mental or physical incapacity, illness or disability, become unable to
perform his duties hereunder for in excess of ninety (90) days in any 12-month period. Upon any termination pursuant to this Section 5.2, the Company shall pay to the Executive (i) the balance of Executive’s salary and other benefits for the
remainder of the month in which disability occurs, and (ii) a pro rata portion of any Bonus Compensation to which Executive would be otherwise entitled under Section 3.2 based upon the ratio the number of months employed (calculated through the end
of the then current month) bears to the bonus period of twelve (12) months and the Company shall have no further liability hereunder (other than for reimbursement for reasonable business expenses incurred prior to the date of termination, subject,
however to the provisions of Section 4.1). 
  
 5.3    Death.    In
the event of the death of the Executive during the term of his employment hereunder, the Company shall pay to the estate of the deceased Executive (i) the balance of Executive’s salary and other benefits for the remainder of the month in which
death occurs, and (ii) a pro rata portion of any Bonus Compensation to which Executive would be otherwise entitled under Section 3.2 based upon the ratio the number of months employed (calculated through the end of the then current month) bears to
the bonus period of twelve (12) months and the Company shall have no further liability hereunder (other than for reimbursement for reasonable business expenses incurred prior to the date of the Executive’s death, subject, however to the
provisions of Section 4.1). 
  
 5.4    Termination by the Company Without
Cause.    At any time, the Company shall have the right to terminate this Agreement and Executive’s employment with the Company by providing at least 30 days prior written notice to the Executive; provided, however,
that, the Company shall (i) pay to the Executive any unpaid Base Salary accrued through the effective date of termination specified in such notice, (ii) pay Executive’s Base Salary in the manner set forth in Section 3.1 hereof until the date
which is 

 three months following such effective date (the “Severance Date”) and (iii) pay a pro rata portion of any Bonus Compensation
to which the Executive would be otherwise entitled under Section 3.2 based upon the ratio the number of months employed bears to the bonus period of twelve (12) months. Following the effective date of such termination, the Company shall continue to
pay for or provide to the Executive such benefits as may have been provided to the Executive in accordance with Section 4.2 immediately prior to such termination (subject to changes in the terms of such coverage by the provider as may be applicable
to the Company as a whole) for a period ending on the earliest of (A) the date of the Executive’s employment by a third party on a substantially full-time basis, (B) the death of the Executive and (C) the Severance Date. Except as expressly
provided herein, the Company shall have no further liability hereunder (other than for reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however to the provisions of Section 4.1). 

 
 5.5    Termination by Employee.    At any time, the Executive may terminate
this Agreement and Executive’s employment with the Company by providing at least 30 days prior written notice to the Company. Upon termination of this Agreement pursuant to this Section 5.5, the Executive shall be entitled to receive any salary
(other than Bonus Compensation) and employment benefits which shall have accrued prior to the date of termination, but shall not be entitled to any bonus or severance payments, salary or employment benefits relating to periods subsequent to the date
of termination, subject to Executive’s rights to continue medical and dental coverage under the Company’s group policy at Executive’s expense, as may be provided by law. 
  
 6.    Restrictive Covenants. 
  
 6.1    Non-competition.    While employed by the Company and for a period of one year following the later of the date his employment is terminated hereunder or, if applicable, the Severance
Date (the “Restricted Period”), the Executive shall not, directly or indirectly (whether as owner, principal, agent, shareholder, employee, partner, lender, venturer with or consultant to any person, firm, partnership, corporation, limited
liability company or other entity), whether or not compensation is received, engage or participate in any activity for any business or entity which is or plans to engage in the marketing and sale of any products or services which are under active
development or are marketed or sold by the Company and/or their respective subsidiaries and affiliates during the term of this Agreement anywhere in the United States; provided, however, that nothing herein shall be deemed to prevent the Executive
from acquiring through market purchases and owning, solely as an investment, less than three percent in the aggregate of the equity securities of any class of any issuer whose shares are registered under §12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended, and are listed or admitted for trading on any United States national securities exchange or are quoted on the National Association of Securities Dealers Automated Quotations System, or any similar system of
automated dissemination of quotations of securities prices in common use, so long as the Executive is neither involved in the management or conduct of the business affairs of such issuer nor a member of any “control group” (within the
meaning of the rules and regulations of the United States Securities and Exchange Commission) of any such issuer. Notwithstanding the foregoing, in the event that the Executive’s employment hereunder is terminated pursuant to Section 5.4 or
Section 5.5, the Restricted Period shall terminate on the later of (a) one year after the date Executive’s employment is terminated or (b) two years from the date of execution of this Agreement. The Executive acknowledges and agrees that the
covenants provided for in this Section 6.1 are reasonable and necessary in terms of time, area and line of business to protect the Company’s “Trade Secrets” (as hereinafter defined). The Executive further acknowledges and agrees that
such covenants are reasonable and necessary in terms of time, area and line of business to protect the Company’s legitimate business interests, which include their interests in protecting the Company’s (i) valuable confidential business
information, (ii) substantial relationships with customers throughout the United States, and (iii) customer goodwill associated with the ongoing business of the Company. The Executive expressly authorizes the enforcement of the covenants provided
for in this Section 6.1 by (A) the Company and its subsidiaries, (B) the Company’s permitted assigns, and (C) any successors to the Company’s business. To the extent that the covenant provided for in this Section 6.1 may later be deemed by
a court to be too broad to be enforced with respect to its duration or with respect to any particular activity or geographic area, the court making such determination shall have the power to reduce 

 the duration or scope of the provision, and to add or delete specific words or phrases to or from the provision. The provision
as modified shall then be enforced. 
  
 6.2    Nondisclosure.    Executive shall not divulge, communicate, use to the detriment of the Company or for the benefit of any other person or persons, or misuse in any way, any
“Confidential Information” pertaining to the Company. Any confidential information or data now known or hereafter acquired by the Executive with respect to the Company shall be deemed a valuable, special and unique asset of the Company
that is received by the Executive in confidence and as a fiduciary, and Executive shall remain a fiduciary to the Company with respect to all of such information. For purposes of this Agreement, the following terms when used in this Agreement have
the meanings set forth below: 
  
 “Confidential Information” means confidential data and
confidential information relating to the business of the Company (which does not rise to the status of a Trade Secret under applicable law) which is or has been disclosed to the Executive or of which the Executive became aware as a consequence of or
through his employment with the Company and which has value to the Company and is not generally known to the competitors of the Company. Confidential Information does not include (a) information that is or becomes generally available to the public
other than as a result of the Executive’s disclosure of such information, (b) information that was within the Executive’s possession prior to it being furnished to the Executive by or on behalf or its affiliates, including the Company,
provided that the source of such information was not known to the Executive to be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the Company or its affiliates, or any other party
with respect to such information, (c) information that becomes available to the Executive on a non-confidential basis from a source other than the Company or any of its affiliates, provided that such source is not known to the Executive to be bound
by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the Company or its affiliates, or any other party with respect to such information, (d) information the disclosure of which is required by
applicable law or judicial process, or (e) general technical skills or general experience gained by the Executive during the Executive’s employment with the Company. 
  
 “Trade Secrets” means information of the Company including, but not limited to, technical or nontechnical data, formulas, patterns, compilations,
programs, financial data, financial plans, product or service plans or lists of actual or potential customers or suppliers which (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable
by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. 
  

In addition, during the Initial Term and during the periods described in the last sentence of this Section 6.2, the Executive (a) will receive and hold all Confidential Information
and Trade Secrets (collectively “Company Information”) in trust and in strictest confidence, (b) will take reasonable steps to protect the Company Information from disclosure and will in no event take any action causing, or fail to take
any action reasonably necessary to prevent, any Company Information to lose its character as Company Information, and (c) except as required by the Executive’s duties in the course of his employment by the Company, will not, directly or
indirectly, use, disseminate or otherwise disclose any Company Information to any third party without the prior written consent of the Company, which may be withheld in the Company’s absolute discretion. The provisions of this Section 6.2 shall
survive the termination of the Executive’s employment (i) for a period of five years with respect to Confidential Information, and (ii) with respect to Trade Secrets, for so long as any such information qualifies as a Trade Secret under
applicable law. 
  
 6.3    Nonsolicitation of Employees and
Customers.    While employed by the Company and for a period of two years following the later of the date his employment is terminated hereunder by either the Company or the Executive, or, if applicable, the Severance Date,
the Executive shall not, directly or indirectly, for himself or for any other person, firm, corporation, partnership, association or other entity, (i) attempt to employ or enter into any contractual arrangement with any employee or former employee
of the Company, unless such employee or former employee has not been employed by the Company for a period in excess of three months, and/or (ii) divert or take away, or attempt to divert or 

 
take away, the business or prospects of any of the actual or targeted prospective customers or clients of the Company, nor shall the Executive make known the names and addresses of such
customers or any information relating in any manner to the Company’s trade or business relationships with such customers. 
  
 6.4    Assignment Of Inventions. 
  
 (a)    Original Development.    The Executive represents and warrants to the Company that all work that the Executive performs for or on behalf of the Company and its clients, and all work
product that the Executive produces in such capacity, including but not limited to software, documentation, memoranda, ideas, designs, inventions, processes, algorithms, etc. (“Work Product”), will not knowingly infringe upon or violate
any patent, copyright, trade secret, or other property right of any of his former employers or of any other third party. The Executive will not disclose to the Company, or use in any of his Work Product, any confidential or proprietary information
belonging to others, unless both the owner thereof and the Company have consented in writing. 
  
 (b)    Disclosure.    The Executive will promptly disclose to the Company all Work Product developed by him within the scope of his employment with the Company or which relates directly to, or
involve the use of, any Company Information, including but not limited to all software, concepts, ideas and designs, and all documentation, manuals, letters, pamphlets, drafts, memoranda and other writings or tangible things of any kind. The
Executive will not disclose them to anyone other than authorized Company personnel. 
  
 (c)    Copyright Ownership.    The Executive acknowledges and agrees that all Work Product which is made by him (solely or jointly with others) within the scope of his employment and which is
protectable by copyright is being created at the instance of the Company and is “work made for hire,” as that term is defined in the United States Copyright Act (17 USCA, Section 101). 
  

(d)    Assignment.    The Executive hereby assigns to the Company all of his other rights, title and interest
(including but not limited to all patent, copyright and trade secret rights) in and to all Work Products prepared by him, whether patentable or not, made or conceived in whole or in part by him within the scope of his employment hereunder, or that
relates directly to, or involves the use of Company Information. 
  
 (e)    Documents.    The Executive agrees to execute all documents reasonably requested by the Company to further evidence the foregoing assignment and to provide all reasonable assistance to
the Company (at the Company’s expense) in perfecting or protecting any or all of the Company’s rights in his Work Product. 
  
 (f)    Pre-existing Inventions Not Assigned.    The Executive represents that the Executive has indicated on Annex III to this Agreement all inventions, expression of
ideas or other Work Product related to the Company’s business and created prior to his employment by the Company in which the Executive has any right, title or interest that the Executive does not assign to the Company. If the Executive does
not have any such inventions, expressions of ideas, or work product to indicate, the Executive will write “none” on Annex III. The Executive will not assert any rights under any inventions as having been made or acquired by him prior to
his being employed by the Company, unless such inventions are identified on Annex I. 
  
 6.5    Books and Records.    All books, records, reports, writings, notes, notebooks, computer programs, sketches, drawings, blueprints, prototypes, formulas, photographs, negatives, models,
equipment, chemicals, reproductions, proposals, flow sheets, supply contracts, customer lists and other documents and/or things belonging to the Company or embodying or relating to any Confidential Information or Trade Secrets, whether prepared by
the Executive or otherwise coming into the Executive’s possession shall not be copied, duplicated, replicated, transformed, modified or removed from the premises of the Company except pursuant to the business of the Company and shall be
returned 

 
immediately to the Company on termination of the Executive’s employment hereunder or on the Company’s request at any time. 
  

6.6    No Conflict.    The Executive represents to the Company that his execution and performance of this Agreement
does not violate the provisions of any employment, non-competition, confidentiality or other material agreement to which he is a party or by which he is bound. The Executive also agrees to indemnify and hold harmless the Company from any and all
damages and other obligations or liabilities incurred by the Company in connection with any breach of the foregoing representation. 
  
 7.    Injunction.    It is recognized and hereby acknowledged by the parties hereto that a breach by the Executive of any of the covenants contained in Section 6 of this Agreement will cause
irreparable harm and damage to the Company, the monetary amount of which may be virtually impossible to ascertain. As a result, the Executive recognizes and hereby acknowledges that the Company shall be entitled to seek an injunction from any court
of competent jurisdiction (without posting a bond or other security) enjoining and restraining any violation of any or all of the covenants contained in Section 6 of this Agreement by the Executive or any of his affiliates, associates, partners or
agents, either directly or indirectly, and that such right to injunction shall be cumulative and in addition to whatever other remedies the Company or the Company may possess. 
  
 8.    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of Florida without
regard to conflicts of laws principles thereof and all questions concerning the validity and construction hereof shall be determined in accordance with the laws of said state. 
  
 9.    Entire Agreement.    This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter
hereof and, upon its effectiveness, shall supersede all prior agreements, understandings and arrangements, both oral and written, between the Executive and the Company (or any of its affiliates) with respect to such subject matter. Except for the
obligation to pay all accrued but unpaid salary due the Executive, all such prior agreements, understandings and arrangements for the provision of services by the Executive to the Company and the compensation of the Executive in any form are hereby
terminated, and the Executive hereby releases and forever discharges the Company (as well as its affiliates) from any and all liabilities and obligations of any nature arising out of or in connection with any and all such prior agreements,
understandings or arrangements. This Agreement may not be modified in any way unless by a written instrument signed by both the Company and the Executive. 
  
 10.    Notices.    Any notice required or permitted to be given hereunder shall be deemed given when delivered by hand or when deposited in the United States mail, by
registered or certified mail, return receipt requested, postage prepaid, (i) if to the Company, c/o SmartDisk Corporation, 3506 Mercantile Avenue, Naples, Florida 34104, Attention: Daniel E. Reed, Vice President, and (ii) if to the Executive, to his
address as reflected on the payroll records of the Company, or to such other address as either party hereto may from time to time give notice of to the other. 
  
 11.    Benefits; Binding Effect.    This Agreement shall be for the benefit of and binding upon the parties hereto and their respective heirs, personal representative,
legal representatives, successors and, where applicable, assigns, including, without limitation, any successor to the Company, whether by merger, consolidation, sale of stock, sale of assets or otherwise; provided, however that the Executive shall
not delegate his employment obligations hereunder, or any portion thereof, to any other person. 
  
 12.    Severability.    The invalidity of any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall not affect the enforceability of the remaining
portions of this Agreement or any part thereof, all of which are inserted conditionally on their being valid in law, and, in the event that any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall be
declared invalid, this Agreement shall be construed as if such invalid word or words, phrase or phrases, sentence or sentences, clause or clauses, or section or sections had not been 

 
inserted. If such invalidity is caused by length of time or size of area, or both, the otherwise invalid provision will be considered to be reduced to a period or area which would cure such
invalidity. 
  
 13.    Waivers.    The waiver by either party hereto of a breach or
violation of any term or provision of this Agreement shall not operate nor be construed as a waiver of any subsequent breach or violation. 
  
 14.    Damages.    Nothing contained herein shall be construed to prevent the Company or the Executive from seeking and recovering from the other damages sustained by
either or both of them as a result of its or his breach of any term or provision of this Agreement. In the event that either party hereto brings suit for the collection of any damages resulting from, or for the injunction of any action constituting,
a breach of any of the terms or provisions of this Agreement, then the party found to be at fault shall pay all reasonable court costs and attorneys’ fees of the other. 
  
 15.    Section Headings.    The section headings contained in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. 
  
 16.    No Third Party
Beneficiary.    Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or remedies under or by reason of this Agreement. 
  
 IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. 
  
 
	 SMARTDISK CORPORATION
 
	 
	 By:
 	 	 /S/    MICHAEL S.
BATTAGLIA        
 

	  	 	 Michael S. Battaglia,
 President and Chief Executive
Officer
 
	 
	  	 	 /S/    PETER J.
QUINN        
 

	  	 	 Peter J. Quinn
 

 

  
 ANNEX I 
  
 PRE-EXISTING INVENTIONS 
  
 None<PAGE>

                                                                    Exhibit 10.1

            FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
            --------------------------------------------------------

         THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as
of May 14, 2002 (this "Agreement"), is by and among GEO SPECIALTY CHEMICALS,
                       ---------
INC. ("Borrower"), certain financial institutions party to the Credit Agreement
       --------
referred to below (the "Lenders"), DEUTSCHE BANK TRUST COMPANY AMERICAS f/k/a
                        -------
BANKERS TRUST COMPANY, in its capacity as administrative agent ("Administrative
                                                                 --------------
Agent"), SALOMON SMITH BARNEY INC. in its capacity as syndication agent
-----
("Syndication Agent"), and US BANK NATIONAL ASSOCIATION, in its capacity as
  -----------------
documentation agent ("Documentation Agent").
                      -------------------

                                   BACKGROUND
                                   ----------

         A.   Borrower, the Lenders, Administrative Agent, Syndication Agent and
Documentation Agent are parties to that certain Amended and Restated Credit
Agreement dated as of May 31, 2001 (as amended, restated, supplemented or
otherwise modified and in effect from time to time, the "Credit Agreement").
                                                         ----------------

         B.   Borrower has requested Administrative Agent and the Lenders amend
the Credit Agreement in certain respects as set forth herein and Administrative
Agent and the Lenders are agreeable to the same, subject to the terms and
conditions set forth herein.

                                    AGREEMENT
                                    ---------

         NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:

         SECTION 1.  DEFINED TERMS. Unless otherwise defined herein, all
                     -------------
capitalized terms used herein shall have the meanings given them in the Credit
Agreement.

         SECTION 2.  AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is, as
                     ------------------------------
of the First Amendment Effective Date (as defined below), hereby amended as
follows:

         (a)  Subsection 4.02(d) of the Credit Agreement is hereby amended by
              ------------------
deleting the number "$15,000,000" appearing in the first proviso of such
subsection in its entirety and substituting therefor the number "$5,000,000."

         (b)  Subsection 4.02(f) of the Credit Agreement is hereby amended by
              ------------------
deleting the second parenthetical therein in its entirety and substituting
therefor the following parenthetical:

         "(other than equity contributions to the Borrower by its Subsidiaries,
         any Pinjarra Equity Issuances and any Allentown Equity Issuances)"

         (c)  Subsection 4.02(g) of the Credit Agreement is hereby amended by
              ------------------
adding the following parenthetical after the reference therein to Section
                                                                  -------
8.05(j):
-------

         "(other than subordinated Indebtedness issued by the Borrower to
         finance Pinjarra Consolidated Capital Expenditures and Allentown
         Consolidated Capital Expenditures pursuant to Sections 8.05(e) and (f),
                                                       ----------------     ---
         respectively)"

         (d)  Subsection 7.01(c) of the Credit Agreement is hereby amended and
              ------------------
restated in its entirety as follows:

<PAGE>

              "(c)  Monthly Report. As soon as practicable, and in any event
                    --------------
         within 30 days after the end of each monthly accounting period of each
         fiscal year of the Borrower (other than the last monthly accounting
         period in such fiscal year), monthly reports in a form reasonably
         satisfactory to the Administrative Agent, which shall include the
         consolidated (and certain business unit data as the Administrative
         Agent and the Borrower may agree consistent with the manner provided in
         the Information Memorandum of the Borrower dated April 2001) balance
         sheet of the Borrower and its Subsidiaries, as at the end of such
         monthly accounting period, and the related consolidated (and certain
         business unit data as the Administrative Agent and the Borrower may
         agree and consistent with the manner provided in the Information
         Memorandum of the Borrower dated April, 2001) statements of income and
         cash flow for such monthly accounting period, setting forth (i) (A) in
         the case of statements of income, comparative figures to the budget
         prepared in accordance with Section 7.01(d), (B) in the case of the
                                     ---------------
         balance sheet, comparative figures to the balance sheet delivered
         pursuant to Section 7.01(a) for the fiscal year most recently ended,
                     ---------------
         and (C) in the case of statements of cash flow, a summary of cash flows
         for the elapsed portion of such fiscal year ended with the last day of
         such quarterly accounting period, and (ii) information relating to the
         Pinjarra Consolidated Capital Expenditures and Allentown Consolidated
         Capital Expenditures, as at the end of such monthly period, which shall
         include, without limitation, the amount of such expenditures during the
         applicable period, the status of the Pinjarra Project and the Allentown
         Restructuring and a comparison of budgeted to actual Pinjarra
         Consolidated Capital Expenditures and Allentown Consolidated Capital
         Expenditures for the applicable period and percentage completion."

         (e)  Subsection 7.01(d) of the Credit Agreement is hereby amended by
              ------------------
deleting the words "of the twelve months" appearing in the first sentence
thereof and substituting therefor the words "fiscal quarter."

         (f)  Section 8.01 of the Credit Agreement is hereby amended by adding
              ------------
the following clause after the first parenthetical therein:

                    "including, without limitation, maintaining at all times
         gallium sales arrangements between the Borrower and its Subsidiaries
         which are satisfactory to the Administrative Agent."

         (g)  Subsection 8.02(m) of the Credit Agreement is hereby amended by
              ------------------
amending and restating clause (vii) therein as follows: "(vii) immediately after
giving effect to such Permitted Acquisition there is Available Liquidity of at
least $20,000,000," and by deleting the word "and" after clause (vii) therein
and adding a new clause (ix) thereto as follows:

              ", and (ix) both before and after giving effect to such Permitted
         Acquisition, the Leverage Ratio shall be no greater than 4.50 to 1.00
         (with calculations therefor set forth in the certificate required to be
         delivered pursuant to clause (vi) hereof)."
                               -----------

         (h)  Section 8.03 of the Credit Agreement is hereby amended by deleting
              ------------
the word "and" at the end of subsection 8.03(n), deleting the period at the end
                             ------------------
of subsection 8.03(o) and substituting therefor the words "; and" and adding a
   ------------------
new subsection 8.03(p) thereto as follows:
    ------------------

                                      -2-

<PAGE>

               "(p)  Liens securing Indebtedness permitted to be incurred
         pursuant to subsection 8.04(l); provided that such Liens do not at any
                     ------------------
         time encumber any property other than the property financed by such
         Indebtedness and proceeds thereof."

         (i)   Subsection 8.04(e) of the Credit Agreement is hereby amended and
               ------------------
restated in its entirety as follows:

               "(e)  Indebtedness under Permitted Hedge Agreements;"

         (j)   Section 8.04 of the Credit Agreement is hereby amended by
               ------------
deleting the word "and" at the end of subsection 8.04(j), deleting the period at
                                      ------------------
the end of subsection 8.04(k) and substituting therefor the words "; and" and
           ------------------
adding a new subsection 8.04(l) thereto as follows:
             ------------------

               "(l)  Indebtedness of the Pinjarra Subsidiary relating to the
         financing of the Pinjarra Project in an aggregate amount not to exceed
         $40,000,000 at any time outstanding;"

         (k)   Subsection 8.05(a) of the Credit Agreement is hereby amended by
               ------------------
deleting the table therein in its entirety and substituting therefor the
following table:

                     "Fiscal Year Ending                      Amount
                      ------------------                      ------
               December 31, 2001                              $13,000,000
               December 31, 2002 and each fiscal
               year thereafter                                $10,000,000"

         (l)   Subsection 8.05(e) of the Credit Agreement is hereby amended and
               ------------------
restated in its entirety as follows:

               "(e)  In addition to the foregoing, the Borrower and the Pinjarra
         Subsidiary may make Consolidated Capital Expenditures related to the
         Pinjarra Project ("Pinjarra Consolidated Capital Expenditures") to the
                            ------------------------------------------
         extent such Pinjarra Consolidated Capital Expenditures are financed by
         the proceeds from (x) the incurrance by the Pinjarra Subsidiary of
         Indebtedness as contemplated by Section 8.04(l), (y) the issuance of
                                         ---------------
         common stock of the Borrower pursuant to Section 8.12 ("Pinjarra Equity
                                                  ------------   ---------------
         Issuances") or (z) the issuance of unsecured Indebtedness, in the case
         ---------
         of each of the foregoing clauses (x), (y) and (z) on terms and
                                          --------     ---
         conditions reasonably satisfactory to the Administrative Agent (and, in
         the case of the foregoing clause (z), such terms and conditions to
                                   ----------
         include, without limitation, subordination of such Indebtedness to the
         Obligations as contemplated by Section 8.04(j) and the prohibition of
                                        ---------------
         any cash interest payments in respect of such Indebtedness on, or prior
         to, the Term B Loan Maturity Date)."

         (m)   Section 8.05 of the Credit Agreement is hereby amended by adding
               ------------
thereto a new subsection 8.05(f) as follows:
              ------------------

               "(f)  In addition to the foregoing, Borrower may make
         Consolidated Capital Expenditures relating to the Allentown
         Restructuring ("Allentown Consolidated Capital Expenditures") to the
                         -------------------------------------------
         extent such Allentown Consolidated Capital Expenditures are financed by
         the proceeds from (x) the issuance of common stock of the Borrower
         pursuant to Section 8.12 ("Allentown Equity Issuances") or (y) the
                     ------------   --------------------------
         issuance by the

                                      -3-

<PAGE>

         Borrower of unsecured Indebtedness to the Borrower's shareholders, in
         the case of each of the foregoing clauses (x) and (y), on terms and
                                           ----------      ---
         conditions reasonably satisfactory to the Administrative Agent (and, in
         the case of the foregoing clause (y), such terms and conditions to
                                   ----------
         include, without limitation, subordination of such Indebtedness to the
         Obligations as contemplated by Section 8.04(j) and, except as
                                        ---------------
         contemplated by the proviso set forth herein, the prohibition of any
         cash interest payments in respect of such Indebtedness on, or prior to,
         the Term Loan B Maturity Date) and in an amount not to exceed
         $15,000,000 in the aggregate for all transactions permitted by this
         Section 8.05(f); provided, however, that payments in respect of any
         ---------------  -----------------
         Indebtedness issued pursuant to the foregoing clause (y) shall be
                                                       ----------
         permitted on the same terms and at the same times as set forth in
         Section 8.08(a)(iii) for Allentown Equity Issuances. "
         --------------------

         (n)   Section 8.06 of the Credit Agreement is hereby amended by
               ------------
amending and restating subsection 8.06(f) as follows: "(f) Permitted Hedge
                       ------------------
Agreements;" and by deleting the word "and" after subsection 8.06(m), deleting
                                                  ------------------
the period at the end of subsection 8.06(n) and substituting therefor the word
                         ------------------
"; and" and adding a new subsection 8.06(o) and a paragraph at the end of such
                         ------------------
Section as follows:

               "(o)   investments made by the Borrower in a joint venture formed
         under the laws of Puerto Rico on or after the First Amendment Effective
         Date in an amount not to exceed $400,000 in fiscal year 2002 and
         $400,000 in fiscal year 2003.

         Notwithstanding anything herein to the contrary, the Borrower shall not
         be permitted to make any investment in the Pinjarra Subsidiary or the
         Pinjarra Project other than investments in the Pinjarra Subsidiary
         financed with the proceeds of Pinjarra Equity Issuances or Indebtedness
         permitted by Section 8.05(e) and the exercise of the Borrower's option
                      ---------------
         pursuant to the Option Agreement as contemplated by Section 8.06(n)
                                                             --------------
         above."

         (o)   Section 8.08 of the Credit Agreement is hereby amended by
               ------------
deleting the word "and" after subsection 8.08(a)(i), deleting the period at the
                              ---------------------
end of subsection 8.08(a)(ii) and substituting therefor the words "; and" and
       ----------------------
adding thereto a new subsection 8.08(a)(iii) as follows:
                     -----------------------

               "(iii) The Borrower may return capital to its stockholders up to
         an amount equal to the original dollar value of any Allentown Equity
         Issuance commencing with the fiscal year ending December 31, 2004;
         provided, however, that such capital returns shall not exceed in any
         -----------------
         fiscal year one third of the total amount of the original dollar amount
         of all Allentown Equity Issuances; and provided further, however, that,
                                                -------------------------
         both before and after giving effect to any such capital return, (x) the
         Leverage Ratio shall be less than or equal to 4.50 to 1.00, (y) no
         Default or Event of Default shall exist, and (z) there is Available
         Liquidity of at least $20,000,000."

         (p)   Section 8.09 of the Credit Agreement is hereby amended by adding
               ------------
the following parenthetical after the words "such Subsidiary" in the fourth and
fifth lines thereof and after the word "Subsidiaries" in clause (ii) of the
proviso thereof: "(other than the Pinjarra Subsidiary)".

         (q)   Section 8.10 of the Credit Agreement is hereby amended by adding
               ------------
the following parenthetical after the word "below" in the last line of the
introductory paragraph: "(effective with the fiscal quarter ended March 31,
2002)" and deleting the table therein in its entirety and substituting therefor
the following table:

                                      -4-

<PAGE>

                         "Fiscal Quarter                      Ratio
                          --------------                      -----
                         March 31, 2002                     1.45:1.00
                         June 30, 2002                      1.15:1.00
                         September 30, 2002                 1.20:1.00
                         December 31, 2002                  1.25:1.00
                         March 31, 2003                     1.45:1.00
                         June 30, 2003                      1.65:1.00
                         September 30, 2003                 1.85:1.00
                         December 31, 2003                  2.05:1.00
                         March 31, 2004                     2.50:1.00
                         June 30, 2004                      2.50:1.00
                         September 30, 2004                 2.50:1.00
                         December 31, 2004                  2.50:1.00
                         March 31, 2005                     2.75:1.00
                         June 30, 2005                      2.75:1.00
                         September 30, 2005                 2.75:1.00
                         December 31, 2005                  2.75:1.00
                         March 31, 2006                     3.00:1.00
                         June 30, 2006                      3.00:1.00
                         September 30, 2006                 3.00:1.00
                         December 31, 2006                  3.00:1.00
                         March 31, 2007                     3.25:1.00
                         June 30, 2007                      3.25:1.00
                         September 30, 2007                 3.25:1.00
                         December 31, 2007                  3.25:1.00"

         (r)   Section 8.11 of the Credit Agreement is hereby amended and
               ------------
restated in its entirety as follows:

               "8.11  Leverage  Ratios. (a) The Borrower will not permit the
                      ----------------
         Leverage Ratio of the Borrower at any time during a fiscal quarter of
         the Borrower set forth below to be greater than the ratio set forth
         opposite such fiscal quarter:

                         Fiscal Quarter                       Ratio
                         --------------                       -----
                         June 30, 2001                      4.90:1.00
                         September 30, 2001                 4.90:1.00
                         December 31, 2001                  4.90:1.00
                         March 31, 2004                     4.00:1.00
                         June 30, 2004                      4.00:1.00
                         September 30, 2004                 4.00:1.00
                         December 31, 2004                  4.00:1.00
                         March 31, 2005                     3.50:1.00
                         June 30, 2005                      3.50:1.00
                         September 30, 2005                 3.50:1.00
                         December 31, 2005                  3.50:1.00
                         March 31, 2006                     3.50:1.00
                         June 30, 2006                      3.50:1.00
                         September 30, 2006                 3.50:1.00
                         December 31, 2006                  3.50:1.00
                         March 31, 2007                     3.50:1.00

                                      -5-

<PAGE>
                    Fiscal Quarter                     Ratio
                    --------------                     -----

                    June 30, 2007                      3.50:1.00
                    September 30, 2007                 3.50:1.00
                    December 31, 2007                  3.50:1.00

          The parties hereto agree that measurement of the Leverage Ratio
     pursuant to this Section 8.11 (a) shall be suspended for each fiscal
                      ------------
     quarter occurring in fiscal years 2002 and 2003; provided, however, that
                                                      -----------------
     the Borrower shall continue to be subject to all other terms and conditions
     of this Agreement relating to the Leverage Ratio (including, without
     limitation, the reporting requirements with respect thereto set forth in
     Section 7.01(e)).
     ---------------

          (b)  The Borrower will not permit the Senior Leverage Ratio of the
     Borrower at any time during a fiscal quarter of the Borrower set forth
     below to be greater than the ratio set forth opposite such fiscal quarter:

                    Fiscal Quarter                       Ratio
                    --------------                       -----
                    March 31, 2002                     3.00:1.00
                    June 30, 2002                      3.80:1.00
                    September 30, 2002                 3.70:1.00
                    December 31, 2002                  3.30:1.00
                    March 31, 2003                     3.05:1.00
                    June 30, 2003                      2.50:1.00
                    September 30, 2003                 2.15:1.00
                    December 31, 2003                  1.90:1.00"

     (s)  Section 10 of the Credit Agreement is hereby amended as follows:
          ----------

          (i) The table in the definition therein of "Base Rate Margin" is
     hereby deleted in its entirety and replaced as follows and the following
     proviso is added to the end thereof as follows:

<TABLE>
<CAPTION>
       ----------------------------------------------------------------------------------
                                         Applicable Base Rate Margin for    Applicable
                 Most Recent                     Revolving Loans             Base Rate
                Leverage Ratio                                              Margin For
                --------------                                             Term B Loans
       ----------------------------------------------------------------------------------
       <S>                               <C>                               <C>
             Less than 2.25 to 1                      1.25%                    2.25%
       ----------------------------------------------------------------------------------
          Equal to or greater than                    1.50%                    2.50%
        2.25 to 1 but less than 2.50
                   to 1
       ----------------------------------------------------------------------------------
          Equal to or greater than                    1.75%                    2.50%
        2.50 to 1 but less than 3.00
                   to 1
       ----------------------------------------------------------------------------------
          Equal to or greater than                    2.00%                    2.75%
        3.00 to 1 but less than 3.50
                   to 1
       ----------------------------------------------------------------------------------
          Equal to or greater than                    2.25%                    2.75%
        3.50 to 1 but less than 4.25
                   to 1
       ----------------------------------------------------------------------------------
</TABLE>

                                      -6-

<PAGE>

<TABLE>
          <S>                                         <C>                         <C>
          -------------------------------------------------------------------------------------
            Equal to or greater than                  3.00%                       3.50%
          4.25 to 1 but less than 5.00
                    to 1.00
          -------------------------------------------------------------------------------------
           Equal to or greater than                   3.75%                       4.25%
                 5.00 to 1.00
          -------------------------------------------------------------------------------------
</TABLE>

               ; provided, however, notwithstanding the foregoing, for the
                 -----------------
          period from the First Amendment Effective Date until the date of
          receipt by the Administrative Agent of the certificate required to be
          delivered by the Borrower pursuant to Section 7.01(c) for the fiscal
                                                ---------------
          quarter ended March 31, 2002, the Base Rate Margin shall be 3.75% for
          Revolving Loans and 4.25% for Term B Loans."

               (ii)  The definition therein of "Consolidated Net Indebtedness"
          is hereby amended by adding the following sentence to the end thereof:

               "For the purposes of computing the Leverage Ratio, the Senior
          Leverage Ratio and the Interest Coverage Ratio for any period, the
          definition of "Consolidated Net Indebtedness" shall be deemed to
          exclude the impact of FASB 133 as such financial accounting standard
          relates to obligations of the Borrower under Permitted Hedge
          Agreements."

               (iii) The table in the definition therein of "Eurocurrency
          Margin" is hereby deleted in its entirety and replaced as follows and
          the following proviso is added to the end thereof:

<TABLE>
<CAPTION>
          -------------------------------------------------------------------------------------
                                          Applicable Eurocurrency Margin for      Applicable
                   Most Recent                      Revolving Loans              Eurocurrency
                  Leverage Ratio                                                  Margin For
                  --------------                                                  Term B Loans
          -------------------------------------------------------------------------------------
           <S>                            <C>                                    <C>
               Less than 2.25 to 1                       2.25%                       3.25%
          -------------------------------------------------------------------------------------
            Equal to or greater than                     2.50%                       3.50%
           2.25 to 1 but less than 2.50
                     to 1
          -------------------------------------------------------------------------------------
             Equal to or greater than                    2.75%                       3.50%
           2.50 to 1 but less than 3.00
                     to 1
          -------------------------------------------------------------------------------------
             Equal to or greater than                    3.00%                       3.75%
           3.00 to 1 but less than 3.50
                     to 1
          -------------------------------------------------------------------------------------
            Equal to or greater than                     3.25%                       3.75%
           3.50 to 1 but less than 4.25
                     to 1
          -------------------------------------------------------------------------------------
             Equal to or greater than                     4.00%                       4.50%
           4.25 to 1 but less than 5.00
                    to 1.00
          -------------------------------------------------------------------------------------
           Equal to or greater than                     4.50%                       5.00%
                 5.00 to 1.00
          -------------------------------------------------------------------------------------
</TABLE>

                                      -7-

<PAGE>

               ; provided, however, notwithstanding the foregoing, for the
                 -----------------
          period from the First Amendment Effective Date until the date of
          receipt by the Administrative Agent of the certificate required to be
          delivered by the Borrower pursuant to Section 7.01(c) for the fiscal
                                                ---------------
          quarter ended March 31, 2002, the Eurocurrency Margin shall be 4.50%
          for Revolving Loans and 5.00% for Term B Loans."

               (iv)  The definition therein of "Excess Cash Payment Date" is
          amended by deleting the word "2001" appearing therein and substituting
          therefor the word "2002."

               (v)  New definitions of "Allentown Restructuring," "Available
          Liquidity," "Consolidated Senior Indebtedness," "FASB 133," "First
          Amendment Effective Date, "Permitted Hedge Agreement," "Pinjarra
          Subsidiary," and "Senior Leverage Ratio" are hereby added to such
          Section 10 in appropriate alphabetical order as follows:
          ----------

               " `Allentown Restructuring' shall mean the closing of all or
                  -----------------------
          substantially all of the operations of the Borrower located in
          Allentown, Pennsylvania and the relocation of such operations to one
          or more locations of the Borrower."

               " `Available Liquidity' shall mean the sum of (i) the Total
                  -------------------
          Unutilized Revolving Loan Commitment and (ii) cash and Cash
          Equivalents."

               " `Consolidated Net Senior Indebtedness' shall mean, at any date
                  ------------------------------------
          of determination, an amount equal to the amount of Consolidated Net
          Indebtedness at such time less any Indebtedness evidenced by the
          Senior Subordinated Notes."

               " `FASB 133' shall mean Statement of Financial Accounting
                  --------
          Standards No. 133 promulgated by the Financial Accounting Standards
          Board."

               " `First Amendment Effective Date' shall mean May 14, 2002."
                  ------------------------------

               " `Permitted Hedge Agreements' shall mean all obligations
                  --------------------------
          (contingent or otherwise) of the Borrower or any Subsidiary existing
          or arising under Hedge Agreements, provided that each of the following
                                             --------
          criteria is satisfied: (a) such obligations are (or were) entered into
          by such Person in the ordinary course of business for the purpose of
          mitigating risks associated with liabilities, commitments or assets
          held by such Person and not for purposes of speculation or taking a
          "market view" and (b) such Hedge Agreement does not contain any
          provision ("walk-away" provision) exonerating the non-defaulting party
          from its obligation to make any payments on outstanding transactions
          to the defaulting party."

               " `Pinjarra Subsidiary' shall mean a Wholly-Owned Subsidiary of
                  -------------------
          the Borrower formed under the laws of Australia for the sole purpose
          of financing and operating the Pinjarra Project."

               " `Senior Leverage Ratio' shall mean, at any date of
                  ---------------------
          determination, the ratio of (i) Consolidated Net Senior Indebtedness
          to (ii) Consolidated EBITDA for the Test Period most recently ended
          (taken as one accounting period)."

               (vi)  The definition therein of "Total Revolving Loan Commitment"
is hereby amended and restated in its entirety as follows:

                                      -8-

<PAGE>

          " `Total Revolving Loan Commitment' shall mean the sum of the
     Revolving Loan Commitments of each of the Lenders which shall equal
     $20,000,000 in the aggregate as of the First Amendment Effective Date."

     (t)  Annex I to the Credit Agreement is hereby deleted in its entirety and
replaced with Annex I attached hereto.

     SECTION 3. AMENDMENT FEE. (a) Borrower agrees to pay a fee to the
                -------------
Administrative Agent on or prior to the First Amendment Effective Date on behalf
of each Lender which has executed and delivered this Agreement on or prior to
5:00 p.m. C.S.T. on May 14, 2002 equal to 0.25% times the sum of the Total
Revolving Loan Commitment, and outstanding Term Loan B of such Lender as in
effect under the Credit Agreement on the First Amendment Effective Date, such
fee to be due and payable on the First Amendment Effective Date.

          (b)   Borrower also agrees to pay all reasonable costs and expenses of
the Administrative Agent in connection with the negotiation, preparation,
printing, typing, reproduction, execution and delivery of this Amendment and all
other documents furnished pursuant hereto or in connection herewith, including
without limitation, the reasonable fees and out-of-pocket expenses of Winston &
Strawn, special counsel to Administrative Agent and any local counsel retained
by Administrative Agent relative thereto or the reasonable allocated costs of
staff counsel as well as the fees and out-of-pocket expenses of counsel,
independent public accountants and other outside experts retained by
Administrative Agent in connection with the administration of this Agreement.

     SECTION 4. CHANGES IN INTEREST RATES AND FEES. Borrower, the Lenders and
                ----------------------------------
Administrative Agent acknowledge and agree that any increases in any interest
rates or fees resulting from the effectiveness of this Agreement shall be
effective as of the First Amendment Effective Date.

     SECTION 5. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AGREEMENT. This
                --------------------------------------------------
Agreement shall become effective upon the date (the "First Amendment Effective
                                                     -------------------------
Date") each of the following conditions have been satisfied:
----

          (a)   First Amendment. Borrower, Administrative Agent and the Lenders
                ---------------
shall have executed and delivered this Agreement.

          (b)   No Defaults. No Default or Event of Default under the Credit
                -----------
Agreement (as amended hereby) shall have occurred and be continuing.

          (c)   Representations and Warranties. The representations and
                ------------------------------
warranties of Borrower contained in this Agreement, the Credit Agreement (as
amended hereby) and the other Credit Documents shall be true and correct in all
material respects as of the First Amendment Effective Date, with the same effect
as though made on such date, except to the extent that any such representation
or warranty expressly relates to an earlier date, in which case such
representation or warranty shall be true and correct in all material respects as
of such earlier date.

          (d)   Payment of Amendment Fee. Borrower shall have paid in full to
                ------------------------
the Administrative Agent, on behalf of each Lender, the fees set forth in
Section 3 hereof and any other separately agreed upon fees.
---------

          (e)   Perfection Certificate. Borrower shall have executed and
               ----------------------
delivered a duly completed perfection certificate in form and substance
reasonably satisfactory to the Administrative Agent.

                                      -9-

<PAGE>

          (f)   Security Agreement Amendment. Borrower shall have executed and
                ----------------------------
delivered the Security Agreement Amendment (as defined in Section 6 below) and
                                                          ---------
such other documents and instruments as Administrative Agent shall reasonably
request in connection therewith.

          (g)   Prepayment of Term Loan B. Borrower shall have prepaid the Term
                -------------------------
Loan B in an amount equal to $7,500,000.

          (h)   Reaffirmation of Guaranty. Each Subsidiary Guarantor shall have
                -------------------------
executed and delivered a Reaffirmation of Guaranty in the form attached hereto
as Exhibit A hereto.
   ---------

          (i)   Other. Such other documents, instruments and certificates as the
                -----
Administrative Agent or any Lender may reasonably request.

     SECTION 6. Consent and Acknowledgment. Pursuant to Section 7.11 of the
                --------------------------
Credit Agreement, the Lenders hereby instruct the Administrative Agent to enter
into that certain Supplement and Amendment No. 1 to Amended and Restated
Security Agreement, in form and substance satisfactory to the Administrative
Agent (the "Security Agreement Amendment") which Security Agreement Amendment
            ----------------------------
shall amend the Security Agreement to make changes thereto necessary or
desirable to conform the terms of the Security Agreement to the provisions of
revised Article IX of the Uniform Commercial Code.

     SECTION 7. Acknowledgment of Reduction in Total Revolving Loan Commitment.
                --------------------------------------------------------------
Pursuant to Section 3.02 of the Credit Agreement, as of the First Amendment
Effective Date, the Borrower hereby reduces permanently the Total Revolving Loan
Commitment to $20,000,000.

     SECTION 8. REPRESENTATIONS AND WARRANTIES.
                ------------------------------

          (a)   Borrower represents and warrants (i) that it has full corporate
power and authority to enter into this Agreement and perform its obligations
hereunder in accordance with the provisions hereof, (ii) that this Agreement has
been duly authorized, executed and delivered by Borrower and (iii) that this
Agreement constitutes the legal, valid and binding obligation of Borrower,
enforceable against Borrower in accordance with its terms, except to the extent
that such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting creditors' rights
and by equitable principles.

          (b)   Borrower represents and warrants that the following statements
are true and correct, in each case after giving effect to this Agreement:

                (i)   The representations and warranties contained in the Credit
          Agreement and each of the other Credit Documents are and will be true
          and correct in all material respects on and as of the First Amendment
          Effective Date to the same extent as though made on and as of that
          date, except to the extent such representations and warranties
          expressly relate to an earlier date, in which case they were true and
          correct in all material respects on and as of such earlier date.

                (ii)  No event has occurred and is continuing or will result
          from the consummation of the transactions contemplated by this
          Agreement that would constitute an Event of Default or a Default.

                (iii) The execution, delivery and performance of this Agreement
          by Borrower do not and will not violate any provision of the
          certificate of incorporation or by-laws,

                                      -10-

<PAGE>

             any applicable law, statute, rule, regulation, order, writ,
             injunction or decree of any court or Governmental Authority having
             jurisdiction over it or any contractual provision to which it is a
             party or to which it or any of its property is subject.

                     (iv) No material order, consent, approval, license,
             authorization, or validation of, or filing, recording or
             registration with, or exemption by, any foreign or domestic
             governmental or public body or authority, or any subdivision
             thereof, is required to authorize or is required in connection with
             its execution, delivery and performance of this Agreement and all
             agreements, documents and instruments executed and delivered
             pursuant to this Agreement.

         SECTION 9.  REFERENCES TO AND EFFECT ON THE CREDIT AGREEMENT.
                     ------------------------------------------------

             (a)     On and after the First Amendment Effective Date each
reference in the Credit Agreement to "this Agreement," "hereunder," "hereof,"
"herein," or words of like import, and each reference to the Credit Agreement in
the Credit Documents and all other documents (the "Ancillary Documents")
                                                   -------------------
delivered in connection with the Credit Agreement shall mean and be a reference
to the Credit Agreement as amended hereby.

             (b)     Except as specifically amended above, the Credit Agreement,
the Credit Documents and all other Ancillary Documents shall remain in full
force and effect and are hereby ratified and confirmed.

             (c)     The execution, delivery and effectiveness of this Agreement
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of the Lenders or Agent under the Credit Agreement, the
Credit Documents or the Ancillary Documents.

         SECTION 10. EXECUTION IN COUNTERPARTS. This Agreement may be executed
                     -------------------------
in counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and the
same instrument. Delivery of an executed counterpart of a signature page of this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart of this Agreement.

         SECTION 11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND BE
                     -------------
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE INTERNAL CONFLICTS OF LAWS PROVISIONS THEREOF.

         SECTION 12. HEADINGS.  Section headings in this Agreement are included
                     --------
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purposes.

                                      -11-

<PAGE>

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

                                            GEO SPECIALTY CHEMICALS, INC.

                                            By:________________________________
                                            Name:______________________________
                                            Title:_____________________________

<PAGE>

                                                DEUTSCHE BANK TRUST COMPANY
                                                AMERICAS (F/K/A BANKERS TRUST
                                                COMPANY), individually and as
                                                Administrative Agent

                                                By: ___________________________
                                                Name: _________________________
                                                Title: ________________________

<PAGE>

                                              SALOMON SMITH BARNEY,
                                              as Syndication Agent

                                              By: __________________________
                                              Name: ________________________
                                              Title: _______________________

<PAGE>

                                          US BANK NATIONAL ASSOCIATION,
                                          as Documentation Agent

                                          By: _________________________
                                          Name: _______________________
                                          Title: ______________________

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